STRATEGIC HUMAN RESOURCE MANAGEMENT AT LLOYDS TSB

University Of Sunderland

ARJUN THEKKADAVAN

INTRODUCTION Lloyds TSB is one of the best represented banks in UK. They use to define themselves as the most reputed financial player in UK which has multifarious activities in insurance, wholesale and international banking. the total tangible asset of Lloyds is estimated to be around 344 billion, some 63,000 employees and is valued at more than 32 billion. From then the bank has been busy in re-organising and restructuring their whole process especially HR function. Their vision is to become the No.1 financial organisation in UK and is on the way of achieving it. To be precise the human resource activities in Lloyds are regarded as an ideal one since past many years. The necessity of recent partnership approach is the HR to think and act more strategically this is why the banks management want HR to take due part in fabric of the organisation and multiply the value. After completing an assignment on the strategic human resource management at Lloyds TSB, I will be able to understand how the strategic human resource management contributes to the achievement of organisational objectives.

Strategic human resource management (SHRM) was defined by Hall (1984) as The identification of needed skills and active management of learning for the long range future in relation to explicit corporate and business strategy (Armstrong, 2009). In the modern accelerated paced business world like this it is not just the deal of employing perplex or drafting policies associating the work but amply responding to the viable necessities of competitors pulses(Small Business, 2010). SHRM deals with the changes in the structure, culture, performance and the requirements of human capital. Strategic human resource management adorns its primary attentions to framing the hr programs for long run rather than that of dealing with hr issues for the near future. Lloyds TSB is one of the leading retail banks in UK and also operates in international banking and insurance and investments. Lloyds merged with Halifax Bank of Scotland and formed Lloyds banking group. Their vision is to become the best financial services in UK and to achieve this they need highly skilled and efficient resources especially human resources. For this they need to develop their human resource division to achieve its critical success factors (Lloyds TSB, 2011). The HRM is the key factor in describing the vision, mission and goals of the HRM function in an organisation in alignment with their strategic objectives. Strategic HRM helps in improving the business performance by developing the human capital and thus creates an organisational value. Communication with the stakeholders will be improved and ultimately results in business performance. SHRM plays its role in obtaining high quality workforce. Quality people will be employed and then their skills are developed by imparting training programmes. The employees and staff are motivated by an organisation employing strategic HRM and thus urge them to do their best for the organisation and for their individual betterment. SHRM also develops the core competencies in the business. The main contribution of SHRM lies in developing and improving the skills of the people associated with the organisation (Armstrong, 2009). Lloyds TSB, which is a service based sector, always make sure that they recruit right person for the right job. They retain the best work force and thus maintain a healthy business environment.

Strategic HRM mainly concerns with identifying and developing the organisational approach towards its objectives. To manage strategic resources of an organisation, strategic human resource management is essential. (Wangdhee, 2010). The Human resource results of an organisation is said to be an aple index of the staffing pattern, wage rates, employee attendance, employee turnover, and performance appraisal ratings. From these we will be forced to conclude that the human resource management is an integral part to each and every organisation irrespective to its size and operations (Wangdhee, 2010). Some of the activities of SHRM are, Gain Competitive Advantage: - Employees are the most valuable asset as far an organisation is concerned. So by developing human resource sector and putting more efforts on its betterment helps in achieving competitive advantage. Employee Management: - Proper management of employees and thus maintain a good relation with them can increase the productivity. Involving them in the issues related to the bank and asking for suggestions can make them aware of their responsibilities and can result in better productivity. Recruitment: - Selecting the right people and employing them for the right job is one of the important activities of SHRM. The selected candidate should have a basic understanding of the task they are going to be allocated. As far as Lloyds TSB is concerned, the recruited candidate should have the basic customer service skills and accounting knowledge. Gain Commitment:- The workforce should be integrated and the employees are motivated through different schemes. This helps the HR management system in improved performance and thus meeting organisational objectives. Improving Effectiveness: - SHRM helps in producing effective human resource management results in alignment with the strategic organisational strategic objectives. TSB Lloyds Group consistently executes skilful employees and generates effective outputs. Modifications and developments in the HR department have been done over the years thus they were able to maintain a healthy and good relation among their stakeholders (LLoyds TSB, 2010). Human resources should be managed effectively and efficiently to achieve organizational objectives. A strategic human resource management is needed for this. Lloyds TSBs vision is to become the No.1 financial service
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organization in UK and the main challenge for human resource was to change from transactional to a strategic role and to work in accordance with the business strategies. In general, the HR function at Lloyds TSB had historically been viewed as a provider of services. For this, the human resource management communicates with their employees regarding the business aims and objectives. The SHRM developed at TSB Lloyds has helped them in paving their way forward to meet the objectives. Stakeholder value creation: - The key stakeholders for Lloyds TSB are the customers, employees, investors etc. By bagging more customers and investors through proper and efficient functioning of their financial business, the HRM creates value to their stakeholders. Bonus & Reward Policies: - This is one of the main contributions of strategic HRM. This is a way of employee motivation. Employees who are excelling in their work are given rewards including bonuses and thus it helps in better productivity. People Engagement and co-ordination: -The people and their job should be properly co-ordinated and effective communication among them should be ensured. This makes a good working environment and can enhance the productivity. Each and every employee should be engaged and involved in their job and they should be aware of their responsibilities and work towards a common organisational objective. Job Flexibility: - Giving flexible job timings to employees can help in gaining good performance. Lloyds want its HR to take part duly in fabric of the firm to steer it towards betterment of its value. Lloyds made strategies to implement these plans and are successful in it. There was a huge improvement in the employee attitude and commitment in the bank and their performance improved and are having a steady growth (LLoyds TSB, 2010).

