The Impact of Training and Development on Employee Performance - Literature review Example

Chapter 2: Literature Review

This chapter is a literature review that explores the impact of training and development on employee performance. Special emphasis is placed on how employees develop problem-solving skills from training programs and how they enhance their performance to achieve organizational objectives. The literature review also considers the conceptual framework of training and development for building capability in public service agencies.

TrainingandDevelopment

Training is a key strategic tool that organizations can use to achieve its goals and objectives. The most successful organizations are the ones that appreciate the importance of training and development in improving employee performance and problem-solving skills. The rationale is that employees are the most valuable asset for any business organization. Investing in them would translate to getting the best returns in both the long run and short run. In today’s business environment, it is natural for employers to focus on cutting back on costs than increasing their budget. However, there are some areas of the business that will always require investing. The most probable area of investment is human capital for the sake of enhancing performance. The reality is that most business organizations cannot afford to lose their best employees to their competitors. Some of their competitors may attract their employees because they offer the best opportunities for career advancement and enhance their knowledge. In fact, keeping employees sharp has the effect of enhancing the competitive position of a business in the marketplace.

In today's competitive business environment, we cannot overemphasize the importance of employee training. One of the effects of employee training is that it reduces the rate of employee turnover for any business organization. The reason is that training and development make employees develop positive feelings about their place of work and reduces the time they would take to get initiated into their place of work. However, it is important to note that employee training and development is not limited to new employees. Managers also need training and development for the sake of achieving workplace safety, satisfaction and productivity. Some of the key areas of emphasis may include manager communication, employee recognition and employee motivation. The success of any organization's training and development program depends on its continuity and sustainability over a long period.

A long term training and development plan ensures that experienced as well as new workers become efficient, motivate and committed to organizational goals and objectives. Organizations bridge performance gaps by implementing the relevant training interventions so that employees can acquire particular skills and abilities that they will use to achieve organizational goals and objectives. Additionally, training ensures that organizations identifies the skill levels of their employees and make interventions for improvement so that they can match the needs of the organization. However, it is important to note that training can only be effective if it is continuous thus organizations should never wait for performance gaps before implementing a training program for its employees.

An analysis and appreciation of the idea of employee training and development requires an understanding of the changes associated with training and development (Pallisera, Fullana, Palaudarias&Badosa, 2013). Employee training and development is responsible for generating new knowledge thus it is placed within a broad context of human resources management (Pallisera, Fullana, Palaudarias&Badosa, 2013). The context is global organizational management and training are part of a planned staff education and development for individual employees groups and teams (Pallisera, Fullana, Palaudarias&Badosa, 2013). The goal of enhancing employee performance and the overall performance of the organization (Nadda, Rahimi, Dadwal&Bhan Singh, 2014). As mentioned earlier on, organizations are increasingly implementing training and development programs for their employees for the sake of preserving their positions and increase their competitive advantage. Rather than utilizing existing knowledge, organizations are finding it important to create new knowledge.

According toNadda, Rahimi, Dadwal and Bhan Singh (2014), the strategic value of training and development is to encourage creativity, promote inventiveness and shape an organization’s knowledge so that an organization can be unique and different from others. One important point is that education is not limited to the power in higher positions. Rather, people and almost everyone are increasingly becoming educated regardless of their position in society or organizations. The size of business organizations influences how much these organizations spend on training and development. For instance, the bigger the organization, the more they allocate resources to create diverse possibilities for their employees to get training and development.

Modern organizations appreciate and understand the tremendous contribution of education to the success of any business in the current competitive world. Therefore, these organizations are finding good returns from investing in employee training and development. In fact, modern organizations spend between 3 percent and 5 percent of their revenue in educating their employees. A common assumption is that companies that seek to remain competitive and consistent in the marketplace need to allocate 2 percent of their annual fund on training and development. Therefore, this has made it necessary for companies to make training and development a continuous and permanent process. This has been in practice for more than two centuries. During the age of Enlightenment, Denis Diderot mentioned that “Education shouldn't be finished when an individual leaves school, it should encompass all the ages of life...to provide people in every moment of their life with a possibility to maintain their knowledge or to obtain new knowledge” (van Rooij and Merkebu, 2015).

