E-Commerce, Human Resource Strategies, and Competitive Advantage: Two Australian Banking

Case Studies
Author(s): Yvette Blount, Tanya Castleman and Paula M. C. Swatman
Source: International Journal of Electronic Commerce, Vol. 9, No. 3 (Spring, 2005), pp. 73-89
Published by: Taylor & Francis, Ltd.
Stable URL: http://www.jstor.org/stable/27751155
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Human

E-Commerce,

Resource

Two Australian

Competitive Advantage:
Banking Case Studies

Yvette Blount, Tanya Castleman, and Paula M.C.

ABSTRACT:

Service

need

organizations

and

Strategies,

to consider

in

Swatman
the human

depth

resource

man

agement (HRM) strategies thatwill enable them toachieve sustained competitiveadvan

tage in the e-commerce era. This paper analyzes the HRM strategies developed to
accommodate

the changing

customer

service

practices

associated

B2C

with

e-commerce

in the retailbanking sector. Based on case study data, itdescribes how two banks in
Australia,

one

large,

the other

small,

have

linked

their e-commerce

strategies

with

their

overall business strategy,and theextent towhich theirHRM strategies have helped them
to utilize

their e-commerce

KEYWORDS

capability

to achieve

sustained

competitive

advantage.

AND PHRASES: Banking industry,

e-commerce, human resources.

E-commerce technologies have provided service industries with the ability to

cut costs and offer additional services to customers. In the retail
banking in
are
now
a
customers
to
24
able
do
their
hours
dustry
day seven days
banking
a week
and
Internet.
the
the
service
Electronic
(24/7) using ATMs,
phone,
channels
have
face-to-face
channels
like the
delivery
progressively replaced
local branch for a significant proportion of B2C banking activities. Given the
increasingly ubiquitous nature of the Internet, it is important for banking or
ganizations to consider how best to use e-commerce and other new technolo
gies to strategically position themselves in themarket.
The introduction of e-commerce technology affects both theway employ
ees work and how they relate to customers when their interactions with them
are mediated,
replaced, or constrained by technology Despite themany ben
efits itoffers banks and other service organizations, the introduction of e-com
merce has created new and often
unexpected challenges in theway staff interact
with

customers.

As

customers

out many

(ifnot most)

Service

Industry,

embrace

e-commerce

technologies

and

carry

of their transactions on-line, there is less need to use

the branch network for day-to-day banking activities. This has given rise to a
new competitive environment inwhich firmsmust
develop new and effective
business strategies for sustainable growth.

Competitive

Human

Resources,

and

Advantage

The developed world has experienced a major shift in employment toward

are consid
service industries and white-collar
jobs [12,16, 27]. Organizations
new
to
how
their
in
the
services
service
of
the
economy
ering
improve
delivery
and how it affects employees [14].As technology has become more pervasive,
the structure of interactions between customers and providers has changed.
International JournalofElectronic Commerce / Spring 2005, Vol. 9,No. 3, pp. 73-89.
Copyright ? 2005 M.E. Sharpe, Inc.All rights reserved.
1086-4415/2005 $9.50 + 0.00.

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74

BLOUNT, CASTLEMAN,AND SWATMAN

Gutek argues that interactions with an organization

two ways [14]:

can take place

in one of

as a "relationship" where the customer and organization know each

other and have ongoing contact (e.g., frequent interactions with
a
or with one's accountant)
employees in local office
as an "encounter" where customers may know the organization but
is available at the time (e.g.,
receive the same service fromwhoever
an
a
a
or
transaction at a large branch office)
inquiry to call center
This is an important distinction because it raises questions about how em
ployees interact with customers in these different situations. Organizations
whose dealings with customers are based on face-to-face communication must
to an on-line
their employees when moving
develop new ways tomanage
environment and must consider inmore detail the qualities they need to de
velop in their human resources [4,16]. They need to integrate theirHR prac
tices with their business strategy if they are to significantly improve business

performance and gain competitive advantage.

Integration may be achieved
an
measures
as
such
HRM
through
including
specialist on the top manage
ment team, ensuring that linemanagers have HRM responsibility and account
to the development
the contribution of HRM
of
ability, and recognizing
business strategy [16]. Intangible assets such as the capabilities of theworkforce
will become increasingly important to such organizations
[3, 27]. If an organi
zation does not give due emphasis to human resource strategies, investment
in technologies such as e-commerce may not give it the
competitive advan
it
seeks.
tage
The banking sector, long at the forefront of technological development,
is
an important
in
one
which
to
these
it
is
in
because
issues,
industry
explore
which the many advances
in information technology and communications
have facilitated major restructuring ofwork [7,12]. The research discussed
in
this paper was concerned with the e-commerce technologies used for retail
banking activity in the B2C market, including ATMs, phone banking, EFTPOS
(electronic funds transfer point of sale), and Internet banking [13]. Research
on the banking sector will have
implications formany other industries that
deliver services and implement e-commerce technologies affecting interac
tions with customers.

