The Relationship Of Training & Development Practices and

Organizational Performance
(The Case of Commercial Bank Of Ethiopia)

By: Firehiwot Guta

A Thesis Submitted to the School of Graduate Studies of Addis

Ababa University in Fulfillment of the Requirements for the Degree
of Masters of Arts in Human Resource Management

Advisor: Fesseha A. (Ass. Prof.)

ADDIS ABABA UNIVERISTY SCHOOL OF COMMERCE DEPARTMENT

OF HUMAN RESOURCE MANAGEMENT
Addis Ababa, Ethiopia
Jun, 2017
 ADDIS ABABA UNIVERISTY SCHOOL OF COMMERCE
DEPARTMENT
OF HUMAN RESOURCE MANAGEMENT

THE RELATIONSHIP OF TRAINING & DEVELOPMENT

PRACTICES AND ORGANIZATIONAL PERFORMANCE
(The Case of Commercial Bank Of Ethiopia)

By
FirehiwotGuta

Approved by Board of Examiners:

Advisor: --------------- Signature--------------- Date ---------------

Examiner: -------------- Signature ------------- Date-----------------

Examiner: -------------- Signature ------------- Date-----------------

 STATEMENT OF DECLARATION

I, the undersigned, declare that this thesis is my own original work and has not
been presented in any other University. All sources of materials used for this thesis
have been duly acknowledged. I have produced it independently except for the
guidance and suggestion of the Research Advisor.

Declared by
Name: Firehiwot Guta Degefa
Signature: _______________
Date: Jun, 2017

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 STATEMENT OF CERTIFICATIONS

This is to certify that Firehiwot Guta Degefa has carried out her thesis work on the topic entitled
The Relationship of Training and Development Practices and Organizational Performance (the
case of Commercial Bank of Ethiopia).The work is original in nature and is suitable for
submission for the award of Master’s Degree in Human Resource Management.

Advisor: Fesseha Afework (Ass. Pro)

Date: -------------------------------

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 ACKNOWLEDGEMENT

I am grateful to my Merciful Shepherd, God, for giving me the grace and strength to complete
this work. My sincere gratitude goes to my advisor Assistant Professor Fesseha Afework whose
consistent guidance and support enabled me to successfully do this research project. I am also
indebted to my beloved and honored family and friends for their patience,understanding and all
the encouragement they gave me when I needed it most. Godbless you all!!!

Firehiwot Guta

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 ABSTRACT

The study objective is to investigate the relationship of training and development and
organizational performance in CBE under West Addis Ababa District. An explanatory cross-
sectional survey study and quantitative approach was used to provide empirical data to help
address the existing research gap. The study consisted sample of 125 employees selected through
stratified simple random sampling. The respondents answered questionnaire items adopted from
previous researchers using Likert`s traditional questionnaire. The findings showed that CBE has
had experienced inefficiency in TNA and Training evaluation elements of its T&D practices. An
inferential relationship was computedusing Pearson correlation analysis to investigate their
relationship with organizational performance under the BSC measurement framework, which
CBE is currently practicing. Therefore, it is found that both TNA and training evaluation
elements has strong positive relation with all the four dimensions, i.e. financial, customer,
internal process and learning & growth performance in CBE. As a result, in order to achieve
effectiveness in its T&D programs, CBE is recommended as the TNA and training evaluations
needs to be systematically linked and derived from the overall organizational strategies, plans
and policies, rather than being piecemeal, standalone activities, designed to react to the current
organizational conditions.

Key words: Organizational Performance, T&D Practices.

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 ABBREVIATION AND ACRONYMS

BSC Balances Scorecard

CBE Commercial Bank of Ethiopia
CSO Customer service officer
HR Human Resource
HRD Human resource development
HRM Human Resource Management
ROI Return On Investment
SWIFT Society for Worldwide Interbank Financial Telecommunication
SCSO Senior Customer service officer
TNA Training Needs Assessment
TQM Total Quality Management
WAAD West Addis Ababa District

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 LIST OF TABLES

Table 1.1- Differences Between Training And Development…………………………………….. 9

Table 3.1 Carvalh Sample Size Determination……………………………………………………. 39

Table 3.2 Sample Unit Taken From Each Branch…………………………………………………. 40

Table 3.3 Cronbach’s Alpha Statistics For The Survey Questioner……………………………….. 43

Table 4.2 Overall Response Rate………………………………………………………………….. 45

Table 4.3.1 Demographic Information Of The Respondents……………………………………… 45

Table 4.4.1.1: Training Need Assessment (TNA) Practices……………………………………….. 49

Table 4.4.1.1-I: TNA Practice Category Of Mean Value…………………………………………. 50

Table 4.4.1.2: Training Evaluation Practices……………………………………………………... 51

Table 4.4.1.2 -I: Training Evaluation Practice Category Of Mean Value………………………… 52

Table 4.4.2: Factors Affecting The Effectiveness Of T&D………………………………………. 54

Table 4.4.2- I Factors Affecting The Effectiveness Of T&D Category Of Mean Value…………. 55

Table 4.5. Correlation Result Interpretation Guide………………………………………………... 57

Table 4.5.1 Correlation Between T&D Practice And Organizational Performance……………….. 57

