Chapter 30 - Ho Sin Hang and the Early Company Culture of Hang Seng Bank
Today’s Chapter is based on the book “Ho Sin Hang and the Early Company Culture of Hang Seng Bank”, a book based on the life of Ho Sing Hang, the founder of Hang Seng Bank by Ip Po Keung.
Buy it here:
https://hkejpublish.hkej.com/ereader/views/book_template/universal_link3.php?id=9789887527824
Here’s what I have learned from the book:
Self-Learning
“The more that you read, the more things you will know. The more that you learn, the more places you’ll go.”
— Dr. Seuss
Due to family poverty, Ho Sin Hang was only able to take a few years of education at a private primary school. Despite this, he was able to build Hang Seng Bank without any formal qualifications. As a matter of fact, the three founders of Hang Seng Bank, including Ho Sin Hang, were able to overcome their lack of education because “they absorbed experiences from their lives and work, distilled and consolidated them, combining their experiences with practical matters, and adeptly learned and used them to solve problems. Living and the work place were the school for the three founders.”
One of Ho Sin Hang’s greatest attribute was his passion for learning. He was always curious and interested in acquiring new knowledge and knowing new things. As such, he continuously conducted self-study after work to absorb as much knowledge as possible. In fact, his idea to transform Hang Seng into a commercial bank came to him from his travels overseas where he was able to learn about advanced financial management:
“In a bid to adjust the direction for the business and search for new paths, Ho Sin Hang in 1950 through 1952 undertook three overseas study trips, visiting countries including the USA, Canada, Japan, Malaysia, Singapore, South Africa, Cuba and countries in Europe. In the seventeen cities of the nine countries visited, he searched for business opportunities and learnt the advanced financial management of these countries. Through this round of studies, Ho Sin Hang envisioned a clearer picture about the future path, and decided to develop the Ngan Ho into a commercial bank.”
— Ip Po Keung
This concept of self-learning at Hang Seng Bank was certainly not unique to Ho Sing Hang. This was also very common among other founders and leaders who were humble and passionate about learning. Ip Po Keung mentions that “they all possessed common manners: when they knew they did not know enough, they were not ashamed to ask.” Perhaps because of their lack of formal education, they upheld a learning philosophy of “you’re never too old to work and you’re never too old to learn; you learn while you are working, you work while you are learning” at the company which was spread to all employees within the company.
Naturally, Hang Seng became known as a learning organization. As a matter of fact, Ho Sin Hang encouraged young people to increase their knowledge, to absorb different kind of experiences and to combine both of knowledge and experience for self-improvement.
"Using knowledge as the substance and experience for functioning combining them together you can fully equip yourself for work and to pursue your ideals in life, and you do not have to worry about not having a great future... to apply to your present career. This is beneficial in every way."
— Ho Sin Hang
This concept of constant self-learning reminds me of the importance of having intelligence curiosity that we have learned from the Wright brothers’ story. Orville Wright believed that this intelligence curiosity that was cultivated from a young age by their father is the main reason for their success in creating the first successful motor-operated plane in history and the special advantage they had over the others that were also looking to master flying.
In fact, despite having no college education, no formal technical training, no experience working with anyone other than themselves, no friends in high places, no financial backers, no government subsidies, and little money of their own, the Wright Brothers still managed to be the first ones in mastering the art of flying. As James Dyson once said, “Anyone can become an expert in anything in six months, whether it is hydrodynamics for boats or cyclonic systems for vacuum cleaners. After the idea, there is plenty of time to learn the technology.”
“But it isn’t true to say we had no special advantages…the greatest thing in our favor was growing up in a family where there was always much encouragement to intellectual curiosity.”
— Orville Wright
Chinese Virtues
“Virtue is not left to stand alone. He who practices it will have neighbors.”