The current business environment is highly competitive and the only way to survive is for business organizations to be innovative or perish. The ability of any organization to remain innovative strongly depends on the organization’s knowledge processes thus the survival of any business depends on how much faster it learns than its competition. In this case, the most logical sequence starts with creating knowledge followed by innovation and eventually getting results in the form of competitive advantage. Knowledge is good thus the most knowledgeable organizations become the better they become. However, Scheel, Rigotti andMohr(2014) note that a significant number of organizations have been trapped into the pitfall of becoming as much knowledgeable as possible. Consequently, they become unnecessarily knowledgeable thus wasting their efforts. Such case reveals how much important strategic knowledge is for the success of any organization. Strategic knowledge helps the company increase in value by achieving its strategic goals. Therefore, organizations should not become knowledgeable for the sake of just acquiring knowledge but for the sake of meeting the need to create innovation and establish a competitive advantage.

The ability of an organization to obtain knowledge, facilitate learning, become innovative and establish a competitive advantage can affect the quality of labor only if the process of acquiring knowledge is harmonized with organizational goals as well as employee goals. Organizations must consider the necessity of training and development and how much such systems can solve certain problems. Such a factor influences an organization’s choice of training approaches and methods. It is important that organizations go beyond just obtaining new knowledge whenever they implement training and development programs. Rather, they should focus on promoting entrepreneurship, introducing employees to changes and business decisions, and changing employee attitudes. These days, organizations are targeting the best candidates in the labor marketing by offering annual hours for training and development in their employment advertisements. Skilled people are the most wanted in the labor market thus organizations are increasingly investing in making their workforce knowledgeable. Managers should learn to manage skilled employees and organizations for the sake of retaining their services in the long run. Diamantidis and Chatzoglou(2014) note that the success of any organization is its knowledge and the ability to retain a skilled workforce, motivate them and improving their reward systems to match their performance.

In the context of organizational learning, it is not enough that employees add value to an organization based on their prior knowledge but it is important that the employee gains more knowledge. Employees give and share as much as what the organization offers. An organization that offers opportunities for learning and development empowers its employees to give their best and achieve beyond the set goals and objectives. In the present world of business, it is not enough that organizations offer monetary compensation to their employees. It is also important that organizations invest in them in the sense of investing in their knowledge because employees no longer work for money alone.

Nature of Training and Development

Training and development refer to the imparting of specific knowledge and skills to an employee (Ikhlas, 2012). This is the simplest definition of training and development, but the formal definition is "any attempt to improve current or future employee performance by increasing an employee’s ability to perform through learning, usually by changing the employee’s attitude or increasing his or her skills and knowledge. The need for training and development is determined by the employee’s performance deficiency as computed as follows:

Training and development need = Standard performance – Actual performance” (Ikhlas, 2012).

Employee development is the term that elucidates training and education plans in the place of work with focus on the individual development of the workforce. They may include elements of job-related training but are typified by their broad approach to the training requirements of employees. An important observation is that there is a difference between training and development and education. Whereas training and development involve imparting skills and knowledge, education is limited to theoretical learning in a classroom environment (Muhammad Ikhlas, 2012). Even though there is a difference between training and development and education, the two concepts are complementary. For instance, organizations assume that an employee who undergoes training has acquired some formal education. In fact, there is no form of training that can be complete without an element of education. The two concepts are highly complementary to the extent that their differences are increasingly becoming blurry these days. Organizations are increasingly calling upon employees to excise judgment and identify alternative solutions to problems thus broadening training programs and seeking to develop employees through education. For example, employees in the service industry are expected to make independent decisions with regards to their association with clients. Therefore, organizations must consider both education and training when planning training programs. The assumption is that education and training are both elements of training programs for any organization.

Tahir, Yousafzai, Jan &Hashim’s (2014) objectives were to investigate the employees’ perceptions of the different ways in which training and development has been beneficial to them. Another factor that these researchers investigated was whether the competency levels of employees improved after training and development. The results of this study demonstrated that the model of the research was statistically significant meaning that there exists a significant connection between training and employees performance.

