Executive Summary
The report has served as a piece of research for Barclays so that it can realise the importance of AI and its impact on strategic human resource management. The bank is one of the largest multinational banks in the UK, and it has more than 120000 employees in 40 countries around the world. Therefore, this report suggests and recommends its strategic HRM department as being UK HR Director for the bank; this report has been presented to the bank. The purpose is to find the impact of artificial intelligence and its various forms on strategic human resource management. As a methodology, implications of artificial intelligence on strategic HRM have been analysed critically, and Kurt Lewin’s Force Field Analysis has been applied to the bank. Moreover, Lewin’s model of change has been recommended for the bank to apply so that its human resource management department is ready to apply these changes. It is recommended that the bank should apply this change because innovation and increasing use of technology calls for the application of AI in the bank on an urgent basis. In so doing, the bank must be careful about its strategic HRM as it is vital in the success of a service organisation like Barclays.
Introduction
Artificial intelligence is one of the new concepts which is expected to transform the business field in future. There is evidence that it may affect all areas of business and organisations. Similarly, its effects on strategic human resource management are vital because, after the introduction of AI, the most affected area of an organisation would be human resource management. Strategic human resource management aims to increase the value of employees by taking perspective deep into the future. On the other hand, AI is there to affect employees because its basic concept is to get things done without human resources. Different forms of AI like weak or narrow AI, strong AI, reactive machines, robotics, and autonomous systems are expected to affect human resources. In the result, strategic human resource management is expected to be influenced by AI very much. This paper has been undertaken to find the impact of AI on strategic human resource management. To find the impact, the relationship is going to be studied on Barclays, which has presently employed 120,000 employees in its branches in 40 countries of the world. Therefore, it would be a very informative and useful discussion to study the relationship in connection with Barclays.
1.1 SHRM (Strategic Human Resource Management)
Traditional human resource management served the organisational function of recruiting, inducting, training and developing human resources to help the organisations to operate at their optimal level. Traditionally, HRM is also tasked with fulfilling the legal requirements related to compensation, hiring or terminating employment. Strategic HRM (SHRM) is a more expansive concept that takes the role of traditional HRM to a strategic level, where HRM is not just a support function for the organisation but plays a greater role. SHRM, therefore, does not work in a silo but is connected with all departments of the organisations intimately and helps them develop their workforce needs to develop an overall strategy for human resource management. It looks at the entire selection, training, and development process from a more strategic and long-term perspective for the organisation. By focusing on the company’s vision and mission and considering the transformations that are expected to come into effect within the organisation due to technological adoptions, the SHRM can help the organisation to attract and retain a workforce that has the relevant and updated skill set needed in a dynamic organisation.
1.2 What Is AI, Types and Forms
Artificial Intelligence of AI has made a foray into how organisations operate and serve their customers. With the advent of technologies like Big Data, which allows organisations to capture an enormous amount of data from both within and outside, and ‘Internet of Things’ which renders all human and device activity available to capture and analysis, there has been an unprecedented change in workplaces. Data analytics has gained a central and strategic role in almost all organisational functions. While on the one hand, the increased use of monitoring and data capturing devices is yielding exponential amounts of data, on the other hand, there is also a breakthrough in AI in the form the data is collated, analysed, used in decision making to create business insights. Also, increasingly, business processes are getting automated and supported by artificial intelligence. Business process automation is one area that finds the intensive application of AI and is often cited as a cause for alarm as according to some opinions, humans may become redundant in the future (Bhushan, 2018). Nevertheless, the AI the global spending recent data indicates that AI spending by organisations was $5.1 billion in 2017, a substantial increase from the $4 billion spent worldwide in 2015 (PWC, 2017). 79% of banking organisations included in Accenture’s Accenture Banking Technology Vision 2018 report stated that they believed AI to be working alongside humans within the next two years (PWC, 2017).
1.3 Brief Overview of the Tasks
This paper, therefore, aims to evaluate the pros and cons of AI as it gets increasingly deployed in the context of Barclays and to assess the role played by SHRM as AI gets assimilated in the bank. Task 1 of the paper discusses the scope of inclusion of AI in Barclays and also discusses the HR policy changes that may be warranted.
Task-1
AI and its Impacts on How Work is Done in the Banking Sector
Barclays is a multinational banking organisation that serves both individual customers and corporates across the globe. Barclays has transitioned to online banking operations and now delivers most of its services online, but there are also traditional banking operations. The customers can still visit the physical branches, which are also fully computerised and operate through intranet as well as Internet operations. There are branches of Barclays in 40 countries of the world.