It is the duty of an effective human resource manager to relate internal and external supply of human resource with that of the respective demand for a stipulated period of time. In precise the hr planning which is thinking in advance has two major components such as requirements and availability. The human resource planning is termed to be an inextricable part of strategic
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planning in every organisation. In this world which is in its accelerated pace to change every firms needs to be in its quasi stationary state of equilibrium, as well as the number and types of personnel needed. If an organisation uses HR planning, it can predict these changes and takes steps to adapt to them. The information gathered through HRP can be used for other HR management functions (Kleynhans, 2007). HRP plays a vital role in linking business strategy and its operation. Lloyds TSB has reshaped their HRP for an efficient and effective management of their human capital. The mergers didnt affect them in this because they have urged them for a reshape as well. HRP plays a crucial role in linking the business strategy and operation in Lloyds. There are various business factors that determine the human resource planning of them. They include technological advancement, business growth or decline, expansion in business, economic turbulence, labour cost, competition from other financial organizations etc. The employees need to be trained and skilled enough and they should be flexible enough to work with the latest technology. Considering the business growth or if it is a decline, the strategies have to be changed and so is the human resource plans. Competition from others is the main business factor and the organization has to be alert and the HRP should be active in responding to such situations. Economic conditions can cause the company to lay off or increase their work force and the human resource planning has to respond quickly to such situations. We can see a close and subtitle relation between the business cycle and the hr planning activities, simply because of the same hr planning will be closely affected by the vibrations in normal business cycle. There are numerous factors should be figure into organisational hr plans. Some of them are inflation rates, interest rates and so(Gartenberg, 2008). The recent economic recession affected Lloyds TSB as well and they had to lay off more than 500 employees across UK. The human resource management has to emphasize on human resource for meeting the organisational objectives. During such economic conditions, certain requirements are to be met. Proper business forecasting plays a key role here. Recruiting skilled employees based on their knowledge and ability can make the HR more efficient. Outsourcing can also be done in such turbulent economic situations. This can minimize the cost and reduce the risk. Almost all the banks after the recession have started plans for outsourcing and Lloyds TSB is not different. In
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cases where economic conditions have brought about layoffs, employees who were let go while in good standing may be recalled to their jobs when the economic outlook brightens and job openings occur (Bohlander & Snell, 2010). So managing shortage is a major requirement. Workforce alignment and sharing of jobs are the other requirements under economic turbulence. The HRM of Lloyds has managed turbulent situations well but effective strategic planning is needed for the future. Employee, job role and responsibilities, team work and the business objectives are the key units in any organisation and these all are linked each other. Lloyds TSB has to consider these factors carefully while developing strategy and monitoring the environment is also necessary. Considering these factors, an HR plan is required for proper internal and external assessment. The need of skilled personnel having good knowledge in accounts and finance can enhance the HR department of banks like Lloyds. Proper communication and effective training are necessary to develop the skills and capabilities. Employee motivation and employer-employee relationship plays a key role here. The strengths and weaknesses of present staffs should be identified and rectify the problems if any. Effective supervision helps for this. Forecasting the future business helps acting properly at tough situations and managing the employee working hours, data protection, employee feedbacks helps in measuring the efficiency. The environment should be scanned properly and the best employees are to be brought forward. Developing HR practices can gain stability and competitive advantage and helps in maintaining the reputation of the organisation. The periods for the planning should be adjusted and helps in generating better outcomes. This can be either long term or short term. As far as Lloyds TSB is concerned, it is 5 years which is long term (EThames Class Lecture, 2011). The HR planning denotes the activities which are engaged in ascertaining the need of human resource in the organisation and to cater these needs with able bodied and qualified personnels (Garanti, 2010). The main objective of Lloyds TSB is to provide the customers with best service and provide long term assurance and flexible finance for business (LLoyds TSB, 2010). Their HR planning process helps in meeting these objectives and thus coordinates the employees in working towards the organisational goals. Planning provides vision and it motivates the employees to give their best to the organisation. The HR planning relates HR objectives with organisational goals. The staffs get involved in the changes in the organisation through huddles and