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 TABLE OF CONTENT

Preliminaries

Statement Of Declaration…………………………………………………………………………i

Statement Of Certifications………………………………………………………………………ii

Acknowledgement……………………………………………………………………………….iii

Abstract…………………………………………………………………………………………..iv

Abbreviation and Acronyms……………………………………………………………………..v

List Of Tables..…………………………………………………………………………………...vi

Table of Content…………………………………………………………………………………vii

Contents

CHAPTER ONE………………………………….…………………………………………….. 1
1. Introduction………………………………….…………………………………….………… 1
1.1 Background Of The Study………………………………….……………………………… 1
1.2 Background Of The Organization…………………………………………………………. 3
1.3 Statement Of The Problem………………………………….……………………………… 4
1.4 Research Questions.………………………………….…………………………………….. 7
1.5 Objective Of The Study………………………………….…………………………………. 7
1.5.1 General Objective Of The Study………………………………….……………………… 7
1.5.2 Specific Objective Of The Study………………………………………………………… 7
1.6 Significance Of The Study………………………………….……………………………… 8
1.7 Scope Of The Study/Delimitation………………………………….………………………. 8
1.8 Definition Of Terms………………………………….…………………………………….. 9
1.8.1 Training And Development ………………………………….…………………………… 9

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1.9 Organizations Of The Paper………………………………….…………………………….. 10
CHAPTER TWO………………………………….…………………………………………….. 10
REVIEW OF RELATED LITERATURE………………………………….…………………… 11
2 Introduction……………………………………….…………………………………………. 11
2.1 Theoretical Literature Review……….……………………………………………………… 11
2.1.1 Training And Development………………………………………………………………. 13
2.1.1.1 Purpose Of Training And Development……………………………………………….. 15
2.1.1.2 Approaches To T&D……………………………….……………………………………………. 16
2.1.1.3 Key Elements Of An Effective Training program…………………….,.……………… 18
2.1.1.4 Main Characteristics: Factors Influencing T&D Effectiveness…………..……………. 22
2.1.2 Organizational Performance………………………………………………..…………….. 26
2.1.2.1 What Is Performance Measurement? .……………………………..……..…………….. 26
2.1.2.2 What Is Organizational Performance? ….……………………………….…………….. 26
2.1.2.3 The Balanced Scorecard………………………………………………………………… 27
2.1.3 Models That Link Organizational Performance With T&D………………………………. 30
2.1.4 T&D Contribution To Organizational Performance……….……………………………… 31
2.2 Empirical Literature Review………………………………….…………………………….. 34
2.3 Conceptual Framework………………………………….………………………………….. 36
CHAPTER THREE………………………………….……………………..…………………… 38
3. Research Design And Methodology……………………………….……………………….. 38
3.1 Introduction………………………………….…………………………………………….. 38
3.2 Research Design & Approach………………………………….………………………….. 38
3.3 Population Of The Study, Sampling Method And Sample Size…………………………… 39
3.3.1 Population Of The Study………………………………….…………………………….. 39
3.3.2 Sampling Method ………………………………….…………………………………… 39
3.3.3 Sample Size………………………………….………………………………………….. 39
3.4 Data Sources & Type And Instrumentation………………………………………………. 40

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3.4.1 Data Sources & Type………………………………….………………………………… 40
3.4.2 Data Collection Instrument……………………………………………………………… 41
3.5 Data Collection Procedure………………………………………………………………… 42
3.6 Validity And Reliability…………………………….………………………………………. 42
3.7 Analysis Of Data………...………………………………………………………………….. 43
3.8 Ethical Considerations………………………………….…………………………………. 44
CHAPTER FOUR………………………………….…………………………………………. 45
Data Analysis And Discussion…………..…………………………………………………….. 45
4.1 Introduction………………………………….…………………………………………….. 45
4.2 Overall Response Rate ………………………………….…………………………………. 45
4.3 Demographic Information Of The Respondents. ………………………………………….. 45
4.4 Analysis Of Findings ………………………………….…………………………………… 47
4.4.1 Extent Of T&D Practice Efficiency……………………………………………………… 48
4.1.1.1 Training Need Assessment (TNA)………………………………………………... 48
4.1.1.1 Training Evaluation……………………………………………………………….. 51
4.4.2 Factors Affecting The Effectiveness Of T&D…………………………………………… 53
4.5 Correlation Analysis……………….……………….……………………………………….. 56
4.5.1 Relationship Between T&D Practices And Organizational Performance………………… 56
CHAPTER FIVE………………………………….…………………………………………….. 59
Summary, Conclusion And Recommendations…………………………………………………. 59
5.1 Introduction…………………………………………………………………………………. 59
5.2 Summary…………………………………………………………………………………….. 59
5.2.1 Extent Of T&D Practice Efficiency………………………………………………………. 59

5.2.2 Factors Affecting T&D Effectiveness…………………………………………………….. 60

5.2.3 Relationship Between T&D Practices And Organizational Performance………………… 60

5.3 Conclusion…………………………………………………………………………………... 61

5.4 Recommendations…………………………………………………………………………... 61
5.5 Limitation Of The Study………….…………………………………………………………… 62

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5.6 Suggestion For Further Research …..……………………………………………………… 62
Reference……………………………………………………………………………………………..………………………………… 63
APPENDEX………………..…………………………………………………………………………………………………………….. I

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 CHAPTER ONE

1. INTRODUCTION

The success of an organization is the sum total of the factors or variables that exist in the
environment that may influence the present and future survival of an organization (Armstrong,
1998). The factors may be internal or external to the organization. Cascio (1995), uses the terms
societal environment to define the varying trends and general forces that do not relate directly to
the company but could impact indirectly on the company at some point in time. Four of these
forces are identified as economic, technological, legal and political and socio-cultural and
demographic forces. The second type of environment is the task environment that comprises
elements directly influencing the operations and strategy of the organization. These may include
the labor market, trade unions, competition and product markets comprising customers, suppliers
and creditors. The task environment elements are directly linked to the company and are
influenced by the societal environment.

