Managing Human Capital at Barclays Bank - Essay Example

Managing Human Capital at Barclays Bank Introduction Human resources are considered as the greatest assets of every organization. Therefore, recruitment, selection, training and retaining of efficient work force has a significant role in the success of an organization. Recruitment of efficient employees was always a challenging task for the management. This paper conducts a research on the problems related to the recruitment and retention of employees in a financial organization. The organization selected here is the Barclays Bank. Unlike organizations in other sectors, organizations in financial sector face acute shortage of talented and efficient work force. The Barclays Bank also faces the same problem. Like recruitment, retention of the recruited employees is another main problems faced by the financial organizations like Barclays. 1. Human resource at Barclays Barclays has an efficient and talented human resource team which is one of the key factors behind the success of the organisation. The human resource policies at Barclays are designed in such a ways that it attracts the fresher to the organisation and force the experienced existing employees to remain in the organisation. The Barclays has a pension scheme for the retired employees. The organisation conducts different programs for the staff at various levels. The salaries fixed for the different positions at the organisations are analysed by a team namely Compensation and Benefits Analysts and they makes any amendments in the pay package if required. There is an HR business partner who works with the operations manager and valuable contributions while taking decisions regarding recruitment, training…etc. There is one HR operations Advisor who makes advice on different aspects, whether internal or external related to human resource of the organization. There is a resourcing manager who helps and guide in attracting the efficient candidates to the organization and also to reduce the labor turnover. Also the pensions at the organization are managed by Pension Administrator (Human Resources, n. d.). Motivation and morale contributes in its own way to develop a right attitude towards the organization (Hirschfeld, 2006). 2. Strategic fit: The field of HRM is constantly evolving. While at one stage it was equated with personnel management the current role of HRM is more strategic in nature. It works in close association with the top management and plays a part in formulating and implementing the policies of the company with a focus on the bottom-line. According to Armstrong, strategic integration is necessary to provide congruence between business and human resource strategy so that the latter supports the accomplishment of the former and indeed, helps to define it (Armstrong, 2000, p. 45). There are some clear trends emerging in the field today. “Times certainly have change from those days when the HR department was called the "smile and file" department since in that era; the primary qualifications for HR were simply a friendly disposition and an ability to file” (Buchanan, 2006). Barclays has a unique human resource strategy which designed to achieve the following objectives (Human Resources, n. d.): a. To confirm that the employees that the organization is selecting must be able to provide a full-fledged customer service and make the customer satisfied thereby achieving the objectives of the organization. b. To acquire a talented work force and give them an effective training in order to make the leaders of tomorrow by way of retaining the acquired talents. c. To provide such a work environment, those not make the existing employees to think about quitting the organization. d. To ensure the selection of right people at the right time in the right place with right pay. Barclays bank strictly implements equitable employment concept. It treats male and females equally in the recruitment process. No special preference given to any candidates on the basis of sex, race, ethnicity, union…etc. as it is against the company’s policies and also it is unethical to do so. The Bank always follows an employee friendly policy in which the employees are given enough opportunities for their career development. It provides leave to the employees as and when required on genuine reasons. The working hours at Bank is a flexible which is designed in such way that by considering the needs of the employees. Another thing that motivates the employees to get a job in Barclays Bank is that, the bank has a scheme or provision to employees for taking either complete leave or reduction in working hours for looking after disabled dependents. This motivates the existing employees also which helps the company to retain the experienced existing staff (Categories of discrimination, 1998). 3. HR theories and strategies Even though human relations management is a highly regarded subject in management circles today, the concept itself is not very old. The functions of HR functions have been codified only after the recognition and subsequent evolution of HRM and HRD. Early management theorists like Taylor did not give much importance to the human side of HR and hence considered HR function as one where the employee is made to work for maximum productivity. Early traces of human oriented thought regarding workers were seen in the theories of Peter Drucker and Douglas McGregor and were considered to be the behavioral sciences. A book by Srinivas Kanduala, titled HRD in Competitive Business Environment traces the development of HRM and its functions. The author citing from other sources say that the “origin of HRM as a defined school of thought is usually traced back to 1970s with the development of human Resources Accounting Theory” ( Kandula, 2005, p.52). Max Weber is another expert in classical approach of management. Weber was of the opinion that well established principles and practices were the best option for growth and productivity. Once