With this backdrop, it is already evident that technology is playing a major role in the bank’s internal processes. The banking organisations are already adopting AI in the form of smarter chatbots that can help customers solve their basic problems, AI robots that can help customers avail of self-service at the banks, and also for providing customised and personalised services (He, 2017). AI enabled data capturing and analysis done at the bank end helps banks to offer customers specific and accurate service, for example, banks can now offer payment options based on their past behaviour while making purchases and tailored financial products to suit the specific demographic and personality of the customers (Stone, Neely & Lengnick-Hall, 2018). AI is also used to improve internal operational efficiency as well as making the banking system more secure and safe. ATMs use voice and face recognition AI and deep learning to detect fraudulent attempts and log analysis of online transactions can detect suspicious behaviour (Wright & Schultz, 2018).
How HR policies will change as a result of the introduction of AI
AI is expected to bring about a drastic change in the skills that become essential for banking personnel. These skills would include data science skills, and the ability to use AI tools and applications. The current workforce is not equipped to deal with the technology that will need to be installed to support service delivery using AI and machine learning applications. So, an immediate challenge for the HR would be to conduct a need analysis and develop focused training programs for the existing workforce, to ensure that employees do not become redundant and get laid off. However, the organisation would still need to make changes in its workforce and may require laying off of redundant workers (Chadwick, Super& Kwon, 2015). To facilitate such actions, the HR policies need to be amended to make the transition smoother for both the organisation and the workers as well as to ensure that any such actions fall within the law (Visvanathan, Muthuveloo & Ping, 2018). HR policies on compensation and salaries may also be required to be changed to accommodate the employees with new and improved skills. On a strategic level, HR policies need to be directed at attracting technical talent to the banking sector, so that people who are skilled at data science seek out the opportunity to work for the financial sector. SHRM initiatives can also help the company to partner with universities to sponsor and support data science courses to ensure that there is a constant supply of the talent pool (Smith, 2019). There are 120000 employees in different branches of Barclays who would be affected directly by shifting towards AI.
AI is also expected to change the organizational structure and communication patterns. Traditional chains of commands based on hierarchical structures may get dismantled as the flow of communication would become more open, multi-dimensional and free (Lindzon, 2018). A challenge for HR would, therefore, be to develop an organisational culture of trust, knowledge sharing, and valuing employees for their skills and abilities and not just positions (Wright, Nyberg & Ployhart, 2018). HR policies will also have to focus on hiring employees that provide a greater cultural fit to the organisation (Abdow & Ariri, 2018).
How the change will affect business strategy
The introduction of AI and the accompanying changes in the strategic HRM policies have wide implication for the business strategy. Barclays needs to focus on market penetration strategy with the help of its technological investments. It has already installed ERP for payroll and accounts management. It also outsources its customer-facing operations through a third party managed by a call centre. However, with market expansion and the addition of a large number of financial services and offers, there is a shift in the volume and scope of operations. This would require a business strategy that aims to focus on customer retention as well as market penetration.
Task-2:
Lewin’s Force Field analysis is used for evaluating the likelihood of change in the context of Barclays. To conduct the force field analysis of the for the case of AI implementation in the banking sector organisation, it is important to understand the basic theory. Lewin’s Force Field model postulates that in any given situation, there are both restraining and driving forces, but these are balanced and as such a status quo is maintained. Only when the driving forces, like internal and external pressures that push for change, become stronger than the restraining forces like fear of change, insecurities, and old habits, that a change can occur.
In the context of the implementation of AI in Barclays, therefore it is important to study the nature and magnitude of both the restraining and the driving forces.
External Driving Forces
The banking sector is poised to change drastically with disruption technologies like AI, machine learning, Big Data analytics. Adopting latest technologies are now a matter of survival as competitors with better AI enabled processes would be preferred by the customers, who themselves are becoming increasingly reliant on technology for the management of their personal and business activities. Banking organisations are expected to not only provide a safe and secure platform for customers’ financial transactions; they are also required to do so with a personalised focus on individual customers’ needs. Also, the competition is now global, where multinational banks can operate anywhere and compete with local banks. As such, it is important that the banks equip themselves for adopting AI and adapting to the changes that accompany (Hussain et al., 2018).