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team meetings, and by giving feedbacks. Planning is a main tool to manage the man power and improve communication among people and between customers which results in better service. The planning process is delivered for possible outcomes and for the proper functioning and control of resources; it needs to be abided by policies and terms. Forecasting is the key component needed to achieve the business objectives. If human resource planning shows that the talent supply is tight, then banks need to secure more employees by increasing their recruiting. Human resource planning even helps the bank to build manpower policies and hence result in the achievement of corporate objectives. HR solutions in an organisation is said to be very essential and indisputable in the sense that only through proper administration of human resource management policies we can confront the personal issues of persons on an organisation. The effectiveness and productivity of an organisation is actively related to its hr policies. It should provide hr advices for the organizations needing help with specific HR-related issues. These policies ensure that the management and the rest human resource crew are on rightly on the track. Ultimately it facilitates empowerment, devolution and delegation (EThames Class Lecture, 2011). The policies are based on the objective of the organisation and it includes employee benefits, recruitment, leaves, compensation and to termination. It also protects employees from arbitrary and discriminatory actions from the management. It also determines the working hours, code of conduct and health and safety policies. These HR policies give the employees a clear cut idea of what they should do and what they should not. Lloyds TSB has a set of HRM policies that fit and shape their corporate culture. These policies make sure the employees feel that they are working in one of the best places. The bank provides flexible working hours and this helps them in delivering high quality services to customers (Times, 2010). The employees are more motivated and active in working on the hours they like. This leads to better productivity. All the employees are treated equally and thus the bank follows equality and diversity policies. The new policy called Work options allows staff to work flexibly. Lloyds TSB focuses on individual and not on group differences. The newly hired employees are given proper training and orientation and they comply with the employment laws and keep the confidentiality of all the employees (Lloyds TSB, 2011). The government of UK introduced general work laws and regulatory requirements on the organisations for the well being of the society. Like all
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other organisations, Lloyds TSB also faces its impacts. The legal and regulatory requirements are related to pay, equality, employment rights and responsibilities, contractual terms and conditions and data protection. After accepting the unconditional offer letter by a newly recruited employee that is after agreeing the terms by employer and employee then there exists a contract of employment. It should define the working relationship between employer and employee. This is a legal requirement on employers. The employment right act (1996) give the employee with a lot of rights that includes wage protection, unfair dismissal, rights for leave, guarantee payments etc. The Employment Acts 2008 enforces the minimum wages for an employee. There is a mandatory statutory dismissal procedure which says that the employer has to follow a procedure before dismissing an employee else the dismissal will be treated unfair. This is an important requirement. The Data Protection Act asks the organisations to keep data about individuals including workers keep confidential. The work and family act must have to be administered for amply entertaining maternity pays up to the tenure of nine months without any fail which will result in employees benefits from transparent communication between employers and employees. The Equality Act and Race relations Act gives equal opportunity and avoids racial discrimination respectively. These are mandatory requirements. Lloyds TSB follows all these legal requirement policies and is making a significant contribution and impact on their HR policies. The bank is providing flexible working hours to all employees and is treated equally. Lloyds also supports the minimum wage act and employee data are kept confidential. Bank also offers paid maternity and annual leaves and ensures that they abide by all the laws and are meeting the legal requirements. An organisational structure is a formal collection of people and other resources established to accomplish a set of goals. To be precise, it says how the job responsibilities are divided and managed. According to Weber, organisations can be classified according to the legitimacy of power. Charismatic Authority is based on the characteristic of the individual and Traditional Authority is based on a respect for customs. Rational Legal Authority is based on a set of rules. Lloyds TSB can be considered under rational legal authority because the bank operates according to a set of rules and regulations. The bank operates within the requirements or regulations of UK government. The organisational structure of Lloyds TSB has a direct impact on