— Confucius
Ho Sin Hang’s views on values and ethics is definitely heavily influenced by Chinese virtues. As a matter of fact, he greatly admired the Confucian teachings of respecting virtuous characters and encouraged young people to cultivate the virtues of being temperate (wen), kind (liang), respectful (gong), frugal (jian) and forbearing (rang). All of these virtues were definitely incorporated into core values of Hang Seng Bank.
One of the virtue that Ho Sin Hang puts great emphasis on is the virtue of forbearance which he believed was not only an essential element of success, but the manifestation of a high moral cultivation of a person. The virtue of forbearance is defined as the ability to endure or tolerate difficult or challenging situations without becoming angry, frustrated or upset. This virtue allows one to exercise self-restraint and understanding by showing empathy and compassion even in the midst of a disagreement or conflict.
"Forbearance is the expression of the highest moral cultivation of people's character, learning, thinking and behaviour. Only by observing a person's level of forbearance in dealing with people, matters, things and work, you know what stage of moral cultivation he has reached."
— Ho Sin Hang
And why is the virtue of forbearance so important in a company setting? Ho Sing Hang believes that all human affairs rarely go accordingly to expectations. As such, he mentions that “when things do not go your way, the first thing to do is to exercise tolerance so as to avoid conflict caused by little misunderstandings.” As such, this is certainly a virtue that encourages harmony, cooperation and resilience in a corporate environment.
One example where the virtue of forbearance shines is in the way Hang Seng treats mistakes. As a matter of fact, people are not perfect and making mistakes is certainly unavoidable. However, what is important is for people in the company to have to courage to admit mistakes and to correct them, and that is only possible in a company that encourages the virtue of forbearance. As Warren Buffett once said, “when you find bad news, I say get it right, get it fast, get it out, get it over. Get it right is important.” Similarly, Ho Sin Hang encouraged people to not only have the courage to admit mistakes, but also to have the ability to reflect on them:
"If people smooth over faults and are unwilling to admit mistakes, ... which will lead to a life of mistakes and ultimately destroy their future by themselves. To be able to conduct self-review is the way to be virtuous."
— Ho Sin Hang
“Ho Sin Hang said that after admitting mistakes there are two kinds of review: daily review and after-event review. The daily review is the Zengzi-style self-review: "I do reflection three times every day. To conduct business for others, how can I not be loyal? To deal with friends, how can I not be trustworthy? With regard to the teachings of the Master, how can I not revise and practice?" After-event review is the review conducted after an event, which aims to figure out: Whether the method used was correct? Whether the attitudes were appropriate? Whether the consideration was comprehensive enough? Whether there was any omission? Whether the means and ends were in line with each other? Whether the result was as anticipated? According to Ho, "... [one] should not only examine the mistakes discovered, but should also seriously and candidly do a total review ..."
— Ip Po Keung
This concept of forbearance is eerily similar to the virtue of temperance practiced by Benjamin Franklin. He mentions that temperance “tends to procure that coolness and clearness of head, which is so necessary where constant vigilance was to be kept up, and guard maintained against the unremitting attraction of ancient habits, and the force of perpetual temptations.” Whether it is temperance or forbearance, it is clear that it is essential to success in business and investing.
“Success in investing doesn’t correlate with IQ. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.”
— Warren Buffett
Furthermore, based on Chinese values, Ho Sin Hang proposed a few restraining precepts to lead a successful life. Here are the basic ideas:
Refrain from criticizing. ".. to casually criticize other people's affairs will possibly hurt their self-respect and harm friendship..."
Refrain from being selfish. "Always do things for the public interest, treat people with compassion and love, bestow benefits to and provide support for other people."
Refrain from arguing. "Arguing is different from discussion and explanation. ...Arguing entails the effect of overwhelming others...they always abuse words to displace truth and distort facts."
Refrain from being talkative. “He who talks much errs much, even brings disasters and dangers to himself. Therefore, you should cultivate yourself to restrain your angry emotions to prevent smooth words coming out of your mouth."
Refrain from being arrogant. “Arrogance often arises from bloated self-importance. It always displays an unbearable attitude towards others, which easily makes oneself unpopular among people."