Approaches

to HRM

and

e-Commerce

Strategy

A clear business strategy is critical ifan organization implementing e-commerce

technology is to reap the benefits it offers, such as increased customer value.
Porter, in an influential article, argued that an organization could gain two types
of benefits from the Internet: operational effectiveness (efficiency) and strategic
or distinctiveness in themarket [20].As all
positioning
competitors are capable
of achieving operational efficiency in time, this is not a differentiator. Only stra
tegic positioning can deliver sustainable competitive advantage. Unless it tai
lors its Internet and other on-line strategies to itsbusiness strategy,an organization
may not be able to sustain its competitive advantage.

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INTERNATIONAL JOURNALOF ELECTRONIC COMMERCE

75

For service industries whose product involves personal interaction, strate

gies to achieve competitive advantage inevitably involve employee manage
ment. Several authors have addressed
the relationship between information
technology and employment relations, but there has been little research atten
IT has been linked to a variety of employ
tion to e-commerce applications.
ment outcomes. Zuboff, for instance, argued that information technologies
could be used to empower employees, enrich the employment experience,
and make organizations more flexible [26]. In short, the introduction of new
technology to theworkplace enables an organization to become "informated,"
because
technology provides the data employees need to analyze and con
ceptualize information, thereby adding to the firm's store of knowledge and
making their jobs more meaningful. This gives employees an opportunity to
add value to the organization's products and services. Zuboff argues that a
to harness the
comprehensive organizational
strategy needs to be developed
intellectual capability new technology facilitates to exploit an organization's
[26].
competitive advantage
The same basic technologies can be used to replace jobs with automated
the range of duties per
processes, outsource them, deskill them, or widen
formed in a role to increase employee output [6]. Any combination of these
possibilities should be managed
through theHR function. Employee motiva
tion and commitment are important components in developing an HRM strat
for service-delivery
workers who present
the
egy [22, 27], especially
to
face
its
customers.
motivation
and
commitment
organization's public
High
lead to low absenteeism and turnover, good morale, and a willingness
to learn
and be flexible [12, 22]. Organizations
need to findways tomanage
the em
to provide the
ployment relationship so that their employees are motivated
and
interaction
customers
Without
support
expect.
appropriate support and
are
to
management,
employees
likely provide poorer service to customers [27].
The link between a service organization's strategic approach to e-commerce
technology incorporating its strategic approach toHRM and the implications
for competitive advantage has not yet been well researched. An examination
of the experience of banks can offer useful insights on this issue.

The Competitive

Banking

Environment

inAustralia

The banking and finance industry inAustralia has been transformed by the
introduction of information technology and by changes in the external envi
ronment [23]. Relationships between customers and banks have also
changed.
The banking industry has traditionally been an early adopter of technology,
driven by the managerial
objectives of increasing efficiency, improving the
level of service offered, increasing flexibility, improving control over opera
tions, and reducing operating and labor costs [1, 6, 9]. Workforce size was
reduced as the labor process became more efficient and career paths started to
a mix of
[9]. These developments
disappear
produced
positive and negative
or
the
of
enrichment
consequences:
informating
jobs suggested by Zuboff and
the job deskilling and reduction described by Child [6, 26].

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76

BLOUNT, CASTLEMAN,AND SWATMAN

In the early 1980s, Australia's

to deregulate the
federal government moved
sector.
This
intensified
the
competition, opening
banking
industry to new en
trants from other countries as well as new national competitors. Deregulation
also meant thatAustralian banks were able to enter foreign markets and pro
vide services to customers unrestricted by geography Technology has played
an important role in these changes by eroding barriers to entry and allowing a
more diverse range of competitors to enter themarket. It has given banks the
ability toprovide new services and offer existing services more efficiently [10,18].
There have been significant shifts in the customer nexus since the early
1990s. B2C e-commerce technologies have removed the need for personal in

teraction and have given banks the opportunity to shift customers from the
branches to alternative service-delivery channels. At the same time, banks
have introduced fees, rationalized
their branch networks, and reduced the
number of people they employ. During the 1990s, this equated to a 25 percent
reduction in branches and a 20 percent reduction in full-time employees
[10].
Bank customers have become more sophisticated in their use of
technology
[17]. On the other hand, they have also become more demanding?expecting
goods and services tailored to their needs but not willing to pay premium
satisfaction with banks has suffered in consequence,
prices [16]. Customer
and many customers have been vocal in their criticism of the loss of facilities
such as their local branch [24]. Although banks sell themselves as attractive
and reputable organizations
to customers, a greater
offering relationships
are now electronic,
of
the
interactions
and
between
bank
customer
percentage
and these exchanges are more likely to be
as op
"encounters"
perfunctory
to
are
customers
more
much
inclined
to
posed
"relationships." Paradoxically,
use e-commerce channels, but many still believe that a
with
their
relationship
bank is desirable and resent branch closures.
customers with
Banking institutions now face the challenge of managing
whom they never (or rarely) interact on a personal level and of
trying tomain
tain their loyalty without the traditional branch-based
relationship [8]. Be
cause they offer individual financial advice, banks want to understand
their
customers and use that
a basis for
as
their
relation
understanding
managing
ships with them, retaining them, and selling them financial products and ser
vices [8,p. 96]. The use of e-commerce channels, however, is a
limiting factor,
because there are fewer opportunities forbranch
to
sell
other prod
employees
ucts and services, particularly themore
services
and
complex, higher-margin
products, to on-line customers [2, 11, 24].
These competitive pressures raise questions about the way organizations
theirHR capability. Employees are vital for the bank's service culture
manage
and strategic positioning, and changes in a bank's
technology can have a sig
nificant impact on its personnel. The research reported in this paper
explored
to these pressures and addressed HR issues to deal
how banks responded
with the implementation of e-commerce tomaximize potential gains.

