The human resource management (HRM) practitioners in Hong Kong are currently facing unprecedented challenges which have been caused by major changes in competitive environment. Base on the words of officials of Hong Kong government, the vision of Hong Kong is to reposition itself as the world’s most service-oriented knowledge economy that capitalizes on its strength in value-added producer services in order to complement the growth of the Chinese economy in the future. (Chan ; Lui, 2004)
In view of various environmental changes and the associated pressure that companies in Hong Kong are facing, HRM practitioners are expected to take an active role in advising their companies on what HRM strategies and policies should be adopted to cope with environmental change.
In order to understand the contingent factors affecting the HRM strategies and practices, the economic, organizational, political and legislative environment is analyzed.
2.1 Economic Challenge
The Hong Kong government has adopted a laissez-faire economic policy which has been described as “positive non-interventionism”. This policy has provided a lot of economic freedom which has facilitated the growth of entrepreneurial capitalism and the recovery of Hong Kong economy. A major increase is noted in finance and business services including banking, insurance, real estate and professional services. These changes have resulted in skill shortages in the growth sectors, such as finance, with skill surplus in other areas such as manufacturing.
Recently, following economic recovery, the average labor turnover rate in the third quarter of 2005 jumped to 3.66%. The turnover rate is also the highest it has been during the past three years. The financial services / banking / insurance recorded 8.62%. (IHRM, December, 2005)
It is expected that the size of an organization will affect the characteristics of its HRM function. In a free economy like Hong Kong, where 90 percent of employers are small enterprises, HRM policies and practices have a direct casual relationship with business realities. It makes sense, therefore, to maintain an optimum employment relationship through versatile HR practices.
More recently, a lot of PRC invested companies have been established. The HRM practices in these companies are likely to be influenced by the cultural background of the owner or the company, the nationality of the owner and the corporate policy.
2.3 Industrial Relations
In the past, Hong Kong in general has enjoyed harmonious industrial relations. The Asian financial crisis of 1997 struck a huge blow to Hong Kong’s externally-oriented service-based economy. The post-crisis environment in Asia was one of rapid globalization. Traditional industrial relations were reshuffled and became very stressful. Other complex issues like returning emigrants, labor importation schemes, a depressed property market, the outbreak of SARS and performance-based compensation degraded the psychological contract between employers and employees.
2.4 Labor Legislation
In recent year, Hong Kong government has made many changes in Hong Kong Employment Ordinance. For example:
– The amount of pay a woman receives while on maternity leave has been increased from 60% to 80% of her base salary.
– New legislation has been enacted to end discrimination and harassment base on gender, martial status, pregnancy and disability.
– Employers must register their retirement programs unless specifically exempted. Also, private employers may establish mandatory retirement plans.
2.5 Demographic Change
As a result of the low birth rate and the graying of Hong Kong citizens, new immigration policy proposed by the Hong Kong government in February 2003. The rational behind this policy asserts that skilled and professional people will make up the most critical portion of Hong Kong’ knowledge workforce. It’s the time for the HR managers to revisit expatriation and kindred international HRM issues, once hot topics in the 1980s. This time “the internal customers may well be local Hong Kong Chinese moving across the border to work in the mainland, as well as indigenous Chinese coming to work in Hong Kong from all parts of China and the rest of the world.” (Chan & Lui, 2004, pp89-90)
By the end of twentieth century, many organizations have developed well-integrated HRM systems. Technology, and in particular, information technology, has made it possible for organizations to deliver HRM service to both managers and employees that is better than in the past. Furthermore, technology has made it possible to reduce the size of the HRM staff without reducing services. The rapid evolution of electronic-HR delivery systems is pushing more information in more usable formats to employees and mangers who can use it directly for the benefit of their organizations.
However, technology promises to impact HR practice in ways far beyond simply automating clerical activities. For example, HR practices should provide
(i) fast and cheap access to accurate real time HR information – access and the ability to analyze, assess, interpret, manipulate, leverage, and share the information effectively will be the key to giving organizations a strategic edge.
(ii) ubiquitous access to information to improve employee effectiveness and efficiency – it means working from anywhere and at anytime
(iii) smart self-service – most employee self-service will be provided
(iv) customized content – human resource management system will enable employees to perform optimally by providing knowledgeable content that has been filtered based on the employee’s role.
Human resource management faces a new imperative in the twenty-first century. It is no longer enough for HRM to maintain a narrow operational focus. HRM practices must (i) build strategic capability, (ii) expand its boundaries and (iii) manage new roles.
Given the above situation, Hong Kong employers have to face a more turbulent environment. Competition from PRC and multi-national corporations have intensified and forced HK employers to find ways to attract, maintain and enhance their ‘talent’ .
The high labor turnover rate has pushed up the recruitment and employment cost in most organizations. Conflict between employers and employees ahs increased because of the rising expectations form the workforce on issues like compensation and benefits, quality of working life, career development, equality and rights. Union activities are now better organized and more visible and therefore have put greater pressure on the HRM professionals to manage the situation.
Additionally, economic growth has insert more pressure on corporations to seek ways to maintain its competitiveness in industrial and labor market.
4. Case Illustration – Wing Hang Bank (WHB)
4.1 Company Background
Founded in 1937, Wing Hang Bank was listed on The Stock Exchange of Hong Kong Limited in 1993. With over 50 branches and representative offices throughout Hong Kong, Macau and Mainland China, the Group offers a diverse range of banking services to meet the needs of its customers and is firmly committed to continuous service quality improvements in attempt to become the preferred bank for its customers and the “employer of choice” for talents.
