Human Resource Management in Multinational Banks in Tanzania (Term Paper Sample)

Human Resource Management in Multinational Banks in Tanzania
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Human Resource Management in Multinational Banks in Tanzania
Introduction
The rapid development of Multinational Corporations from developed nations has resulted in the deployment of managerial strategies from Western ethnocentric orthodoxy, without taking into account the prevailing conditions in the host country. Subsidiaries from developed economies have had to diffuse these strategies into their operations as dictated by these MNCs. South African based Standard Bank and American based Citi bank started offering financial services to foreign customers in Tanzania while claiming to employ “global HR best practices”. The banks targeted only a small niche of the foreign customers in the construction sector, tourism and mining sector in Tanzania. Standard and Citi bank case exemplifies the diverse practices implemented in cross market integration. This paper offers a summary of this case and discusses how and why Citi bank and Standard bank implemented global HR best practices in cross-market integration.
Case Summary
Overview of Tanzania
United Republic of Tanzania is located in East Africa and has a weak national institutional system and high poverty levels and unemployment. After independence, this developing nation had little impact on the business operations of foreign investments. Tanzania was undergoing a transformation of its social policies into a market economy. Around the 1980’s, the Ujama system or African socialism began experiencing significant external and internal economic shocks. The Ujama system was ineffective in alleviating poverty levels, irresponsibility and weak performance of factories and farms, and bureaucratic inefficiencies. Tanzania was unable to escape the prevailing globalization forces hence in 1995 it introduced privatization policies to attract MNC’s and foreign direct investment. These policies would aid Tanzania in improving its socio-economic and socio-cultural conditions.
Citi Bank and Standard Bank
Early 2000, South African based Standard Bank and American based Citi Bank commenced offering financial services to a small group or niche of foreing consumers in Tanzania. The two banks claimed that they were similar in various ways and employed global HR best practices. Both banks originated from foreign countries with neo-liberal business practices. Citi bank offered specialized products and services in purchasing and selling foreign exchange, monitoring and issuing credit card systems, and electronic banking. Citibank offered these services and product through three branches in Arusha, Mwanza and Dar Es Salaam. The bank’s organizational system comprised of systematic interconnections with the bank’s hierarchical structures. It used modern sophisticated technological systems and platforms in executing its operations. The physical working environment comprised of subdivided rooms, which were identified with a grid numbering system. The bank’s overriding philosophy was efficiency and specialization in delivering of services and products.
Citi bank’s head office was located in New York and handled major strategic activities such a bank’s fundraising and research and development. E-check systems facilitated integration between branches, departments, regional and country head office. The bank also incorporated the concept of expatriates who equipped resource centers. The banks maintained the global HRM function through linking the head office corporate culture with its human resources department. Recruitment and selection were conducted while focusing high quality service. Training programs were controlled from the head office since it was believed the main office possessed HR training model capable of effecting significant change in the organization. The bank rewarded individual effort as opposed to team effort and teamwork was emphasized but within a personalized approach. Citi bank developed HR policies and practices designed to curb the employee’s desire to enroll in a trade union. Since each branch had less than 100 employees, it was difficult to join any trade union.
As previously discussed, Standard bank also ventured in Tanzania to provide financial services to a small group of customers in Tanzania. The core activities of the bank were corporate banking, trade financing, fund accounting and treasury operations. The bank’s mission was to provide guidance and expertise to meet customer needs in the financial industry. The bank organizational structure was centralized, and the country head office was tasked with ensuring that head office decisions are effectively implemented. Branch and bank representative made regular reporting on HRM policies, customer and financial reports. Just like Citi bank, it also adopted the concept of cubicles in its physical environment. The cubicles were transparent and open, thus allowing employees to interact easily within the bank.
Standard banks also used expatriates to train local employees. Branch representatives played a significant role in linking the head office corporate culture with the HR department. Branch representatives enforced HRM policies image in the bank. Just like Citi bank, Standard bank exercised high quality service in the recruitment of employees. It attracted many experienced job candidates owing to the vigorous training and high wages provided by the bank. Appraisal systems were both individual and group based, and employees were provided with benefit schemes and salary increases. Standard bank allowed employees to join trade unions and stresses on the importance of collective and open communication and Ubuntu and Indaba.
How & why MNCs implemented global HR best practices in cross-market integration
A best practice refers to a methodology or technique which through research or experience has proven effective or reliable in attaining the desired result. Citi bank applied best practice through adopting modern sophisticated technology in its banking operations in Tanzania. This technology was applied in standardizing services, monitoring performance and work, financial transactions, informing customers of price changes, fluctuations and the global financial market. The New Yo...