The Role of Human Resources at JPMorgan Chase - Case Study Example

Case Solution While the case of JPMorgan Chase can be studied in the light of different disciplinary frameworks including ethics, financial conduct and operations the case analysis can be better understood through the lens of Human Resource Management. The changes planned for the bank’s mortgage business, including massive lay outs and an updated branch network, are designed to increased efficiency for better customer service. However, these changes are going to first of all impact the staff and the work place expectations will have to be carefully monitored in order to ensure acceptance and compliance. These management changes can also be utilized to correct the culture which has become tolerant of excessive risk and errors on the part of the employees; Human resources (HR) will have to play an important role in these transitions and for maintaining employee motivations. Literature Review Barney and Wright in their 1997 research paper on understanding the functions of HR determined the contribution of the department in terms of their VRIO (value, rareness, limitability and organization) model. The Value added by HR is directly related to the comparative Rareness of a firm’s unique HR practices. HR practices strengthen the culture and values of any organization adding to its completive advantage which cannot be easily imitated by other competitors (Barney and Wright, 1997). However, HR needs to be given strategic level importance in order for an organization to achieve the relative advantages. In the recent years the importance of HR has come to surface as the organizations move through sharp changes and need the function as a supporting point (Appendix 1). The recent economic downturn and financial scandals have forced financial institutio0ns and banks to make drastic restructuring in the way their business is operated. Layoffs and downsizing are just one the tools being utilized to achieve greater efficiency (Gandolfi, 2008). Ideally in such times companies should consider all their options and adopt the survival and cost-reduction strategies which are the least harmful for their culture and towards their employees. However, in the case where restructuring and downsizing becomes necessary the management should be duly concerned with the effect it will have on the remaining employees and the steps needed for a smooth transitioning period. Unfortunately the case is often that managing culture and cultural change is often a low priority for executives who are distracted more by the financial and over arching strategic aspects of the restructuring (Marks and Mirvis, 2011) The immediate concern of a company going through such changes are no the employees who have left but the ones who are still with the company. Research has shown that such ‘survivors’ often face feelings of guilt and they may be hostile and resenting towards the management (Nelson, 1997). It is a traumatic experience which can have long term repercussions for the company’s intended savings and the new strategy. Resignation and incidents of fatigue and depressions increase among employees after such measures; because of perceived job security. At such times open and trusting communication is the key to maintaining employee morale (Beier et al, 2014). While the remaining employees have to be motivated regarding their jobs, it is also vital that they understand and accept the necessity of such changes. “Survivors who believe that the downsizing was part of a well-considered long-term plan that will improve the organization will have greater confidence in managements abilities and more faith in their intentions” (Fowke, 1998). This is compared with employees who may be left in the dark about why the restructuring was necessary and would then believe that the management was not looking out for the best benefit of the firm. The key at this point is to open up channels of communication between employees and the upper management so ideas and feedback can be quickly transferred fostering an environment of open trust and transparency (Beier et al, 2014). While the organization may not be able to offer secure, long term careers that were the traditional norm to their employees anymore, they can still provide personalized motivation plans catered to the needs of individuals as planned out through the two-way communications (Fowke, 1998). This would go a long way towards incentivizing the employees towards higher performance. The role of HR is invaluable in developing the communication channels and making an explicit link “between the human capital capacity of the organization and the board’s strategic options” (Bywater and Glennon, 2009). HR cannot only create suitable expectations for the work place through policies and practices but also monitor and influence the employee’s perceptions and moods. It is important that employees are able to distinguish between the concepts of Downsizing and restructuring, as one refers to an unexpected lay off program designed to cut costs and deal with economic downturn but the other is a long term, planned approach to changing the strategy of the organizations. It is the job of HR to ensure that employees are aware of the difference and accept the changes (Bywater and Glennon, 2009). Employees may also be motivated through other programs related to career advancement and training. A large of body of research is available on the different methods that can be employed by HR to both measure and increase employee involvement and motivation even in hostile times like immediately