KNOWLEDGE MANAGEMENT PROJECT

TITLE: IMPLEMENTATION OF KNOWLEDGE MANAGEMENT IN HSBC

Under The Guidance of : Mrs. Teena Bagga Information Technology Faculty Amity Business School

Team Members: Aman Arora (B-25) Anuj Sood (B-32) Mohit Gupta (B-34) Sumit Kumar (B-41)

EXECUTIVE SUMMARY

Banking giant HSBC bills itself as the worlds local bank, a phrase no doubt intended to highlight the importance of local knowledge, combined with financial might that businesses need in their banking partners today. However, HSBC has had a chequered background with knowledge management (KM). For example, in 2002 it established a specialist unit to drive through a newly established knowledge-management strategy. One year and one management re-organization later and that unit had been disbanded in favor of a less centralized approach. But it certainly did not mean an end to KM at HSBC. Far from it. In the past, HSBC has undertaken such KM initiatives as knowledge audits and knowledge-capture projects, which were intended primarily to identify and download the knowledge, experience and wisdom of wise old heads before they left the business. Along with knowledge audit HSBC also used Knowledge caf and Peer assist for knowledge management. Just as knowledge-capture projects make many members of staff feel valued (because such initiatives reflect the value that the organization places upon their knowledge, skills and accumulated experience) so does the introduction of flexible working if it is done correctly, for the right reasons and staff are adequately supported.

TABLE OF CONTENTS

ABOUT HSBC CHALLENGES FACED BY HSBC STRATEGIES USED BY HSBC TOOLS AND TECHNIQUES USED BY HSBC BENEFITS TO THE HSBC KNOWLEDGE MANAGEMENT SUCCESSFUL IN HSBC

4 5 6 8 11 12

ABOUT HSBC
HSBC (abbreviation origin: the "Hongkong and Shanghai Banking Corporation") was founded in the former British colony of Hong Kong (in 3rd March 1865), it is a British multinational banking and financial services company headquartered in London, United Kingdom but founded in China. As of 2011 it was the world's second-largest banking and financial services group and second-largest public company according to a composite measure by Forbes magazine. HSBC is a universal bank and is organised within four business groups: Commercial Banking; Global Banking and Markets (investment banking); Personal Financial Services (retail banking and consumer finance); and Global Private Banking. It has around 7,500 offices in 87 countries and territories across Africa, Asia, Europe, North America and South America and around 100 million customers. As of 30 June 2010, it had total assets of $2.418 trillion, of which roughly half were in Europe, a quarter in the Americas and a quarter in Asia . The HSBC Group operates as a number of local banks around the world, which explains its advertising tagline "The World's Local Bank." In response to ongoing discussions about the survival strategies for banks, and the suggestion of "Living Wills" HSBC explains its structure as "separately incorporated and capitalised" the structure is based on a lead bank in each region .The hexagon symbol was originally adopted by The Hongkong and Shanghai Banking Corporation as its logo in 1983. It was developed from the banks house flag, a white rectangle divided diagonally to produce a red hourglass shape.

