Diversity and change work

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HSBC launched a transition campaign in 2015, deciding to downsize its existing staff by 50, 000 jobs and divest a portion of the company in order to concentrate on the Asian market. The action was to last two years, from 2015 to 2017. (Arnold & Pickard, 2015). The step, which will result in the layoff of 8000 employees in Europe and others in other host countries, was seen by the bank's strategists as a way to save $5 billion annually by the end of the two years. The action announced by the bank would comprise selling of the HSBC outlets in Brazil and Turkey that would reduce the workforce by 25,000 employees. Bray (2015) in his report highlighted that the next course of action was to reduce the number of workers in the retained outlets by between 22,000 to 25,000 job cuts. This analysis will explore the 2015 decision with the focus of the layoffs of the 8000 workers in the main branch in UK.

The bank made the decision to shrink the poorly performing outlets in the European and American markets and focus those resources on the worthwhile Asian market. The target market by the HSBC move was the River Delta developed region in southern China (Bray, 2015). The move is viewed as strategic in restoring investors_x0092_ confidence in the bank_x0092_s management having been on the news with a series of scandals and a rising and falling compliance cost. Riley (2015) argued that the move by HSBC was following the recent global trend that has seen several companies in different industries increasingly getting a connection with the Asian market especially in China and India. HSBC management expects the actions taken in this change program to help the bank capture anticipated future growth opportunities and in turn deliver value to the investors.

Internal and External Elements that Influenced the Change Program

The internal factors within HSBC Bank that influenced the change are the reduced profitability in the recent years that the company management attributes to the high costs of operations (Riley, 2015). The rising cost of operation is as a result of several factors like labor costs inflation rates, exchange rates and interest rates among other factors. Amongst the leading factors that pushed the cost of operation higher, the cost of labor is the factor management has control over. HSNC bank has not been performing well in some parts of South America, and Europe that affected company_x0092_s profitability and the management deemed it necessary to shut down those branches (Riley, 2015). The underperformance of the bank's outlets influenced the selling of the outlets in South America located in Brazil and the European outlets in Turkey. The selling of the two branches would see 25,000 workers lose their jobs.

An external factor that influenced the change program includes the increasing focus and business inclination to Asia. Asian is on the rise forming one of the fastest growing and slowly becoming the biggest economy globally. According to Flavelle (2015), HSBC management had planned to accelerate the company_x0092_s investments in Asia that involved an expansion of the asset management and insurance business with the intention of fetching more profits from the Asian market that is rapidly expanding the class of the freshly wealthy group. Flavelle (2015) further explained that the expansion of the company_x0092_s presence in the Asian market necessitated downsizing of the existing business in Europe to allows for a refocus of the assets to the Asian market.


The main strategy the company employed to limit the effect of the layoffs is spreading the process to last two years to allow time for adjustment. Changing programs that affect the normal operations of a company needs well-thought strategies in order to avoid the risk of having the company_x0092_s operations halt in the process of implementing the change. HSBC bank_x0092_s change program comprised tow actions first selling out the underperforming branches in South America and Europe and the second action being laying off some workers as a means of lowering the cost. Laying-off of workers affects the normal operations of a company. HSBC in cautioning against the likely effects on the normal operations of the company had the strategy of spreading the laying off the process to a span of two years to allow time for adjustment. The two years is the required period for the employees who are retained to adapt to the additional roles. The company had programs for compensating the workers who were laid off to avoid public condemnation and court battles that would affect the reputation of the company.


Players in the financial industry have been hit by the falling economic trends across the globe that have reduced bank_x0092_s profitability significantly and augmented investor pressures. Several banks at not only HSBC have considered downsizing their operations to lower their cost of operations since that is one of the factors under their control. The move by HSBC to sell out some of its underperforming branches and cut on the number of employees was a right decision in company_x0092_s efforts to cut down on the operations costs. However, the it wouldn_x0092_t proceed without creating hitches within the organization. The first challenge is the looming scarcity of talent since the company had to send home a considerable number of employees and to adjust with the remaining employees must take time.

The second challenge is dealing with the existing staff. Any news on downswing creates unnecessary instability amongst the retained staff killing their morale and creates fear of the unknown. Besides, branches like HSBC Canada had the employees unsettled for a while since they were not sure if the management would make a decision to sell or shut down the Canadian Branch. The change program affected the normal operating at the organization that in turn affected its profitability. The other effect is the public outcry and critic of the massive layoffs that kills the banks status globally. The 2015 layoffs was arguably one of the biggest in the history of the bank.

