Factors that Potentially Influence Managements Strategic Choices - Case Study Example

Factors that Potentially Influence Management’s Strategic Choices in HRM Name: Institution: Table of Contents 1.0 Introduction 2 2.0 Methodology 3 3.2 Leadership contingency theory 5 4.2.5 Trade Associations 12 4.3 External Factors and Common Wealth Bank 13 According to Julien, 2013, Australia as a nation has a variety of laws and regulations that ought to be followed by the Commonwealth Bank of Australia, just like any other entity with operations in any other country. Looking at the way the bank employs its staff is enough reason to show the adherence of the bank to the external conditions affecting its operations. In this policy, the bank allows for diverse groups to apply for employment in the bank without any segregation whatsoever. Such other factors as workplace health of employees are also adhered to by the bank. All these have gone a long way ensuring that the bank actually adheres to the external legal environment (Julien et al., 2013). 13 5.0 Conclusion 15 6.0 References 15 1.0 Introduction Commonwealth Bank of Australia is one of the best multinational banks in the world and it has operations in New Zealand, USA, Asia, Fiji and the United Kingdom. It is commonly known as the commonwealth and it provides several financial services which includes, institutional banking, business, retail banking, and management of funds, insurance, broking and investment services. That aside, the bank in particular has employed the Strategic Human Resource Management practices in a number of its operations. Considering the facts that shall come out at the end of this report, one can confidently say that such concentration in the Strategic HRM has had a significant impact in placing the reputation of the bank where it is now. Currently, the Common wealth Bank of Australia boasts of being the second largest amongst the Australian banks with a second position in the Australian securities exchange (Healey, 2005). It is due to this blatant fact that this report seeks to find out the impacts that such strategies in HRM have had on the limited choices that the bank has been forced to contend with. 2.0 Methodology In the pursuit of a detailed study, various methods of data collection were used and they proved efficient. The most important part of the data collection was through an interview, where a couple of the employees of the bank were interviewed. The interviews proved efficient since they helped to give a clear picture of what exactly was happening in the bank in terms of the Strategic Human Resource Management. In addition, some questionnaires were prepared and clients of the bank completed them. Those questionnaires contained a lot of what the report actually wanted to know about with regards to the Strategic HRM practices that the bank did employ. Therefore, the main ways through which we managed to get information was through questionnaires and interviews. However, some information was collected from the banks website and it was useful in the analysis. This was equally informative and helpful in the development of this entire report. 3.0 Objectives of the study This study is basically aimed at achieving all of the objectives outlined below in its course of addressing the issues around factors affecting the management’s strategic choices: a) To revisit the factors behind effective management which contribute to success of the bank b) To find out the crucial internal and external factors that influence the HRM management in the bank c) To relay the key to effective organizational culture d) To determine the system the bank has employed to promote success e) To discuss the theoretical and conceptual foundation This paper, in overall, therefore seeks to look at the various factors that have over time potentially influenced the management of the Commonwealth Bank of Australia’s strategic choices in Human Resource Management. 3.1 Open Systems Theory Open systems theory (OST) is a modern system that is based on management and it is designed to create healthy, resilient and innovative businesses and communities in the today unpredictable and fast changing environments (Rothaermel, 2013). Normally, communities and organizations conduct their business and influence the development of the external environments. However, at the same time it is influenced by the external changes both in the global and local environments. The two way influential change is commonly known as the active adaptive change. Organizations and communities are mainly the open systems and they change and influence each other every time, Commonwealth bank has taken the opportunity and is growing with the dynamicity of the society. For instance, the bank has developed the virtual account where one can open the account online and this has helped in increasing the customer. Initially, it was not possible to operate virtual accounts but with advanced technology, it is easy for one to open an account (Rothaermel et al., 2013). Many multinational companies and more especially Hewlett Packard mainly apply the open system theory (Aguinis, & Lengnick-Hall, 2012). Employee engagement research carried out in Australia in 2009 by David Croston Affirms that 62% of the employees are not involved in their work, 20% are actively disengaged and only 18% of all Australians are actively involved. This proves that there is pending danger should be solved and taken into account (Aguinis, & Lengnick-Hall, 2012). The study was attempting to help employees and other stake holders to develop a good relationship with employees through developing an adaptive relationship between the two parties 3.2 Leadership contingency theory Contingency theory is one of the behavioral theories which base their views on assertions that there is no the best way to lead an organization, make a decision or even organize a cooperation (Grisham, 2010). The theory asserts that the actions are usually dependent on the internal and external factors within that particular group. It continues to assert that no single theory for contingency management can contribute to the success