HSBC and its employees
Employees and organization, in the global world are facing the increasing speed of business activities as well as career internationalization since mid of 90’s. Since then expatriation has become a normal part of business career advancement either assigned or self-initiated (Beer, Boselie, and Brewster, 2015). This normal part in business career advancement is also an essential prerequisite step for some managerial positions in their home country, host country or in third party country. Expatriation includes employees able to transfer technical, for instance, administrative or management practices, improve communication between head office and its subsidiaries, to ensure organization policies, coordinate activities between HQ and subsidiaries, many more skills required to manage the organization’s business in foreign countries (Allen, Lee, and Reiche, 2015). In such practices management has to design a separate reward and compensation system for their expatriate employees working in any of the parent country, host country, or third party nations.
This report discusses the complexity of designing a reward and compensation system for such expatriate employees. Further part of the report discusses an existing reward system of HSBC in its
HSBC was started with a simple idea of becoming a local bank for international needs. Bank is more than 150 years old and headquartered in London. Bank has expanded its international banking network in 66countries comprising of around 3800 offices. Most of the business operates in Europe, America, Middle East, North Africa, and Asia. This huge network of the bank outsource for its human resource need.
Organization encourages both the horizontal as well as vertical move for employees hence, HSBC encourage its employees to apply for their suitable positions across the organization network. In the organization it is employees’ responsibility to apply for a suitable position. However this opportunity is not for employees, in their probation period or for those who have joined a new position, to apply for within six months of working at the new position. HSBC also apply some strategic methods of human resource management to select most logical and efficient candidates to operate its international business network. In order to take care of organization’s expatriate employees bigger branches have minimum 20 HR personnel while smaller branches have minimum 3-6 HR personnel. These HR personnel are employed to monitor and motivate the performance of respective branch employees (HSBC, 2018a).
HSBC believes that in order to get the long-term sustainability of their business, efficient performance of people to achieve their goals is essential. To adhere the value of HSBC’s business, organization conducts an annual performance review of its employees working in parental nations or in host countries. To manage the international performance of the organization, management has to evaluate and motivate the performance of its expatriate employees. In this practice HRM of the organization needs to design a separate performance evaluation system to give rewards and compensation to its expatriate employees (Ndofor, Wesley, and Priem, 2015).
In order to manage an international business, organizations need to build strong and healthy relationship with its customers. This healthy relationship is possible only with the help of skilled and job satisfied employees. Job satisfaction of employees enhances their performance as well as their motivation to contribute for the success of organization. This satisfaction can be provided in the form of rewards and recognition of employees as per their role expectations (Bullock, Stritch, and Rainey, 2015). Reward and compensation system of an organization makes its employees motivated and enthusiastic as well. Therefore, a well prepared and structures rewards and compensation system is essential for sustainable growth of the organization. In this way designing process of an effective and well structures rewards system has its own complexity or challenges in context of expatriate employees. In the designing process employees of host nation, parent nation, and third party nation create varying challenges for the HRM (Connelly, et al., 2016).
Pay for performance
A rewards and compensations system of international organizations like HSBC has complexity of different factors. Some of these challenges are discussed as below:
The Multi factor
Different economic factors varying from nation to nation increase the complexity of rewards and compensation system. Other factors like different currencies, companies, different time zones, rewards cultures, and time zones can add a great complexity to the rewards and compensation system of the organization (Matousek, and Tzeremes, 2016).
Balancing global and local
For human resource management of international organizations, finding a balance between the global and local point of view is very challenging especially in expatriate’s context. People working in third party nation create more challenges to the human resource of an organization. This includes that the bonus plan, rewards policies and benefits to the expatriate employees must be consistent throughout the global network of the organization. At the same time on other hand, local contacts and their compensation practices may need some adaptability as well as flexibility in rewards policies and system.
Driving extended process
The process of performance evaluation of expatriate employees assigned for consistent targets is extended for international organization. For human resource management team of an organization operating internationally, the process of controlling and meeting the timelines to distribute rewards on a fair evaluation is way more challenging.
Optimizing the budget
Managing a rewards and compensation system without budget constraints is quite an easy task but organizations operating in international market have to maintain their budget allocated for each operation to make it economic and profitable (Osibanjo, et al., 2014).