Problem-solving cultures conduct training and development programs that deliberately develop the problem-solving skills necessary. Training and development should not be limited to a handful of individuals who are assigned to problem-solving teams. As Kulkarni (2013) found out in her study, training on problem-solving skills should be provided to everyone at all levels of the organization. In addition, training and development programs should be carefully designed to ensure that each individual in the organization develops the capability to solve the problems that are important to their own project, department, and managerial level. However, providing training to individuals who cannot immediately apply what they learn is ineffective and wasteful training. These researchers also indicated that training should be provided to those individuals who need it when they need it and in the fashion that develops the skills effectively. The study also concluded that, to develop a culture that deliberately develops problem-solving skills of all employees within the organization, it is important for the organization to identify the skills necessary at each level and in each area, and then provide appropriate training and coaching.

According to Kulkarni (2013), employee development is composed of four components; employee training, employee skills, training effectiveness, and employee quality of work life. Consequently, Kum, Cowden &Karodia (2014) have discussed several reasons for training and developing employees’ skills. These reasons include capital development, morale boosting, and ability to adapt to change.

In another study in Africa, Boadu, Fokuo, Boakye&Kwaning (2014) examined the role played by training and development as a tool for employee performance in Ghana. Training and development is one of the most important activities in an organizational set-up. The researchers used a sample of 50 employees who were employed on full time basis in Kumasi Metropolitan Assembly. The results of the study found out indicated that there exists a direct connection between training and progress and the performance of the workers. Other results also indicated a direct correlation between training as well as development and workers’ job satisfaction. However, there were some problems and challenges that the participants associated with training and development exercises. While the management indicated that there are limited financial resources to cater for training and development programs, employees expressed concerns about the time the managements of organizations allocate to various training and development programs. The study observed that employees play a crucial role in every organization. It is difficult for organizations to achieve their goals and objectives without the input of employees. The highest percentages of jobs in organizations are performed by human resources. In their study, Hameed&Waheed (2011) emphasizes the important role played by employees in an organization. The success or failure of an organization is dependent on the performance of its employees. As a result, Boadu, Fokuo, Boakye&Kwaning (2014) recommended that organizations should allocate enough financial resources that will adequately support the training and development of their employees. Training and development enables the employees to better understand the organizational goals and objectives. The study defined training as a learning process in which employees are provided with skills, knowledge, attitudes, and experiences that they need to perform their duties within the organization.

Boadu, Fokuo, Boakye&Kwaning (2014) made various recommendation including offering intensive training to employees regularly in order to achieve the objectives of the organization. The study emphasized on focusing on more innovative training and development programs to enable the employees perform better. Secondly, the study recommended that the managements of organizations should first identify the knowledge and skills required to meet its goals.

Rooij&Merkebu (2013) have extensively examined the ways in which organizations in the professional services sector measure the outcomes of employee learning. Good training and development programs bring about employee satisfaction, which in turn creates customer satisfaction. Thus, there are two benefits derived from training and development: employee satisfaction and customer satisfaction. The two benefits later add to the bottom line by reducing employee turnover. Citing a 2005 study by Forte Hotels in London, Owen &Teare (2005) stated that, “Clearly, if staff is happy about what they and the company need to do in order to satisfy customers and are well trained and supported, they will, on average, remain with their employer three to four times longer than employees who feel less secure.” In another study, Berry &Parasuraman(2009) stated that interacting with dissatisfied and frustrated customers can deflate employees' enthusiasm in a certain job, reduce their commitment, and result in increased employee turnover. These studies established a relationship between employee satisfaction and customer satisfaction. Good employees hate engaging with customers who are dissatisfied and disgruntled. A two-way association occurs between customer satisfaction as well as employee satisfaction. Every time that customer satisfaction declines, employee satisfaction diminishes. Consequently, an increase in customer satisfaction leads to an increase in employee satisfaction.