Refrain from being complaintful. "A wrong thing is done ... [you] should not lay the blame on someone else. The act of complaining virtually shows that you are narrow-minded and lack cultivation and courage,"
Refrain from being lazy. "You must have ...the hardworking habit daily cultivated ...coupled with persistence, patience, only then can you brace yourself up."
Refrain from being indulgent. "... a bad habit of young people today, which is more or less the result of the influence of Western romantic thinking.... If you exercise self-restraint and know the rules, you are worthy of a good citizen."
Refrain from making easy promises. "If you want to earn the trust of others, you should be serious about making promises. Once you make a promise, you have the responsibility; even if you encounter difficulties along the way, you should not break your promise and betray trust."
Refrain from being self-correct. "If you always insist on your own opinion, it is possible to mess things up. In fact, giving up prejudice is not a difficult thing to do. You only need to be open-minded, always objectively assess everything ... you will have matters handled properly."
Refrain from having a bad companion. "Mozi said that people who are dyed in green become green, while those who are dyed in yellow become yellow. ...If they mistakenly befriend a bad character and go down the wrong path, not only their character and behaviour become bad they can at any time under threat and have themselves in troubles, even get trapped in the wrong places from which they have no escape.
Refrain from struggling to maintain appearances. "Our countrymen place great importance on face and appearance. For some occasions, people compete to show extravagance regardless of their ability to do so. Those who appear better than they really are try every means to maintain the façade. The result is a ruinous state, causing unspeakably misery."
Finally, Ho Sin Hang was definitely a believer that virtues are more important than ability when evaluating his employees. He would often say to employees to “Learn how to be a person first. Learn how to do things later.” As such, not only did Ho Sin Hang wanted to train his employees to possess the practical knowledge of banking, but more importantly, he taught his employees, through seminars, the importance of integrity, trust and morality. As a matter of fact, Ho Sin Hang had an unique criteria for selection new employees:
“Ho Sin Hang's criteria for selecting new employees were: 30% academic qualification and 70% moral character, especially the virtues of hardworking, passion for learning, humility and forbearance were valued. The rest included traditional virtues like observing discipline, being punctual and courteous were what he highly valued. If employees displayed these virtues in their work, they would be promoted by the company and given important tasks to develop their strengths. Many employees who were promoted to managers from low-level positions without exception displayed these characteristics.”
— Ip Po Keung
Treating Employees as Family
“A company is stronger if it is bound by love rather than by fear.”
— Herb Kelleher
Another interesting aspect of Ho Sin Hang and his management of Hang Seng can be summarized by this ancient maxim: “He who loves others, others always love him. He who respects others, others always respect him.” Ho Sin Hang made sure that the company upheld the belief of love. He would often say that external love means that "[we] always uphold love and with all our heart provide services to the common people in society." And internally, love requires that "[we] treat each other as a member of a family, with love and sincerity, mutual help and encouragement and try with great determination to achieve progress together."
As such, when Ho Sin Hang was at the helm of Hang Seng Bank, his management style was eerily similar to a father’s love towards his children. In fact, he was well known to treat his employees, especially the younger generation, like if they were his own children.
“Ho Sin Hang took good care of his employees and often shared with them his philosophy of life. He used the daily meetings to impart to employees the right way for dealing with people and things as well as workplace ethics, much like a kind patriarch who was eager to be a teacher.”
— Ip Po Keung
“When Ho Sin Hang was at the helm, his management style was similar to a kind patriarch of a clan. He took it as his mission to protect and maintain the wellbeing of the Hang Seng clan. He cared for all the employees. Especially with respect to the teaching of the young employees newly recruited to the company, he ceaselessly and tirelessly taught them, and shared the lessons he learned from his own life and business experiences, very much like a kind parent bringing up his sons and daughters.”