Across the world, HSBC is operating in around 66 countries and as it is known that each country has its own currency, working environment, and payment system. To handle such obstacles, company uses contractual approach at the time of recruitment and selection. In this process employees have to sign a contract designed by experts in the company. Employees generally sign a contract of 6 months to 4 years. Company employs Third country nationals for its operation in host countries. For example, in case of organization’s expansion in Bangladesh, company employs Third country nationals form India. Although, parent country nationals visit to the host countries to monitor the operations over there, they visit for a relatively short time period (HSBC, 2018b).
Organization believes that the approach of employees to achieve their individual’s goals is very important for organization’s long-term sustainability. The approach of HSBC to remuneration, including discretionary incentive or performance based rewards, is specially designed to reward the success of employees. This approach ensures that what the organization is paying to its employees is completely aligned with its business strategy for sustainable growth in the global finance market.
HSBC offers a compensation plan that include different benefit packages including medical, and vision coverage for its employees as well as their eligible family. Options like life and disability insurance provide an income replacement benefit to use at the time of serious injury or death to the organization employees. Bank also provide a bank paid life insurance that measures equal to one times of employee’s annual basic salary, this amount is fixed up to maximum of $2,000,000 (HSBC, 2018c).
In Australia, company’s compensation plan also includes competitive salaries, salary packaging options, and superannuation. Different share plans like employees share plan, salary sacrifice super, salary sacrifice share, and salary sacrifice childcare plans are provided to the expatriate employees working in Australia.
For employees working in US, company uses similar system to reward employees. Rewards and compensation system here are slightly different in terms of their risk management. Employees here get 20 days of casual leave in a year. These leaves are designed to provide as per employees’ requirements. Branch employees excepting branch managers can take these casual leaves on application basis. Other than casual leaves are granted by the head office only. Managers have to apply for their casual leaves to the head office. Employees here can purchase Supplemental Life and Accidental Death and Dismemberment (AD&D) insurance for themselves as well as for their eligible family members. This purchase can be made for up to eight times of their annual pay and bonus up to $3,000,000. This insurance can be claimed if an employee becomes paralyzed, dismembered, or died in an accident (HSBC, 2018c). In addition to the basic salary pay employees are provided with impressive incentive policies designed by the company experts.
Conclusion
This report concludes that employees need an extra motivation to exceed their efficiency limits. Expatriate employees need this encouragement more to feel satisfied with their job in another country. Organizations like HSBC, operating internationally have to design their reward and compensation system separately for different national employees to meet their expectations as well as host country’s reward system policies.
References
Allen, D., Lee, Y.T. and Reiche, S., 2015. Global work in the multinational enterprise: New avenues and challenges for strategically managing human capital across borders. Journal of Management, 41(7), pp.2032-2035.
Beer, M., Boselie, P. and Brewster, C., 2015. Back to the future: Implications for the field of HRM of the multistakeholder perspective proposed 30 years ago. Human Resource Management, 54(3), pp.427-438.
Bullock, J.B., Stritch, J.M. and Rainey, H.G., 2015. International comparison of public and private employees’ work motives, attitudes, and perceived rewards. Public Administration Review, 75(3), pp.479-489.
Connelly, B.L., Haynes, K.T., Tihanyi, L., Gamache, D.L. and Devers, C.E., 2016. Minding the gap: Antecedents and consequences of top management-to-worker pay dispersion. Journal of Management, 42(4), pp.862-885.
HSBC, (2018a) Explore our Business, [online]. Available from: https://www.hsbc.com/careers/explore-our-business [Accessed on 21/10/2018].
HSBC, (2018b) Remuneration, [online]. Available from: https://www.hsbc.com/our-approach/remuneration [Accessed on 21/10/2018].
HSBC, (2018c) Benefits, [online]. Available from: https://www.hsbc.com/careers/why-hsbc/benefits [Accessed on 21/10/2018].
Matousek, R. and Tzeremes, N.G., 2016. CEO compensation and bank efficiency: An application of conditional nonparametric frontiers. European Journal of Operational Research, 251(1), pp.264-273.
Ndofor, H.A., Wesley, C. and Priem, R.L., 2015. Providing CEOs with opportunities to cheat: The effects of complexity-based information asymmetries on financial reporting fraud. Journal of Management, 41(6), pp.1774-1797.
Osibanjo, A.O., Adeniji, A.A., Falola, H.O. and Heirsmac, P.T., 2014. Compensation packages: a strategic tool for employees’ performance and retention. Leonardo Journal of Sciences, (25), pp.65-84.
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