Training for Most Capable Workforce

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Advan ces In Management

ase Study :

Vol. 3 12) Dec. 2010)

Training for Most Capable WorkforceIndradevi R

VIT Business School, VIT University, Vellore 632 014 (T.N.), INDIA. [email protected]

AbstractTh e function of the HR Department is changing

with time and with this change, the relationship betweenthe training function and other management activity isalso changing. Training is a learning process thatinvolves the acquisition of knowledge, skills, concepts,rules, attitudes and behaviors of individuals to enhancethe performance of employees. The training anddevelopment activities are now equally important withthat of other HR functions. The days when training wasconsidered to be futile, waste of time, resources and

money, is gone. Now a days, training is an investmentbecause the departments such as marketing and sales,HR production, finance etc. depend on training for itssurvival. Training actually provides the opportunity toraise the profile development activities in theorganization. TTiis research paper explored employeecapability as a intervening variable between trainingand organizational performance with special referenceto IT Industry. Data were collected using a selfadministered questionnaire. The questionnaire consistsof thirteen items on training and seven items onemployee capability and seven items on organizationalperformance with a Five-Point Scale ranging from

strongly disagree I) to strongly agree 5). A sample of100 respondents from 2 IT Companies in Chennai,constituted as the sample unit for the study. Convenientsampling technique is adopted to select the sample unitsto collect the data. Scale reliability test was conductedon all the 27 items.

Keywords: Training, employee capability, organizationalperformance.

IntroductionTraining is a learning process that involves the

acquisition of knowledge, skills, concepts, rules, attitudes andbehaviors that enhance the performance of employees.Training helps employees to analyze where they stand atpresent and where they will be after some time. Training notonly develops the skills of employees but also helps inoptimum utilization of human resource that further helps theemployee to achieve the organizational goals as well as theirindividual goals. It also helps in understanding and carryingout organizational policies.

Bontis and Serenko^ defined that employeecapability reflects an individual's perception of his or her

own knowledge, skills, experience, network, abilities toachieve results and room for potential growth. It is believedthat highly satisfied employees perceive themselves to bemore competitive than their less satisfied counterparts.

With the rapid expansion of IT sector and coming upof major players and new technologies, companies mustprovide the necessary tools and other innovations for theiremployees to be productive, efficient and informed. A lot ofresearch has identified a direct link between traininginvestment of the companies and the market capitalization.Training has been identified as a major tool to optimize

organization and employee capability. It clearly indicates thatthe companies which have successfully implemented trainingprograms, deliver customer goals with effective results.Training results in enhancement of employee capabilitywhich in turn, helps the organization in achieving its businessgoals.

Review of LiteratureGerhart and Milkovich^ identified a correlation

between training programmes and financial performance.Bates'* described that training was linked to the longevity ofcompanies. Bartel^ recognized a positive relation between thetraining program given to employees in manufacturing sectorand the growth in productivity. Hu selid' evealed thatinvestments made in Human Resource Development resultedin reduced turnover of employees, higher productivity andincreased performance of the organization. Doucouliagos^found that investment in training was desirable both for thedevelopment of the individual and organization. He addedthat Human capital investment is an activity which improvedthe quality (productivity) of the worker. Training as animportant component of human capital investment increasedthe capability of employees. Barcala, Perez and Gutierrez^stated that training is considered to be the great aspect ofinterest for both the public and the private sector.

Bird and Beechler' investigated the fit between asubsidiary's business strategy and its HRM strategy andhigher performance. The study used perceptual performancemeasures. In the absence of objective data, self-reportedmeasures are an acceptable substitute and are also reliable.

Mayo'^ argued that employee capabilities are one ofthe most important measures affecting organizationalperformance. McCowan et al identified that successfulorganizations constantly enhance employee capabilitiesthrough a variety of special program s.

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dvances In Management Vol. 3 (12) Dec. 2010

Atidrew M ayo ' examined the contribution of humancapital to current and future value for stakeholders. The keyimplications for such growth are individual capability,individual motivation, leadership, the organizational climateand workgroup effectiveness. Each of these was examined indetail with quantifiable measures. Individual capability orEmployee capability was measured by knowledge/ skill/experience/ network; ability to achieve results, potential forgrowth and their contribution to work. Employee capability isone of the most important m easures affecting organizationa lperformance.

MacDonald and Colombo'* and DiFrancesco'' arguethe importance of training in Organizations which contributesto the development of Human Capital. Ballot, Fakhfakh andTaymaz' discussed the effects of training on wages andproductivity. The empirical evid ence sugg ested that workersdo tiot get all the benefits of training even though humancapital is completely embodied in them and finns got a

significant improvement in productivity in return for theirinvestment in training.

Paul and Anantharaman'^ developed and tested acausal model that related Human Resource Management(HRM) with Organizational performance. The study foundthat each and every HRM practices under the study had anindirect influence on Organizational performance.