Research

Method

The research approach was largely exploratory but was guided by the con
ceptual perspectives discussed above. A multiple case study approach was

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INTERNATIONALJOURNALOF ELECTRONIC COMMERCE

77

selected to enable comparison and contrast between banks with different

market positions and business strategies, focusing on two cases [25]. The first
case, Australian Union Bank (AUB),1 has grown rapidly from a small bank
bank with a national presence. It em
located in one state to a medium-sized
250
around
and
workers
has
2,000
points of representation around Aus
ploys
tralia and 850,000 customers.
The second case, Lawson Central, is one ofAustralia's
fourmajor banks. It
in Australia, New
has more than 20,000 employees
and operates mainly
more
and
the
Pacific
than
Zealand,
1,200 points of representation.
through
This includes branches as well as agents attached to small businesses
in
areas
in
and
rural
It
in
Australia.
also
maintains
fi
offices
regional
major
nancial centers around theworld. The bank currently has more than 7 mil
lion

customers.

The research data consisted of in-depth, semi-structured interviews with

33 key respondents and documentation relating to each bank's strategies, poli
cies, and procedures relevant to e-commerce implementation. The interviews,
which lasted at least one hour, were designed to elicit in-depth responses and
included such questions as "What is the e-commerce strategy of the bank as
you understand it?" "What do you see as major challenges for the futurewhen
dealing with customers?" and "How has your role evolved over the last 12
months?" To include as many perspectives and experiences as possible, inter
view participants were selected at different levels of the organization and from
various functional areas. They included human resources managers, branch
employees, information systems employees, senior managers, and electronic
banking specialists. Semi-structured field interviews were chosen to obtain
the descriptive data required. Interviews with employees were conducted in
the two banks between February 2002 and March 2003.
In theAustralian Union Bank case
study, therewere two rounds of inter
views a year apart. The first round of interviews, designed as a pilot, identi
fied the specific issues that warranted
further investigation. In this phase,
therewere 10 interviews with 16 participants. The Lawson Central Bank in
terviews and the second round of interviews inAUB followed up with more
focused questions. The second round of interviews at AUB involved six inter
views with seven interviewees. The Lawson Central case study consisted of
eight interviews with 10 participants. All the interviews were conducted on
site as close as possible to the respondent's place of work. This made
itpos
sible to obtain data in context by providing
additional
background
information, such as the physical work environment, and enabling the re
searchers to take note of work processes and of interactions between work
team

members

and

managers.

The interview transcripts were analyzed using Kvale's meaning condensa

tion approach
in interview data and
[19], which looks for natural meaning
then teases out and explains themain themes. This approach encourages the
researcher to keep an open mind by exploring the experiences of employees
in depth to obtain a sense of how issues are being dealt with in practice in an
inclusive, iterative case studies that
organization. Both are multi-perspective,
took account of the responses to the tentative research conclusions by a repre
sentative from each organization.

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78

BLOUNT, CASTLEMAN,AND SWATMAN

Australian Union Bank: Hearts

Minds Relationships

and

Bank (AUB) has a strong reputation in the market as an

organization offering traditional relationships with its customers and the com
munity. The bank's competitive strategy, in thewords of one senior manager,
was to capture the "hearts and minds" of its customers so that
they would
remain loyal as e-commerce technologies become more prevalent. AUB ac
thatmore customers would use electronic banking over the com
knowledged
Union

Australian

ing years, and thus there would be less interpersonal contact with most of
them. This suggests a move away frommostly relationship-type interactions
tomore encounter-type interactions [14]. AUB believed (and customer satis
faction surveys supported this view) that itoffered better service and reputa
tion than other banks and therefore was likely to retain its customers. If, as
AUB predicts, more customers choose electronic service-delivery channels,
and the predominant customer experience becomes an encounter rather than
a
relationship, customers may not exhibit the same degree of loyalty the bank

currently enjoys.
Consistent with this approach, AUB was expanding
its branch network
and workforce. There was no policy of using
to
reduce labor costs,
technology
and its e-commerce service-delivery channels existed primarily to give cus
tomers alternative service-delivery options rather than to
migrate customers
out of the branches or to automate
jobs. AUB believed that its key competitive
advantage was its reputation for face-to-face relationships with customers in
the branches, which the bank saw as unique in themarket and its chief com
petitive advantage. AUB used ATMs, phone banking, and Internet banking to
expand customer service, largely in response to customer demands, and did
not implement them to secure operational effectiveness or
gain strategic com
It used e-commerce as a marketing
tool to attract new
petitive positioning.
customers, particularly small and medium-sized
enterprises (SMEs). AUB
employees reported that personal customers who owned SMEs would only
move
their business banking to AUB ifAUB could provide them with the
same electronic business
functionality as their current bank. This suggests that
SMEs do not find the brand and reputation ofAUB to be an
adequate reason
to change from their current bank.
the
Apparently
relationship characteristic,
on its own, does not motivate an SME to
change providers.
Although successful in terms of customer experience and business perfor
mance,

AUB's

e-commerce

strategies

were

largely

reactive.