— Ip Po Keung
Ho Sin Hang was often seen teaching young employees “the ways of behaving oneself and handling things, to be a solidly grounded person, to be honest and trustworthy, treating customers with respect and loving their co-workers.” But more importantly, Ho Sin Hang was teaching by using himself as an example. Similarly, Ho Sin Hang expected the company’s superiors to be teachers to the younger generation.
"If an employee faces difficulty in work, middle-and low-level leaders should try to help him solve the problem with sympathy, and should not arbitrarily blame him to make him feel embarrassed and disappointed. One must know that helping an employee solve a problem is also to solve the problem for oneself. In this way the employee will conduct work energetically and devote himself to the company. Only when everyone respects and trusts each other, can harmonious human relationships be created."
— Ho Sin Hang
Furthermore, as it is often the case in a harmonious family, Ho Sin Hang strongly believed that mutual help is an essential and critical workplace ethic that can propel the business forward. Understanding and tolerating each other are equally important behaviours in a prosperous work environment. As such, he explains that superiors should be adept at accepting subordinate’s opinions and to take their reasonable and constructive suggestions seriously. This is important considering the fact that employees are the ones on the frontline are are the ones having frequent contacts with the customers. As such, they are the most familiar with the company’s situation and their opinions should always heard. This is eerily similar to what Isadore Sharp advised his general managers when he was leading Four Seasons:
“Our customer-front line relationship is crucial. Customers seldom see or talk to you. They interact almost solely with our front line, three to seven junior employees. If that contact disappoints the customers we want as lifetime patrons, they become ex-patrons. But when our employees remember them, greet them, know what they want and provide it quickly, they create a loyal customer whose referrals and long-term repeat business can often run well into six figures. That’s a cycle of success, dependent entirely on junior employees. “
— Isadore Sharp
Finally, as everyone in the company were expected to behave like members of a clan (big family), It was the consensus among Hang Seng that the young employees were to return the favor and should also listen to their elders and superiors. As a matter of fact, young employees "should use the kind of attitudes they treat their elders to treat their senior colleagues and managers, accept their admonitions and guidance, and show respect and love in the way they respect and love their parents and teachers."
“Everyone in the company behaved like members of a clan (big family). The company's newsletter "Hang Yuan" made this description about this clan atmosphere: "Hang Seng Bank though is growing by the day, but it always uses the spirit of the clan to encourage employees. A common saying says: when the family is harmonious, everything thrives. For the sake of the continuous prosperity and thriving of this Hang Seng clan, employees should have the love and respect to trust, protect and support each other."”
— Ip Po Keung
Treat Customers Equally
“The goal as a company is to have customer service that is not just the best but legendary.”
— Sam Walton
Considering Hang Seng was in the service industry as a commercial bank, Ho Sin Hang knew that treating customers well was the most important thing. As such, he believed that it was necessary to formulate effective ways of service to enable employees to not only understand their customers, but to cultivate their observational capacity and to increase their experiences in making contact with customers. As a matter of fact, Ho Sin Hang expected his employees to not consider customers as short-term interest, and wanted them to build long-term relationships with them. As he once said, “Nurturing customers is to make yourself stronger. Do not see yourself as the breadwinner of the customers, on the contrary, the customers are your breadwinner.”
By taking this long-term approach with customers, Ho Sin Hang often placed himself in the situation of the customer to empathize with them. In fact, “Sympathizing with customers is also a critical factor in providing excellent services. Having sympathy for customers is tantamount to having empathy for customers, being able to stand in their shoes and consider their situations. To put yourself into the customers' shoes can make employees understand the demands and expectations of customers more correctly and precisely. This naturally helps figure out the appropriate plan to satisfy the needs of customers and achieve excellent services.” This was especially the case when his customers were in dire need, instead of taking advantage of them, he would do his best to help them out:
"In the mid-fifties, a small plastic factory located in a premium location received a loan of HKD 50,000 from Hang Seng. The contract required that if the loan was not paid in time, the factory would be taken as collateral. Because the factory was not operating well, it failed to pay back the loan according to the schedule. People in the industry thought that Hang Seng could reap a big gain and take the opportunity to get that location. The factory owner was also very nervous and awaiting his fate. Who knows after Ho Sin Hang's took a personal inspection of the factory, he regarded that the factory only needed some adjustment of the product structure and could still survive and develop. He again granted a loan of HKD 100,000 with low-interest to the factory owner, and rescued the factory from collapsing. This incident reflects Ho Sin Hang possessed the empathy to empathize with people's difficulties and gave assistance to them. He practiced his business ethics of "Junzi loves wealth, but gets it in the right way."
