Discussion Case: Mountain Bank
At first glance, one would wonder why Mountain bank currently has fifty percent of Retail accounts within the market which are the less profitable accounts in the banking industry. Secondly one would also ask or wonder why Mountain Bank has less than 10 percent of the most profitable accounts in the market, corporate accounts. To achieve a competitive advantage Mountain Bank should implement the cost leadership strategy and the differentiation strategy. Currently Mountain Bank has a strong presence in the Retail Banking line which has proven to be the least profitable line in the industry.
Their goal short term goal need to be to own a stronger presence within the more stable and profitable lines, Real Estate and Mortgage and Corporate banking. With the recent mergers and acquisitions, Mountain Bank may have the opportunity to expand and develop efficient methods that will enable them to sell its products and services at a lower price than its competitors. The decrease in the cost of its products and services will attract new customers and retain existing customers.
By lowering the interest rates and cost of its products and services to a rate that smaller banks would not be able to compete with, Mountain Bank will gain the leadership of cost within the industry. The success of weeding out the competition will allow Mountain Bank to achieve its goal of obtaining a stronger presence of the most stable and profitable lines within the industry, Real Estate and Mortgage and Corporate accounts. Currently Mountain Bank provides the same four lines of banking (retail, consumer lending, real estate and mortgage and corporate banking), products and services as other banks in the industry.
Differentiating its brand would allow Mountain Bank to gain a competitive advantage above its competitors. Mountain Bank would need to offer to its customer’s different and unique products and services that are not offered by its competition. This plan should restrict competitors from entering their market, or make it difficult for them to compete with them head on. The differentiation strategy may include implementing mergers with some larger corporations to obtain exclusive contract to do business with that business.
The contract could encompass corporate accounts where Mountain Bank would be the sole provider of the company’s accounts for some of their benefits packages. Based on the universalistic approach and commitment strategy, what types of practices should a human resource professional recommend for Mountain Bank with respect to its tellers? The tellers are the key to the success at Mountain Bank. It is important that Mountain Bank’s human resource team focus on empowering the workers and build a stronger sense of loyalty and commitment within the tellers.
Because the tellers are expected to complete some of the task as customer service it is imperative that hr encompass extensive recruiting and training within their hiring process. The tellers should have more involvement with the communication with management. Tellers should be encouraged to make suggestions about their daily responsibilities, customer service, daily goals, quotas, sales projections etc. Training programs should readily be available for those who show that they are able to handle more responsibilities.
Of course compensation and appraisal systems should be measured and rewarded to those who use the training effectively on the job. These practices would foster a strong sense of cooperation between management and the tellers. Discuss the four human resource strategies (internal/cost, external cost, internal/differentiation and external/differentiation) that may be implemented within an organization. The Internal/Cost strategy combines the theories of the cost leadership strategy and emphasize on employing individuals with a long term goal of employment with the focus of reducing cost.
The employer focuses on satisfying the needs of the employees while the employees work complete their various task in a manner in which to reduce cost for the employer. This is a win-win situation in which employees and employer are both satisfied. Employee satisfaction in turn reduces the likelihood of employee turnover. Mountain Bank would need to implement this strategy to ensure that not only its employees but its frontline employees, the tellers, are satisfied with their job.
If they are satisfied then they have a higher chance of building a stronger bond becoming loyal longtime employees which reduces the cost to Mountain Bank in the long run. The Internal Differentiation strategy focuses on hiring and retaining long term employees that specialize in performing certain task with a combination of differentiation. This strategy emphasizes the importance of the employees. It values the employees and provides training to enhance their career within the company. This strategy compensates the employees with high wages/salaries and good benefits packages for their hard work and dedication for the company.
These employees are known as the experts within the field. The External Cost strategy also known as the bargain labor strategy focuses on hiring employees with a short term goal while reducing the cost. This strategy unlike the previous two would not offer many perks to its employees. This strategy does not offer room for advancement within the company, and they do not offer training to empower employees to advance their careers. The pay rate for employees within this strategy is usually hourly wages. Employees are thought of as being easily replaced because they are not valued as much compared to the previous two strategies.
This is a strategy that should not have top priority for Mountain Bank to implement. External/Differentiation strategy also focuses on hiring employees with a short term goal of employment combined with the differentiation strategy. These employees have critical skills but do not intend to remain loyal long term employees. Little to no training is provided because they are hired based on the skill set and experience they have to perform and complete a certain job/task. Employees who encourage this strategy have no long term commitments for the employees hired.
The only portion of this strategy that Mountain Bank should implement is to hire employees that acquire necessary skill sets and experience to perform the job needed. Recommend a human resource strategy for Mountain Bank with respect to its tellers and support the recommendation. The case states that “bank tellers are crucial to the success of the Mountain bank because they are often times the only person that a customer may come in contact with while visiting the bank. ” (Stewart 2008) The bank tellers at Mountain Bank are entry level employees and they receive a low pay.
Within their daily responsibilities they are expected to cross sell and convince customers with retail accounts to open corporate accounts or obtain a mortgage from Mountain Bank. In a since, the tellers are also acting as sales reps for Mountain Bank and are not being compensated for the success if a sale is accomplished. It is stated that the employee turnover at Mountain Bank is quite high which means that the employees have a shorter average tenure than those of other companies in the same industry. Because employee turnover at Mountain Bank is quite high they should consider adopting the Internal/Cost HR Strategy: The Loyal Soldier. This strategy emphasizes hiring and retaining loyal employees who will do whatever the company asks of them. The efforts are made to satisfy the needs of employees and build a strong bond that reduces the likelihood of employee turnover. ” (Stewart 2008) HR would be responsible for recruiting candidates and hiring employees (tellers) who fit the organizational culture. Because the bank tellers complete several task, it is safe to assume that Mountain Bank expects them to do whatever the company asks of them like cross sell to existing customers to increase profits.
HR will also be responsible for providing tellers with extensive training in a number of different skills. These skills will be related to the teller daily duties/responsibilities i. e. handle a wide range of banking transactions, such as cashing checks, accepting deposits and loan payments, and processing withdrawals. The tellers should also receive extensive training on customer service and sales representative skills as well because they are expected to cross sell and onvince customers with retail accounts to open corporate accounts or obtain a mortgage from Mountain Bank. The sales training crucial to the tellers because it will ensure (1) that they have accurate product knowledge, (2) they are familiar with the company’s sales procedures and (3) they know how to accurately fill out paperwork regarding the successful sale of the product. This process will help improve sales performance in the corporate accounts which are the most profitable accounts within the Mountain.
Alongside finding the “right” employee, the loyal soldier strategy focuses on long term incentives and benefits for its employees. Because the tellers are paid a low wage they should be offered full time employment after a probation period. They should also be offered a benefits package which should include medical dental and the option to purchase stocks within the company. Performance appraisals/evaluations should determine the level of pay increase. This process will result in a great since of pride for the tellers and a strong bond between the employees and Mountain Bank.