Susan et a l developed a new measurement tool thatassessed the human capital development processes of anorganization, benchmarked the performance against otherorganizations and determined the relationship of each process

to business results. Human capital development processessuch as learning or career development lead to improvedperformance in human capital capability like em ployeeengagement or workforce performance. Hum an C apitalCapability is defined in terms of leadership, workforceperformance, employee engagement and workforce adaptabi-lity, ability to change, talent management and human capitalefficiency .

Katou and Budhw ar made a study on the effect ofHuman Resource management policies on organizationalperformance and found that Human Resource managementpractices like training, appraisal, recruitment had a positiveeffect on the performance of the organization.

Kumpikaite and Ciarniene'^ analyzed the scientificliterature and empirical research covering 18 organizations ofLithuania. The study explored training and development ofemployees helped organizations to meet their competitivechallenges and environmental changes. Traditionally, trainingfocused on improving the performance of employees in theircurrent jobs while development prepared the employees for anew job. There are numerous theoretical and empiricalresearch studies on Training. M ost of the studies concentratedon the need for training, training effectiveness and training

and organization performance. There is not much researcdone on training and the implication of training on employecapability.

MethodologyThe study was an explorato ry study which ex plor

the employee capability as an intervening variable betweetraining and organizational p erformance. Primary data wreference to the agreement level of the employ ees on trainingemployee capability and organizational performance wecollected from the respondents by using a well designequestionnaire with 27 items. A sample of 100 respondentfrom IT Companies in Chennai constituted as the samplinunit for the study. Convenient sampling technique is adopteto collect the data. Survey was condu cted with specireference to Chennai.

Independent variable Training Practices: Based on anextensive review of the HRM literature, a list of 13 items wascompiled which described the training practice s followed inIT Companies. The Alpha value obtained is.77.

Intervening variable Employee capability: Employecapability was the intervening variable used in this study andseven items described the employee capability. The Alphvalue obtained is .75.

Dependent Variable Organizational performance:Organizational performance was the dependent variable usein this study and seven items described the organizationaperformance. The Alpha value obtained is .78. The alphvalue for all the variables is higher than the acceptable lowlimit of .6 according to Nunnally' .

Analysis and InterpretationData analysis is carried on with the primary dat

collected from the field study. It was tried to find outassociation between demographic variables like age, gendemarital status and experience of the employees with that oftraining provided to employees and employee capability.

Demographic Variables and Training:

HO: There is no significant association between demographvariables and training provided to employees

HI: There is significant assoc iation betwe en dem ographvariables and training provided to employees

It is inferred from table 2 that the significance valufor demographic variables on training is


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graphic var iables and increased employee capabi l i ty.

H I : There is significant association b etween demogra|.variables and increased employee capability.

It is inferred from table 3 that the significance valuefor demographic variables on employee capability is


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form of employee capabilities which in turn increase theperforinance of the organization. The study had alsoidentified a positive association between demographicvariables of respondents like age, gende r, marital status andexperience and employee capability and training. Thisindicates that all HR Managers of IT Companies shouldconcentrate on the regular training imparted to employees toincrease their efficiency. The HR Managers shouldconcentrate more on planning for the training program,learning by newcomers, senior management involvement,briefing and debriefing on the role of training in order todevelop the capability of employees which leads to theincreased performance of the organization. Study concludesthat employee capability intervenes between training andorganizational performance with a high impact value.

Tab le 1Cronbach s Alpha Coefficient for Scales

Vol. 3 (12) Dec. (2010

S.N.

12

3

Variable

TrainingEmployee Capability

Organizational performance

Alpha

0.77 0.75

0.78

Tab le 2ANO VA Demographic Variables and Training

Gender

Marital Status

Experience

Age

F. . .1.821

6.149

3.369

3.098

Sig.

.036

.000

.000

.000

Table 3ANOVA - Demographic Variables and

Employee Capability

Gender

Marital Status

Experience

Age '

. .- F

4.518

6.449

7.449

8.999

Sig.

.000

.000

.000

.000

Tab le 4ANOVA - Demographic Variables and

Organizational performance

Gender

Age

Experience

Marital status

F - ,

.603

2.539

1.924

3.225

Sig.

.882

.001

.017

.000

Table 5Model Summary

Model

1

R

.731 (a)

R Square

.535

Adjusted RSquare

.534

Std. Error ofthe Estimate

.27382

a Predictors: Constant), training.

Table 5.1ANOVA (b)

. Model

1Regression

Residual

Total

Su m of Squares

36.348

31.639

67.987

Df

1

42 2

42 3

.. ^ Mean Square

36.348

.075

F

484.799Sig.

.OOO a)

a Predictors: Constan t), training; b Dependent Variable: employee capability.

Tab le 5.2

Coefficients (a)Model

1 Constant) training

Unstandardized Coefficients

B

1.631

.608

Std. Error

.110

.028

Standardized Coefficients

Beta

.731

14.773

22.018

Sig.