4.2 Altering HRM Practice of WHB in facing changing environment
In this age of the knowledge worker, virtually all companies are struggling to find the breath and volume of talent required to sustain the growth. Business leaders are challenged to attract and retain quality talent, to harness the intellectual power of the workforce, to improve organizational performance, and to increase shareholder value. (Figure 1) To keep pace with the bank’s demand, HR must provide more value and provide it faster. This requires fundamental changes to the function’s infrastructure along with enhanced, and often redeployed, HR talent.
Figure 1: Four Key things WHB do with talent
4.2.1 Recruitment – A Knowledge Workforce for a Knowledge Economy
Given the importance of knowledge-intensive and highest-value-added activities in banking sector, WHB priorities would prepare to place more resources on supporting these activities. For instance, WHB would like to expand its business in Macau and Mainland China. Internally, the strategic focus will be on identifying long-term HR needs aligning with business strategy. So, in order to compete in the knowledge and information economy, WHB has become highly efficient in information processing: by knowing what staff they need, with what skills, how they can find and re-train them as needed, and how they can motivate them to work more efficiently and raise their awareness of lifelong skills for future roles. In house career counseling and advice about training opportunities will be provided.
In addition, WHB understand that, at a practical level and of more immediate concern, to explore China market, talent with skilled and familiar with China is what Hong Kong seriously lacks. Thus, recruitment will look more at the wide pool of talents, experts, and professional’s resident in South China, Taiwan and among ethnic Chinese familiar with China.
4.2.2 Extensive Training – Redesign Training in Customer-oriented
In WHB, HR practices have become more sophisticated to satisfy the needs of a service economy. It is noted that increased diversify training (e.g. customer service management and crisis management) and internal promotion were being provided to junior staff. It can retain and maintain existing staff in order to provide high quality service to its clients. In facing the higher education level of Hong Kong people, in WHB, the qualifications and quality of people hired are on the rise.
4.2.3 Performance Management – Quality of Work-life
As the staffs require an equality of work life, transparent performance management system was used to reflect the performance of staffs. In the past, performance evaluation emphasized things like absenteeism, punctuality, and personal discipline. Now, it focuses on vision, goals and results, and especially on personal contributions to bank’s objective. Reasonable rewards, like bonus and promotion opportunities, are provided to motivate those initiative staffs.
Working environment including fixtures and computing systems are furnished and updated in providing cozy environment for both internal and external customers.
4.2.4 Staffing – Work force Diversity
Due to the work force diversity, WHB provide a series induction seminar for local and expatriated staffs to understand local market, local culture and local economic situation in order to let them to settle down. Besides, many outward bound training programs offered to all kinds of staff in order enhance team spirit.
4.2.5 Employee Development – Loyalty
As high labor turnover and keen competition in labor supply, WHB try to provide employees with such intangibles as company image, organizational culture, respect, job satisfaction and much more in order to maintain and attract qualified talents.
To build a reputation as an “employer of choice”, WHB has actively joined many community services in order to enhance company image. Provide study allowance and offer excellent award to staff who can achieve self-determined goals. Mentoring system is adopted “to help protgs understand the organizations, guide them in analyzing their experiences, and helps them clarify career directions.” (Noe, Hollenbeck, Gerhart ; Wright, 2006, p404)
4.2.6 Work Attitude – Innovation
In the face of global and local competitions and challenges, WHB do not reclaim past traditions and routines; instead it emphasizes creativity and innovation in the search for new solution, new processes, and new products and services. Thus, responsible HR practitioners in WHB are required to gear the staff to get used to working with dynamic and inspirational leadership instead of under autocratic command.
4.2.7 Learning Organization – Organizational Knowledge
With the recent transitions from the industrial to knowledge economy, WHB recognized that they should remain at the cutting edge of technology and be able to recruit and retain talents with critical work knowledge. An effective HR practitioner of WHB recognize a strong concern for knowledge and continuity management that make good use of employee’s intellectual capital or talent management and thus, they are going to set up a ‘knowledge bank’ including collecting, organizing, transforming and applying work and operational knowledge of the bank. (Lengnick-Hall & Lengnick-Hall, 2003)
Hong Kong corporations are operating in a complex and turbulent environment. With a predominantly Chinese culture and high degree of responsiveness, the economy has recovered rapidly in recent years. It seems that the choice of different HRM practices affect corporations overall performance, staff morale, profit growth, return on investment and return on sales. It also appears that corporations using a HRM strategy to align with its quality enhancement business strategy performed better in changing environment. (Cheung, 2001)
Because of the major changes in the social and business environment where Hong Kong corporations, like banking sector, operate in, there is increasing pressure on HR professionals to resolve the people problems created by these changes. It is essential that employers in Hong Kong recognize the importance of HRM and its contribution to the success of the company.
Chan, A. & Lui, S. (2004). HRM in Hong Kong. In Budhwar, P. S. (Editor), Managing Human Resources in Asia-Pacific, pp.75-92. Routledge, London.
Cheung, S. (2001). Human Resource Management Strategies and Practices in Hong Kong. Hong Kong: Hong Kong Institute of Human Resource Management.
Hong Kong Institute of Human Resource Management (2005). More Jobs Created in the Labour Market. [Online] Available: http://www.hkihrm.org/ihrm_eng/ih_pre_01.asp?id=62 [2005, December16]
Lengnick-Hall, M. L & Lengnick-Hall, C. A. (2003). Human Resource Management in the Knowledge Economy: new challenges, new roles, new capabilities. Berrett-Koehler Publishers, San Francisco.
Noe, R. A., Hollenbeck, J. R., Gerhart, B. & Wright, P. M. (2006). Human Resource Management: Gaining a Competitive Advantage, 5th Edition, McGraw-Hill, Irwin.