Question: Does research support Standard Chartered’s claim about the impact of authentic leadership on employee engagement? (1000 words).
HR Strategies for Growth in Asia Authentic leadership at Standard Chartered. The CIPD’s Next Generation HR Asia research found that HR leaders in Asia have developed four areas of innovative HR practice that address specific business challenges in the region, such as the war for talent and the pace of economic growth. These four areas of HR practice have been identified as: insight, community, purpose and performance. How organisations come to terms with these HR challenges will determine their successful growth in the region in the future. CIPD has used a number of multinational companies to showcase how innovative HR has been implemented in these four areas. (More examples can be found at http://www.cipd.co.uk/hr-resources/research/next-generation-hr-asia-casestudies.aspx
) Standard Chartered Bank has been selected to illustrate how HR practices help build shared purpose among employees and what it means for organizational performance. Purpose and authenticity One organisation that has tapped into a sense of shared purpose is Standard Chartered Bank by demonstrating an authentic style of leadership which creates long-term employee engagement. The market for talent in Asia is rarely static, with some organisations operating within certain sectors in China suffering extreme levels of turnover (40–90%). One way of addressing the war for talent in Asia is to tap into the passion, dreams and aspirations of their people to power long-term growth. This means engagement and brand alignment is being driven by authenticity and purpose. Authenticity is rooted in a different level of openness. On the one hand, the organisation is confident, being genuinely open and acting in a way that is consistent with its values. On the other hand, there is sufficient trust for individuals to be able to explore their own hopes, dreams and concerns in a genuinely safe way. Although it’s a global bank, 70% of its income and profit comes from Asia. Standard Chartered’s style of authentic leadership is crucial in generating employee engagement as the bank faces intense competition for staff in Asia. Its leadership style also directly affects its business performance, remarks David Thomas, Global Head Country HR. ‘The role of manager, the role of leader in the organisation is very much linked to the performance of the bank and we have a lot of data showing the difference it makes to revenue growth and profit. Employee engagement is right at the centre of everything we do.’ Certainly, the bank’s own statistics illustrate the importance of employee engagement to an organisation’s profitability. In 2008, Gallup conducted business impact analysis using bank branches in three markets: Hong Kong, Korea and India. The results demonstrated that branches that improve engagement perform better than those who do not, in both buoyant and turbulent markets. In Hong Kong, analysis showed that the difference between branches with improved engagement and those with reduced engagement amounted to USD $750,000 of new sales growth and USD $1.4 million of income growth per branch. At Standard Chartered, there is a clear sense of purpose shared among employees. Many of them have developed an emotional connection to the bank and this seems reflected by its global brand campaign ‘Here for good’, which sums up Standard Chartered’s commitment to developing deep relationships with its clients and customers; its values, conduct and focus on building a sustainable business. Employee volunteering is a core component of its community strategy. Each employee is given Page 5 of 9 three days paid leave to volunteer. An internal global survey showed that 74% of respondents believed that employee volunteering increased their job satisfaction while 81% preferred working for a company that supports volunteering. ‘We want to be seen as a positive force in banking and in the communities in which we operate. In many countries – for reasons which I well understand – banks and the banking industry’s image is very negative. Employees at Standard Chartered are proud of the fact that the organisation is not solely focused on making a profit but is as equally passionate about the sustainability initiatives that we support – whether it is raising awareness of HIV/Aids, our ‘Seeing is Believing’ campaign or ‘Nets for Life’. For instance, the marathons that we sponsor in places like Mumbai, Hong Kong and Singapore are huge community events in Asia,’ explains David. Standard Chartered is also committed to creating long-term associations with its employees and alumni, explains Thomas. ‘We place a huge focus on retaining employees and helping them to build long-term careers and try to do more to make a strong link between longterm team engagement and individual talent development.’ Standard Chartered weathered the global banking crisis in 2008 relatively well. This was partly due to the fact that the markets in which they primarily operate weren’t affected by the crisis, but also its strong balance sheet, good business momentum and strong customer relationships and the approach taken by senior figures in the bank, explains Thomas. ‘One quality that our group CEO displayed during the time was an incredible humility and an understanding of how important it was for all of us to stay focused on our customers, employees and communities. I think this type of response helped us to reinforce with our employees that the bank is a good place to work and it helps them to think of the bank as somewhere they want to continue to be.’ Across the region, staff engagement levels increased during the period reaching ‘world-class’ levels particularly in China, Hong Kong, Korea and Taiwan. Increasing the diversity of its senior leadership 125 nationalities are represented among their 85,000 employees of which, about 70 are represented among senior management. They have an international, diverse workforce. Thomas states that ‘We believe that this enables us to better serve our customers and maintain competitive advantage.’ However, he is not complacent and knows that as this is a core part of the bank’s DNA, the bank will need to continue to focus on developing the diversity of its leadership. He continues to say that ‘we aim to hire and develop local talent in the countries where we operate as they are more likely to understand the culture and the market. This also increases the cultural diversity across the Bank. We also track the progress of our employees that show high potential in every country, including those in Korea and mainland China. We know these will continue to be important markets for us and it’s important that we are developing those that know are markets best.’ The bank has a strong and focused Diversity & Inclusion Council chaired and lead by Jaspal Bindra who is the Group Executive Director and CEO in Asia. Thomas explains that the bank’s international and graduate programmes are a huge source of future leadership talent for the bank – ‘it’s exciting to think that in the years to come some of these bright, resourceful individuals will be leading the bank through the next stages of its growth.’ The KFCI values Standard Chartered develops the value of authenticity in its current generation of leaders using a set of values known as ‘KFCIs’. This is an acronym where ‘K’ stands for ‘know me’, where the Bank wants its leaders to really know and understand their Page 6 of 9 employees, explains Thomas. ‘To know their strengths, to know what switches them on, what switches them off, to be genuinely interested in their family situation and in what they do outside of work.’ Standard Chartered expects its leaders to be connected to their people and to do this in an authentic way. ‘There is nothing worse than a leader trying to do that but not being genuine because people in Asia watch body language very closely. They know if you don’t care. So first of all we want our leaders to know their people,’ says Thomas. The ‘F’ stands for ‘focus’. ‘We expect our leaders to have the ability to be like micro-surgeons in terms of focusing on the differences in every individual and helping that individual to recognise and to know what it is that is expected of them,’ explains Thomas. ‘Our data tells us that if we achieve that, we will achieve much higher engagement and that will lead to much higher customer engagement and, ultimately, increased operating profits.’ The other critical value for their leaders in Asia is ‘C’, which stands for ‘care’, added Thomas. ‘People do want their managers to care and they want their organisation to care. Whether people have short-term issues such as illness or longer-term concerns, they want to feel they can raise those with their managers. It’s a pretty self-selecting process because if you’re a leader in this organisation and you don’t care a
bout the people in your team, you will have a short shelf life.’ Standard Chartered also wants leaders that inspire (I) people, remarks Thomas. ‘We want leaders who can inspire because people need to have leaders who can make them feel like winners and who can paint a picture of how this can be an opportunity for them. We find that the best leaders in an organisation are people who are inspirational and people who create that following. If one person moves from one country to another, then these individuals typically have whole teams who also want to go and work with them and they build great reputations and therefore get the best talent in the bank wanting to work with them as part of their team.’ In short, Standard Chartered places a great deal of importance on honesty, humility and authenticity in its leaders and role-models those traits in its management population. It creates high levels of employee engagement through its authentic leadership style and its long-term commitment to community activities, which serves to retain and attract employees to the bank. This long-term approach is reflected in its approach to its employees and how the bank does business in Asia. As Peter Sands, the bank’s chief executive, has remarked: ‘We’re here for the long term. We don’t run when things get tough. We don’t dodge tough decisions and trade-offs. This is the way we do business: it has underpinned our strategy and success for over 150 years across Asia, Africa and the Middle East; and it will be the foundation for our future.’ Checklist for developing authentic leadership • Ensure that your leaders are open and honest in their communications with employees and share the vision, values and purpose of the bank with them. • Employees can tell when you’re not being genuine, especially in Asia, where body language is watched very closely. Get to know your employees and be genuinely interested in their family situation and life outside work. • Take a genuine interest in developing your employees’ strengths. Not only will this have an impact on employee engagement but will also lead to higher customer engagement and increased operating profits.