Academic journal article Journal of Management Research

Organisational Strategic Human Resource Management - the Case of Lehman Brothers

Academic journal article Journal of Management Research

Organisational Strategic Human Resource Management - the Case of Lehman Brothers

Article excerpt

Abstract

The emergence of the subprime mortgage crisis - an ongoing economic problem of contracted liquidity in the global credit markets and banking system, in the U.S. has wracked the operations of Lehman Brothers tremendously as their finances were dealt with a huge blow. Continuous hardcore influence of the external environment has further pressurised the human resource aspect of Lehman Brothers. Indefinite effects such as layoff backfire, workers' dissatisfaction, and employment law issues were faced by the once high-flying investment bank. This paper looks at the influence of the external business environment on the human resource management activities using Lehman Brothers as a short case study. The organisational strategic human resource management application is explored and recommendations are presented on how organisations can address human resource challenges from the business environment.

Keywords: Organisational strategic human resource management, Lehman Brothers

1. Introduction

Lehman Brothers Holdings Inc., founded in 1850, is a highly diversified global financial services firm based in the U.S. (New York Stock Exchange, 2008). As an innovator in global finance, Lehman serves the financial needs of corporations, governments and municipalities, institutional clients, and high net worth individuals worldwide (Lehman Brothers, 2008). With a long-established reputation for excellence, Lehman is undeniably one of the most pre-eminent franchises in the global equity market.

Yet, it is arguable that the once high-flying investment bank is currently facing its toughest moment since its listing on the New York Stock Exchange Index in 1994 (Anderson & Dash, 2008). The emergence of the subprime mortgage crisis - an ongoing economic problem of contracted liquidity in the global credit market and banking system, in the U.S. has wracked the operations of Lehman tremendously as their finances were dealt a blow. The undervaluation of real risk in the subprime market would eventually lead to cascades and ripple effects affecting the global economy in which this pre-eminent franchise should be crucially aware of as they operate multinationally. Ultimately, Lehman has been force into a lay off for 1500 workers - 6% of Lehman's workforce (Boyd, 2008).

It is undeniable that the continuous hardcore influence of the external environment would further pressurise the human resource aspect of Lehman. Indefinite effects such as layoff backfire, workers' dissatisfaction, and employment law issues would be some potential affairs in which Lehman would be facing. Hence, essential management theories and concepts ranging from analytical framework of Jackson and Schuler's (1995) and Kochan and Barocci (1985) to internal human resource management (HRM) practices of Human Resource Planning and Workplace Participants' Rights and Responsibilities can be exercise to address the intimidating threat faced by Lehman. Accordingly, this paper attempts to shed some light on the organisational SHRM application and the recommended organisational HRM response in the case of Lehman Brothers. Insights from this paper will provide organisations and human resource decision makers with informed insights on the application of SHRM and a clearer picture on its application using a short case study.

2. Discussion

Following the event of the subprime mortgage crisis, Lehman has been forced into a rethink of the way in which their organisation is managed. Strategic Human Resource Management (SHRM) and HRM has been one of the major developments of this rethinking process.

3. The Organisational SHRM Application

Jackson and Schuler (1995) suggest that the adoption of an organisation's particular HRM practices, policies and philosophies and, subsequently, organisational performance are resulted from the various macro-level environmental influences. It was obvious in the context of Lehman that they should opt for the practice of organisational rightsizing in response to the derailing economic environmental condition (Blumberg, 2008). …

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