As banks find new ways to do business Victoria Bank has sought to lead innovation by acquiring ten technology start-ups over the past three years. However it hasn’t been an easy road. As organisations grow over time, size inhibits innovation as large organisations have the tendency to become bureaucratic. At its worst, this can block ideas from flourishing; at its best, creativity and innovation is slowed. This has created a problem for Victoria Bank as they want to see immediate results from their start-ups when it can take some time.
All of the start-ups they have acquired are in technology innovation. Most of their competitors are taking a similar approach. Unlike their competitors who largely invest in outside organisations, Victoria Bank acquired the start-ups as they wanted to have more control and oversight, as well as actually owning the resultant products that the bank can use and sell, such as customer products, app development, cyber security, customer web experience etc. All of the start-ups are now based in Victoria and each ranges between fifteen and 100 employees. While all were acquired approximately three years ago, they are all at different stages of their organisational life-cycle and have different needs for growth. As such, they all operated independently with different structures and management approaches.
Over the past eighteen months, senior management at Victoria Bank has been more actively involved in and visible to the start-ups. They feel that the young entrepreneurs in their start-ups need more management control. There is also the rising belief that it is taking too much money and effort to oversee and govern ten different start-ups. At present, Victoria Bank is represented at the Board-level but would like to expand their reach. Victoria Bank has decided that all of the start-ups will be consolidated into one daughter company called VicInnovate. Being all under one umbrella also means being in the one location. All functions will be centralised: the start-ups will all now share the same marketing, products, R&D, and HR divisions. The heads of each of these functions will come from Victoria Bank and will bring with them the policies, procedures and tools from the Bank.
You are the new Head of HR at VicInnovate. Your mandate is to manage the process of this merger which will officially happen in six months and the first twelve months of VicInnovate. The start-ups will come together and operate under the same functional structure. However given the nature of their activities, they will still need to be agile. This presents a number of people management challenges.
Identify what the key people management challenges will be during the next eighteen months, as well as provide solutions to the problems you have identified. When providing your solutions, you should also consider timelines. The main issues that you need to consider are groups and teams, power and politics, organisational culture and communication.
Today, banks are faced with numerous challenges such as finding new ways to improve their service provision. To overcome these problems banks have been relying on technology to undertake their business operations (Hewston, 2010, p. 22). However adopting new technology can be a bit challenging as it appears in the case of Victoria Bank. Victoria Bank prefers acquiring start-ups to exercise greater control and own the resultant products. Over the previous three years, Victoria Banks acquired ten start-ups which have been managed by the Bank's senior managers. However, it has become apparent that though these start-ups require more management control, it also becomes expensive and time consuming for the Bank.
Victoria Bank has decided to consolidate all start-ups into one company to be called Viclnnovate. This decision, however, can cause a lot of challenges for people involved. For example, the chief executive officer, direct line manager and the employees themselves.
The chief executive officer of Viclnnovate must understand that although these are startups, they are at different levels of growth and as such need to work with the direct line managers of these firms to have a better understanding of where each startup is coming from. The success or failure of Viclnnovate is dependent his decision (Ulrich, 2008, p. 475). In his initial response, he has to ensure that his firm has enough funds and the funds are properly utilized, he also has to model a culture in the organization that will cultivate harmony amongst stakeholders by forming groups and teams that are effective in their dealings. (Application of power and politics and group and teams)
By building up an effective organizational structure that is effective not just for short-term benefits but also strategic for the long-term success of the business. The chain of communication should be properly aligned with the chain of command for instructions and feedback to flow in the correct lines. In a perspective of the CEO, it should be clear about the laws the company is expected to comply with, the business potential and the expectations of the parent company, for example, Victoria Bank. (power and politics, communication and organizational culture)
Implementing change can be difficult, but in these situations, the direct line managers of Viclnnovate is in the best position to assist the employees to adapt to the changes. Direct line managers should remain focused on their duties because although locations have changed, they retain the same responsibility they owed to Victoria Bank. (power and politics) Therefore, since they work directly with employees, they should take up the role of motivating their employees and build up healthy competition amongst themselves. They can also find ways of rewarding employees who meet their deadlines and also in their assessment performing employees (organizational culture). This helps to ensure that production is at its level best (Ulrich, 2008, p. 480).