For

example,

on

line applications for home loans, personal loans, and credit cards were made
available on theWeb site in response to customer demand, but these func
tions were not fully integrated into the bank's business processes.
Applica
tions had to be printed and rekeyed into the loan application system, and the
process had a three-business-day turnaround, no faster than when the appli
cation was made at a branch. E-commerce did not fundamentally
change ei
ther the jobs or the skills required in the organization. That is, e-commerce did
not "informate" jobs and was not used to deskill or automate jobs [6,26]. AUB
was concerned about how tomaintain the
relationship with its customers as it

moves

to an

on-line

environment

where

customers

may

not

use

a branch

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to

INTERNATIONAL JOURNALOF ELECTRONIC COMMERCE

79

the same extent as before. As a senior manager noted, "The main challenges
will be how do you keep our unique relationship with our customers which
has been over the counter face to face? How do we keep that when we're
intomore of an electronic relationship?" This suggests a weakening
moving

of the relationship-type interaction, and the question forAUB iswhether it

can turn an electronic encounter into a relationship interaction.
its employees,
Instead of adopting a strategic HRM approach tomanaging
AUB followed a traditional personnel approach thatwas more reactive and
focused on operational issues [16]. The executive team did not include an HR
representative. The HR manager commented, "It means as the executive are
out strategies, we are not there to discuss the HR perspective on
mapping
that: so we tend to hear about things often too late.And we are therefore quite
a reactive

department."

The HR department had spent a considerable amount of time developing

formal policies and procedures,
such as recruitment and induction on the
to use, but had no mechanism
in place to ensure
intranet, for themanagers
that these policies and procedures were adhered to. Although
therewas an
induction toolkit, ithad not been integrated into performance management.
An HR manager
revealed, "We haven't followed up on people that haven't
so
are no repercussions for a person that doesn't follow it."
it
there
completed
Line managers had some discretion in deciding whether to follow formal HR
policies and procedures. The HR department wanted more input into helping
business units with their strategy. The HR manager
commented, "As an HR
a
I
don't
have
to service. If I did, I
the
of
business
department,
particular part
would get the option to learn all about those ins and outs and really develop
the relationship."
AUB had grown significantly and thus had avoided the need for layoffs
and early retirements (a major problem in the Australian
"big bank" sector
and one that has drawn a great deal of criticism in the press and among cus
to get rid of
observed, "We find itwasteful
tomers). As a senior manager
our
our
a formal
who
know
know
business."
The
bank
had
culture,
people
recruitment policy, but as the HR manager noted, "Unfortunately, in sum
mary, the recruitment policy is not being followed on every single occasion
and we are getting an improper fit to our culture." AUB relied on its reputa
tion to attract and recruit quality candidates. Several interviewees noted that
the bank's reputation was an important factor in attracting employees. One
observed, "There are a lot of people that come to work for us because they
likewhat we stand for."
AUB employed many 18- to 20-year-old school leavers as tellers. This gave
the bank an opportunity to shape employees
into its organizational
culture
and practices. An unresolved problem, according to one interviewee, was that
"we still lose a significant amount of people in the first 12months of employ
ment

here."

The bank had changed the teller position from a purely transaction-based
role to a sales role, a change that themajor banks had made some years previ
ously It established set targets for referring customers to financial planners in
order tomake employees focus more on cross-selling the bank's products and
services. These were branch-level targets rather than individual targets as used

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80

BLOUNT, CASTLEMAN,AND SWATMAN

by some other banks, a practice that some tellers had found stressful. A branch
a
employee stated that a good many fellow tellers had formerly worked at
certain major bank "where they just couldn't handle being constantly pres
sured into doing targets every day." The AUB call center was operated in
and customers could contact the bank via
house (rather than outsourced),
e-mail or telephone outside of branch hours, including weekends. However,
the call center did not operate 24 hours a day, and jobs have not been auto
mated to any extent. For example, each e-mail enquiry was answered indi
vidually by a call center employee. AUB was considering automating some of
the call center functions, with the potential for job deskilling and layoffs. This
suggests thatAUB saw keeping the relationship interaction with customers as
being more important than using technology to streamline and automate func
tions. Itmay be, however, that customers using electronic service-delivery
channels prefer an encounter if itmeans the service ismore efficient.
Due to the bank's growth, many employees had been elevated to higher
positions created in the new structure. Supervisors were expected to step up
into branch manager roles, while the branch managers
took on more of a sales