CHALLENGES OF KNOWLEDGE MANAGEMENT

Most often knowledge lies within an organisation implicitly, out of sight, undervalued and underused. Often, it leaves the building when the employees walk out of the company along with them. This is what is used in HSBC managing the flow of knowledge around an organisation, is a challenge. The Knowledge management process normally face six challenges at each stage of the process flow and failing to complete all these tasks in HSBC ability to use its knowledge assets to its best advantage. The six challenges are as follows: a) Knowledge Acquisition: HSBC has implemented and began KA as part of the drive to build knowledge-based systems, and was a line of research devoted to developing methods and software tools to provide knowledge content for such systems. The challenge here is to get hold of the information that is around, and turn it into knowledge by making it usable. This might involve, for instance, making tacit knowledge explicit, identifying gaps in the knowledge already held, acquiring and integrating knowledge from multiple sources (e.g. different experts, or distributed sources on the web), acquiring knowledge from unstructured media (e.g. natural language or diagrams). Knowledge acquisition (KA) is a field which has reached a certain level of maturity. b) Knowledge Modelling: Modelling bridges the gap between the acquisition of knowledge and its use. Knowledge model structures must be able to represent knowledge so that it can be used for problem-solving. HSBC needs to acquire not only knowledge but also to model that knowledge into the industry required format. c) Knowledge Retrieval: When a knowledge repository gets very large, finding a particular piece of knowledge can become very difficult. There are two related problems to do with knowledge retrieval. First, there is the issue of finding knowledge again once it has been stored, understanding the structure of your archive in order to navigate through it efficiently. And second, there is the problem of retrieving the subset of content from the repository that is relevant to a particular problem. This second problem, the dynamic extraction of knowledge from a repository, may well set problems for a knowledge retrieval system in HSBC that alter regularly and quickly during problem-solving. d) Knowledge Reuse: One of the most serious impediments to cost-effective use of knowledge is that often knowledge bases or systems are constructed afresh. It is unusual for problem-solving experience or domain content to Knowledge Management: Why Do We Need It for Corporates 43 be acquired and then reused, partly because knowledge tends to require different representations depending on the problem-solving that it is intended to do. HSBC understands the use and application of knowledge would enable more leverage to be gained from the knowledge already at hand, thereby increasing the returns on the investment in those knowledge assets.

e) Knowledge Publishing: The challenge of publishing or disseminating can be described as getting the right knowledge, in the right form, in the right place, to the right person, at the right time this is what HSBC is trying to implement. Different users will require knowledge presented and visualized in different ways, and the quality of such presentation is not merely a matter of preference, but can radically affect the value of the knowledge to the user. Getting presentation right will involve understanding the different perspectives of people with different agendas, while an understanding of knowledge content will help to ensure that important related pieces of knowledge get published at the appropriate time. f) Maintenance: The last challenge for HSBC is to keep the knowledge repository functional. This may involve the regular updating of content as content changes (e.g. as price lists are revised). But it may also involve a deeper analysis of the knowledge content. Some content has a considerable longevity, while other knowledge dates very quickly. If a repository of knowledge it to remain active over a period of time, it is essential to know which parts of the knowledge base must be discarded and when. Other problems involved in maintenance include verifying and validating the content, and certifying its safety.

STRATEGIES USED BY HSBC

KM strategies in HDFC include: using simple mechanisms (such as training programs and seminar series), using technology, using frameworks or process-based models (including concept mapping), and using communities of practice to capture and share knowledge. Simple mechanisms, including training sessions, workshops, mentoring/apprenticeships, and interviews, were implemented in 6 studies . Some of the training programs are virtual or webbased , however, others are delivered face-to-face because it is believed to be an essential component of training programs. Implementing a seminar series was another dominant KM approach; for example, managers and/or employees are interviewed by their peers with the goal of retaining the knowledge of "experts" who are planning to leave their current organization. Other seminar series included a number of classes where group work, problem solving, and coaching occurred in interactive settings. KM is frequently positioned as being comprised mainly of efficient and effective information technology (IT) and ICT systems . For this reason, using technology systems (and communication technologies) is a key element that is incorporated into KM initiatives in HSBC. While details of each technical system vary, the overarching purpose of technology systems is to organize, codify, distribute, and maintain knowledge resources. The

predominant focus of many KM strategies is on technology and management of explicit and tacit forms of knowledge. Another framework in HSBC introduced the concept of mapping out knowledge, routines, capabilities, and inertia as a tool to advance KM in an organization or unit. The fundamental idea behind this is that latent resources (dormant, but capable of development) are mobilized by managerial or legislative/environmental elements, and that different ratios of active to latent resources, routines and capabilities can have different degrees of adaptability. Another framework in HSBC introduced the concept of mapping out knowledge, routines, capabilities, and inertia as a tool to advance KM in an organization or unit. The fundamental idea behind this is that latent resources (dormant, but capable of development) are mobilized by managerial or legislative/environmental elements, and that different ratios of active to latent resources, routines and capabilities can have different degrees of adaptability. In stable contexts, organizations that are more adaptable will also be more flexible and responsive, whereas less adaptable organizations are more "lean" (or efficient) but have a limited portfolio of resources to draw on (i.e., more prone to the status quo). Others have used the mapping concept (e.g. "Capabilities Map", and "Levels of Learning Progression Map") as a process that can capture knowledge-oriented practices. Another concept often considered a useful KM strategy, and heavily discussed in the , is Communities of Practice (CoP) . Communities can vary in format (virtual/face to face), and HSBC has three main underlying structures: Domain (the sphere of knowledge and expertise held by members) Community (relationship, affinity, and the sense of belonging among members) Practice (the common set of frameworks, ideas, and tools members share in their work context) The objectives of the CoP are aligned with the host firm's strategic purpose .Each CoP has a Leader or Moderator who spearheads defining the objectives of the CoP and maintaining the focus of the community .In addition, there is a Core Team who assists the Leader by developing activities and workshops in collaboration with the Leader. The active members each bring their own role, knowledge and expertise to the community .