However, variables in the task, competitive or operative environment as they are variously
referred to, affect organizations in a specific industry and it is possible to control them to some
extent. As such, environmental change, whether remote or task, disrupts the equilibrium that
exists between the organization‟s strategy and structure, necessitating adjustment to change.
Pfeffer (1998) proposes that there is evidence demonstrating that effectively managed people can
produce substantially enhanced economic performance. Pfeffer extracted from various studies,
related literature, and personal observation and experience a set of seven dimensions that seem to
characterize most if not all of the systems producing profits through people. He named them the
seven practices of successful organizations. Extensive Training is one of them.

1.1Background Of The Study

A number of studies has found that, in spite of the methodological challenges, investments in HR
can provide a sustainable source of competitive advantage and can increase the likelihood of
successful implementation of the firm‟s business strategies. Because of these effects, investments
in human capital have the potential to produce attractive rates of return for the firm‟s

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shareholders. The process of investing in HR goes beyond simply hiring and retaining good
people. Bundles of human resource management practices can help to create a source of
sustainable competitive advantage, especially when they are aligned with the organization`
competitive strategy. While organizational HR strategy is properly configured, it will provide a
direct and economically significant contribution to the organization`s performance. Employee
training and development is one of the crucial HR practices where people acquire capabilities to
aid in the achievement of organizational goal (Hitt, Ireland, and Hoskisson 2007).

Training and development is a subsystem of an organization that emanate from two independent
yet interdependent words training and development. Training is often interpreted as the activity
when an expert and learner work together to effectively transfer information from the expert to
the learner (to enhance a learner‟s knowledge, attitudes or skills) so the learner can better
perform a current task or job. Training activity is both focused upon, and evaluated against, the
job that an individual currently holds (Learner R., 1986). On the other hand development is often
viewed as a broad, ongoing multi-faceted set of activities (training activities among them) to
bring someone or an organization up to another threshold of performance. This development
often includes a wide variety of methods, e.g., orienting about a role, training in a wide variety of
areas, ongoing training on the job, coaching, mentoring and forms of self-development. Some
view development as a life-long goal and experience. Development focuses upon the activities
that the organization employing the individual, or that the individual is part of, may partake in
the future, and is almost impossible to evaluate (Nadler ,1984).

Training and development ensures that randomness is reduced and learning or behavioral change
takes place in structured format. In the field of human resource management, training and
development is the field concerned with organizational activity aimed at bettering the
performance of individuals and groups in organizational settings. It has been known by several
names, including employee development, human resource development, and learning and
development (Harrison, 2005).

Although training is used with development, the terms are not synonymous. Training typically
focuses on providing employees with specific skills or helping them to correct deficiencies in
their performance. In contrast development is an effort to provide employees with capabilities

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the organization`s will need in the future. Employee development is, therefore, training people to
acquire horizons, technology or viewpoints. It enables leaders to guide their organization onto
new expectations by being proactive rather than reactive. Development is not only limited to a
particular task, but it aims to improve their personality and attitude for their all-round growth
which will help them to face future challenges. It changes the mindset of the employees and
makes them more challenging or competing (Harrison, 2005).

Training and development, has its strategic positioning and it directly contributes towards
organizational business goals and objectives. The objectivity of training and development and its
continued learning process has always been leverage and now it has become rather an
overarching trend of social needs, emphasizing that organizations must inculcate learning culture
as a social responsibility. It has been also proved by many studies in the past that there are sound
connections between various Training and development practices and different measures of
organizational performance. The performance of an organization is based on the quality of its
employees, and so the greater the quality of employees, the greater will be their performance (
Becker and Huselid,1998).

1.2 Background Of The Organization

The Commercial Bank Of Ethiopia is a state owned bank that has been playing significant roles
in the economic progress and development of the country since its establishment 1942. It is the
leading African bank with assets of 384.6 billion Birr as on June 30th 2016. It has more than
1140 branches stretched across the country with more than 13.3 million account holders and
more than 1,352,000 Mobile and Internet Banking users as of September 30th 2016. It has strong
correspondent relationship with more than 50 renowned foreign banks like Commerz Bank A.G.,
Royal Bank of Canada, City Bank, HSBC Bank and a SWIFT bilateral arrangement with more
than 700 others banks across the world.

The Commercial Bank of Ethiopia has a vision to become a world class commercial bank
by2025 with a mission to best realize stakeholders' needs through enhanced financial
intermediation globally and supporting national development priorities with state-of-the-art

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technology. It combines a wide capital base with more than 29,000 talented employees
committed to the organization`s mission (www.cbe.combank.net.et).

The Commercial Bank of Ethiopia, part of its budgetary allocation, has been earmarked solely
for training of top management, vice presidents, managements and all operational Staffs to
enhance their capacity to perform their duties effectively and efficiently so as to achieve the
vision and mission statements of the bank.

To this effect, the human resource development, with the so called Center of Excellence (i.e.
training institution) ,which has the mandate to promote effective training of all the above
mentioned organs, over the years, has conducted several training programs to build their capacity
to perform their functions as effectively as excellent and has been undertaking the Balanced
Scorecard(BSC) Framework for measuring it`s organizational performance, for the past few
years.

Although, the strategic importance of training and development practices for having highly
skilled and knowledgeable work force that can successfully perform job- with higher
motivation, commitment and productivity- which enables the organization to culminate a strong
competitive advantage, is highly recognized by the bank, still there is a problem in developing
and/or implementing effective training and development practices, objectively, as a key means to
achieve sustainable competitive advantage(CBE Annual report,2014/15).