role, which necessitated being out of the office more frequently. A branch
employee noted that "there have been opportunities, a lot of staffhave moved
up pretty quickly." The HR manager reflected that "it's actually created more
opportunities, I think, for the employees because itmeant a number of addi

tional levels within the structure." Many branch managers had been promoted
into regional manager positions as more management
levels were introduced
into the organization. Several employees reported that they felt this gave them
opportunities to up-skill. Employees experienced some job changes as the or
restructured, but there were no layoffs. The career path in the
ganization
branches is formalized: teller, supervisor, loan officer, and then branch man
ager. Other areas did not have such clearly defined career paths, although HR
was
trying to rectify this because itbelieved that employees are more satisfied
if they have a career path clearly mapped
out. One manager described perfor
mance appraisals as "very casual, sort of ad hoc"
(although a new appraisal
system was being introduced tomake the process more formal and employ
ees more

accountable).

AUB fostered traditional employment relationships. Promotion is expected

and granted, based on time served and technical competence, through a clearly
defined career path. The organizational culture is somewhat paternalistic and
offers job security in exchange for commitment [22]. This would make any
future layoffs especially difficult tomanage.

Lawson

Central:

Customer

Experience

Encounters

Through most of the 1990s, Lawson Central cut its costs by closing branches,
reducing itsworkforce, and migrating customers to electronic communica
tion and distribution channels?and
away from the branches. From 1998 to
Lawson
cut
Central
its
branches
2003,
by nearly 40 percent and employees by
around 25 percent. The implementation of e-commerce technologies was a
to increase operational effective
key plank in the bank's strategy, designed

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INTERNATIONAL JOURNALOF ELECTRONIC COMMERCE

81

ness. This suggests that Lawson Central was focusing on encounter interac
tions rather than relationship interactions. Three years ago, the bank's branches
were mainly concerned with keeping the queues moving, serving each cus
tomer quickly, and moving on to the next one (clearly an encounter interac
tion). The branch design encouraged physical separation between customers
the provision of a service, with some cross
and employees and emphasized
services. The strategy was to induce cus
and
banks'
of
the
products
selling
the
tomers to use the new technologies,
thus cutting costs by utilizing
cost
the
branch
network
and
labor
of
the
and
rationalizing
high
technology
costs. This strategy was, overall, successful, and a significant proportion of
the customer base moved to e-commerce distribution channels. More recently,
Lawson Central changed its focus and implemented amajor program to change
to
its culture to one of "customer experience." Customers were encouraged
return to the branches with the promise that theywould receive superior cus

tomer service. This suggests that Lawson Central believed that ithad the ca
more
technologies became
pacity for
relationship interactions. E-commerce
mainstream
and were seen as just another service-delivery channel with the
view that Internet technologies would help the bank to gain sustained com

petitive advantage in the longer term.One senior manager articulated this by

saying, "The challenge used to be 'how do I get this stuff online; how do I do
this better?' Now everyone, particularly retail banking, ismoving to 'how do
Imanage
this across multiple channels and get the customer experience com
mon across multiple touch points?'"

Lawson Central, in contrast toAUB, is attempting to link itsHRM with its

business strategy by proactively partnering with each of the bank's business
units to help it achieve its business objectives [16]. As a result, the organiza
tion has come to have a more thorough understanding
of its business units
and itsHR requirements. One HR manager described theHRM strategy as
"more about what does the culture of the bank want to look like, how do we

want people behaving and what does the organizational design need to look
like." A senior HR manager described HRM as "the integrity of people man
interven
agement, people processes and the delivery of people management
tions to assist alignment of business
A
executive
has
group
strategy."
means
it
for
and
which
has
strategy
management,
responsibility
people
input
to

strategic

issues.

and cost cutting included theHR departments, and this led to

Downsizing
rethinking about theway HR interacted with the business. A senior HR man
ager

noted,

"There

was

a move

away

from

human

resources

being

a transac

tional and operational type of profession tobeing farmore strategically aligned

with the business." There is one HR person assigned to one or more general
and, in addition, HR internal consultants are involved in projects
managers,
all over the bank. Day-to-day HR responsibilities are delegated
to the line
managers.

"For staffe-commerce was initially sold

One senior manager acknowledged,
as doing them out of jobs. So the customers going out of branches into e-com
merce was going to save theworld from tellers." One of the business drivers
for implementing e-commerce was that itwould allow the bank to cut costs
further by closing branches and therefore cutting the number of employees.

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BLOUNT,CASTLEMAN,AND SWATMAN

82

One of the techniques used during this timewas to have employees "walk the
queues." This meant that an employee would talk to the customers in the queue
and encourage them to use an ATM, the phone, or the Internet to perform their
transactions rather than wait for a teller to become available. This procedure,
which was sold to customers as being much more time efficient and conve
nient, is another indication that Lawson Central was keen to reduce customer
to encounters.

interactions

HR has attempted

ness

strategies.

senior

to increase its contribution

HR

manager

commented,

to the development
"A human

of busi

resource

profes

sional should be proactively creating value for the business." Lawson Central
was improving the
them to
capability of itsHR employees by encouraging
to interact with the
more
to
able
and
skills
be
develop
acquire
qualifications
business

in a more

value-added

way.

