Training and Development in Vietnamese Banking Industry - Literature review Example

?Training and development Critical Literature Review There is a substantial literature in the area of organizational training, and the increasing focus on training programs by HR management departments at the workplace today than ever before, perhaps due to the rising awareness of the significance of training especially in the view of turbulent changes in global business environments. Easterby et al 2008, p.4 observe that the concept of management has shifted in meaning from the traditional classical textbook definitions, especially with the rise of the service industry, and realization that managerial skills are essential for everyone in the organization, and the increasing focus of management on intangibles such as quality and knowledge rather than resources, capital and technology. Therefore, this means that it is increasingly becoming difficult to define management at the contemporary workplace due to inconsistencies in both the classical conceptualization of management and the actual practicalities of management in organizations today, due to challenges of the changing environment. According to Andre De Waal et.al 2009 p.180, Vietnamese banks are increasingly under pressure to find ways of enhancing performance to increase their competitiveness in the highly competitive Vietnamese banking industry. Competition often results to scarcity of resources and decline of returns on investment especially where organizations have a low market strength compared to rivals, and this lack of competitiveness might eventually result to organizational failure. Andre De Waal et.al presents on the much under researched topic of high performance organization and characteristics of high performance in the Vietnam banking industry, and some of the major HPO factors highlighted include, but are not limited to, quality of management and workforce quality. Quality management entails establishing and maintaining trust relationships with the human factor of the firm on all levels by valuing staff loyalty, treating them fairly with respect, understanding individual needs, in addition to encouraging belief and trust in others. A HPO also develops its workforce by training them to acquire strategic competencies and capabilities, giving them opportunities to learn from others, and encouraging creativity in the accomplishment of tasks through performance reviews. The banks in the Vietnam banking sector have come under increasing pressure to implement training programs in response to the pervasive pressures in the banking industry, to achieve both competitiveness and sustainability in the long term. Ha Thu Vu and Sean Turnell 2010, p.115 states that the banking sectors around the world have been subject to considerable changes over the past few decades through a number of factors such as deregulation, mergers and acquisitions, financial liberation, in addition to other reform and restructuring programs. They observe this evolutionary trend in the Vietnamese banking industry that started with the transformation of Vietnam’s banking system from a mono-tier to a two-tier banking system; domestic Vietnamese banks later went through rapid restructuring programs, financial deregulation, and became integrated into the global financial systems. Ha Thu Vu and Sean Turnell examine the cost efficiency of the Vietnamese banking industry by incorporating the monotonicity and concavity constraints in calculating the cost frontier using the Bayesian approach. In addition, this body of literature presents that the Vietnamese banking industry has undergone rapid reform programs to recapitalize the banks, to reorganize management activities, to improve staff skills, and enhance performance. This research further observes that the overall progress of the banking industry reform has been spotty with the profitability of the Vietnamese banks remaining marginal. Quang Truong et al 2010, p.75 highlight the pervasive focus on developing and managing the human resources especially in the light of the search for competitive advantage and increasing competition in many countries today. Vietnam is faced with great challenges like other emerging economies that seek to compete in the highly dynamic and fast changing global markets where competition is the rule rather than the exception; to facilitate the change towards a market based economy, Vietnam requires a highly qualifies workforce with the next generation skills and knowledge. According to Quang Truong et al, the pursuit for competitiveness in response to increased competition has motivated firms to readjust their workforces to address market needs and challenges, thus, highlighting the critical role of the human resources, HR management, and HR development. This view is available both theoretically and empirically as there are evidences of organizations applying the resource-based view of managing their human factor of the production with employees being at the core of organizational functions. This literature further posits that the main source of competitive advantage is the development of firm-specific resources that create knowledge, quality, innovation, and flexibility through consistent, integrated HRM practices that are linked to organizational business strategies. In this respect, education and training