or failure of the business. Some of the important contingencies of the company include; suppliers, distributors, technology customers and competitors, government unions and consumer interest groups. The available information to the managers and the other subordinates affect the decision that is made in a particular setting. The basic relationship between the managers and other subordinates’ determines the back up the leaders are likely to receive from the subordinates’. The tendency of the subordinates’ agreeing with the autocratic decisions is determined by the level of motivation of the employees (Barney & Hesterly, 2006). However, when the disagreement escalates above the set threshold, it becomes paramount for the company to adopt the autocratic style of leadership and the decisions formulated on that basis. According to Law et al., 2011, contingency theory mainly guided by the principles of general orienting whereby only those companies whose internal features concur with the demands of the environment get the best adaptation. 3.3 Stakeholder theory This is a theory based on organizational management and business ethics. It usually addresses values and morals when managing an organization. Originally, R Edward Freeman in his book of strategic management detailed the theory that later ended up becoming one of the best theories. The theory addresses the critical issue of who counts, or what counts. Traditionally view of the firm, shareholders or the stockholders was the owners of the company had the fiduciary duty to put their interests in the fore front (Law et al., 2011). The theory asserts that there are other parties which are included such as employees, suppliers, customers, financiers, among others and should also be inclusive. Moreover, the competitors are stakeholders since they affect the firm and the stakeholders. Kramar et al., (2014) suggests that the stakeholder view strategy involves resource based-view and the market-based view and the socio political view. The theory has improved the performance of many companies and Common wealth bank is no exception. 4.0 Analysis of Factors 4.1 Internal Environment of Commonwealth Bank Internal environment of an organization is the conditions, events, entities, and factors which are within the organization and are influencing the activities and choices and more especially of the employees. The analysis will show how internal factors of the commonwealth bank have contributed to the formulation of strategic management issues and they have impacted on the organization. The internal environment includes; leadership, mission statement, organizational culture and the styles of leadership (Belcourt & McBey, 2010). 4.1.1 Business strategy When developing the business strategy it should relate on the long term strategies of the organization and also the scope and organization of the activities of the organization. The bank has a vision that engulfs all the strategies that may be formulated in the company. For instance their vision asserts that it seeks to be the best financial institution through providing best services and also excelling in customer service. For instance, they have opted to embrace in pursuit of excellence operations. As a business strategy, the bank has heavily employed technology which is evident in such areas as virtual accounts operation and transaction. Any valid individual can open an account with the bank and this seeks to fulfill the stake holder theory (David, 2011). Remember the theory asserts that all other stake holders’ interests should be put forward and the bank has done that through provision of customized accounts. Moreover, the bank has employed contingency theory through adoption of vibrant employees who are ready to work for the improvement of the bank. Hiring professionals in various positions such IT managers have boosted the growth of the bank. One of the interviewees affirmed that the advancement in quality provision of services has heavily employed the contingency theory (Belcourt & McBey, 2010). The world is changing day in day out and levels of technology are advancing day and night. The advancement has led to significant changes in the service provision industries. People have stopped carrying solid cash and it is evident through generation of many smart cards today. The banks have evolved in applying open system theory where it has formulated MasterCard mainly used in paying the utility bills. The innovation has employed the open system which affirms that the business environment determines the strategies to taken by the business. Therefore, considering the above action, it true the bank has employed the theories to ensure it is still significant in the market (Belcourt & McBey, 2010). 4.1.2 Organizational culture of Commonwealth Bank Organization culture refers to the action of people who in the organization and how they achieve their goals and missions. The organizational culture of common wealth bank has made it possible for it to grow up to where it is today. First, the bank has employed the cultural engagement since they have realized the richness that is hidden behind the curtains of culture. Aboriginal and the Torres Strait Islander are some of the oldest living cultures which are existing in the world. Through giving the Australians and customers the unique opportunities to learn about the unique cultures, the business becomes more culturally aware of the environment that can meet the needs of the customer better (Belcourt & McBey, 2010). Still in experiencing the richness of the Australian culture, the Common Wealth Bank staff usually participates in cultural events and they get a chance to learn about the aborigines and Torres Strait Islanders. The contribution from the above named cultures is enhanced through NAIDOC week that ensures that the local communities events are sponsored and through this, they manage to get many clients who inurn contribute to the growth of the business. Moreover, the common wealth bank has managed to partner with the Banagara Dance Theatre which is internationally dance and hence blending the Torres Islander and aboriginal cultures to