Lawson Central sought tobe an "employer of choice," a company thatwould

attract people because of its employment practices. It no longer employed
to a senior manager,
leavers in teller positions because,
they
according
"wouldn't know the difference between good and bad service if it fell over
them." A senior manager
reported that the recruitment strategy in branches
"is to screen for customer orientation, screen forproblem solving. Most of our
women who know the difference between good and
hires are middle-aged
to recruit a more diverse workforce, plac
bad service." The bank also moved
were
older than 55 in financial planner positions.
ing employees who
Retention policies were strategic. One HR manager commented, "We want
tomake sure thatwe know which areas we need to retain and which ones we
don't, and who we want to retain and who we don't. So we have things like
long-term incentives being given to those people we want to retain versus
not."

Central has put more emphasis on recruitment and retention since

the introduction of e-commerce. A senior manager acknowledged,
"The way
we look at recruitment is
was five or six
fundamentally different towhat it
years ago. It is due to a combination of things. One is the scarceness of the
one-on-one interaction now thatmakes that even more critical in retailing as
opposed to being able to do it once or twice and then the third time you grab
them." This suggests that Lawson Central had considered in some detail how
to attract em
it needed to redesign its recruitment and retention processes
Lawson

the
ployees with the appropriate skill levels. Lawson Central acknowledges
a
cus
on
customer
encounters.
in
consistent
Its
is
achieving
change
emphasis
tomer experience regardless of the service-delivery channel used, and this
has changed the bank's focus significantly. A senior manager noted, "We're
not aggressively into a migration out of the branches. We are into educating
and giving the customer the options thatwill work for them in their day to
day. So I think our employees are very comfortable with that strategy." This
a different set of capa
approach requires employees in the branches to have

skills.
bilities, including better communication
two categories of branch employee for dealing
Lawson Central developed
with customers on a day-to-day basis. Employees were able to choose their
level, because the bank realized that some would rather take a service rolewhile
others would prefer a more interactive sales role with customers. The branch

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INTERNATIONAL JOURNALOF ELECTRONIC COMMERCE

83

a
employees in service roles dealt with cash transactions and had more tradi
tional teller role. The sales group did not stay behind the glass partition and
instead interactedmuch more directly with customers, assisting themwith more
complex financial transactions. This moving of staff from back of house to front
of house was designed to allow employees to spend more timewith customers,
a
showing them how to access their banking services in more appropriate way
and demonstrating new services thatwould assist them with their financial
needs. This necessitated more training thatwould enable the employees to de

velop the skills needed to operate in this changed environment.

The migration of customers to e-commerce service-delivery channels freed
up many employees from the need to deal with multiple small transactions
and allowed them to spend more timewith customers assessing their needs.
a new account, for
Opening
example, may now take more than an hour be
cause the customer's needs are so thoroughly considered. It is
important to
at
assessment
account
this
time
the
the
is
because
many cus
perform
opened
tomers will not need to utilize a branch very often, and thus bank employees
have fewer opportunities to cross-sell products and services.
The bank did not envisage that the teller role (performing basic transac
tions) would disappear completely, because therewill always be small busi
nesses
needing cash. Over time, however, the requirement for this first-level
role will diminish, and therewill be greater
emphasis on more highly skilled
on
can
and
who
interact
with
customers on complex financial
jobs,
employees
transactions. This suggests that the bank is headed toward
providing custom
ers with relationship interactions. This is consistent with
changes toward
an
as
involvement
and
outcome
of computeriza
greater employee
autonomy
tion [26]. On the other hand, there will be fewer less-skilled routine
jobs, the
traditional entry-level positions of past decades, now that these tasks are au
tomated [6]. The bank will need to findways tomanage
this transition with
itsworkforce, and current employees will either have to step up to that sec
ond-level position or leave the organization.
Lawson Central decided to emphasize
providing branch employees with
in
customer
as
a senior manager
service
skills
because,
training
explains, "Sales
come off the back of good service." A
was
deal
of
done to en
good
training
sure that
had
the
to
to
confidence
talk
customers
and
to build the
employees

necessary long-term business relationships. The training increased the skill

base of the employees.
There has been more emphasis on communication
to give employees more
"context." A workplace
tool
and
communication
maps were used to
learning
give everyone in the organization clear information about what is happening
in the economy, the banking
industry, and the bank. The interview subjects
reported that their job satisfaction increased as their skills improved (which
was also reported
Their skill improve
separately by the branch manager).
ments were related to both changes in job design and the greater emphasis on
training.