1.3Statement Of The Problem

At this era of globalization, planning for globalization strategy is critical to ensuring you get the
highest quality outcome in the shortest time frame, while keeping costs under control. Training
and development is the way process to cope up with the knowledge of this globalization since
knowledge is becoming a reliable source of sustained competitive advantage and basic capital
and the trigger of development. Modern organizations, therefore, use their resources (money,
time, energy, information, etc.) for permanent training and advancement of their employees.
Organizations which are constantly creating new knowledge, extending it through the entire
organization and implementing it quickly inside the new technologies, develop good products

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and excellent services. These activities determine the company`s success and will be addressed
through extensive employee training and development programs (Harrison, 2005).

Nevertheless, there is significant debate among professionals and scholars regarding the
relationship of T&D and organizational performance.On one hand, like, the resource-based
perspective emphasize the importance of training. It argues that traditional resources, such as
financial capital or access to technology, are less important because they are easier to imitate
than human resources (Neal & Hesketh, 2002).Thus, competencies that are rare, unique, non-
imitable, and non-transferable help to achieve competitive advantages and facilitate business
success (Lepak & Snell, 1999). Such competencies are developed internally by means of
processes such as co-operation, participation, and more importantly by training and development
(Boxall&Steeneveld, 1999).On the other hand, one school of thought argues that training leads to
an increase in turnover- it serves as a way losing talented people to other rival companies
(Colarelli&Montei, 1996:Becker, 1993).

Brum,(2007), however, has come up with an issue that bring most professionals in to agreement-
the reciprocity theory. It essentially states that both the organization and the employees are
mutually benefited from T&D programs. He said an employee will help the company because
the company helped him/her. This parallels the notion of the employees having “a sense of
debate” toward the organization. Researches in this element of commitment indicate that training
can play an integral role in building the sense of debt to the company. Training that achieves
reciprocity in the employee will foster an individual`s commitment to the organization.

Therefore, the question is no longer whether we should train or not, rather it is about whether or
not training is worthwhile and effective (Mann, 1996). This is, therefore, will be attained by first
setting the critical TNA that determines the whole direction and purpose of T&D
processes and second evaluating the proper implementation and effectiveness of these programs
(Hesseling, 1966).

Thus, the researcher had tried to investigate whether the above mentioned theoretical problems
are empirical or not, in the case of CBE.

Commercial Bank of Ethiopia placed T&D as the bases for its strategic operational excellence
and business growth, which are the ultimate results of the Bank. Consequently, it has been

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allocating huge sums of money in its budgetary allocation towards training and developing its
employees as a highly valued asset. It has also built the first huge training center called “center
of excellence” for its capacity building and other firms in the industry. The Germany‟s Frankfurt
School of Finance has also been enlisted as the T&D consulting firm in millions of dollars
expense, for the past few years. The bank believes that its employees are its indispensable assets
and they must uphold critical competencies that match world class standards and is convinced
that this can be attained only when continuous investment is made to upgrade the skills of
existing ones as to boost productivity and the ability of the Bank to effectively realize its
objectives. (CBE annual Report 2013/14).

Thusly, while the researcher review the bank`s Five Years Performance Report,2010/11 –
2014/15, it is stated that regardless of the bank`s huge investment in T&D, these programs are
not being used as a strategic tool of achieving the bank`s vision and objectives. Consequently,
the bank has put it as one of the eight major focus areas in its corporate strategy for the year
15/16 – 19/20. In light of this, the researcher got the interest to investigate the relation of T&D
programs and organizational performance of CBE.

Consequently, in order to clearly identify the practical problem, the researcher has undertaken a
preliminary interview with HR manager at WAAD on “is T&D generating the expected outcome
on the bank`s performance and attainment of its vision?”. The result was, therefore, evident that
there existed knowledge gap that needs to be filled through research. This study, therefore,
sought to help bridge this gap by determining the relation of T&D programs and organizational
performance, which helps to reconcile the gap between what should happen and what is
happening – between desired targets or standards and actual levels of performance.

Therefore, as per the preliminary interview outcome, the researcher has found the following two
basic gaps, mentioned here under,

Poor Training Need Assessment. The training that has been deployed for the past few
years is based on what has been assessed five years ago. In other word the bank has never
made it`s TNA for the past five Years.

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 Poor, if not no at all, evaluation of an added/changed employee‟s performance/behavior,
by immediate supervisor after one has completed a specific training.

1.4 Research Questions.

Upgrading employees performance and improving their skills through training and development
is a necessity in today`s global competition and swiftness of changes, where uncertainty is the
only certainty, knowledge is becoming a reliable source of sustained competitive advantage.
Training and development is concerned with organizational activity aimed at bettering the
performance of individuals and groups in organizational settings. As a result the researcher
essentially research for questions to answer:

1. Which T&D practices lacks effectiveness in CBE?

2. What factors are affecting the current T&D program`s effectiveness?
3. What is the relationship between T&D and organizational performance in CBE?

1.5Objective Of The Study

1.5.1 General Objective Of The Study

The general objective of the study is to investigate the relationship of T&D practices and
organizational performance in CBE, the case of West Addis Ababa District.

1.5.2 Specific Objective Of The Study

In order to investigate the relationship of T&D and organizational performance in CBE, the
researcher conducted the following specific objectives;

1. To assess the T&D practices which lacks effectiveness in CBE, WAAD?

2. To evaluate factors affecting the effectiveness of T& D programs, in CBE,
WAAD.
3. To determine the relationship between training & development and organizational
performance in CBE, WAAD.

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1.6Significance Of The Study

The importance of this study comes from the increasing interest in the relationship of T&D and
the performance of an organization.

In this particular study, the employees and the employer‟s .at large will be benefited from the
findings. Specifically the finding will assist employees in understanding the significance training
and development plays in:

 Acquiring and maintaining the knowledge, skills and abilities to provide quality service
to provide to customers in the most efficient and economical possible manner.
 Providing with opportunities for personal growth and professional development in the
organization.
 Prepare employees to assume broader responsibilities, cope up with change and current
global issues in their current and for future development and improve performance.