the other Australians. The dance promotes diversity and in diversity, they are admiration and love which build up the culture of the bank. Through this, they have managed to overcome barriers of culture going beyond the boundaries hence succeeding ultimately (Belcourt & McBey, 2010). The organizational culture of any given organization, the Commonwealth Bank of Australia in this case, can only be determined by the standards set by the Strategic Human Resource Management practices. Some scholars in the field of Strategic Human Resource Management have also suggested that the performance of business could as well be improved by strategies that are related to the organizational culture, some of which include activities such as the training of employees as well as promotions and development. Customer service is also another organizational culture device that the company uses in an attempt to ensure that the company is growing in the right direction. According to the questionnaires formulated and several interviews conducted. It shows that year 2013 was jubilated due to the realization of goals that were set in year 2006.Commonwealth bank, managed to the best bank in satisfying the customers across all the business networks in Australia. The goal was achieved through far-reaching program of the cultural and technological process that has worked and transformed every aspect of the organization. The bank dedicated all its efforts to building strong customer service and at the same time establishing a decisive lead in the banking technology which ultimately revolutionized the customer service. Every worker and employee is sensitive to the needs of the clients and such culture has improved the welfare of the bank (Barney & Hesterly, 2006). 4.1.3 Products & Services Commonwealth bank offers various products and services. They can essentially be categorized into personal, business and corporate products. Some of the personal products are bank accounts, travelling, currency, electronic banking, private banking, broking services, credit cards, and the home loan accounts. With regard to the Strategic Human Resource Management, all these are specifically tailor-made to suit the various needs and wants of the wide customer base of the bank. In the business sector, the bank offers agribusiness, private banking, electronic banking, risk management products among other products. These products and services have improved the functioning of the business and profits have increased as a result. In relation to Belz, 2011, these products and services are meant to strategically place the Commonwealth Bank of Australia in terms of the HRM. 4.1.4 The people and their skills The people and more especially are paramount in the success or failure of the business. Commonwealth bank realized the need of effective banking and it has employed people who are innovative and customer friendly. It is worth noting that the success of the bank relies highly on customer relation, and the ban k has worked tireless in offering in training services that ensure that the employees have the right skills to handle the employees (Rothaermel, 2013). It is paramount to note that the bank only employs special people who are willing to grow and become professionals. Most of the employees noted were graduates and the individual responsibilities to ensure that the bank remains on the top. Most of the professional employees include accountants, financial analysts, marketers, and IT specialists who ensure that the company is growing at every blink of an eye. Moreover, the entire named professionally have profound skills in public relation and they work for the better of the bank (Burke& Barron, 2007). 4.2 Stakeholders Commonwealth bank has various stakeholders who are consulted matters relating human resource practice. Among the major stakeholders are customers, suppliers, government and the shareholders. However, it is worth noting that employees may not necessarily be stakeholders, but their opinion counts a lot in the process of making decisions. 4.2.1 Customers As posited initially, the Commonwealth bank is highly oriented on customers and most of their activities ensure that the customer is satisfied. According to the interview carried, out, many clients of the bank feel as if they are co-owners since it provides quality services and cares for the clients. In case a client happens to lodge a complaint, the parties involved ensures that the issues are solved immediately hence fulfilling the desires of the client. The customers have played a great role in the growth since most of the views end up being practical works. The developments in the bank are due to the clients (David, 2011). 4.2.2 Shareholders The shareholders are the individuals who have purchased the shares of the bank and they bought the legal ownership of the company. They normally monitor the smooth growth of the business and give ideas on what should be done to improve the business. They have the right to manipulate the strategic issues in various ways. For instance, during the annual general meetings, they can recommend changes related to the management of the bank hence altering the management of the bank. Moreover, the bank shareholders have a share of the profits as per the number of shares. The shares of the bank trade publicly in the stock market and that is how the shareholders manage to acquire the legal ownership (Grisham, 2010). 4.2.3 Suppliers The bank has provided good avenues for communicating with its suppliers. For instance telecommunication, hospitality and other suppliers have chance to air their mind issues related to strategic management and human resource management. For instance, the suppliers are mandated to veto any employee staff in the procurement office charged with corruption and dishonesty. They can do so through the spelt out avenues or address it to the human resource manager. 4.2.4 Government In Australia, there various governmental bodies that watch over the Commonwealth bank and central bank of Australia normally does the cross checking. The lending and interest rates are the roles of the central bank, and it is sufficient in maintaining the banks. The following bodies are relevant in overseeing the authorities of the Commonwealth bank and other banks.