the best practices are indentified they should be implemented and practiced without fail. He was also in favor of a high hierarchical structure with clear cut directions which should be followed to the letter. The industrial revolution and the growth of job opportunities resulted in a mass migration of rural population to the cities. The appalling working conditions brought about by scientific management and the general changes and liberalization in societies resulted in an approach that is more attuned toward the needs of workers other than their salaries and wages. “Several prominent theorists began to direct their attention to the human element in the workplace. Elton Mayo, Mary Parker Follett, Douglas McGregor, Chris Argyris, and Abraham Maslow were writers who addressed this issue by contending that increased worker satisfaction would lead to better performance” (Hahn, 2007). This approach is referred to as the behavioral approach to management. Abraham Maslow observed that workers are motivated by needs that are hierarchical in nature. He developed a standard set of needs where one fulfilled need will then lead to the next one. The hierarchy of needs are physiological, safety, social, esteem, and self-actualization needs. Once the basic needs like food, shelter, and source of livelihood are obtained, the employee will seek job security and safety. It also necessitates social needs like companionship, sense of belonging, and a feeling to be needed in the organization. Any aspect that enhances the ego like recognition and praise comes next (esteem needs). Once all these are achieved, the employee will look at the higher values like truth and meaning of life and existence. He will also be looking for contributing more towards society more than receiving from it. Barclay’s HR policies are clearly based on behavioural theories of management. The bonus system in the bank can be considered a direct association with Taylor’s outlook on motivation. The concept of security can be associated with Herzberg’s removal of dissatisfaction while pension is a factor associated with satisfaction (motivation). Bonuses can also be a motivating factor. The compensation policy is attuned towards McGregor’s Theory Y. Long time employees may also find that concepts of Hierarchy of needs is also present in the bank. In its efforts to maintain the talent employees in the organisation, Barclays has been successful as they could maintain the cream in the industry. As an effort to motivate the key employees of the organisation, the bank has introduced employee stock option plan whereby key employees of the organisation can enjoy all the fruits of an ordinary shareholders such as fair and regular return in the form of dividend and capital appreciation. All these efforts are directed toward one end that is employee motivation and retention. The bank has realized out of its long years of experience that unless the human capital is taken care with utmost care and attention, the future of the organisation will be affected badly. 4. Cost- Benefit Analysis Hiring human resources to any organisation involves costs and the size of the cost depends on the size of the factory and office. This means that people requirements is decided by the size of operations and products and services dealt with. It is undisputable that at Barclays Bank, human resources requirements are increased from years to year as the services offered by the bank improve tremendously over the last several years due to competition and other external forces. The hiring cost involves explicit cost for recruitment, selections, training and maintaining employees in addition to the compensation by whatever name called payable to them for their work. Recruitment and selection costs involves those associated with advertisement, selection of media for advertisement, it is known that electronic media has become the most sought after advertisement tool now-a-days. It is costly as well since they are fast reaching and effective at the same time. This has multiplied the initial cost of recruitment and selection procedures. As the organization is always striving to achieve the talent from a group of performers, the bank has to undertake huge responsibility to reach at the heights in the recruitment and selection process. In addition to recruitment and selection costs, the employees are to be trained from the very first day of induction through the retirement/ termination of employment. However, there is an implicit cost incurred by an organization for employee when his/ her service is terminated on account of any reason and a new employee is replaced for him/her as a fresh one. This increasing hiring cost necessities organization to review the investment made in the human capital in terms of the benefits that accrue from such investment. Employee cost-benefit analysis has become a common tool to examine whether the investment made on human resources contributes fair return. The brief statistics of the human resource cost at Barclays Bank is given below: Table 1- Staff and Salary Statistics Number of staff 151,500 Number of directors 67 Directors remuneration £13,400,000.00 Increase over last 7 years 93.7% Highest paid directors salary £1,700,000.00 Increase over last 7 years 35.06% (Source: Accounts: Barclays) Figure 1- staff numbers over the last eight years (Source: Historical Salaries: Barclays) Figure 2- Salary/Wages paid during the last eight years (Source: Historical Salaries: Barclays) Figure 3- Amount spent for Employee Pension (incomplete data for first four years) (Source: Pensions: Barclays) The above table and figures exhibit that the employee cost at Barclays over the last seven years are on the increase from year to year. The table reveals that the number of staffs during the last eight years increased though very low in the first four years. Consequently, the remuneration paid to employees has also increased. The figure 2 shows that employee salary during the