In addition to this, it will also help to increase the productivity of the bank by identifying the
weakness and demanding the recommendation of the research which can help to insure its
growth and sustainability.

Furthermore, it will be helpful in paving the way to other researchers to go research further in
detail of this specific issue of the topic and can extend to other human resource practices that can
help the bank to be competitive in the market. Beyond all the listed benefits, the findings of this
research will contribute more to the body of knowledge which can helps to build the theoretical
capacity of interested individuals.

1.7 Scope Of The Study/Delimitation

The scope of the study is theoretically delimited to two major variables, T&D and organizational
performance. The assessment of T&D practices is made on training need assessment (TNA) and
training evaluation as a key elements and factors affecting their effectiveness whereas,
assessment for organizational performance were delimited to the Balanced Score Card
measurement, where financial outcome, customer service outcome, internal business process and

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learning & growth outcomes being its four dimensions.Finally, their theoretical relationship and
contribution of T&D for organizational performance has been assessed.

The geographical scope of the study undertaken is delimited at Addis Ababa, the Western
District (WAAD). The study targets the perception of clerical employees (i.e. CSO-
checker/maker, SCSO- accountant, SCSO- auditor, and SCSO- chiefcashier), since these are the
major forces and has direct relation with the service provision and/or the performance of the case
under the study.

1.8 Definition Of Terms

1.8.1 Training And Development

Training is an educational process. People can learn new information, re-learn and
reinforce existing knowledge and skills, and most importantly have time to think and
consider what new options can help them improve their effectiveness and performance at
work. Effective trainings convey relevant and useful information that inform employees
and develop skills and behaviors that can be transferred back to the workplace.
(Charnov 2000)

Development is a process that “strives to build the capacity to achieve and sustain a new
desired state that benefits the organization or community and the world around them”.
(Garavan, Costine, and Heraty 1995).Its processaims to find ideas and solutions that can
effectively return the group to a state of highperformance. Development implies creating and
sustaining change. (Lepak D.R & Snell S.A. (1999).

Four „W‟s bring out the differences between training and development as follows:

Table 1.1- Differences between training and development.

Training Development
WHO? Non-managerial personnel Managerial personnel
WHAT? Technical skills Conceptual skills
WHY? For specific task/job For multiple professions
WHEN? Shot-term Long-term
Source: Lepak D.R & Snell S.A. (1999)

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1.8.1 Organizational Performance

The performance of the organization refers to those attitudes' that have been assessed or
measured as to their contribution to organizational goals (Cook and Hunsaker, 2001).

Among the most common and distinctive performanceframeworks that attempt to tie
performance metrics to the organization strategies and visions, the Balanced Scorecard
Framework developed by Kaplan and Norton (1992) is organizational performance measurement
used for the study undertaken.

The research paper consists of five chapters. The first chapter is the introductionschapter and
contains statement of the problems, research questions, objective of thestudy, and significance of
the study and delimitation of the study. Literature reviewswere presented in chapter two. The
third chapter dealt with the methodology usedin the research activity. Data analysis and
interpretation of the research resultswere discussed in chapter four. The final chapter covered the
discussion of result,conclusions and recommendations. In addition other sections, namely, list
ofreferences and annexes are also parts of the research framework.

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 CHAPTER TWO

REVIEW OF RELATED LITERATURE

2. Introduction

The global competition and swiftness of changes emphasize the importance of

human capital within organizations, as well as the swiftness and ways of knowledge
gaining of that capital. In the economy where uncertainty is the only certainty, knowledge
is becoming a reliable source of sustained competitive advantage - basic capital and the trigger of
development (Schuler& Jackson, 2005).

Leading management thinkers suggest that “it is not technology, but the art of human- and
humane-management” that is the continuing challenge for executives in the 21st century
(Delaney, and Huselid, 1996). Similarly, (Smith and Kelly, 1997) believethat “future economic
and strategic advantage will rest with the organizations that can mosteffectively attract, develop
and retain a diverse group of the best and the brightest human talent in the market place”.

The purpose of this chapter is to review the theoretical background on the effectof training and
development in organizational performance, the empirical findings and conceptual framework
thereof.

Based on the literature review, the relationship between “training and development” and
“organizational performance” were conceptualized, with “training and development” being an
independent variable and “organizational performance” being the dependent variable.

2.1Theoretical Literature Review

Organizations need to consider some important issues as they face the future:continuous
technological change; the increasing removal of trade barriers; theconsequent globalization; the
volatility of customer demand within existing markets (Luoma, 2000; Ulrich, 1997). These
continuous changes have challengedorganizations to learn how to manage their businesses in the
context of thesecontinuous unpredictable changes, to learn how to confront these changes
quickly andsuccessfully. In other words, these continuous changes and challenges have created

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the need for a learning organization. It is argued that, in order for an organization to be a learning
organization and to achieve its objectives and strategies, it needs to consider the important role of
its people; it needs a highly competent, skilled and trained workforce. The need to compete from
the inside out has made organizations aim to increase the power of their people-related processes
to build and sustain competitive advantage as the ultimate organizational objective; thus,
outperforming competitors (Luoma, 2000)

Much attention has been given to the value of Human Resource Management (HRM) activities,
particularly Human Resource Development (HRD), of which T&D is considered the most
important activity. T&D is responsible for building skilled, qualified and capable people and
responsible for creating a learning culture, which helps organizations to improve their
performance and adapt to any new change.

