Case Study for Business Report: HSBC

Please review the case study - presentation.

Critically analyse the organisations which operate in hybrid mode. Effectively and efficiently develop sustainable leadership initiatives to improve the operation management and enhance productivity and performance with a focus on finance performance and people."

Case Study for Business Report: HSBC

Adapted Pilot's book (2015), the journal articles and Bloomberg reports

Sustainability in the Banking Community

In the banking sector, new standards and codes of conduct have been promoting corporate accountability, the need for transparency, and the need for management of risks for environment and society. The traditional approach of the banking sector to sustainability needed to be adjusted, as financial statements alone did not present the whole picture of the sustainability of the business. Under this type of review, potential environmental liabilities, such as decommissioning costs that can create financial risks, can go undetected unless disclosed by the borrower. This may then impair the borrower in repaying the loan. Banks now look to new programs designed for environmental business. International Finance CorporationIFC in its "Banking on Sustainability" report defines sustainability as 'ensuring longterm business success while contributing toward economic and social development, a healthy environment, and a stable society'.

Leadership and corporate governance in banking sector

The Financial Times and IFC launched the Annual FT/IFC Sustainable Finance Awards for financial institutions that show leadership and dedication in integrating environmental, social, and corporate governance into their business, which includes five categories: Sustainable Bank, Investor, Investment, Technology in Sustainable Finance, and Achievement in Inclusive Business.

HSBC

HSBC Holdings PLCis Europe's largest bank and has operations in more than 60 countries employing about 237,000 staff. HSBC Holdings PLC ranks the 8^th largest bank globally by assets.

Largest banks globally as of December 2020, by assets (in trillion U.S. dollars)

(Statista 2020)

Financial performance

HSBC's Global Banking and Markets (GB&M) arm saw a 9% drop in adjusted 2019 profit before tax to $5.35 billion (4.1 billion) from $5.9 billion in 2018. However,HSBC's securities services arm (HSS) finished 2019 with positive figures for adjusted revenue, assets under custody (AUC), and assets under administration (AUA).

The last 18 months have been challenging forHSBCas it has faced a series of problems in its core Asian markets that are responsible for the bulk of the bank's profits. HSBC's European arm, meanwhile, lost $944 million in the nine months to September.

Business Performance

HSBC Holdings PLC has been working to assist global business to sustain and expand and it considers growth and sustainability of one's business start with the principles the business works with and with the focus being on the customer. HSBC's website resource (www.globalconnections.hsbc.com) addresses risk management, supply chain, talent management, sustainability, and many more topics. The HSBC article "Sustainabilitya Growth Strategy" quoted the Netafim, a company which utilises HSBC's resource and then grows 30 percent worldwide, as saying, "We have a different culture in each subsidiary. We aim to understand their needs and limitations, and not force them to act in ways that are not reasonable in their countries."

Diversity and leadership inclusion

HSBCHoldings PLC in India has effectively used workforce policy in creating a gender diverse organizational structure in one of its departments. Elements of gender diversity andleadershipinclusion were enforced throughbusinesscases, realizable work models, and internal and external networking forum.

HSBCArgentina has gone through 100 days of intense activity significantly changing the culture of over 6,000 employees. Design/methodology/approach - Details of this case study are given using two different "voices" and perspectives: one from the CEO and the other one from a program implementation angle. The experience provides evidence that it is possible to change the culture of an organization in about three months, regardless of how challenging it might seem at the start. Most importantly the new culture can be sustained over time when a tipping point is reached across the organization.

Some of the major challenges HSBC confronts stem from following:

• Top Leadership shake up

HSBCHoldings Plc is overhauling the management of its struggling Europeanbusiness, weeks ahead of a strategicreviewacross its global operations.

Stephen Moss is being promoted into a newly created role overseeing Europe, Middle East, Latin America and Canada from March 1, 2020 according to a statement. Moss, who will also look after North Africa and Turkey, is currently group head of strategy and chief of staff. James Emmett, chief executive officer ofHSBCEurope, will leave the bank and be replaced by Nuno Matos, most recently head of the lender's Mexicanbusiness. The moves come weeks afterHSBCannounced senior changes that included replacing its top investment banker. Matos is a close lieutenant ofHSBC's acting Chief Executive Officer Noel Quinn, who is the front-runner to become the bank's permanent boss. Quinn has ledHSBCsince last August, when he replaced the ousted John Flint.