Part 2: Implementation, Resistance of the Change Management Approach

in HSBC Employees Perspective

The global banking industry faces several needs for change that are driven by both external and internal forces (Deneen & Boud, 2014). The external forces are often beyond the control of the banks, but the internal forces are dependent on the internal structures of the bank that can be changed by the executive. HSBC faces the challenge of low profits that is mainly pushed by the global trends in technology, oil prices, exchange rates and interest rates. HSBC management has identified one internal factor that contributes to the increasing fall in the company_x0092_s profitability, and that is the cost of operation. HSBC_x0092_s cost of operation is mainly pushed by the high numbers of employees (Deneen & Boud, 2014). The company deemed it_x0092_s reasonable to cuts down the number of employees to help the company cut down on the cost of operation. Making changes before the changes are forced on the employees is important in helping the company gain competitive advantage.

Change can be challenging and can face resistance from the employees like for the case of the change program HSBC implemented that had a direct impact on the employees. Skillful planning and implementation of change are important. According to Cummings & Worley, (2014), the main phases of the HSBC employee cut change program include driving the change, prioritizing change, preparing for change, selling the change, implementing the change. The different aspects are discussed below.

Theoretical Breakdown of the Change Management Approach

The process with which HSBC management implemented the change program that entailed cutting down on the numbers of employees by 50, 0000 with 8, 000 in the UK branches cane be linked to the Kurt Lewin change model (Flavelle, 2015). Lewin proposed a three-stage model in which the first stage is unfreezing stage, followed by change and them refreezing. The unfreezing stage in the HSBC change program is the stage in which the company prepares for change. The company evaluated the crucial needs at the moment; the management made several deliberations on the best options to have the company reduces its cost of operations. The company later determined that the two options with its powers are to lay off some workers and shutting down outlets in regions that are underperforming and channeling the resources to the Asian market that is actively expanding (Flavelle, 2015). The bank_x0092_s management in consultation with the strategic bank advisers deliberated and concluded that the move would save the company $5 billion every year.

The change stage as explained by Lewin is the actual implementation of the options identified in the freezing stage. According to Lewin, the change phase often takes the time to happen since people usually take some time to embrace the new system, changes or developments (Bray, 2015). The management provided a period of two years to have all the layoffs done. Lewin explained in his model that at the change stage good leadership and reassurance is significant to have a smoother process. According to Flavelle (2015), the important tools at the change stage are communication and timing to sure the process is successful. The management of HSBC must ensure the employees who are retained to continue working in the company are assured of their job security to restore their confidence since in the event of layoff the other employees get scared that they might be on the line. Bray (2015) further discussed the third phase in the Lewin theory is the refreezing stage that comes after implanting the change, and the company stabilizes again. In the change program at HSBC, the change phase is set to end in 2017 and the refreezing phase thereafter.

Managing Change

The change program of the HSBC bank can be divided into stages as discussed below.

Driving change. This stage involves identifying the need for change; the bank identified the trends in the global market and realized the Asian market, and specifically in China is providing rich ground for banks (Craig, Nevin, & Odum, 2014). The management also identified the wasted resources in running the outlet in Brazil and Turkey, and the company earns a little return from the outlets. The bank then communicated the intended change. Craig, Nevin, and Odum (2014) further elaborated his point with the argument that the change implementers in the organization must recognize the importance of the people working in the organization by providing continuous training and development to ensure the get most out of the team retained. The management team must hold discussions with the workers to understand the impending change, discuss the aspects that will or may affect the normal roles the various employees play in the organization and the need to make adjustments or replacements.

Factors driving change. There is a number of factors that can cause the need for change in the financial sector. The factors are in two groups that are internal factors and external factors. Riley (2015) explained that the internal factors within HSBC Bank that drive the change are the reduced profitability in the recent years that the company management attributes to the high costs of operations. The rising cost of operation is as a result of several factors like labor costs inflation rates, exchange rates, and interest rates among other factors. Riley (2015) added that external factors that influenced the change program include the increasing focus and business inclination to Asia. The Asian economy is on the upsurge creating one of the fastest growing economies and slowly becoming the biggest economy worldwide.

Prioritizing the change. Organizations will always be presented with several areas that need change, and in the event, that organization makes the decision to have the changes they must be in the order of priority. The rise in the cost of operation and the need to focus on the Asian market were the two main reasons why the bank wanted to implement change programs (Cai, Santelices & Jiang, 2016). The main reason why the company wanted to implement a change program was to cut down the cost of operation. One option the company was considering was selling the bank outlets in brazil and that in turkey to cut the number of an employee by 25, 000 and them another 25,000 cut from the banks that were to remain in operation. The management prioritized the changes depending on the ease of implementation (Cai, Santelices & Jiang, 2016). The first priority was the selling of the two outlets since the process demanded fewer procedures compared to the change that required reducing the number of employees in outlets that were still in operation. The second option that was reducing the number of employees in the branches that were to remain in operation was because the change required a gradual process to have the system adjust to save the bank from the risk of halted operations.