.000

.000

a Dependent Variable: employee capability.

ReferencesI. Ballot G., Fakhfakh F. and Taymaz E., Who Benefits fromTraining and R D, the Firm or the Workers?, British Journal of

Industrial Relations 44 3), 473-495 (2006)

2. Bartel A.P., Productivity gains from the implementation ofemployee training programs. Industrial Relations 33 (4), 411 (1994)

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Advances In Management.,. - r ; a Vo l . 3 12) Dec. 2010)

Model

1

a Predictors: (Constant),

R.675 (a)

training


R Square

.456Adjusted R Square

.455Std Error of the Estimate

.36591

Model

1 Regression

Residual

Total

Table 6.1ANO VA h)

Sum of Squares

47.333

56.501

103.834

df

1

4 2 2

4 2 3

. Mean Square

47.333

.134

F .

353.527Sig.

.OOO(a)

Table 6.2Coefficients a)

Model

1 (Constant)

training


B1.356

.694

Std. Error.147

.037

Standardized Coefficients

Beta

.675

, t : .

9.196

18.802

Sig.

.000

.000a Dependent Variable: organization performance.

. Model

1

R

.683 a)


R Square

.466

Adjusted R Square

.465Std. Error of the Estimate

.36254a Predictors: (Constant), employee capability.

Table 7 .1ANO VA h)

Model

1 Regression

Residual

Total

Sum ofSquares

48.368

55.466

103.834

df

1

42 2

423

Mean Square

48.368

.131

F

367.997

Sig.

.OOO(a)

a Pred ic to rs : (Cons tan t ) , employee capab i l i ty ; b Dependen t V ar iab le : o rgan iza t ion per fo rmance .

Table 7 .2Coefficients a)

Model

1 (Constant)

employee capability


B

.699

.843

Std. Error

.179 .

.044

StandardizedCoefficients

Beta

.683

t

3.914

19. i 83

Sig.

.000

.000

a Dependent Variable: organization performance.

3. Barcala M.F., Perez M.J.S. and Gutierrez J.A.T., Training insmall business retailing: testing human capital theory, Journal ofEuropean Industrial Training 23 (7), 335-352 1999)

4. Bates T., Entrepreneur Human Capital Inputs and SmallBusiness Longevity, The Review of Economics and Statistics72 4),551-559(1990)

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dv nces n Management Vol. 3 (12) Dec. (2010)

Traming.608 Employee

capability

.694

.843 .: Organizationalperformance

- i i

Graph 1: Training - Performance framework

5. Bird A. and Beechler S., Links between bu siness strategy andhuman resource management strategies in U.S.-based Japanesesubsidiaries: An empirical investigation, Joumal of InternationalBusiness Studies, 2 6, 23-45 (1995)

6. Bontis N. and Serenko A lexander A., The m oderating role ofhuman capital management practices on employee capabilities,Journal of Knowledge Management, 11 (3), 31-51 (2007)

7. DiFrancesco J., Managing human capital as a real businessasset, IHRIM Journal, 6 (2), 7-16 (2002)

8. Doucouliagos C , The Aggregate demand for Labour inAustralia: A meta-Analysis, Australian Economic papers, 36 (69),224-242 (2002)

9. Gerhart B. and Milkowich G.T., Organizational differences inmanagerial compensation and firm performance. Academy ofManagement Journal, 33 (4), 663-691 (1990)

lO.Huselid M.A., The impact of human resource managementpractices on turnover, productivity and corporate financialperform-ance. Academy of Management Journal, 38 (3), 635-672(1995)

ll.Katou A.A. and Budhwar P.S., The effect of human resourcemanagement policies on organizational performance in Greekmanufacturing firms, Thunderbird International Business Review,49 , 1-35 (2007)

12. Kumpikaite V. and C iamiene R., New Training TechnologiDeveloping Human Resources, Economics and Management, 9 (2)155-159(2008)

13. Mayo A., The role of employee developm ent in the growth intellectual capital. Personnel Review, 29 (4), 521-533 (2000)

14. MacDoniald B . and Colombo L., Creating value through humcapital management. The Internal Auditor, 58 (4), 69-75 (2001)

15. McCo wan. R.A., Bowen U., Huselid M.A. and Becker B.Strategic human resource management at Herman Miller, HumanResource Management Review, 3 8 (4), 303-308 (1999)

16. Nunnally J.C , Psychoriietric T heory, 2nd ed.. New YorMcGraw-Hill (1978)

17. Peter Cheese and Benton James M ., Human C apital D evelopmeAccenture research note (2003) .

18. Paul A.K. and Anantharaman R.N., Impact of people managempractices on organizational performance: analysis of a causal modThe International Journal of Human Resource Management, 14 (7(2003)

19. Susan C antrell, Benton Jam es M ., Laudal Terry and Th omRobert J., Measuring the value of human capital investments: the Scase. Strategy Leadership, 34 (2), 43-55 (2006).

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