inevitably forms the basis for human resource development, which is also an essential prerequisite for a wider socio-economic development base; the rate of economic development positively correlates to the investment in human resource training and development, and the competitive strength of firms rests squarely in the competitiveness of their workforce. On the other hand, Quang Truong et al also present contrary suggestions that are held by opposite fractions that strategic human resource management may not necessarily be a resource contributing to competitive advantage because it lacks key attributes. Some of the criticisms of HRM include, but are not limited to, the assertion that it is not valuable because it exploits opportunities and/or neutralizes threats in the firms’ environments, it is perfectly imitable, and it is not unique. Nguyen and Quang, 2011 have also identified that human resource training policies are critical for enhancing staff competence, organizational performance, and organizational sustainability, and maintaining the firms’ competitive advantage. This literature goes further to highlight the significance of training and its impacts on firm performance in human resource management fields, and the increasing global attention to the relationship between training and performance. However, this literature argues that much is yet to be done in assessing the effectiveness of training programs and how human resources influence firm performance, especially in the emerging economies like Vietnam. Strategic management of the capital resources such as knowledge, skills, and experience is very essential because it enables firms to improve their performance, competitiveness, innovation, and effectiveness accordingly. However, this literature also presents contrary results from studies that challenge the general knowledge that training influences firm’s skill acquisition, creating a sustainable competitive advantage and enhancing output. The implication, therefore, is that training does not automatically always improve or impact on firms productivity, and, company training may result to increased sales but not productivity because the latter depends on both sales and reported labour. Reed and Vakola 2006 p.393 examine how the process of developing a training needs analysis tool could potentially influence organizational change in the long term, and argues that despite the general agreement that training plans and budgets must be reinforced by a thorough training needs analysis, it hardly takes place and is often overlooked in firms. Many organizations limit training to courses only, and very little literature provides any substantial proof of organizations’ involvement in the training needs analysis, or consideration of change dynamics in the introduction of training needs assessment in organizations. Training needs assessment entails the process of gathering, assessing, and analysing data to determine the organizational training needs, and this process facilitates the determination of overall and specific area training need, to develop appropriate plans that eventually enable provision of training opportunities essential to promote organizational goals. Eighteen 1999, p.149 argues that with the adoption of contemporary and next generation information systems, staff training is imperative to translate the investment in technology to business benefits, but bemoans the lack of training or ‘blanket-fashion’ training offered by firms. To help save time and reduce wastage in organizational training programs, a Training Needs Assessment tool can be used to establish the organizational, departmental, and individual objectives of those to be trained. Lucier 2008 p.482 also supports that assertion by arguing that a needs assessment is a diagnostic process that can be very essential in establishing the specific learning gaps between the current and the desired future state. Lucier further contends that the most important benefit of needs assessment is avoiding costly mistakes by ensuring that the training plan is in tandem with the knowledge and skills of the employees and organizational objectives. Morano 1973, p.479 asserts that the most significant task of training departments is identification of the training needs of the firm, to obtain not only direction, but also justification for investment in training programs. Training needs analysis has not received as much attention traditionally, especially because many firms have conceptualized training as provision of courses, a phenomenon that often results to time wastage and resource misappropriation by offering irrelevant training to the workforce. The training or organization development departments must diagnose the training or development needs of the organization and make recommendations on the most appropriate training programs. Many training organizations have thoroughly neglected the task of assessing and evaluating the effectiveness of the training courses, and some of the methodologies that can be used in assessing the training and development needs of the existing workforce within an organization include surveys, labor analysis, in addition to organizational analysis. Mulili and Wong 2011 p.377 explore the need for organizations to adopt organizational development programs continuously, to cope with the highly dynamic and fast