Direct line management can also ensure that they maintain a friendly environment for employees to voice their grievances. If the employees feel that they are taken care of, they learn to belong to the organization and feel like they are a part of it. Direct line managers are in a better position to understand and influence the behavior of those employees that work under them. However just working in harmony with their subordinates is not enough they must also associate properly with the upper-level management who are involved in coming up with long-term strategies and making long –term decisions. This is because direct line managers make day to day routine decisions and they must take care not to sabotage the long term goals of the organization (Gomez and Cardy, 2015, p. 32).
Employees are the lifeblood of all organizations. This is because without them it would be the death of any business. (Hewstone & Brown, 2012, p. 30). Employees are regarded as assets even though they are not owned by the organization they are utilized by organizations in order to generate profit. Viclnnovate employees have come from different and separate locations and have been brought together for the benefit of both Viclnnovate and Victoria Bank. The organization must ensure that employees are properly introduced into this new environment (organizational culture).
The Human resource personnel is responsible for ensuring that the employees adapt to their new location (power and politics). For example, the culture of the people, the laws, their geographical location, and language if necessary. The Human Resource manager should give employees an opportunity to settle in and hear their grievances. The HR personnel then take necessary measures to address the issues raised by employees (Adler, 2011). Training and seminars should be planned for if necessary to ensure employees are better equipped to face these new challenges.
The new company will have a larger workforce to manage and therefore, human resource manager must make sure proper rules and guidelines are put in place to reduce any cases of conflict that may affect employee efficiency. Lastly, human resource manager must ensure that proper consideration is observed in the amount of remuneration that the employees receive. This is because to a large extent human resource is motivated by the pay they receive and not their input in the organization. Proper compensation will keep employees from engaging in industrial actions like strikes and boycotts. (Lewin and Michelle 2008, p. 16)
The applicability of this theory in the Victoria’s Bank context will help resource manager understand employees’ needs and therefore employ appropriate measures To fulfil them. The diagram alongside show several employees’ that Victoria Bank should ensure they are fulfilled (Maslow, 2013).
Viclnnovate is a young company that has just been set up and therefore, must be given room to grow like any other organizations. Its stakeholders must be prepared to work for its success. Management at Viclnnovate must be vigilant in ensuring that all the companies are restored to their previous efficiency before they were consolidated and even grows. When selecting the management team, Victoria Bank should select managers who are well equipped in managing diversified organizations and also those who are well vast with emerging technologies. (power and politics)
These qualities will help them understand the expectations of the existing market and also enable them to be able to predict future technological needs of the existing market. (Ulrich, 2007, p. 473.)The management must be alert to the needs of this organization and respond adequately to the needs of the organization. Proper marketing strategies must be put in place for the products produced by all the production units and quality must be ensured to ensure that innovate products remain competitive. Management should provide their employees with frequent training and seminars to equip them with new ideas and prevent obsolesce (Boxall, 2011, p. 16).Although Viclnnovate is under Victoria Bank, Victoria Bank should ensure that it does not engage too much in the operations of Viclnnovate to give the managers enough space to exercise their powers, make plans and see them through and perform their duties.
This is because such interference can lead to confusion or diversion of goals and plans and eventually lead to an environment where no plan goes through, or order of command is not known. (power and politics). Also, frequent interruptions can intimidate management to an extent that they are no longer interested in making effective decisions. This will hamper organizational success because managers may feel that they are not trusted enough to be left unsupervised.( Youndt & Lepak,2008, p. 840)
Adler, N.J. (2011). International dimensions of organizational behavior. Boston: PWS-Kent Publishing Company. Bartel, A.P., 2014.
Human resource management and organizational performance: Evidence from retail banking. ILR Review, 57(2), pp.181-203. Boxall, P. and Purcell, J., 2011.
Strategy and Human Resource Management. Palgrave Macmillan. Delery, J.E. and Doty, D.H., 2012.
Modes of theorizing in strategic human resource management: Tests of universalistic, contingency, and configurational performance predictions. Academy of Management Journal, 39(4), pp.802-835.
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