However, there has been a general resistance to investment in training in organizations until
recently because of the presumption that employees hired under a merit system are qualified and
trained for their jobs (Okotoni and Erero, 2005). It was further assumed that if that was not
the case then it means that initial selection of personnel was faulty (Stahl, 1956). This
assumption no longer holds as the need for training became evident in all sectors (Okotoni
and Erero, 2005). Training offers a way of “developing skills, enhancing productivity and quality
of work, and building worker loyalty to the firm” (http://www.bls.gov/oco/ocos021.htm)

Training and development has become the Holy Grail to some organizations, an evidence of how
much the management truly cares about its workforce (Hamid, 2011). Hamid (2011) went further
to say that the effectiveness with which organizations manage, develop, motivate, involve and
engage the willing contribution of those who work in them is a key determinant of how well
these organizations perform.

There are two main theoretical approaches towards employee training and development
, namely, the human capital approach and the technology-based approach. According to Luo
(2000), the human capital approach regards training as investment in human capital. Thus,
training is provided only when the benefit from productivity gains is greater than the cost of
training. On the other hand, the technology-based approach regards training as a skill formation
process. According to this approach, the expanded training in the contemporary period is driven

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by the rapidly changing technologies and work reorganization. Thus, training is provided
because it satisfies the functional needs of an organization and equally contributes to human
capitalaccumulation or skill formation.

2.1.1Training And Development

T&D is the most important subsystem or element of HRD. It concerns increasing,improving,

enhancing and modifying employees' skills, abilities, capabilities andknowledge, thus, they will
be able to conduct their current and future jobs effectively,thereby increasing individuals' and
organizations‟ growth and performance. According to Mondy et al. (1999: p.254), T&D is "a
planned, continuous effort bymanagement to improve employee competency levels and
organizational performance". Nadler and Nadler (1990: p.6) define T&D as "an organized
learning experience provided by employers within a specific period of time to bring about the
possibility of performance improvement and/or personal growth”

The Manpower Services Commission (1981) defines training as "a planned processto modify
attitude, knowledge and skills through learning experience to achieveeffective performance in an
activity or range of activities ". It defines development as"the growth of realization of a person's
ability, through conscious or unconsciouslearning. Development programmers usually include
elements of a planned study andexperience and are frequently supported by a coaching or
counseling facility".

According to Neelam et al., (2014) Training and development is defined as the planned
learning experiences that teach employees how to perform current and future jobs.
These two processes, Training and Development, are often closely connected. Training can
be used as a proactive means for developing skills and expertise to prevent problems from
arising and can also be an effective tool in addressing any skills or performance gaps among
staff. Development can be used to create solutions to workplace issues, before they become a
concern or after they become identifiable problem (Kennedy, 2009).

Training and development have become the most important factor in the business world
today, because training increases the efficiency and the effectiveness of both employees and
the organization (Raja, Furqan and Mohammed, 2011). Training is a systematic restructuring

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of behavior, attitude and skills through learning- education, instruction and planned
experience. The cardinal purpose of training is to assist the organization achieves its short
and long term objectives by adding value to its human capital. Training and development are
not undertaken for the sake of training, but rather are designed to achieve some needs.
Therefore, training and development are need based in the sense that they are undertaken to
fill some knowledge gap within an organization (Gunu et al., 2013).

 Key Differences Between Training And Development

Although training is used with development, the terms are not synonymous. Training typically
focuses on providing employees with specific skills or helping them to correct deficiencies in
their performance. In contrast development is an effort to provide employees with capabilities
the organization`s will need in the future.The major differences between training and
development are as under:

 Training is a learning process for new employees in which they get to know about the key
skills required for the job. Development is the training process for the existing employees
for their all-round development.
 Training is a short-term process i.e. 3 to 6 months, but development is a continuous
process, and so it is for the long term.
 Training focuses on developing skill and knowledge for the current job. Unlike, the
development which focuses on the building knowledge, understanding and competencies
for overcoming with future challenges.
 Training has a limited scope; it is specific job oriented. On the other hand, development
is career oriented and hence its scope is comparatively wider than training.
 In training, the trainees get a trainer who instructs them at the time of training. In contrast
to development, in which the manager self-directs himself for the future assignments.
 Many individuals collectively attend the training program. Development is a self-
assessment procedure, and hence, one person himself is responsible for one‟s
development.

2.1.1.1 Purpose Of Training And Development

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A number of authors recognize the purpose of training and development as being to develop
capacities ofemployees and by extension represents an investment in human resources (Ulrich
and Lake,1990). The quality of employees and their development through training and education
aremajor factors in determining long-term profitability of any business venture.
Human Resource professionals also believe that an organization is only as good as its
employees, and this understanding suggests that training should be more specifically
responsive to employees‟ training needs (Noe, 2008). Arguing in the same line, Bratton and
Gold (2000) affirm that successful corporate leaders recognize that their competitive edge in
today‟s market place is their people. They also acknowledge that few organization know how
to manage human resources effectively, primarily because traditional management models
are inappropriate in today‟s dynamic work environment.

To manage an organization both large and small requires staffing them with competent
employees. The formal educational system in Nigeria does not adequately teach specific job
skills for a position in a particular organization and few employees have the requisite
knowledge, abilities, skills and competencies needed to work. As a result, many employees
require extensive training on the job to acquire the necessary knowledge, abilities, skills and
competencies needed to make substantive contribution towards the organization‟s growth.
The effectiveness and success of an organization lies on the people who form and work
within the organization. It follows therefore that for the employees in an organization to be
able to perform their duties and make meaningful contributions to the success of the
organizational goals, they need to acquire the relevant skills and knowledge (Ospina and
Watad, 1999). In the appreciation of this fact therefore, it becomes imperative for
organizations to ascertain the training and development needs of its employees, through its
training need analysis and align such needs to the organizational overall needs and objectives
in order to actualize the organizational vision and mission.

