What arguments for and against HSBC managers making public their short-term and intermediate-term objectives - Management Essay Example
1) What arguments for and against HSBC managers making public their short-term and intermediate-term objectives, unit by unit or division by division?
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The first step in the planning process is stating organizational objectives. Before any kind of planning can start, stating and outlining the organization’s objectives would have to be undertaken. The fundamental and most important purpose of planning is to help the organization reach its goals so by stating organizational objectives, managers will be continually reminded of the things that they have set out to do. Making these statements public show the organization’s commitment to their goals. With the public’s eyes on the organization, it could be, in some way, more motivated to fulfill their goals and live up to its objectives.
HSBC is an organization that operates across many countries and different cultures, most of which have different business and economic climates. Therefore it is reasonable that it creates objectives that would fit the unit or division’s situation. When making uniform objectives for all units or divisions, objectives may not be applicable or relevant. Creating short and intermediate objectives unit by unit or division by division would help the organization tailor their processes and decisions in the best possible way, in accordance to factors unique to that unit or division.
One disadvantage however, is that setting objectives unit by unit or division by division can be too-time consuming. Another downside is that these short and intermediate objectives may not be in line with the organization’s long-term goals. Setting the objectives too high or too low could have undesirable effects. Striking the balance is therefore important in the organization’s objectives—it must work on seeing the bigger picture amidst specialized objectives and understanding how day-to-day activities and decisions fit within the grand scheme of things.
2) Would you recommend that HSBC use the MBO process to reward investment bankers and analysts according to results, even though key factors influencing performance can’t be precisely predicted or controlled? Explain.
I would not recommend the use of the MBO process when key factors influencing performance can’t precisely be predicted. The first step in the MBO process necessitates that the right objectives be applied and setting objectives too high or too low can have unfavorable consequence. If the factors influencing performance are unknown, erratic, or unpredictable, the objectivity and the suitability of the set objectives are compromised.
Having reliable performance metrics may render the objectives inadequate and vice versa; indeed, if objectives are implemented this way, managers may not know whether or not the objectives are right in the first place. This situation hurts the company as a whole. While rewarding employees based on results can help them reach or surpass their objectives, rewarding employees when factors affecting their performance cannot be quantified may have more disadvantages. For instance, implementing MBO in spite of the aforementioned scenario may result in employees being insufficiently compensated for their efforts; on the other side of the coin, they could also be given more compensation than they deserved. Instead of making employees more committed to achieving organizational goals, this could, depending on the situation, breed discontent and result on the organization losing out as a whole.
3) Which stakeholders might be affected by HSBC’s plan to invest $50 million in environmental conservation? Should the company continue this plan, regardless of short-term financial performance?
Managers have social responsibilities in accordance with the ethical and moral codes of the society in which the business operates. HSBC’s move to invest in environmental causes does not only fulfill these responsibilities, they set a good example by promoting social responsibility.
All human beings are affected by the environment’s state (whether they like it or not), at least in the long run. In the short run however, investing a great amount of money ($50 million dollars) in environmental conservation may affect the profit margin of the company. The shareholders and investors are most affected since they do not get a return on their investments. Resources that could have been allocated to directly profit-generating endeavors are lost. This issue becomes especially important when the company’s short-term performance is not good. When this happens, it would be a choice between promoting social responsibility versus maintaining a healthy profit. How the organization handles this matter would greatly depend on their objectives and which goal they value more.