Employee development is a term that explains training and education ideas in an organization with a focus on the personal development of employees. They may include the elements of job-related training but are typified by their broad approach to the education and training requirements of the employees. Cicekli (2013) emphasizes the importance place upon training by employing organizations. Cicelkli conducted a study on employees to examine the qualities they need while hiring employees. The study found out that employees seek for those graduates with analytical thinking, interpersonal skills, and willingness to work. One of these skills (analytical skills) is highly associated with problem solving. Discussing previous studies, Cicekli found out that employers also seek skills such as computer application skills, teamwork skills, and communications skills. Today, many organizations are seeking for employees whom they can give the task of research and development. Research and development needs people who have high problem-solving skills. Computer applications skills, interpersonal skills, communication skills, and analytical skills are highly desirable in research and development. Other organizations are engaging experts to come and train their employees about these skills. Employers in the accounting services sector are also seeking to upgrade and employ people with accounting problem analysis skills (Cicekli, 2013). In another study by Wickramasinghe&Perera (2010) using 26 employers from Sri Lanka, it was established that employers seek for those graduates with computer science education citing that they have high problem solving skills, a positive attitude towards work, self-confidence, learning skills, and ability to work as a team. All these studies emphasize the important role and the high demand for employees with problem solving skills. Reviewing 47 jobs advertisements from the American Libraries, Colleges & Research Libraries, another study established that the most cited needed skills by many employers included innovativeness and creativity, oral and written communication, work collaboration skills, leadership skills, and interpersonal/human relations skills (Cicekli, 2013). These studies have placed a special emphasis on skills that are mostly used in problem solving. It is evident that problem solving skills are highly needed in organizations emphasizing the need to train and develop all the employees in the company to help them acquire these important skills. Training and development empowers employees, as individuals or in teams enabling them to interact more often with co-workers, customers, suppliers, and management. It arms employees with the ability to identify problems and opportunities and take appropriate actions. Employees who have been empowered through training are always able to lead others and resolve their own conflicts without appealing to the management. Skills training also enable employees to assume more responsibilities within the organization.

Training in problem-solving skills has general application, thus is not directly related to the technology of the organization or to the specific responsibilities of the scientists. On-the-job training has found not to be very effective in problem-solving. Problem-solving skills are effectively learned for further application if the learning is done in a non-threatening situation. This is best done outside the organization and takes the form of seminars using role-playing and case studies. In their study, Khan, Khan & Khan (2011) have discussed training and development, on-the-job training, training design, and delivery as the four significant features in organizations. The study sought to identify the impact the four aspects have on employees’ performance.

Impact of Training on Employee Performance

The growth and development of any organization depend on a myriad of factors. Employee training is among the factors that influence organizational growth and development. Organizations that train their employees have a better position to face competition and remain competition than organizations that do not train their employees. Therefore, there is a distinction between organizations that train their workers and organizations that do not train their employees. Existing literature on employee training and development reveals that training generally improves employee performance. Whereas some studies analyze the impact of employee training from the perspective of employee performance, some researchers extend their analysis to the overall performance of the organization. However, the latest research studies reveal that employee performance and organizational performance are related. According to Saks and Burke-Smalley(2014), employee performance is a subject of organizational performance. In this regard, organizations can use effective training and development to change the competencies of their employees. Therefore, training is not limited to improving the overall performance of workers and execute their current tasks but also augment their understanding and skills so that they can handle future tasks thus achieving superior organizational performance (OSBORN, 2016).

Early research studies on training, and employee performance present interesting findings regarding the relationship between the two concepts. The studies mention that training has proved to improve performance through the development of skills, behavior and competencies (Kennett, 2013). However, other studies reveal that training is an effective tool for organizations to address the issue of skill deficits and performance gaps. This is also a way of improving employee performance. Organizations bridge performance gaps by implementing the relevant training interventions so that employees can acquire particular skills and abilities that they will use to achieve organizational goals and objectives. Additionally, training ensures that organizations identifies the skill levels of their employees and make interventions for improvement so that they can match the needs of the organization. However, it is important to note that training can only be effective if it is continuous thus organizations should never wait for performance gaps before implementing a training program for its employees.

Kennett (2013) has significantly discussed the ways of training provision to the employees and the impacts they make on individual, organisational, and skill development. In his study, Hameed&Waheed (2011) stated that employee development means the way in which the abilities of individual employees are developed. Human capital has been considered to be a differentiator between great and good companies. Whenever an organization invests in training in training and development, it is investing in its human resources which make it realize both short-term and long-term returns.

