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The Effects of Human Resource Practices on Credit Union Employees and Performance

This report presents the results of research on the relationship among human resource practices, employee attitudes, and credit union performance.

Executive Summary

On the basis of previous studies conducted in other industries, this research investigates the following hypothesis: that sophisticated and innovative human resource practices demonstrate the credit union's commitment to and support of its employees who respond with attitudes and behaviors that lead to greater organizational effectiveness. More generally, human resource practices may provide a competitive advantage to credit unions by increasing employee' satisfaction with the organization and ultimately enhancing the member-service culture and increasing credit union effectiveness.

What is this research about?

Professor Whitener surveyed 1,733 credit union employees at 185 credit unions and found that, regardless of size, a credit union can improve its performance by implementing modern human resource practices.

Credit unions whose employees reported more positive attitudes performed better than credit unions whose employees reported less positive attitudes. Human resource practices such as developmental appraisals, externally competitive and internally equitable compensation, merit-based promotions, and periodic attitude surveys were significantly related to attitudes such as perceived organizational support, trust in employer, and trust in supervisor. Perceptions of organizational support and job satisfaction appears to lead to better management of the loan portfolio, as reflected in measures of asset quality.

What are the credit union implications?

The data and analysis in this study provide significant evidence that human resource practices have an important impact on employee attitudes and credit union performance. Credit union managers who design and implement progressive human resource practices can improve their credit union's effectiveness.

This report is sponsored by the Center for Credit Union Research at the University of Wisconsin-Madison, and the Center for Financial Services Studies at the McIntire School of Commerce of the University of Virginia.