COM 230 Module 1 HRM and Value Example

From Paperwork to Value: What Human Resource Management Can Deliver at a Community Credit Union

Student Name

Business Administration Program, Aspen University

COM 230: Human Resource Management

Instructor Name

Month Day, Year

From Paperwork to Value: What Human Resource Management Can Deliver at a Community Credit Union

Blue Ridge Community Credit Union serves about 58,000 members from fourteen branches in and around Asheville, North Carolina. Its 310 employees include 120 tellers and member service representatives. Last year, 38% of tellers left, most within their first eighteen months. Branch managers spend weeks each year interviewing and training replacements, and members complain about long lines and unfamiliar faces. Until recently, the credit union's human resources department of four people handled payroll, benefits enrollment and hiring paperwork. The new HR director, Denise Carter, wants HR to do more. This paper explains how human resource management can create value at Blue Ridge.

The Cost of the Problem

Each teller who leaves costs Blue Ridge about $6,500, a figure Denise built from payroll and training records: advertising and interviewing, three weeks of training at full pay, overtime for colleagues covering the vacancy and the lower productivity of a new teller in the first months. With about 46 teller departures a year, the total is close to $300,000, before counting the effect on members.

Why Tellers Leave

Exit interviews from the past year point to three reasons. Pay was the most common: tellers start at $15.50 an hour, while two nearby banks start at $17 and a large retailer at $16.50 with no weekend shifts. The second was a sense of going nowhere; few tellers knew how to move into member service or lending. The third was the branch manager. Tellers at two branches left at twice the rate of others, and their exit comments described managers who scheduled unpredictably and rarely gave feedback. Each reason points to a different HR practice, which is why a single fix is unlikely to work.

HR Practices and Results

Huselid (1995) surveyed nearly a thousand U.S. firms about practices meant to raise performance, among them careful selection, training, performance appraisal tied to compensation, incentive pay, employee participation and internal promotion. Firms that used more of these practices kept their people longer, produced more per employee and posted stronger financial results. The effects on financial performance appeared to come partly through lower turnover and higher productivity.

Combs et al. (2006) conducted a meta-analysis of 92 studies of high-performance work practices and organizational performance. They found that such practices were related to performance and that the relationship was stronger for systems of practices than for individual practices, which they took as evidence that practices reinforce one another. Effects were larger in manufacturing than in services, but present in both. The research is correlational, and firms that perform well may adopt more practices, but the pattern has been consistent across many studies.

For Blue Ridge, the implication is that fixing turnover will take a connected set of practices, not a single program.

Defining HR by What It Delivers

Ulrich (1998) argued that HR should be defined not by its activities, such as staffing or compensation, but by what it delivers to the organization. He described four roles. As a strategic partner, HR helps turn strategy into action. As an administrative expert, it makes HR processes efficient. As an employee champion, it represents employees' concerns and works to raise their commitment and capability. As a change agent, it helps the organization change. He argued that line managers remain responsible for people, with HR as their partner.

Blue Ridge's HR department has played only the administrative role. The others are where value can grow.

Value for Each Stakeholder

A First-Year Agenda

Denise will focus on teller turnover through three connected practices. First, selection: a structured interview and a realistic preview of the job's pace and demands. Second, development: a clear path from teller to member service representative to loan officer, with training at each step. Third, pay: a review comparing teller pay with local banks and retailers, which compete for the same workers. She will also train branch managers in coaching, since much of an employee's experience depends on the immediate manager.

Line Managers and HR

Ulrich's view that line managers own people results matters at Blue Ridge, because the two branches with the highest turnover show that the same pay and policies produce different results under different managers. Denise will not take responsibility for turnover away from branch managers. Instead, she will give each manager quarterly turnover data for their branch, train them in scheduling and feedback and include retention in their own performance goals. HR's job is to equip managers, not to replace them.

What the Evidence Cannot Promise

The research linking HR practices to performance comes mostly from large firms, and much of it shows association rather than cause. A credit union of 310 people may see different effects. Denise will therefore treat the first year as a test: if teller turnover does not fall after selection, development and pay changes, she will revisit which practice is not working rather than add more programs.

Measuring Value

Denise will report teller turnover, turnover cost, member wait times and an annual engagement survey to the board each quarter. She will also track how many teller openings are filled by internal promotion and how many new tellers reach their first anniversary, since these are early signs that the development path and selection changes are working before turnover figures for a full year are available. If the board sees turnover cost fall by a third in the first year, the savings alone would pay for the pay review.

Conclusion

Huselid and Combs and colleagues show that HR practices, especially as a system, relate to turnover and performance, and Ulrich shows how HR can be defined by what it delivers. At Blue Ridge, a focused agenda on teller turnover can create value for members, employees, the credit union and its community.

References

Combs, J., Liu, Y., Hall, A., & Ketchen, D. (2006). How much do high-performance work practices matter? A meta-analysis of their effects on organizational performance. Personnel Psychology, 59(3), 501-528. https://doi.org/10.1111/j.1744-6570.2006.00045.x

Huselid, M. A. (1995). The impact of human resource management practices on turnover, productivity, and corporate financial performance. Academy of Management Journal, 38(3), 635-672. https://doi.org/10.2307/256741

Ulrich, D. (1998). A new mandate for human resources. Harvard Business Review, 76(1), 124-134.