Smith (2010) opines that training motivates employee and make them more productive and
innovative. Smith asserts further that the reasons why training makes sense include, well trained
employees are more capable and willing to assume more control over their jobs; they
need less supervision, with free management for other tasks; employees are more capable to
answer questions from customers which enhances customer loyalty. Furthermore, employees

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who understand their job, complain less, are more satisfied and more motivated and thus
improve management-employee relationships. Heathfield arguing in the same direction
opines that the opportunity to continue to grow and develop through training and
development is one of the most important factors in employee motivation (Heathfield,
About.com Guide).

2.1.1.2 Approaches To T&D

1. Reactive, Proactive And Active Approaches To T&D

I. Reactive Approach

The traditional approaches to training can be generally termed as reactionary, driven by

tactical delivery of technical skills in bricks and mortar, classrooms trainings and where
training is seen as an event oriented activity.This approach is similar with Robinson and
Robinson (1989) training-for-the-activity approach. In this approach the program is designed to
meet the qualitative expectations of topmanagement and tends to be reactive to the
organization‟s current needs andproblems.

II. Proactive Approach

In the learning organization this approach aligns all learning activities with the corporate
business strategy, and its focus is on developing competencies.Robinson and Robinson (1989)
also called this approach as training-for-the-impact approach, which emphasizes the proactive
role of T&D; that is, through makingemployees more capable and skillful to improve on-the-job
performance and toachieve the organization‟s corporate objectives.

III. Active Learning Approach

In this approach, trainees play a leading role in learning by exploring issues and situational
problems under the guidance of their facilitator. The trainees learn by asking thought
provoking questions, searching for answers, and interpreting various observations made
during the process. The active learning approach has its lasting impact on learning since it
helps in long-term retention and finding better solutions in the challenging situations.In

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today‟s fast paced world, continuous learning is essential to success. Individuals need to learn
to succeed in life and at work. Companies need to ensure their employees continue to learn,
so they can keep up with increased job demands and so the company can gain or maintain
competitive advantage.

2. Systematic And Non Systematic Approaches To T&D

I . Non Systematic T&D

Adamu (2008) argues that the traditional approach of training of staff in organizations is not a
systematic one. Training follows a process and that process makes it systematic. But most ofthe
time, human resource departments in most organizations ignore the process and conduct
training in an ad-hoc and haphazard ways without training need analysis. (Olaniyan and Ojo,
2008).

II .A Systematic T&D Approach and Process

T&D should be based on a systematic approach, rather than being piecemeal,fragmented,

isolated short programs developed to meet specific short-terms needs.Armstrong (2003) argues
that T&D will fail to obtain its objectives and affectorganizational performance if it is based on a
piecemeal basis and is used in isolationwithout the backing of top management.

A systematic training approach includes some important stages or sub-processes:development of

Training Needs Assessment (TNA); formulating T&D objectives;designing and implementing
the T&D program; evaluating the effectiveness of the program (Goldstein, 1993; Lubernd,
1989). One of the mostimportant training approaches is advanced by Robinson and Robinson
(1989). Theyargue that organizations need to adopt training-for-the-impact approach
(proactiveand strategic), rather than training-for-the-activity approach (reactive). Training-for
the-impact approach emphasizes the proactive role of T&D; that is,through makingemployees
more capable and skillful to improve on-the-job performance and to
achieve the organization‟s corporate objectives. While, in training-for-the-activity approach the
program is designed to meet the qualitative expectations of top management and tends to be
reactive to the organization‟s current needs and problems.

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In general, it could be argued that the systematic T&D approach emphasizes fouressential stages,
training need assessment; development stage; implementation stage; evaluation stage. However,
it is important to say that a general understanding of learning theories and individual's and
groups' preferred learning styles is required when conducting any of the T&D stages,
importantly, the development and designing stage.

2.1.1.3 Key Elements Of An Effective Training Program

I. Training needs assessment

Training is designed to help the organization accomplish its objectives. Consequently, assessing
organizational training needs represents the diagnostic phase of setting training objectives. The
assessment phase considers employee and organizational performance issues to determine if
training can help. When doing the training needs assessment, it is important to consider non-
training factors such as compensations, organization structure, job design, and physical work
settings. Mathis and Jackson (2004) further note that organizational analyses, job analyses and
individual analyses could be used to identify training needs.

After training needs have been identified using appropriate analyses, then training
objectives and priorities must be established by identifying a skill gap or training need, which is
the distance between where an organization is with it employee capabilities and where it needs to
be. Training objectives and priorities are set to close the gap. Ideally, training needs are ranked in
importance on the basis of organizational objectives.The training most needed to improve the
health of the organization is done first in order toproduce visible results more quickly.

II. Training Design

Once training objectives have been identified, trainingdesign has to be developed. Training must
be designed to address the assessed needs. Effective trainingdesign considers learning concepts,
legal issues, and different approaches to training.

A trainingprogram is constructed in terms of the achievement of objectives.When you are

developing your objectives it should has to be specific, attainable and measurable.

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  Specific -- Objectives should be clear-cut and to the point, without leaving a lot of
room for ambiguity.
 Measurable -- This can be more difficult, but it can be very helpful to develop objectives
that you can measure in some way. This accomplishes two different things: first of all,
achieving these objectives helps both trainers and trainees leave the session with a better
feeling of accomplishment. Second, it's also a good way to be able to use your training
results in future grant applications or on other documents where your organization needs
to be able to quantify what you have done.
 Attainable -- World peace won't happen overnight. Try to think in terms of what can
realistically be accomplished in the time you have. Particularly if this is the first training
session your organization has developed, you might try to obtain some relatively simple
objectives. Unrealistic objectives will leave everyone involved frustrated. It's important
to set yourself up for success.