Setting the change and managing resistance. The most baffling and obstinate of the various challenges that organizations face in the process of change management and implementation is the problem of employee resistance to change (Lundy & Morin, 2013). Employee resistance can be manifested in a number of forms like requests for transfer, reduction in output, increasing cases of employees quitting their positions, bad-tempered hostilities and continuous quarrels in the office. The change implemented by HSBC was, without a doubt, likely to attract several resisting forces among the employees. Employees were likely to oppose the change seeking to reduce the number of employees since the normal operation would have to continue and the only way the company is going to make-up on the positions left behind by the employees laid off is giving extra duties or extra working hours for the remaining employees.

Companies before commencing the process of implementation must have strategies for managing resistance in case it arises. Some of the major strategies that HSBC could apply to help manage employee resistance include (Lundy & Morin, 2013). The first strategy is to have the employees being part of the change process; the management should make the employees understand the reason behind the decision of the company to downsize and the criteria the company used to lay off to clear any suspicion for favoritism. The second strategy is to understand the true nature of the anticipated resistance. The company needs to understand the concerns of the employees that are retained to work in the various branches of which other employees were laid off.

Resistance often comes because of certain attitudes and blind spot on the side of the employees because of some preoccupations in their technical features. The company must come up with measures for addressing the grievances of the customers retained in the various outlets. Some of the strategies that the company may use are having rewards for extra duty covered and any extra hour worked because of the additional responsibilities (Lundy & Morin, 2013).. The company executives must take the initiative to engage directly with the staff members to encourage them to do their best to maintain company stability irrespective of the employees laid off.

Reasons for Resistances

The employees at the HSBC would reject the proposed changes for a number of reasons. One of the major concerns is the issue of loss of status at the company or job insecurity (Lozano, 2013). In the event that the organization is laying off employees no employ is likely to support the idea. The retained employees would not support the change program since that sends a message that the remaining employee would too be on the line in the near future (Lozano, 2013). The proposed change would also be rejected by the employees since they will have to carry out extra duties that can overlap into extra time that the company may not willingly pay.

The non-reinforcing reward system, HSBC are reducing the number of employees but maintain the normal operations. This has the implication that the remaining employees will have to undertake extra roles. HSBC just like any other company will in most cases fail to reward the worker extra pay for the extra job done (Appelbaum, Degbe, MacDonald & Nguyen-Quang, 2015) Fear of the unknown is another reason the employees were likely to reject the proposed changes. The employees may be scared to continue doing their best at the company since they may fail to understand the reasons behind the layoff. In such cases, the employee's output will be reduced sine they are not sure of their future at the company. According to Watson, G. (2013), Organizational politics often stand opposing grounds in terms of the proposed changes. Organizational politics create tension that may influence the management to reconsider an earlier decision.


Craig, A. R., Nevin, J. A., & Odum, A. L. (2014). Resistance to Change. The Wiley Blackwell Handbook of Operant and Classical Conditioning, 249.

Lozano, R. (2013). Are companies planning their organisational changes for corporate sustainability? An analysis of three case studies on resistance to change and their strategies to overcome it. Corporate Social Responsibility and Environmental Management, 20(5), 275-295.

Appelbaum, S. H., Degbe, M. C., MacDonald, O., & Nguyen-Quang, T. S. (2015). Organizational outcomes of leadership style and resistance to change (Part One). Industrial and Commercial Training, 47(2), 73-80.

Watson, G. (2013). Resistance to change. R. Cohen, J. McManus, D. Fox, & C. Kastelnik, Psych City: A Simulated Community, 246-257.

Deneen, C., & Boud, D. (2014). Patterns of resistance in managing assessment change. Assessment & Evaluation in Higher Education, 39(5), 577-591.

Cummings, T. G., & Worley, C. G. (2014). Organization development and change. Cengage learning.

Lundy, V., & Morin, P. P. (2013). Project leadership influences resistance to change: The case of the Canadian public service. Project Management Journal, 44(4), 45-64.

Cai, H., Santelices, R., & Jiang, S. (2016). Prioritizing Change-Impact Analysis via Semantic Program-Dependence Quantification. IEEE Transactions on Reliability, 65(3), 1114-1132.

Arnold M., & Pickard J. (June 9, 2015). HSBC to axe up to 50,000 jobs in 2 years. The Financial Times. https://www.ft.com/content/2fddac06-0e4b-11e5-9a65-00144feabdc0. Accessed on May 2, 2017

Bray C. (June 9, 2015). HSBC to Shed 50,000 Jobs in Overhaul of Global Business. The New York Times. Accessed on May 2, 2017

Flavelle, D. (June 9, 2015). HSBC bank to cut up to 50,000 jobs; Canadian impact unclear. The star.com https://www.thestar.com/business/2015/06/09/hsbc-bank-to-cut-25000-jobs-canadian-impact-unclear.html. Accessed on May 2, 2017

Riley C. (June 9, 2015: 7:52 AM ET). HSBC to shed 50,000 jobs. CNN. http://money.cnn.com/2015/06/09/investing/hsbc-job-cuts/. Accessed on May 2, 2017.

November 09, 2022


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