TOOLS AND TECHNIQUES USED BY HSBC

1) Knowledge audits
Knowledge audits help organizations identify their knowledge-based assets and develop strategies to manage them. Developing a knowledge-sharing culture helps HSBC to change process on the way to better organizational performance. To achieve that change, HSBC needs a vision of where it wants to be and an accurate picture of where it is nowthat is, its current reality. A knowledge audit is one way of taking that picture. A Knowledge audit is a practical way of getting to grips with "knowing what you know". It identifies owners, users, uses and key attributes of core knowledge assets. Objectives of using Knowledge Audits in HSBC To give a high-level view of the extent, nature, and structure of the knowledge in a specified section; To provide meaningful hard data input to the strategic plan for knowledge processing; To identify the relevant knowledge repositories within the organization; Implementation of Knowledge Audit in HSBC To achieve the above objectives, a step by step approach was adopted by HSBC while undertaking the knowledge audit, details of which are as under: 1. Identified what knowledge currently exists in the targeted area HSBC determined existing and potential sinks, sources, flows, and constraints in the targeted area, including environmental factors that could influence the targeted area HSBC identified and locate explicit and tacit knowledge in the targeted area HSBC build a knowledge map of the taxonomy and flow of knowledge in the organization in the targeted area. The knowledge map relates topics, people, documents, ideas, and links to external resources, in respective densities, in ways that allow individuals to find the knowledge they need quickly 2. Identified what knowledge was missing in the targeted area HSBC done a gap analysis to determine what knowledge was missing to achieve business goals HSBC determined who needs the missing knowledge 3. HDBC provides recommendations from the knowledge audit to management regarding the status quo and possible improvements to the knowledge management activities in the targeted area. What a Knowledge Auditor Does in HSBC A Knowledge Auditor does not attempt to develop a comprehensive inventory of knowledge assets, but works on the basis of developing a prioritized list of assets. These are identified by analyses of core business processes and critical management decision areas. Analysis of key documents e.g. plans, process models and descriptions Analysis of current information systems

 Interviews with representative cross-section of staff Information requirements questionnaires Analysis of information and knowledge flows Development of knowledge maps Creation of an action plan. Knowledge analysis methods used by Hsbc in the Knowledge Audit 1. Questionnaire-based-To obtain broad overviews of knowledge surveys: an operation's knowledge status. 2. Task environment analysis-To understand, often in great detail, which knowledge is present and its role. 3. Basic knowledge analysis-To identify aggregated or more detailed knowledge. 4. Knowledge use and requirements-To identify how knowledge is used analysis: for business purposes and determine how situations can be improved. 2) Knowledge cafe Through knowledge cafe HSBC brings people together to have open, creative conversation on topics of mutual interest. It can be organized in a meeting or workshop format, but the emphasis should be on flowing dialogue that allows people to share ideas and learn from each other. HSBC encourages people to explore issues that require discussion in order to build a consensus around an issue. The knowledge cafe brings to the surface, in an informal environment, all the understanding we have in an area. How HSBC runs a knowledge cafe A simple and recommended method that works well involves the following steps: 1. Preparation for a knowledge cafe

HSBC appoint a facilitator someone who can encourage participation. Identify a question relevant to those participating. Invite interested parties. Create a comfortable environment a caf layout, with a number of small tables, supplied with tea and coffee, is one option. 2. During a knowledge caf

The facilitator should introduce the knowledge cafe concept, any codes of conduct, and finally pose the question. Participants should arrange themselves into groups to discuss the question. Each participant in turn shares their knowledge and experience without interruption, giving everyone an opportunity to talk. Alternatively, a talking-stick can ensure only the person holding the stick can speak, thus avoiding the discussion becoming dominated by one or a few speakers. After each participant has shared, the group continues the discussion together. The groups should eventually reconvene to exchange ideas and findings these could be captured electronically or on paper.