after downsizing/restructuring. One example is of a learning organizational culture that focuses on learning and improvement is positively correlated with employee job satisfaction and motivation (Egan et al. 2004). Such an organization also lowers job switching and turnover rates. Relating to the case it is also important to discuss how HR can influence the ethical culture within an organization. While it is widely accepted in the academic circles that HR is the most important function through which management can instill ethical values into the workplace, in practice the department is often given a very minor role in the companies ethics management efforts (Weaver and Trevino, 2001). This is problematic since it is expected that the employees will have questions and concerns regarding any ethical policies and requirements especially as they relate to the question of fairness. HR should ideally be the face of the corporate ethics, indicating the management’s commitment to the practice of values and not just to the development of a code of conduct (Vuuren and Eiselen, 2006). The HR can offer the following services towards the company’s ethical culture: Communicate ethical codes, provide ethics training, manage compliance and training, manage compliance and monitor/enforce the code of ethics (Lloyd and May, 2005). In a study done on the Spanish banking industry the researchers focused on studying the effects of HR mandated ethics training program on behaviors and attitude of the employees. While employees who had become used to a lenient ‘value’ system were more likely to commit small frauds despite their own individual beliefs, those who successfully went through the training showed more concern for ethical behavior in line with corporate strategy (Palomino and Martínez, 2011). Analysis of the Issues Relating to Human Resources (HR) Analyzing the JPMorgan case study in light of this literature review we can see why linking the HR department with the overall strategic direction will be so important for the firm. The changes in technology, staff structure and physical infrastructure have to be supported by adequate employee policies and support systems to ensure success of the restructuring process. Some of the issues that the management needs to take into consideration are: 1. Training needs: The new direction JPMorgan cannot be reached without the employee’s hard work and acceptance of the strategy. Considering that the company is going to introduce advanced technology for greater services they also need to train their employees for the appropriate skills and conduct towards customers and services in order to complement the firm reputation. The HR department will have to take the lead in designing and conducting the necessary training programs keeping in mind that the employees may have to re-learn a lot of new operating skills. The training program should also include sessions on the new company culture, the emergence of ‘protean careers’ and career counseling for the employees still with the company. 2. Developing an ethical culture: The HR will have to direct the ethical culture at JPMorgan chase in order to answer all the concerns raised by the public and the industry about the fraudulent and risky practices being conducted by the employees. Ethical training seminars and cultural direction will be needed from top to bottom with programs targeting the top executives and management as well as the front line employees. The ethical habits will have to be communicated and ingrained deeply into the new culture and HR will have to take the initiative for that. 3. Motivating employees: The remaining employees are sure to feel insecure about their jobs and uncertain about the direction the firm is taking. Through one –on-one counseling and communicating directly with the employees HR can clear any worries and ensure that the employees are still involved and motivated regarding their jobs. This may be the single most important aspect of the new strategy because unless the employees are ready to embrace their new responsibilities the whole initiative will fail. 4. Communicating the change: Finally the need for these changes and the long term plans for the company have to be shared with the employees in order to involve them in the tactical and operational planning. As long as the employees understand why the restructuring was necessary and how it can contribute to their own career plans, they are more likely to be accepting of the process. HR will need to be the center of these communicating efforts. Recommendations At this point while JPMorgan has outlined a clear plan of what they intend to do with regards to the operational, technical, ethical and staffing structures of the company, a clear plan has not yet been made for the employees who will stay with the company and how they will be trained and guided. 1. Drastic layoffs and restructuring can be effective tool for immediate change in any organization; however their disruptive nature can be hard to manage effectively. Ideally, the company should first try out less disrupting strategic changes such as profit revenue differentials, more innovative marketing and products, cutting down on benefits (for cost cutting) or utilizing cost effecting trainings to get the desired changes in employee behavior and customer services. These methods can be managed through HR, will raise employee morale and signal the management’s intentions to revitalize the business while also showing concern for employees. 