PP International Wealth-Management and International HRM Case-Study, 2020

PP International Wealth-Management (PPIWM) is a small but successful independent asset-wealth

management company based in the City of London in the UK which specialises in managing the wealth of
high net-worth individuals and of corporations with substantial cash reserves. PPIWM can be regarded as
a “high growth firm”, a “gazelle” and considered a “born global” firm in that its clients, staffing and
operations have been international from the very beginning. The company was formed in 2013 by two
International Finance and Taxation graduates, Sam Rogers and Les Hick, who had been made redundant
by Lloyds Investment Bank in the financial “crash”. Despite the financial crisis that continued until 2017,
PPIWM has grown rapidly by focusing tightly on high net worth individuals in BRICS countries,
particularly in Brazil, Russia and South Africa. The firm now manages client wealth totalling £68.6
billion, achieving an industry-leading average annual ROI for its private and corporate investors of 7.4%
(with some investors, those who are willing to accept high-risk, earning up to 26% pa). PPIWM employs
73 people (27 in international locations such as Jersey, Monaco, the Cayman Islands and Cyprus) most of
whom are Finance, Economics or International Law graduates working in professional roles such as face-
to-face with clients as “Investment Advisors” or “Taxation Consultants” or in head office jobs such as
“Investment Portfolio Managers”. PPIWM is still run as a partnership with the partners undertaking all
internal management tasks, including people management issues, themselves. Last year PPIWM attracted
362 new clients (both private individuals and corporations) which represented an increase of 12.2% over
the previous years’ business growth and was thus well ahead of the wealth management industry growth
figure of 4.4%. In addition to investment activities, the company also provides taxation advice services
ensuring its clients legally minimise their taxation liabilities. The segment of the financial services
industry working with high net-worth individuals, particularly in the BRICS economies, is predicted to
grow at a rate of 15-18% pa during the next 5 years as the financial world emerges from recession and as
the BRICS countries resume their rapid economic ascent. PPIWM thus feels that the time is right for
expansion and they have decided to develop into the Chinese market. A Development Manager with
substantial experience of providing investment and taxation advice to Chinese entrepreneurs and
industrialists based in London, Holger Terhaus, has been appointed and it is felt that two Financial
Marketing Assistants will need to be appointed as soon as possible to assist with this business
development work.

Sam, Les and Holger quickly drafted an advertisement: The main copy gave brief details of the company
and its expanding business and asked for graduates with an interest in China, some knowledge of
marketing and of economics / finance and with a willingness to spend 2 - 3 months a year actually in
China. Candidates were invited to apply by CV and letter. The advert, which was stylishly designed by
PPIWM’s usual design agency, was then placed in the London newspaper, the Evening Standard, for three
nights, the weekly magazine for the international finance industry - The Finance Gazette, and for two days
in the European edition of The Financial Times newspaper. The corporate web-site also carried the
vacancies and the vacancies were posted on www.financejobs.com.eu which is the main industry jobs
board in Western Europe.

By the closing date, 802 applications had been received (an additional 84 were received over the next few
days) from most parts of Europe. The three managers took a pile each and decided to shortlist on the basis
that the candidates met their three key criteria (graduates, interest in China and knowledge of marketing
and / or economics and finance). About 600 of the applicants met the key criteria and the managers then
agreed with Les when she noted “what we are really looking for is candidates who are like Rosie and Jo
(two existing members of staff involved in financial marketing and sales the company); people who are
clearly well organised and who have been to a good British, or top flight European, university so that they
will fit in with our culture”. Eventually 12 candidates were short-listed and invited for interview, although
the partners and Holger felt that some potentially good candidates had been rejected simply because there
was not enough time to look carefully at their applications. An email and text was sent to the short-listed
candidates’ referees asking for “any information that might be of help to us in selecting candidates for
these high profile jobs”.

Six candidates arrived for interview and the partners and the manager agreed to proceed on the basis that
they were looking for “the best of the bunch”, that is, the best of the six. The interviews had to be
interrupted on a number of occasions because one or other of the interviewers had to rush back to their
offices to deal with one crisis or another. There were a few such crises relating to people management
problems during the interviews: Sam had to go and sort out a problem with a member of staff based in the
Cayman Islands who had flown all the way to the London HQ office (6,500km) just for the day to answer
an accusation from a number of clients that she had had her “hands in the till” and had been taking too
much commission and that she had been receiving “back-handers” from certain investment fund managers
in exchange for placing clients’ funds with their portfolios. Les had to dash out to deal with another issue
that had “come to a head” with one the of the key London based administrative staff who was threatening
to resign because she had discovered that she received considerably less pay than the internationally based
staff doing similar jobs despite the fact that she believed her work to be of a higher level, involving not just
administrative support to the professional investment / taxation staff but also direct contact with ultra-rich
clients. To make the selection procedure even worse, the interviews were also disrupted when Holger had
to assist a relatively new administrator who was simply unfamiliar with the relevant, and actually quite
straightforward, international regulations relating to taxation-at-source liability which had resulted in a
Russian client paying Russian taxation on their investment dividend of £268,344 at the level of 20.2%
rather than Monaco taxation at the level of 3.36%.

Returning to the interviews. Eventually, the partners and manager concluded that three of the candidates,
two women and a man, seemed extremely good and Les wished to re-interview the three to make sure they
were right for the jobs in China. However Les was over-ruled by Sam and Holger who stated that they
always felt happier having women work for them and that there was thus no difficulty in making the
decision. The two women were therefore appointed.

The candidates were told “on the spot” of the decision, but only one of the appointed candidates accepted
the offer and so the managers had to offer the other job to the third placed, male, candidate. However, four
weeks later only the male candidate arrived to start work at PPIWM and within a very short time it became
apparent to the partners and manager that this person really didn’t fit the requirements of the job: the new
employee was interested in travelling to China and thought that the job would involve meeting high net-
worth individuals in China and advising them on their investment portfolios and taxation liability
minimisation. This new employee was not interested in the routine market surveying and data analysis
work which forms the core of a Financial Marketing Assistant’s job.

Three London based staff have since resigned claiming to be “fed up with the pressure and work-load”.
One of the staff who left, claimed that her six monthly bonus of £300,000 had been a figure “ picked out of
the air” and “has no relationship to the amount of hours I put in at this firm and the commission income I
am earning for PPIWM”. Another member of staff who has left stated on her ‘reasons for leaving’
document that: “You partners and managers never listen. You neither listen to our complaints and
grievances nor do you listen to our suggestions for improving the business. In this industry, managers
should be sensitive both to our knowledge of our clients and their changing investment preferences (risk
versus opportunity). You should also respect our insights into what our competitor investment firms are
doing. We are, of course, the people with our ‘ear to the ground’, working closely with clients whereas
you guys just sit in your offices playing about with figures in your spreadsheets”. For obvious reasons, the
legal employment contracts of such professional staff in PPIWM prevent their employment or self-
employment in the same sort of work for six months after they have left PPIWM but, nonetheless, the
directors feel that in one way or another a lot of business could be “walking out of the door” with these ex-
employees.
Case-Study Questions

You will be formed into groups and your group should answer the questions below

Use the diagram of “HRM activities – outcomes – performance” as a guide:

1) Identify 6 HRM problems at PPIWM

2) What are the consequences of these problems for “HRM outcomes” and for “performance” at
PPIWM?

3) In light of the PPIWM’s business strategy of quality and innovation in financial services for
clients with high expectations, what would be the advantages of PPIWM adopting a ‘best practice’
Strategic HRM approach?