Internal Driving Forces
Some of the internal drivers of change are related to the growing redundancy of the traditional business processes which are ill-qualified to serve the ever-increasing demands of the customers that have global choice and access in the current day.
Restraining Forces
The most common factor that prevents change is an inherent reluctance to change the status quo, and to move away from current habits. Employees are often worried about an uncertain future and suffer from job insecurity, especially if the top management does not share adequate information. The top management too may be reluctant to adopt new changes due to its narrow vision or short-term orientation, where it may consider the costs required to be invested as high and may not take into account the long-term benefits of change. Resistance to change may also occur due to inadequate understanding of the technology and its usage or worries about its implication on safety and security (Hussain et al., 2018).
However, in the context of the banking sector, it is exigent that organisations embrace AI as the forces driving change are potent and powerful; and not making the change may lead to concerns of survivability.
Change Management Model for Implementation of Changes
The change management model that is recommended for the bank is Kotter’s Eight-Stage Model, as depicted in Figure 2 below:
Increase Urgency
A sense of urgency needs to be created within the workforce that can propel them to gear up for change. This urgency can be created by sharing market specific information related to competitors’ investing in new technologies, and customers’ changing behaviour and preferences, which make internal changes mandatory if the organisation has to survive.
Build a Guiding Team
The top-level management needs to show commitment by becoming a part of the team for change. Also, people who are well-respected and can influence others need to be made part of the guiding team to add credibility and relevance to the change management process.
Get the Vision Right
The top management needs to develop a vision of the future, where the new technology will empower employees, make them perform better and enable them to learn more and develop themselves for future roles.
Communicate for Buy-In
The vision and the accompanying strategy need to be communicated articulately and openly so that there are no misconceptions and employees get answers that they need. Communications can also help appease employee insecurities and clear the path for acceptance of the change.
Empower Action
Employees can be encouraged to adopt change through supportive mentoring and leadership and by providing them with suitable training and skill development opportunities. Also, performance appraisal and constructive feedback can guide them continuously.
Create Short Term Wins
It is important that employees’ adoption of the change process be recognised early on. Also, all small and big milestones need to be acknowledged and rewarded to keep morale up.
Don’t Let Up
The organisation needs to sustain the momentum through continuous vigilance against barriers to change, and by giving rewards for changed behaviour and constructive guidance in case of errors.
Make Change Stick
It is important to continue to develop a supportive organisational culture that can sustain the changed behaviours. This can be done by providing employees with reminders about the way new technology is shaping the business and how the employees continue to play a key role in sustaining the new business processes.
Task 3:
Recommendations:
The paper recommends Barclays to fully and perfectly embrace AI and all of its forms. It has been noted above that change management can easily happen at Barclays because it is already advanced in the field of technology. It has also been noted that the bank has a global presence and being technologically innovative and advanced, there would be plenty of opportunities for the bank. It is recommended that bank introduces the Lewin’s change management model. The stages of unfreezing, change, and refreezing is very easy to explain and discuss. Barclays should start this process by taking measures in strategic human resource management. Strategic human resource management should introduce the change, and it should ensure that the least number of its valued employees is affected by this change. The impact of AI on strategic HRM is inevitable, and there is no escape available for the bank. Therefore, it is recommended to get prepared for the introduction of the change.
Summary and Conclusion
The banking sector is facing unprecedented challenges as more data is being collected regarding the current customers’ transaction activities at diverse contact points – through their calls to call centres, through their online or mobile banking activities. In this paper, the discussion has been conducted on Barclays, which is one of the largest multinational banks of the UK. The bank is also able to obtain data and analytics from big data companies regarding target customer profiles and expected behaviour patterns and its correlates. All this information is processed using a back-end data analytics company that furnishes usable and actionable insights for the bank enabling it to develop suitable products and promotions. The need is felt to not only change and update the business processes and make them more effective and relevant but also to bring about a change in the organisational structure and communication and control systems that can help the organisation to became more efficient and flexible and hence responsive to the needs of its customers. The role of SHRM becomes crucial because banking organisations now need to hire technically skilled people, and SHRM is tasked with developing workforce planning for the long term. Personalised banking products, customised investment portfolios, personalised recommendations and targeted marketing are now creating a competitive advantage in the banking sector. These driving forces are expected to lead to the adoption of AI, and the change management can be supported using Kotter’s Eight-Stage Model of Change Management.
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