3. After a knowledge cafe The real value of a knowledge cafe is what people take away with them in their heads, and the new connections they have made with people. Sometimes HSBC recorded the knowledge cafe making sure to avoid disrupting or influencing the conversation the information may be distributed to participants after the session. Remember, a knowledge cafe is not a talking shop. Turn-taking is important. If everyone is encouraged to have their say, a natural and stimulating group discussion should evolve, and good ideas wont be long coming.

3) Peer assist HSBC use a peer assist to gather knowledge and insight from other teams before embarking on a project or activity. It partners those seeking assistance receivers with a peer or group of peers who have expertise in a desired area. HSBC used peer assist at last from an hour to a full day depending on the size of the project. Benefit of using Peer Assist in HSBC Talking to experienced peers about the best way to approach new projects saves time and money and avoids repetition of mistakes. It also creates strong links across teams and relationships between people. How HSBC implement peer assist? A simple method that works well involves of the following steps: Appoint a facilitator HSBC appoint someone from outside the team who will ensure the participants achieve their outcomes. Select the participants HSC choose participants who have diverse knowledge, skills, and experience. There is no hard and fast rule about minimum or maximum numbers but the right participants are particularly important.

Share information HSBC divide the meeting time into four parts:

Clarify purpose HSBC presents the background and objectives of the project or task they are about to begin. They should also say what they hope to achieve in the peer assist.

Encourage the peers to ask questions and give feedback The peers discuss the receivers situation and share ideas and experiences. The receivers should simply listen. Analyze whats been heard This is the main part of HSBC, analyze and reflect on what they have learned and to examine options. The peers should take a back seat. Present the feedback and agree actions The peers present their feedback to the HSBC analysis and answer any further questions.

BENEFITS TO THE COMPANY

The primary purpose of KM as efficiency and productivity is achieved through the reuse and sharing of experience and know-how. Often overlooked is the potentially more important goal of promoting quality of work product and practitioner training that can be shown to increase the value of the client service. In fact, knowledge management can serve a wide variety of purposes, effective knowledge management pays off in fewer mistakes, less redundancy, quicker problem solving, better decision making, reduced research development costs, increased worker independence, enhanced customer relations, and improved service . Among the many possibilities, HSBC considers the following : Productivity and efficiency Knowledge sharing, skill development, and training Competitive advantage, including market visibility as a high-tech firm Ability to direct work to skilled specialists Consistency of work product across offices or practice areas Faster delivery times Quality control Reduced frustration searching for documents Client collaboration

KNOWLEDGE MANAGEMENT SUCCESSFUL IN HSBC

Success in Behavioural and Cultural Traits in HSBC after implementation of KNOWLEDGE MANAGEMENT Individuals working in HSBC are not afraid to ask others for inputs. Management is careful to not blame individuals. Problems can be technical or. If technical, solutions are sought and corrections implemented. If human, management explores how it can change the situation through its own behaviour, education, staffing, or perhaps by changing the operation itself. Knowledge Management successful in HSBC Helped in making a e-directory. Through knowledge audit, HSBC was able to introduce an electronic expertise location tool. HSBC successfully has now created opportunities for UK Businesses through knowledge sharing and facilitating connections Their 'Business Thinking' initiative connects forward looking businesses with each other and with businesses across the World (through 'thought exchanges'). Their online Knowledge Centre provides over 500 pages of insightful information to help businesses plan and grow. In HSBC, with the implementation and success of Knowledge Management, Knowledge Sharing and Learning were made possible, due to which the people working at HSBC can Post Research Online Conducting After-Action Reviews Conduct Peer Assists Knowledge Storage Assessing the Effectiveness of Assistance in Capacity Development Monthly Progress Notes Conducting Exit Interviews