• Hierarchical and complicated corporate governance

HSBC Holdings Plc's streamlining drive has reached its top executives, with the bank promising to shake up a "hierarchical culture." Several hundred managers will have their "leadership bands" altered over the coming months, according to an internal memo from human resources chief, Elaine Arden, seen by Bloomberg News.

Europe's largest bank found it had a more complicated management system than peers and a lack of consistency in "how we determine the seniority of roles," according to the memo. HSBC now plans to merge its top four bands into three, starting in September 2021. Following a thorough review, we are creating a simpler leadership framework ensuring clarity on scope and accountability to help accelerate our transformation and drive growth," HSBC said in an emailed statement. "There will be no change to contractual employee benefits as a result of this change."

• Global restructuring

Currently, HSBC is undergoinga global restructuringthat will cut thousands of jobs and refocus on its Asian business, particularly its wealth management unit in the region. HSBC has group managing directors and group general managers, as well as executive ranks it calls GCB1 and GCB2. In the new structure, these classes will be replaced by group executives, general managers and managing directors. Though the changes have no impact on pay and conditions, there are concerns that the move could mean some are effectively demoted, according to people familiar with the matter.

• Hybrid working mode

HSBC Plans for permanent hybrid Work model. The bank, which is in the midst of a historic pivot and cost cutting program, predicts it will be operating in a profoundly different way. HSBC is the latest to embrace hybrid working with plans to make it a permanent model for the bank worldwide. The bank's work-from-home embracement is part of broader plans to cut costs including a 40 percent reduction in property footprint in the coming years. It also changed its office policy to include two employees per desk, excluding branches, and scrapped the executive floor of its London-based headquarter.

The bank said it is reducing its office space by 40% and moving to a hybrid-working model that enables staff to work from home as well as in offices.

The move is a cost-cutting measure following a fall in profits to 6.3bn in its latest financial year from 9.4bn in the previous 12-month period. But the decision also follows a trend that has seen the success of remote working during the pandemic make businesses, including banks, think again about their operations.

HSBC CEO Noel Quinn said offices with support functions and head office activities are being targeted for space reduction. "We believe we will achieve it via a very different style of working post-Covid with a more hybrid model," he said. Despite the plans, Quinn highlighted some of the advantages of the physical workspace such as social relationships or spontaneity.Global banks remain divided on work-from-home measures with some like Citi and Standard Chartered signalling or planning a permanent shift while others like Goldman Sachs and Morgan Stanley preferring a return to the office.

Reference list

Wee, D and Lacqua F (2021) 'HSBC Plans for Permanent Hybrid Work Model'https://www.bloomberg.com/news/articles/2021-09-02/hsbc-ceo-plans-for-permanent-hybrid-work-much-less-jet-setting

Battistella, P. (2020) 'HSBC profits slump, plans restructuring',Global Investor, p. N.PAG.

Losada, A. and Bajer, J. (2009) 'How we transformed our culture in 100 days: the story behind an intensive culture change program at HSBC Argentina',Strategic HR Review, 8(5), pp. 18-22. doi: 10.1108/14754390910976799.

Pilot, J (2015) Driving sustainability to business success: the DS factor - management system integration and automation Hoboken: John Wiley & Sons

Singh Deo, A. N. (2009) 'Gender Diversity and Leadership Inclusion: The Keys to Workplace Success',Vikalpa: The Journal for Decision Makers, 34(4), pp. 102-106.

Wee D, Wilson H and Choudhury A (2021) HSBC Tells Senior Executives to Prepare for Management Revamphttps://www.bloomberg.com/news/articles/2021-07-09/hsbc-tells-senior-executives-to-prepare-for-management-revamp

Wilson, H. and Spezzati, S. (2020) 'HSBC Overhauls European Management Ahead of Major Review',Bloomberg.com, p. N.PAG.

The Economist (2020) 'The incredible shrinking bank HSBC undergoes yet another overhaul. It still may not be enough'https://www.economist.com/finance-and-economics/2020/02/20/hsbc-undergoes-yet-another-overhaul-it-still-may-not-be-enough