(APRA) Australian Prudential Regulation Authority, (RBA) Reserve Bank of Australia (ASIC)Australian Securities & Investments Commission, and (ACCC) Australian Competition & Consumer Commission(Grisham,2010). These bodies are literally responsible setting up the necessary regulations that have an impact in the ethical code of conduct of the employees (human resource). 4.2.5 Trade Associations Common wealth banking system is an affiliate of the government and also a founder member of Australian Bankers Association .In its quest for example to enhance strategic human resource of the Commonwealth Bank of Australia, the ABA has several representatives from the banking industry which help in ensuring that the best practices are adopted in an attempt to making Australia a better place. In fact, the ABA has been, and still remains one of the major stakeholders in outlining the best practices of the Commonwealth Bank of Australia’s HRM policies. 4.3 External Factors and Common Wealth Bank According to Julien, 2013, Australia as a nation has a variety of laws and regulations that ought to be followed by the Commonwealth Bank of Australia, just like any other entity with operations in any other country. Looking at the way the bank employs its staff is enough reason to show the adherence of the bank to the external conditions affecting its operations. In this policy, the bank allows for diverse groups to apply for employment in the bank without any segregation whatsoever. Such other factors as workplace health of employees are also adhered to by the bank. All these have gone a long way ensuring that the bank actually adheres to the external legal environment (Julien et al., 2013). In its course to remain relevant in the market irrespective of its aggressive competitors (other players in the banking industry), the Commonwealth Bank of Australia has implemented an internal policy where its internal human resource are restricted from exiting to its competitors through job appraisals of the concerned employees. Additionally, the bank does a lot of in-house trainings on ethics and good mannerisms to its employees so that it can retain its current customers and/or attract new clients who may otherwise have preferred to do business with the bank’s competitors (Julien et al., 2013). In brief, the Commonwealth Bank of Australia has put in place a wide range of strategies to ensure no poaching of its employees to other entities. In addition to the above already-discussed strategies, the bank has elaborate employee retention strategies that include attractive remunerations as well as vacation schedules for its employees at a specified period of time (Barney & Hesterley, 2006). The bank has also partnered with some specific reputable consultancy firms that have specialized in providing solutions to human resource management issues such as training employees in good customer relations. Even as the bank strives to enhance its human resource, it has not put to any chance the use of automation in some of its services and products. It has employed automated services such as the ATMs which have increased efficiencies even to the clients themselves. It should be noted that this is a technology that has been lately implemented by virtually all banks and should therefore be done in a unique way for it to have some meaning. According to Aguinis & Lengnick-Hall, 2012, a number of companies have found their HRM promotions and appraisals populated by a lot of ethnicity, favouritism and corruption. On its part, the bank ensures that promotions are strictly based on the employees’ knowledge, gifts, talents, experience and creativity. This strategy ensures that only the best suited employees are promoted and not any other chunk. 5.0 Conclusion In conclusion therefore, it is important to note to note that Strategic Human Resource Management has been, still is, and will always remain to be a key issue to consider if the success of any organization is anything to go by (Rothaermel, 2013). This has been evident in the clear case of the Commonwealth Bank of Australia. Despite the few loopholes in its HRM strategies, the many strategies that the bank has already put in place such as in-house training, performance-based appraisals, automation of some of its services and products and elaborate organizational culture, have gone a long way in not only popularizing the bank but also increasing its overall efficiency against its competitors. 6.0 References Aguinis, H., & Lengnick-Hall, M. L. (2012). Assessing the value of human resource certification: A call for evidence-based human resource management. Human Resource Management Review, 22(4), 281-284. Barney, J. B., & Hesterly, W. S. (2006). Strategic management and competitive advantage: concepts and cases. Upper Saddle River, NJ: Pearson/Prentice Hall. Belcourt, M., & McBey, K. J. (2010). Strategic human resources planning (4th ed.). Toronto: Nelson Education. Burke, R., & Barron, S. (2007). Project management leadership: building creative teams. United States: Burke Publishing. David, F. R. (2011). Strategic management: concepts and cases (13th ed.). Upper Saddle River, N.J.: Prentice Hall. Grisham, T. W. (2010). International project management leadership in complex environments. Hoboken, N.J.: Wiley.  Julien, V (2013) One hundred customers abandon Commonwealth Bank in fossil fuel protests. Market Forces. Retrieved April 20, 2014, from http://www.marketforces.org.au/one-hundred-customers-abandon-commonwealth-bank-in-fossil-fuel-protests/ Kramar, R. (2014). Beyond strategic human resource management: is sustainable human resource management the next approach?. The International Journal of Human Resource Management, 25(8), 1069-1089. Law, S. (2011). Human Roles and Communication Strategies of Corporate Identity Performance: Enhancing Global Image, Leadership, and Legacy of a High-Tech Leader. Academy of Marketing Studies Journal, 38, 185. Rothaermel, F (2013). Strategic management: concepts & cases. New York: McGraw-Hill Irwin. Read More