Following are some steps that were crucial to the success of a KNOWLEDGE MANAGEMENT initiative: Provide rewards and recognition. Some individuals perceive that it is in their interest to hoard knowledge because then they come to be recognized as experts and indispensable resources. To make KNOWLEDGE MANAGEMENT successful, such behaviour must be changed. New incentives need to be put in place. Incentives do not need to be in the form of direct financial compensation: Visible recognition across an organization as an expert who contributes his or her knowledge may be incentive enough. Implement in phases. . Rushing an organization into radical changes is not the way to succeed. Breaking the initiative down into manageable phases is a better way to implement KNOWLEDGE MANAGEMENT.

Recent case study on HSBC HSBC adds quartet of US law firms to knowledge-sharing venture Bank moves to boost access to US legal data with KNOWLEDGE MANAGEMENT venture banking giant HSBC has added four US firms to its knowledge-sharing venture in a bid to improve its understanding of the US legal market. White & Case, Cleary Gottlieb Steen & Hamilton, Wilmer Hale and New York State law firm Phillips Lytle have been added to the bank's in-house Smart Search database - taking the roster of firms sharing their know-how with the bank to 17. Smart Search, which allows HSBC's legal team to access legal know-how and precedents at panel firms, now comprises magic circle firms Linklaters, Clifford Chance, Fresh fields Bruckhaus Deringer and Allen & Overy (A&O) and City firms SNR Denton, Norton Rose and CMS Cameron McKenna. Other firms signing up to the database in the last two years include Wragge & Co, Eversheds, Pinsent Masons, Australia's Dibbs Barker and offshore firm Ogier. Mayer Brown became the first US firm to sign up in 2009. All the firms which are part of the knowledge-sharing venture also hold a position on one of HSBC's legal panels, but it is understood that firms are given extra incentives to join the knowledge-sharing database, including guaranteed work levels. One adviser commented: "In order to gain access to a firm's know-how and precedents, clients have to provide us with incentives to do so. This can include arrangements whereby a firm will be used exclusively in particular areas, as well as a guaranteed amount of work over

a certain period."

HSBC online platform offers business resources, including SWOT analysis, marketing HSBC Bank Malta has launched the Knowledge Centre, a free online resource for entrepreneurs, managers and business owners, offering practical help to people seeking to establish new ventures or in managing operations. The Knowledge Centre, at www.knowledge.hsbc.com.mt, provides a free, user-friendly check list for business owners. It invites them to honestly appraise their strengths and weaknesses and analyse whether they have the skills and determination required, as well as the support they need to achieve their goals. HSBCs Knowledge Centre provides hands-on information on how to design a business plan and how to research the market. Other features include articles which can help people determine where to set up their firm, the size and the type of the office, the different types of tenure and the costs and factors involved in the search process. There are also tips on adoption of sales strategies and practical information on all aspects of finance, including profit-and-loss accounting, the balance sheet, cash flow statements, profitability and budgeting, and advice on how to select an accountant. Other facilities within the Knowledge Centre focus on recruitment advice, marketing tips on planning and strategy, measurement and competitiveness. Sound and reliable advice is a necessary tool for business owners, HSBC Maltas head of commercial banking Michel Cordina stressed. HSBC Bank Malta, with its trained experts and international expertise, is well positioned to offer such advice to prospective business owners and enterprises. The Knowledge Centre is our way of offering more practical and readily available information to enterprises. The Knowledge Centres management and start-up briefings and checklists are provided by BHP Information Solutions, a network of 400 leading experts providing independent information of premium quality.

References: http://www.adb.org/Documents/Information/Knowledge-Solutions/Building-a-LearningOrganization.pdf http://www.legalweek.com/legal-week/news/2030097/hsbc-adds-firms-knowledge-sharing-

venture http://www.itworld.com/060131Knowledge Management http://www.timesofmalta.com/articles/view/20110821/business-news/HSBC-online-platformoffers-business-resources-including-SWOT-analysis-marketing.381120