year 2006 is multiplied as compared to that of the previous year. Similarly the amount spent for employee pension also shows a tremendous change in 2007 and 2008. All these imply that the explicit cost of employees at Barclays is on the increase and naturally it can be presumed that the implicit costs such as recruitment, selection, training and retention costs must also be high. At Barclays, the annual turnover per employee comes to £62,633.66 in the year 2008 and profit per employee: £40,112.21 in the same year (Accounts). Employee attrition or turnover should also be considered seriously as it involves both explicit as well as implicit cost. Since the cost of turnover to organization is high (Griffeth and Hom, 2001), understanding the causes of turnover are also important in determining organizational success. Researches in the organizational behavior field have established that both organizational justice and organizational commitment are strong predictors of turnover intentions (Mathieu and Zajac, 1990; Konovsky and Cropanzano, 1991; and Lee, 2000). However, it is still less clear which component of organizational justice, i.e., distributive justice or procedural justice, is most important predictor of turnover intentions. Furthermore, it is also less clear, whether distributive justice or procedural justice directly impacts turnover intentions or these relationships are mediated by organizational commitment. 5. Suggestions and recommendations The organization must endeavor to allocate rewards as consistently as possible across individuals and communicate to middle level managers that the consistency principle is important to the organization and is integrated into the reward allocation decision making process. This means, application of the same procedures to all potential recipients of rewards and giving special advantage to none. Performance evaluations should be conducted and they must be perceived as fair by all middle level managers. Organizations need to provide a thorough explanation for how and why an evaluation was reached and should provide middle level managers a voice in the evaluation process. It is also important that there must be a right approach to hiring in the organization of empowered employees. With empowerment employees tend to do more work with fewer resources. In such a situation, hiring an “empowerable” workplace becomes a daunting task and the author suggests steps as to how an “empowered” hiring manager has to go about the task beyond the traditional interviewing methods. Steps such as understanding what constitutes a good fit, defining both technical and non-technical elements of the job, picking the cost-effective recruitment method, conducting a telephone screening, making the hiring decision at different levels of recruitment process, orienting and motivating the new recruit to stay are mentioned 6. Conclusion and Recommendation on Cost Benefit Analysis Like any other corporation, Barclays also treat its human resource as the most valuable assets and the only active element to activate other elements such as machinery and equipments, which are otherwise, remain dead. However, unless the costs associated with the people management and maintenance is critically evaluated in the light of its probable benefits, the entire efforts will be a waste. Considering the employee initial cost and annual expenditure for hiring and training, it can be presumed that a huge amount has been incurred every year at Barclays. From all stakeholders’ point of view, it can be said that this is not a good sign of success. Rather, it is an indication that the company unnecessarily invest in hiring and maintaining people in the organization and is likely to incur huge loss unless all the employees are retained in the organization. Today’s employees have the tendency to switch over from job to another within no time. This causes further increase in the employee maintenance cost as the organization is required to fill the gap on account of such movement. The most possible solution for this kind of unnecessary increase in the employee cost is that hire only those people whose services are unavoidable to the organization. Also make sure that newly joined are likely to be maintained in the firm at least for three years. It has been mentioned in the report that the pension cost has been on the increase and this can be reduced, if proper care is taken while fixing the compensation plan. References “Accounts”, (n. d.), Barclays Bank PLC, Work Smart, accessed on 15th September, 2009, from http://www.worksmart.org.uk/company/company.php?id=1026167#Salaries Armstrong, Michael (2000), Strategic human resource management: a guide to action, 2nd Edition, Kogan Page Publishers Baron, James N & Kreps, David M (1999), Consistent human resource practices, California Management Review, 41(3): 29-53 Buchanan, Kadence (2006), Trends in Human Resources, Webpronews, accessed on 17th September, 2009, from http://www.webpronews.com/expertarticles/2006/10/25/trends-in-human-resources Bliss, Wendy (2000), Avoiding ‘Truth or Dare’ in Reference Checks, HRFOCUS, 2000 Campion, Michael A, Palmer, David K, and Campion, James E. (1998), Structuring employment interviews to improve reliability, validity, and user reactions Current Directions in Psychological Science. American Psychological Society, 7, (3) 77-82 “Categories of discrimination” (1998), Employment and working condition provisions related to equal employment opportunities- Equal Opportunities at Barclays: Survey, International Labor Organization, accessed on 19th September, 2009, from, http://www.ilo.org/public/english/employment/gems/eeo/company/uk/barc.htm Griffeth R W and Hom P W (2001), Retaining Valued Employees, Sage, CA Hahn, Martin (2007), Behavioral Management Theory, Articlesgratuits.com, accessed on 19th September, 2009, from http://www.en.articlesgratuits.com/behavioral-management-theory-id1593.php “Historical Salaries” (n. d.), Barclays Bank PLC, Work