The bank spent a considerable amount on training each year?both

on in
house, bank-based
training in such areas as customer service and product
knowledge, and on more formal education, such as MB As and other degrees.
At the time of the interviews, however, Lawson Central Bank did not uni

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84

MAN
BLOUNT,CASTLEMAN,AND SWAT

ac
formly link training back to performance. Its training and development
tivities do not yet appear to be tightly integrated with its business goals,
in the organization
A career structure with opportunities for advancement
is an asset in recruitment and an incentive to good performance. One inter
viewee noted that 10 or more years ago itwas rare to see someone in a senior
as a teenager and worked up to a
position who had not started with the bank
has become more strategic in
Lawson
Central
position.
general management
its decisions about promotion and advancement, and a career in the bank is
no longer the "job for life" itwas two decades ago [9,21]. Promotion is based
on good performance, and there are a number of paths to themore desirable
positions.

Lawson Central's HR strategies did not all follow the "informating" ap

proach described above. The bank's call center operations were still charac
terized by deskilled jobs and high turnover. Far from offering a relationship
with customers, the bank still offered only minimal encounters, using a "tra
ditional" CRM approach of scripting customer transactions in great detail, so
that the high rate of employee turnover would not affect its operations. This
approach reflects patterns found elsewhere in the industry [5]. The bank had
not adopted the "communication
center" approach, an alternative to call cen
termanagement
that is designed to empower both employees and customers,

and aggregates the knowledge

fragments of the different participants [15].
Until recently, employee retention was not necessarily seen as a problem at
Lawson Central Bank, because the organization had been going through sig
nificant rationalization. Some respondents believed that attracting and recruit
ing people might be difficult in the future because of the social stigma a ttached
toworking for large banks. So far,however, the bank had not had trouble in
attracting and recruiting graduates.
A major project was underway to review ways of implementing the "people
part" of delivering a better customer experience. This was one of a number of
initiatives to align people management
processes with business strategy, sug
was
that
to
the
bank
realize thatHRM strategy is a crucial
gesting
beginning
ingredient inmaking

Discussion

themost

of its technology and e-commerce

strategies.

and Conclusions

AUB

and Lawson Central operate in different but overlapping markets. Both

banks had apparently successful implementations of e-commerce but pursued
toHRM and
very different HR strategies. Table 1 presents their approaches
e-commerce issues. The different strategies can clearly be seen.
Both banks have been profitable, and the signs are that thiswill continue.
This suggests that linkages between HRM and e-commerce strategies to achieve

competitive advantage may be implemented in differentways. The retail bank

ing industry is dynamic, and there have probably been further changes in the
two organizations
since this research was undertaken.
At the time of the interviews, both banks still had some way to go to align
theirHRM and e-commerce strategies. AUB was promoting its reputation for
relationships and used e-commerce technologies to complement its existing

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be
Goal
including
to
Experienced
choice.
of
employer
staff
an
HRM
closely
linked
business
with
strategies.
A
more
proactive
with
multiple
Highly
delivery
professional,
service
channels.
large
Benefits
of
broad
size
national
and
presence
networks
from
diverse
backgrounds
to
preferred
leavers
school
for
where
to
continually
employees
expected
improve.
are
appraisal
high-performance
linked
to
culture
work
Multiple
points.
positions.
customer-facing
Customer
entryFormal
approach
taken
since
e-commerce
technologies
have
been
Implemented
to
migrate
costs
cut
customers
and
from
more
both
Increased
in-house
training
certified.
externally
and
skilled
customer
to
staff
provide
relations
with
customers
a
professional,
high-quality,
consistent
customer
experience
service
solving
problem
skills
and
paramount.
are
provide
is
to
service-delivery
expensive
Goal
channels.
a
Strategic
flexible
promotion;
to
approach
and
broad
financial
of
services.
range

Skill
based
than
rather
focused.
product

all
service-delivery
channels.
across

Lawson
Central

achievement
based.
introduced.

employees.
leavers
School
recruited
are
teller
into
positions
and
marketed
simply
service-delivery
another
channel.
as
Emphasis
branch
interaction
face-to-face
augmented
by
on
hoc
but
Ad
is
introduced,
formality
being
more
such
as
Defined
career
structure;
more
opportunities
available
the
with
intention
hearts
community
of
winning
and
organizational
and
values
attract
new
belonging.
commitment,
to
Not
aligned
and
values Reputation
"personnel"
Traditional
approach
based
on
employee
setting
of
targets
and
amore
formal
performance
Primarily
job
the
training.
on
Some
computer-based
the
banking
convenience
on-line
of
services.
Traditional
branch
valued
presence
by
much
of
the
Implemented
response
customer
to
demand
banking
public;
bank
the
strong
in
reputationin
and
into
inducted
the
bank's
culture.
training
monitoring
and
results.
implementation.
e-commerce
Australian
Union
Bank
due
growth.
to
significant
minds
of
customers.
Table
1.
of
Summary
HR
and
e-Commerce
Strategies:
AUB
and
Lawson
Central

appraisal.