changing global business environment. Organizations must be prepared to change to adapt themselves to change, to survive turbulent times in the business environment, or suffer challenges that might eventually threaten their continued profitability and survival. Consequently, this research goes further to highlight the change intervention strategies essential to implement change in an organization, and among them are the human process based strategies such as sensitivity training that seeks to ensure that managers and employees are accommodative to the social needs of other workers at the workplace. Rahman et al 2013, p.472 argue that training alone is not sufficient to enhance organizational effectiveness largely because the staff may not transfer and apply all the skills and knowledge acquired from training properly. The literature still acknowledges that investments in training and development result in organizational or individual enhancements and companies all over the world spend billions of dollars in the training of their workforce. Similarly, this literature argues that the large budget allocations to training in organizations all over the world seek to enhance the competencies of the workforce by equipping them with specific knowledge that motivates them to acquire certain capabilities that are a source of competitive advantage to the firms. Bulut and Culha 2010, p.309 also confirm that all dimensions of training positively affect employee levels of commitment, because provision of training and access of training opportunities at the workplace is a strong signal of the firm’s dedication to its human factor of production. Employees often perceive training as proof of the firms’ interest enhancing their competencies to promote their career mobility and advancement, while increasing organizational performance and this is more likely to motivate the employees to feel more attached to the firms, and more engaged in their current job positions thus reducing turn over tendencies. In this regard, human resource practitioners must utilize the organizational training strategies to increase employee motivation and commitment accordingly; employee commitment can be conceptualized as their attachment to the organization, the extent to which they are willing to belong to the organization, in addition to, their acceptance, and commitment to achieving organizational goals. According to Rebecca, Glenn-Ryan and Guss 1989, p.187, successful organizations are those that plan training experiences for individuals that fill gaps in their skill inventories, in addition to knowing the quality of their training experience through audit, and make choices that continuously support their values and needs. Normally, individual and small-group based training programs are effective in the enhancement of employee competencies, but not for transforming the workplace culture and values from a hierarchical top-down directed group to a service-oriented group that values relationships. Overall, all the literature reviewed provides a significant proof of the increasing debate on training both as a source of organizational competitive advantage and sustainability in the view of mounting pressures in the competitive global business markets. References Bulut, C. and Culha, O. (2010), The effects of organizational training on organizational commitment. International Journal of Training and Development, 14: 309–322. De Waal, A, Duong, H, & Ton, V 2009, 'High Performance in Vietnam: The Case of the Vietnamese Banking Industry', Journal Of Transnational Management, 14, 3, pp. 179-201. Easterby-Smith, M. Thorpe, R. & Lowe, A. (2008). Management Research: An introduction. 3rd edition. California: SAGE Publications Ltd Eighteen, R. (1999) "Training needs analysis for IT training", Industrial and Commercial Training, Vol. 31 Iss: 4, pp.149-153. Lucier, K.H. 2008. 'A Consultative Training Program: Collateral Effect of a Needs Assessment', Communication Education, 57, 4, pp. 482-489. Morano, R 1973, 'DETERMINING ORGANIZATIONAL TRAINING NEEDS', Personnel Psychology, 26, 4, pp. 479-487. Mulili, B.M, and Wong, P. (2011) "Continuous organizational development (COD)", Industrial and Commercial Training, Vol. 43 Iss: 6, pp.377-384. Nguyen, N.T and Truong, Q. 2011. The impact of training on firm performance in a transitional economy: evidence from Vietnam. Research and Practice in Human Resource Management. 19. pp. 1:11. Quang, T, van der Heijden, B, & Rowley, C 2010, 'GLOBALISATION, COMPETITIVENESS AND HUMAN RESOURCE MANAGEMENT IN A TRANSITIONAL ECONOMY: THE CASE OF VIETNAM', International Journal Of Business Studies, 18, 1, pp. 75-100. Rahman, A.A Siew, I.N, Murali, S. and Florence, W. (2013) "Training and organizational effectiveness: moderating role of knowledge management process", European Journal of Training and Development, Vol. 37 Iss: 5, pp.472-488. Rebecca, M. Glenn-Ryan and Edward J. Guss. 1989. Public Productivity & Management Review, Vol. 13, No. 2, pp. 187-193. Reed, J. and Vakola, M. (2006) "What role can a training needs analysis play in organisational change?” Journal of Organizational Change Management, Vol. 19 Iss: 3, pp.393 – 407. Vu, H. T. and Turnell, S. (2010), Cost Efficiency of the Banking Sector in Vietnam: A Bayesian Stochastic Frontier Approach with Regularity Constraints. Asian Economic Journal, 24: 115–139. Read More