Geoghegan Exits in HSBC Shake-Up - Essay Example

Management at HSBC A recent article in the Wall Street Journal discusses how HSBC Chief Michael Geoghagen stepped down after a dispute erupted among Board members of HSBC about who would succeed Mr, Green, existing Chairman after he left to become a UK Trade Minister (Munoz, 2010). Mr. Geoghagen instituted an intense campaign to succeed as HSBC Chairman, but stepped down after his campaign failed. This led to the appointment of financial officer Douglas Green as Chairman and investment banking head Stuart Gullivar became the CEO.

The decision to appoint two long time employees of HSBC, who had a long history of service with the bank was a victory for the traditional factions of the bank. HSBC has generally been a very conservative bank that strictly follows a management style that is regulated and controlled by insiders, i.e the Board. It may be noted at the outset that all the people who were in contest for the posts of Chairman and CEO, including Mr. Geoghagen were all long time employees of HSBC, London, who had ascended from the bottom ranks and moved into managerial positions. When Mr. Geoghagen stepped down, it has brought to the surface and to the attention of the public, an issue that would generally have been decided within the organization, without any outsiders being involved in it at all.

The final decision by the HSBC board to appoint two long time HSBC employees rather than seeking to employ someone from outside the organization has been criticized as being an insular process that could have been improved upon considerably. The problem with the HSBC decision was that it was all regulated within the organization. In general, following such an insular policy may not benefit the organization in the long run. In today’s global economy, it is vital for an organization to be constantly changing and adapting in order to adapt to the changing global business environment.

The nature of leadership which is provided is vital in promoting the growth and continuing progress of the organization. Leadership has traditionally been associated with management, but this may not necessarily represent an accurate view because managers think incrementally while leaders think radically. Moreover, leadership involves a transformation in individuals, according to Spencer, ““transformational leadership is a process that changes and transforms individuals”. (Spencer 1). It must be noted that transformational leadership is best likely to be achieved when fresh new ideas are brought into the organization by using individuals from the outside to be leaders within an organization.

Since such individuals are entering the organization from the outside, they are able to bring a fresh perspective and develop an innovative approach in solving problems. HSBC however, has adopted a management policy that focuses upon retaining individuals within an organization as its leaders. This may not be a good policy to bring innovation and new ideas into the organization. When individuals have remained within an organization for a long time, they develop an insular perspective that is strictly limited.

Since they have remained inside an organization for years, they are unable to spot problems that an outsider is likely to see easily. On the whole, HSBC’s conservative policies may not be good for the growth of the organization ad its survival in a rapidly changing global marketplace. In order to improve its operations and make it more competitive, HSBC bank should have considered appointing an outsider as CEO. This would have ensured that the individual in the post could have brought a wealth of new experience to enrich the organization.

Moreover, this could have also allowed for an insight into some of the problems of bureaucracy or flawed thinking and organizational patterns. At the very least, it would have injected fresh blood and shaken up the fixed organizational patterns. References: Munoz, Sara Schaefer, 2010. “Geoghagen exits in HSBC shake-up”, The Wall Street Journal, September 24, 2010; Retrieved October 15, 2010 from: http://online.wsj.com/article/SB10001424052748703384204575510280502216578.html?KEYWORDS=%22Geoghegan+Exits+in+HSBC+Shake-Up%22Spencer, Emily.

Leadership Models and Theories: A Brief Overview. Retrieved on March 2, 2007 from http://jobfunctions.bnet.com/whitepaper.aspx?docid=162454