Another study was conducted by Kum, Cowden &Karodia (2014) investigating the impact of training and development on employee performance in ESCON consulting in South Africa. The study recognized the great role played by training and expansion in enahancing the expertise and intellectual capacity of the employees. Similar to the previous study by Tahir, Yousafzai, Jan &Hashim, the researchers in this study collected data through the use of questionnaires. The study attributed the significant decline in service delivery in the public sector in South Africa to limited investment in training and human development initiatives. The study further indicated that significant improvements can be realized with the increase in artisan and analytical skills development.

In their study, Tahir, Yousafzai, Jan &Hashim (2014) investigated whether training and development of employees makes an impact of the performance and productivity of employees. The study drew employees from eight united banks and the data was collected through the use of questionnaires. The results of this study revealed that there is a positive correlation between training and development and employees’ productivity and performance. The study starts by observing that it is not possible for an organization to achieve good performance without a good performance by its employees. The researchers observed that most of the bank sectors have integrated training and management programs in their activities. They have further observed that training and development serves two purposes. While training and development programs are started by organization with a focus of improving the performance of the organization, these programs also contribute to improving the skills of employees. Therefore, while the organization becomes the focus of training and development programs, employees are the targets of training and development.

Training Theories and Theoretical Framework

The concept of training and development is based on social learning theory including the Bandura’s social learning theory and Argyris’ double loop learning(Thompson& West, 2013). These two theories are greatly relevant to the concept of training and development. However, Bandura’s social learning theory is the most accepted among the two theories because it presents a complete but parsimonious interpretation of social learning (Illeris, 2015). Bandura explains how humans behave regarding their continuous interaction with behavioral, environmental and cognitive factors (Illeris, 2015). According to Bandura, learning takes place through observation of other people's behavior. The underlying components of Bandura’s social learning theory include:

• Attention: consists of modeled events such as functional value and the characteristics of the observer such as arousal level.
• Retention: relates to the ability of the observer to rehearse events using approaches such as symbolic coding and motor rehearsal
• Motor reproduction: consists of the physical abilities of the observer and accuracy of feedback.
• Motivation: consists of external as well as self-reinforcement

Bandura's social learning theory spans behavioral as well as cognitive frameworks because it encompasses memory, attention and motivation. Bandura’s social learning has an important role in understanding the concept of training and development. First, managers act as role models to their subordinates thus influencing their behavior. In fact, research studies reveal that there is a higher chance of employees imitating their superiors than their peers because of the high status of their superiors. Second, training is some form of self-managed approach that organizations model for their employees. Third, the effectiveness of employee training depends on four stages synonymous to the four components of the social learning theory. They include presentation of models for desired action (attention), imitation by the employee (retention), social reinforcement by the organization (motor reproduction) and transfer training to encourage learning among employees when on the job (motivation). The double loop learning theory also influences the concept of employee training. The theory focuses on how people learn to change values and assumptions in the face of problems within the organization. According to the double loop learning theory, employees respond to changes in the organizational environment by detecting and correcting problems that affect the norms and values of the organization. In this case, employee training aims at equipping employees with the necessary skills to solve problems whenever they arise.

Conceptual Framework for the Study

• Independent variables

Training is the independent variable in this study because it is the determinant factor for employee performance. Business organizations design training programs for their employees to enhance employee performance and overall organizational performance. In the conceptual framework, there are six elements of employee training including assistance systems, learning options, learning evaluation, effective management of training, aligning training with the business and integrating training with human resources management (SaifAlMarri, 2015).

• Dependent variables

Employee performance is the independent variable for this study. Employees have different capabilities, but their ability to achieve high standards of performance depends on their level of training. Organizations measure the effectiveness of employee training through employee performance. A training program is effective when employees can improve their performance during or at the end of the training program (Kyndt, Govaerts, Claes, De La Marche&Dochy, 2013).

Summary

This literature review studies the concept of employee training and its influence on employee performance. The review reveals that employee training is an important aspect of strategic management and enhances performances among employees and the overall organization. In fact, the difference between successful organizations and their less successful peers is the effectiveness of training and development. Organizations that implement effective training and development programs have the opportunity to acquire and retain a competitive advantage in the market.