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the management of human resources in the organisation. The bank operates on various segments like retail, insurance, investments, mortgages, loans etc. Efficient and highly skilled employees are needed in dealing with different job roles. Organisational structure determines a culture it helps in better performance by keeping the employees motivated. The HR organisational structure has to follow the needs of the organisation and allow the employees to operate smoothly and deliver consistent results. This influences the potential for the future development of new initiatives and potential to improve the current HR processes of Lloyds TSB (HRM Advice, 2010). Structural features of organization and Human Resource systems and practices have significant influence on organizational climate, Human Resource Development, climate, and Job Satisfaction. There was strong relationship between climate perceptions and job satisfaction which in turn to both individual and organizational outcomes. Organisational culture consists of the shared values of an organisation including the norms and beliefs. The organisational structure of Lloyds TSB has helped them to smoothen the cooperation and communication among the employees. They were also able to motivate them by giving flexible working hours and were able to abide by the rules and regulations of UK government. Strategic planning meetings helped in designing plans for the future. Lloyds TSB emerged as one of the best organisations to work with regardless of gender, race, sexual orientation and disability. An organisational structure is said to be fruitful and feasible only when it is capable of enhancing the potential of development of new plans in the future courses of time and then in ameliorating the current process. It should be kept in mind that the organisational structure is likely to be so easy at the stage of its implementation but it is so laborious to confront all the issues associated with it later on. Lloyds TSB made strategic partnerships to monitor performance and develop the learning culture. The culture plays a predominant and developed role where as an interaction will taken place in between the functional specialism by the means of procedures, rules, job descriptions and systems. The effectiveness of an organization can be calculated by introducing some measures that can improve the specific department. In human resource management, creating value for the organisation is the main goal. Lloyds TSB conducted some qualitative measures to monitor the effectiveness of human resource which can be stated as such:
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HRM Policies: - The HR department of Lloyds TSB formulated different policies in managing and safeguarding the rights and privileges of employees. These help them to meet the organisational objectives in alignment with the strategic objectives. Stakeholder feedbacks:- This plays a vital role in the success of an organisation. The decisions taken by the stakeholders and the positive feedbacks from the customers can measure the effectiveness of human resource. Benchmarking and Return on Investment (ROI): - On the basis of benchmarking, the effectiveness of HRM can be measured. Thus it helps in analysing the strengths and weaknesses. On the basis of human capital investment, ROI used in financial streams can also measure the effectiveness (Pynes, 2008). Improvements:- Making continuous changes can increase the efficiency and thus the profit margin especially in the case of banking industry. The problems need to be rectified and the existing services has to be improved. On the basis of employee retention and the turnover rate, the effectiveness of the HRM can be measured (EThames Class Lecture, 2011) Lloyds TSB is one of the largest retail banks in the UK with a number of leading market positions. As per their denomination the leadership position are not on the pure basis of scale but on the basements of reputation and recommendations. Here all the financial service firms in UK are challenged by the short term outlook around the globe. HBOS and made opportunities (Lloyds TSB, 2011). Recent economic recession like all other financial organisations affected Lloyds as well and they are recovering from its impact. The human resource management of Lloyds managed such turbulent situations effectively and helped in the organisations way ahead. They provided excellent HR policies and culture to employees. The main challenges in front of Lloyds now are to fight with other competitors in this field and become the market leader. Offering more employment opportunities and introducing new policies will be a good idea. This will help them to retain the current employees and attract new. The employment package should be revised and a re-thinking should be done on the employee incentives and bonuses. The HRM should always keep an eye on the changing environment and act accordingly. Enhanced training programs can develop the
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skills of employees and thus result in better productivity and ultimately in meeting the organisational objectives. Bibliography
Armstrong, M. (2009). Human Resource Management Practice (10 ed.). Kogan Page. Bohlander, G., & Snell, S. (2010). Managing Human Resources. USA: South-Western Cengage learning. EThames Class Lecture. (2011). Lecture Notes. EThames . Garanti. (2010). HR Policies. Retrieved 2011, from Garanti: http://www.garanti.com.tr/en/our_company/human_resources/human_resources_policies.page Gartenberg, D. (2008). HR Input. Retrieved 2011, from Personnel Today: http://www.personneltoday.com/articles/2008/01/29/44121/human-resources-input-is-key-tomanaging-recession-risk.html HRM Advice. (2010). HR Organisational structure. Retrieved 2011, from HRM Advice: http://hrmadvice.com/hrmadvice/hr-organizational-structure.html Kleynhans, R. (2007). Human resource management. Capetown: Pearson Education. LLoyds TSB. (2010). LLoyds TSB. Retrieved 2011, http://www.roffeypark.com/whatweoffer/BespokeDevelopment.com from Roffeypark:

Lloyds TSB. (2011). Lloyds TSB. Retrieved 2011, from Lloyds TSB: http://www.lloydstsb.com/ Scribd. (2009). HRM Practices. Retrieved 2011, from Scribd: http://www.scribd.com/doc/19701371/Strategic-Human-Resource-Management-Practices.com Small Business. (2010). Strategic Human Resource Management. Retrieved 2011, from Small Business: http://www.smallbusinessbible.org/strategic_humanr_management.html Times, T. (2010). The Times 100. Retrieved 2011, from The Times: http://www.thetimes100.co.uk/studies/view-brief-study--changing-working-patterns--99-302.php Wangdhee, P. (2010). Making People Management a Strategic Organizational Purpose. Making People Management a Strategic Organizational Purpose .

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