2. The company needs to provide HR with a strategic role and include employee plans from the very initial step of the restructuring. The HR executives should be allowed to form a report on the challenges relating to work place environment and employee motivation following the mass layoffs and restructuring. Research studies can be cited which delve on the subject and the executives should also offer concrete policies regarding increasing employee motivation, career counseling and training regarding the new structure. If the restructuring and mass layoffs have been decided on as the preferred solution the measure should be supported by strong HR policies designed to retain and retrain the remaining employees. 3. In either if the two options presented above, unless the employees accept the ethical culture and new work direction, it is improbable to think that JPMorgan will be successful in their attempts to form a more responsible, customer centric organization. The company should immediately initiate a companywide ethical training program conceived, designed and communicated through the HR to bring the required change in culture that will encourage employees to be concerned about the moral requirements of their job (Appendix 2). This will have a positive impact on overall customer satisfaction and services with the company. Conclusion With the public and government pressure mounting, JPMorgan has been forced to change the way they operate. Their targeted military programs are a good step towards salvaging their reputation and assuaging the sentiments of their consumers, it is not clear whether their drastic restructuring policies will be enough to bring the culture of the company back towards ethical practices which take into account the wellbeing of their customers. The culture and practices of any organization are derived from the example of top management; if JPMorgan executives are sincere about the changes required in their company than that has to be communicated effectively to the employees through the use of HR management and structures. A robust HR policy can impact not only the culture of the organization but also motivation and involvement level of the employees; HR can even provide incentives for the employees to behave in a responsible manner in form of monetary or otherwise rewards. In any case the involvement of HR is a mandatory step for the restructuring process so that the employee rights and sentiments are considered as well. It is a shame that unethical practices have taken such deep roots in our financial industry, however, JPMorgan’s efforts are a step in the right direction and the developed HR tools and systems can help them get to their desired operational and cultural capacity efficiently. References Palomino, P.R., Martínez, R. (2011). Human resource management and ethical behavior: Exploring the role of training in the Spanish banking industry. Ramon Llull Journal of Applied Ethics, V1, Issue 2, :69-88 Lloyd, H. And Mey, M., (2005). An Ethics Model To Create An Ethics Model To Create And Sustain An Ethical And Sustain An Ethical Organizational Culture Organizational Culture. Presented at NEPAD Council, Commission for Trade and Investment Conference 2005. Available at: http://www.nepadcouncil.org/conference2005/presentations/day2/track2/EthicalOrganisat ionalCulture.pdf Weaver, G.R. and Treviño1, L.K., (2001). The role of human resources in ethics/compliance management: a fairness perspective. Human Resource Management Review, Volume 11, Issues 1–2, Spring–Summer 2001, Pages 113–134 Eiselen, R.J. and Vuuren, L.V., (2006). A Role For Hr In Corporate Ethics? South African Practitioners’ Perspectives. SA Journal of Human Resource Management, 2006, 4 (3), 22-28. Egan, T.M., Yang, B. and Bartlett, K.R., (2004). The Effects of Organizational Learning Culture and Job Satisfaction on Motivation to Transfer Learning and Turnover Intention. Human Resource Development Quarterly, vol. 15, no. 3, Fall 2004. Nelson, B. (1997). The Care of the Un-Downsized. Training & Development , Vol. 51, No. 4. Available at: http://www.questia.com/magazine/1G1-19618509/the-care-of-the-un- downsized#/ Beier, S., Gordon, P. and Sienrukos, J., (2014). Helping employees after layovers: methods to motivate employees to overcome survivor’s guilt. Career Convergence Magazine, NCDA. Available at: http://www.ncda.org/aws/NCDA/pt/sd/news_article/88749/_PARENT/layout_details_cc/ false Fowke, K.G., (1998). Layoffs and Survivors’ Career Motivation. IRC Press, Industrial Relations Centre, Queen’s University, Canada. Bywater, J. & Glennon, R., (2009). Guidelines for Best Practice in Restructure and Redeployment. Best Practice Series, SHL. Available at: http://ceb.shl.com/assets/resources/Best%20Practice_Guidelines%20for%20Best%20Prac tice%2 0in%20Restructure%20and%20Redeployment.pdf  Gandolfi, F., (2008).  Hr Strategies That Can Take The Sting Out Of Downsizing-Related Layoffs.  Ivey Business Journal, strategy, Jul/Aug. Barney, J.B., and Wright, P.M., (1997). On Becoming a Strategic Partner: The Role of Human Resources in Gaining Competitive Advantage. Center for Advanced Human Resource studies, Cornell University. Marks, M. L., And Mirvis, P.H., (2011). A Framework For The Human Resources Role In Managing Culture In Mergers And Acquisitions. Human Resource Management, November–December 2011, Vol. 50, No. 6, Pp. 859– 877 Appendix 1. The role of HR in an Organization (Burguillos, B., (2013). HR Strategy. Available at: http://borjaburguillos.com/what-is-hr strategy/) 2. A proposed tool for the use by HR team. (Daicel Corporation, (2014). Corporate Ethics Available at: http://www.daicel.com/en/profile/ethics.html) Read More