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Strategic Human Resource Management at Royal Bank of Scotland

By Garima Saxena, 3EA
The Royal Bank of Scotland Group

The world's leading financial services providers and one of the oldest banks in the UK, Royal Bank of Scotland Group adopted SHRM approach with the recognition to outperform its peers, the contribution and performance of its people would be key. This was done by a joint initiative by HR Director and Chief Executive, and a 'make it happen' culture within RBS. The development of SHRM was aimed to keep ahead of the information needs of the company. RBS's focus was to get the basics right and concentrate on four main measures around engagement, absence, turnover and short-term tenure. RBS brought in a range of people to develop the SHRM framework to supplement the skills of the HR team. The organization was keen to bring in the very best people available to ensure the most robust and 'joined-up' approach. Skills included market research, technology and finance. It was key for RBS that:

1. SHRM was on its business (and not just HR) agenda
2. It built a compelling employee proposition that attracted, engaged and retained the best talent
3. The effectiveness of the people strategy was assessed through the impact on business performance

Underpinning the SHRM approach was the RBS strategy summarized in the diagram below.

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This strategy reflects that RBS generates superior sustainable value for shareholders through adding value for both customers and the Bank's own people. RBS analyzed the data collected from employee survey which was sent to all employees, containing over 100 questions. The analysis was done against both employees characteristics and against business outcomes and initiatives. In terms of the contributions to the SHRM model, RBS has been able to adjust the employee proposition and assess the impact on staff. This was linked with the business outcomes, and to assess the links between the two. The important findings from the survey were:

1. The impact of engagement on business outcomes
2. The links between reward and engagement
3. The life stage of the employee, and that the proposition needs to reflect differing needs at differing times

In terms of outputs, RBS has identified seven areas of employee performance that show a significant, consistent positive link with business and customer performance metrics. These measures are:

1. Structured information is developing by more than 40% consistently.
2. Traditional content writes, including unstructured information, are developing by up to 80% each year.
3. Global information will develop to 40 zettabytes (ZB) by 2020.
4. 85% of this information development is required to originate from new sorts; with machine - produced information being anticipated to expand 15 times by 2020.

The analysis has shown that engagement is a key indicator in human capital terms. Engaged employees perform well and contribute directly to business success. They found that the employees who are engaged:

1. Say: Consistently speak positively about the RBS Group to colleagues, potential employees, and customers.
2. Stay: Have an intense desire to be a member of the RBS Group.
3. Strive: Exert extra effort and engage in behaviors that contribute to business success.

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The Drivers to Engagement is a recognized toolkit used in RBS to reward the superlative performers and to encourage through engagement. The links between monetary reward and engagement are not exact and non-monetary recognition has been found to be more important in engagement terms. 'Reward' also covers hygiene issues which need to be put right rather than just paying more. However, while the link is not precise, RBS points out that reward can be organized from the epicenter and can be sorted out rapidly for everyone and therefore have an extensive impact as follows:

1. Reward is not the number one driver of engagement, for example, the impact of a good manager is significantly greater.
2. However, the organizational impact of good managers is limited by narrow spans of control i.e. they can have a very positive impact but only on a relatively small number of people.
3. In contrast, reward done well can drive engagement across the whole organization.
4. Investment in the design of effective reward programs can therefore deliver significant enterprise wide returns.

RBS offers flexible reward through its RBS Select program to ensure all employees can be engaged through being able to choose the rewards that best meet their circumstances at that time. Some 105,000 employees are eligible for the program and administration of it has been outsourced. RBS judiciously targets the rewards which makes the engagement levels increase by up to 20 per cent. The SHRM approach also makes financial sense for RBS as on an average, it takes ten months to repay the recruitment and onboarding costs of a new recruit. Therefore, knowing the engagement criteria is important for the new recruitment and retention strategy.

For RBS, the key to success has been the identification of the impact of engagement on their business performance and the links between engagement and reward. Coupled with this has been RBS's linkage of SHRM with business performance. The bank has attempted to turn as much HR data into bottom line impact as possible, which has helped with organization wide buy in. RBS HR staff have had to learn 'business language' to communicate with their colleagues and RBS found, as other organizations have, that this was not always easy for the HR team. RBS has supported the SHRM approach with senior management buy in and has ensured senior people from all elements of the business are involved in getting SHRM right.

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Article by: Garima Saxena, 3EA