Smart, accessed on 15th September, 2009, from http://www.worksmart.org.uk/company/company.php?id=1026167#Salaries Hirschman, Carolyn (1998), Playing the high-stakes hiring game - includes related article on questions for employee interview. HR Magazine- Online Bnet.com, accessed on 17th September, 2009, from http://findarticles.com/p/articles/mi_m3495/is_n3_v43/ai_20853288/ Hirschfeld, Karin (2006), Retention and Fluctuation: Keeping staff - Losing staff, accessed on 18th September, 2009, from htpp://www.uniglobalunion.org/UNIsite/Groups/PMS/publications/Retention-EN.pdf “Human Resources”, (n. d), Barclays Commercial, accessed on 17th September, 2009, from http://www.barclays-jobs.com/commercial/about_us/our_structure/human_resources/ Kandula, R Srinivas (2005), Hrd in Competitive Business Environment - Realities, Challenges And Practices, ICFAI Books Konovsky M A and Cropanzano R Z (1991), "Perceived Fairness of Employee Drug Testing as a Predictor of Employee Attitudes and Job Performance", Journal of Applied Psychology, Vol. 76, pp. 698-707 Lee H R (2000), "An Empirical Study of Organizational Justice as a Mediator of Relationship Among Leader-Member Exchange and Job Satisfaction, Organizational Commitment, and Turnover Intention in Lodging Industry", Unpublished Ph.D. Thesis, Virginia Technical University, Blackburg, Virginia Mathieu J and Zajac D (1990), "A Review and Meta-analysis of the Antecedents, Correlates, and Consequences of Organizational Commitment", Psychological Bulletin, pp. 171-194 Miner, B. John (2005), Organizational behavior, Volume 1, M.E. Sharpe “Pension” (n. d.), Barclays Bank PLC, Work Smart, accessed on 15th September, 2009, from http://www.worksmart.org.uk/company/company.php?id=1026167#Salaries Phlips, Louis (1988), The economics of imperfect information, Cambridge University Press “The Recruitment Process” (n. d.), Barclays Commercial, accessed on 17th September, 2009, from http://www.barclays-jobs.com/commercial/recruitment_process/ Appendix A Brief Profile of Barclays Bank and its Human Resources practices Barclays is a major global financial services provider engaged in retail and commercial banking, credit cards, investment banking, wealth management and investment management services, with an extensive international presence in Europe, the Americas, Africa and Asia. Barclays is a well established institution with a long tradition and history. It has developed a planned and structured recruitment process. But there are certain factors that can be incorporated into the current process. . Many experts in field of HR feel that the best results are obtained from conducting structured interviews rather than open ones. According to Campion et al “in the 80 years of published research on employment interviews, one of the mostly strongly supported conclusions are that structuring the interview enhances its reliability and validity and, hence, its usefulness for prediction and decision making” (Campion et al, 1998). It appears that the Bank is following this policy of conducting structured interviews. They can also take into consideration the concept of job signaling in order to assess the quality of the applicants. It can include qualification, experience, appearance, dress, and any other relevant non-technical attributes ( Phlips, 1988, p.123). Organizations are complex and the authors compare it to a menagerie. HR strategy should be in tune with this complexity as well as the business strategy of organizations. The concept of fit is extremely important because this factor has a direct positive relation with employee turnover (Baron & Kreps, 1999, p. 34). Past employment (if any) referencing and verification is also very important. According to Hirschman, “to increase the odds of making the right hiring selection, many HR managers and consultants recommend behavior-based interviewing, an approach that looks at past behavior as the best predictor of future performance” (Hirschman, 1998). The author adds that this practice will also result in reduced employee turnover. Another factor to be considered is that many students tell lies about their past in order to get recruited. Studies have shown that 95% of college students are willing to lie, and 15% had false resumes in order to get a job. 45% of those selected admitted to lying during the interview process (Bliss, 2000, p. 5). A very good and highly attractive compensation package can motivate employees for the better performance of the tasks assigned to them and also it works as an employee retention tool. Though the compensation package at Barclays bank is comparatively it need to be revised as and when required. A conducive, teamwork-based and friendly work environment is essential for the faculty to put in their best and continue to serve. Conducting frequent `satisfaction surveys and acting upon the survey results is highly essential in these days of intense competition. More so, because these surveys generally indicate the morale and motivation levels of the employees of the organization. Pension plan at Barclays is the one of the retention strategy of the organization. The process of Recruitment at Barclays The recruitment process at Barclays is systematically designed one and is explained below. It appears that the process is a standardized one as seen in most organizations. a. Structure Interview: It is a standardized interview process whereby a set of similar questions is used to test all the candidates for a particular job. b. In-Tray exercise: This is a simulation exercise where candidates will be presented with routine paperwork that they can expect in actual employment scenarios. c. Written Exercise: This is primarily aimed at assessing the communication skills (writing) of the candidate. d. Presentation: This focuses on assessing the oral communication skill of the candidate. e. Role Play: As the name suggests, this will assess how well the candidate interacts with colleagues and customers (The Recruitment Process). Read More