Corporate governance and strategic human resources management in the UK financial services sector: the case of the RBS

Abstract

In this paper, we outline a new configurational framework linking different models of corporate governance to their associated ethical, strategic management and strategic human resources management (SHRM) policies and practices. We draw on this framework to analyze the role played by HRM and leadership in the rise and spectacular failure of the Royal Bank of Scotland, the Scottish headquartered financial services group, which grew to be one of the largest and most successful banks in the work prior to the global financial services crisis (GFC) but had to be rescued by British taxpayers following a failed acquisition during the GFC. Drawing on published accounts and interviews with senior RBS HR staff, we also analyze how a post-crisis shift in corporate governance, ethics and strategy is shaping organizational climate and HR policies at the bank to provide the HR function with a greater opportunity to exercise an influence on the corporate governance regime. However, the global nature of the financial services industry, the needs to satisfy financial markets and the desire of the UK government to return RBS to private sector ownership has placed strict limits on the potential for the emergence of a stakeholder model of corporate governance and HR, which many critics anticipated would be one of the few positive outcomes of the GFC.

Looking ‘Beyond the Factory Gates’: Towards more Pluralist and Radical Approaches to Intraorganizational Trust Research

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Can leadership branding work in theory and practice to resolve the integration-responsiveness problems facing multinational enterprises?

“…In line with current business and management literature and newer ideas on the relationship between corporate governance and organizational climate (Martin and Gollan 2012;Farndale, Paauwe and Boselie 2010), HRM has (re)discovered the role that strategic leadership can play in achieving key people management, organizational and business outcomes. The nature of strategic leadership and top management teams has been extensively researched, and while there is still some debate over senior executives' impact on important organizational outcomes, the general conclusion is that top executives matter (Finkelstein, Hambrick and Cannella, Jr., 2009).…”

An integrative approach to HRM–firm performance relationship: a missing link to corporate governance

“…The role of the HR department / HR professional as a strategic partner (Ulrich and Brockbank, 2005;Singh et al, 2012;Martin and Gollan, 2012;Sheehan et al, 2014;Chadwick et al, 2016) has been considered in the literature on HRM -firm performance link in terms of the support this department provides to a TMT in pursuing company strategy. However, the literature also points to the possibility that some of the most critical HR decisions take place in executive suites without the input of HR professionals (Campbell et al, 2012).…”

“…With some exceptions (e.g., Welbourne and Cyr, 1999;Hope Hailey et al, 2005;Singh et al, 2012;Martin and Gollan, 2012;Sheehan et al, 2014;Chadwick et al, 2016), most studies of the so-called "black box" of the HRM -performance relationship focus upon HR practices (processes/systems/policies/strategies), rather than the role played by the HR department in making strategic HR decisions. On the other hand, the stream of research that focuses on the influence of HR department/professionals on strategic decision making on the board (e.g., Ulrich and Brockbank, 2005;Kelly and Gennard, 2007;Charan et al, 2015) tends to exclude a more indepth consideration of HR practices and their relationship to firm performance.…”