basis
Perceived
of
Competitive
Advantage
Training
and
skill
development
Recruitment
and
retention Performance
management

e-Commerce
strategy

Career
structure
HR
strategies

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86

BLOUNT,CASTLEMAN,AND SWATMAN

advantage in this area, although ithad not yet addressed theHR issues to the
same degree as Lawson Central. Its
employee policies also relied on relation
and
its
commitment,
ships
mirroring
approach to customers. To maintain its
in
the
to link itsHRM strategies more
AUB
needed
market,
strategic position
not
with
the
business.
AUB
had
closely
thoroughly considered how itmight
be able to defray the high cost of its organizational
structure by utilizing
e-commerce
more
to
gain operational effectiveness, and
technology
effectively
thiswas likely to have implications for its employees. Over time, as custom
ersmove still further toward self-service
technologies, AUB may have to trya
new way of competing instead of the
personal, face-to-face interaction for
which it is currently known. At the time of the research, e-commerce was not
really part of the customer relationship strategy but rather an add-on. It had
not been used for strategic
positioning and had not been linked to an HRM
strategy or an informated employment environment. AUB's success was linked
to the public's view of the bank as
a
offering relationship, and its competitive
were
all
to
oriented
this
view.
strategies
High levels of employee commitment
had contributed to its success in interaction with customers. Whether
this
is
in
sustainable
the
term
seen.
to
remains
be
approach
longer
If the banking public comes to accept non-branch services, as
predicted
here, AUB's
reputation for face-to-face customer service may no longer be a
strong source of competitive advantage. If the organization continues to grow,
and its growth is partly based on its
popularity, itmay well have to develop a
different approach to HRM, and this could create some
employee manage
ment issues, at least
during the transition.
Lawson Central's approach was
notably different. Ithad moved well along
toward developing a strategic HRM policy to
gain competitive advantage from
its on-line capability. The bank
to
recruit,
train, and retain highly skilled
sought
workers in informated jobs and to support their further skill
acquisition. The
customer nexus was characterized
encounters
rather than
by well-supported
a
relationship inGutek's terms. E-commerce was an integral part of this strat
take place
egy, and the bank expected thatmost routine transactions would
electronically. Lawson Central recognized the need to overcome consumer
distrust with its new culture of customer service and was
trying to optimize
the use of all customer channels, both electronic and
physical, by making the
branches more customer-friendly. This included some
gesturing toward a re
lationship once the customer had entered the branch, but itwas unlikely that
Lawson Center could, in fact,match the personal connection offered
by small
banks such as AUB.
Lawson Central had successfully pursued an HRM strategy that increased
the professionalism and satisfaction of
employees inmost customer-interface
roles and fostered a high-performance culture. Since customer
acceptance of
on-line encounters in the future is likely to increase, thismay prove a success
ful and sustainable strategy.
These very diverse case studies inwhat appears from the outside to be a
consistent industry illustrate the breadth of the issues with which service or
ganizations are grappling to come to terms. The need to align their e-com
merce strategies and theirHRM
strategies in pursuit of long-term competitive
has
been
to
shown
be
farmore complex than was initially antici
advantage

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INTERNATIONALJOURNALOF ELECTRONIC COMMERCE

87

pated by either of the banks. Interestingly, Lawson Central Bank, which has
followed a more conventional or mainstream approach, seems to have found
the process both more straightforward and more consistent with the other
because it is a very process
elements of its organizational
strategy?perhaps
the smaller AUB, which has so far focused primarily on
oriented bank?than
less

process-oriented

customer

relations.

These issues are complex, and the strategic solutions are by no means self
in e-commerce along with changes in customer
evident. Further developments
HR practices, and the competitive
workforce
characteristics,
expectations,
environment will make this an important area towatch.

NOTE
1. The

cases

have

been

fictionalized

to protect

their

identity.

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at the Deakin
is a Ph.D.
candidate
Busi
(blount@deakin.edu.au)
inMelbourne,
in a num
Australia.
She
has
worked
University
over
ber of organizations
the past
20 years,
nine
in
years
including
banking
a
an internal
in
was
in a
of
roles.
Most
she
consultant
organizations
variety
recently
was
to
business
informa
bank, and her main
processes
objective
improve
by utilizing
tion
technology.

YVETTE
ness

BLOUNT

School

TANYA

at Deakin

CASTLEMAN
(tanyac@deakin.edu.au)
in the
at Deakin
of Business
and Law
Faculty
the head
of the Deakin
Business
School.
Her

is professor
of information
systems
and
Australia,
Melbourne,
is in the field of organiza
background
University,

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INTERNATIONALJOURNALOF ELECTRONIC COMMERCE

tional
ness,
PAULA

and employment
sociology
and
organizational
impacts

relations.

Her

of e-commerce

research
and

focuses

on

the social,

89

busi

e-business.

is professor
of information
sys
(paula.swatman@unisa.edu.au)
at the
of Computer
and Information
Science
of South
University
in the field of e-commerce/e-business
since
Australia.
She has been working
1984,
in this field. Most
and has taught, researched,
and presented
written,
widely
recently,
as
in
she spent three years
and foundation
of e-business
director
Germany
professor
at the
of the Institute
for Management
of Koblenz-Landau.
University
tems

SWATMAN

in the School

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