— Ip Po Keung
More importantly, Ho Sin Hang believed that all customers should be treated equally no matter how big or small of a business they would bring in to Hang Seng. He would often advised his employees that "Regardless of the size of the deal, customers should be treated equally and should not be handled differentially. In particular, ordinary people from the lower strata of society should be given special attention.” This turned out to be one of Hang Seng’s competitive edge compared to other banks. In fact, most major foreign banks at the time were not welcoming to small businesses and ordinary people. As such, Hang Seng was able to build a niche in the heavily competitive banking industry and became well known as the friendly neighborhood bank.
"We always uphold the spirit that customer is number one, and always remind employees, whether they are from the lower social stratum or the working poor, once they step inside Hang Seng Bank, they become our honored guests."
— Ho Sin Hang
“According to Mok Wai Kin's memory, in the old days the customers of major foreign banks, like HSBC and Standard & Chartered Bank, were foreign merchants and Chinese of high society or middle-class people, the bank receipts and other documents used the English language. A gap existed between the banks and ordinary people, who thus felt that the big banks were difficult to approach. Quite the opposite, Ho Sin Hang and other founders decided that the bulk of their customers were middle and small businesses and ordinary people in quite an early stage. Thus, they attentively shaped the bank as a neighbourhood bank. The forms in the bank, apart from using Chinese, could be filled by courteous employees who took the initiative to do it on behalf of the customers, making it very convenient for some illiterate customers. Thus, the bank was strongly welcomed by ordinary people, and the image of a neighbourhood bank thus was deeply implanted in people's minds. Furthermore, other banks did not place customer service staff, but Hang Seng dared to be the first to install customer's service to listen to customer's opinions for improving services or offering new products.”
— Ip Po Keung
Furthermore, Ho Sin Hang reminded his employees that they should listening to their customers’ needs. As a matter of fact, when meeting face to face with customers, he would tell his employees that they "should use [their] brains to first see what his intention is, then ... listen to what he says, and then consider using what means and language to respond as well as pay attention to his manner and reaction. Or, ... show our sympathy and shun what he avoids. When politely declining his request, [they] should be skillful in language so as to avoid producing ill feeling and bad consequences."
“In talking to customers, the important thing is to learn to be a good listener. This includes allowing customers to say all that they want to say and not intermittently interrupting their words, yet not being expressionless but occasionally showing agreements, appreciation or sympathy, or raising some questions. What is important is to allow the customer to know that you are listening attentively.”
— Ip Po Keung
This idea reminds me of the story of Sam Zell, who understood that being a good listener can make all the difference in the world during a negotiation, since you never know when or how you will learn something new. It is only listening that you can understand one’s intention which is essential both in negotiation and in providing excellent first-class services.
“This is perhaps my most fundamental principle of entrepreneurialism, and to success in general. But my experience with Mrs. D was also about the value of really listening, which is at the heart of any negotiation. Understanding what’s truly important to the other person out of the dozen or so things they might tell you. Mrs. D’s brother had to be taken care of. That was her bottom line. Homing in on that got the deal done.”
— Sam Zell
Beyond the Book
Read “ Accelerated Learning: Learn Faster and Remember More” by Farnam Street
Read “ When Things Go Wrong: The Warren Buffett Way to Handle Problems” by Farnam Street
Read “Listening to Win” by Farnam Street