III. Training Delivery

After the development of the training design, then begins the actual delivery of training. It is
generally recommended that the training be pilot-tested or conducted on a trial basis in order to
ensure that the training meets the needs identified.

IV. Training Evaluation

Training evaluationcompares the post-training results to the objectives expected by managers,

trainers and trainees. Often times, training is conducted with little thought of measuring and
evaluating it later to see how well it worked. Mathis and Jackson (2004) suggest that because
training is both time-consuming and costly, it is imperative that there is evaluation after training

Grove and Ostroff (1990), Redshaw (2000) and Shandler (1996) argue that evaluating
training gains or influences on organizational effectiveness and performance is a very hard task
for the following reasons.

 There are many other factors which can have an influence, positively or
negatively, on the organization‟s performance: for example, other

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 organizational activities, market forces, competitive activity, new technology,
legislation, the economy, etc (Shandler, 1996; Redshaw, 2000; Burrow and
Berardinelli, 2003); also, luck, industry, power and size.
 The impact of training may take a considerable time to show up in overall
results (Redshaw, 2000).
 Training results and outcomes are usually complex and difficult to be measured
or quantified, such as employee satisfaction, commitment, motivation, changes
of behavior and attitudes, etc. This causes confusion between accountants and
line managers who view training evaluation differently from the way trainers
view it. Accountants and line managers may believe that training evaluation is
not different from any other form of evaluation; simply, outputs can be
compared with inputs, while the fact is that the relationship between training
intervention and organizational performance cannot be easily identified.

To overcome most of the evaluation difficulties, Burrow and Berardinelli (2003) and Redshaw
(2000) suggest that there are two important things to be taken into account. First, line managers
hould be involved. As mentioned before, effective T&D programs require top and line
anagement support, commitment and leadership. Thus, line managers should participate in
determining the training objectives and evaluation criteria. These occur when trainers are
consulting with line managers. They may ask them questions such as, what they want to
improve, how they will recognize success and how they will measure this success. During this
process all the other factors that influence the organization‟s performance would be identified
andagreed. Second, because it is hard to connect training interventions to the
organization‟sperformance measurements directly, these measurements need to be revised,
refined and resized to document the impact of planned learning (T&D) on organizational
performance.

There are many training evaluation approaches and techniques. However, there are four main
complementary evaluation frameworks: Kirkpatrick, the Bell system, Parker and CIRO; all have
been reported by McCracken and Wallace (2000). However, Kirkpatrick's evaluation model is
the one most commonly used by many organizations (Hale, 2003) According to Kirkpatrick

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(1996), there are four stages to be considered when evaluating training effectiveness: reaction,
learning, behavior and results level.

Training Evaluation Model

The need to measure the effectiveness of training programs is as important asdetermining the
need for training and the best program that fits such needs.According to (Donald Kirkpatrick
1998), there are Four-Level TrainingEvaluation Model which serves as a tool in analyzing the
effectiveness of training.The Four Levels Models are:

Level 1: Reaction

This level measures how the employee been train reacts to the empowermentprogram, their
experience towards the program, instructor, the deliver style andthe materials been used. The
need to measure the reaction of training is importantbecause it helps the organization in
understanding how well the training isreceived, the strength and weaknesses of training and
determining if itaccommodates personal learning styles.

Level 2: Learning

This level measures what the trainee has learnt, how much of knowledge andskills acquired
through the training session. When planning training program a listof specific learning objectives
to be achieved are to be put into consideration andit is important to measure what the trainees are
learning, by this not only will ithelp in mapping out knowledge acquired but also as a guide for
future trainingprograms to be adopted.

Level 3: Behavior

At this level, the employee`s behavior is evaluated based on the training program
received, by looking at how the skills and information gained is applied on the job through the
employee`s behavior. Most time, the behavior can only change if theconditions are favorable and
when the behavior has not changed, it indicates thatnothing has been learnt and training was
ineffective.

Level 4: Results

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Analyzes are evaluated based on the final result of training through the outcomethe employee
exhibit after the training. This is evaluated alongside theorganizational goals and objectives such
as employee retention, higher morale,higher quality rating, less customers complains
andincreased production.

2.1.1.4 Main Characteristics: Factors Influencing T&D Effectiveness

Pettigrew et al. (1989) identify a number of factors that influence T&D effectiveness. These
factors relate to the business strategy, the external labor market needs, and internal actors and
systems, which include factors such as training philosophies, systems, management organization
and external supporting and funding for training. Hussey (1985) identifies three important
matters related to HRD that affect T& D activities and program: an integral strategy, top
management commitment and an organizational culture. Armstrong (1992) adds another theme:
a coherent and flexible training approach. Garavan et al. (1995) identify eight contextual factors
which affect the form of HRD function and the type of activities it engages in: the external
environment and organization stakeholders, culture, technology, structure, change, size and
power. Also, Garavan (1991) identifies nine key characteristics or criteria for SHRD, which
relate to the main organizational factors influencing T&D effectiveness. All are important in
their own right, but they are interrelated and integrated together.

Integration with an organization’s missions and goals.

This criterion implies integrating HRD strategies within an organization‟s corporate

strategy and objectives. It also stresses that HRD is viewed as a strategic lever in the
organization, as a means of helping the organization to implement and shape its strategies. This
kind of integration is called `vertical integration', as described by Guest (1997) and Storey
(1992), or `strategic HRD aligned' (Legnick-Hall, 1988; Garavan, 1991). Therefore, strategic
integration implies that HRD should play responsive and proactive roles, rather than just a
reactive role. Also, HRD integration with the overall organization‟s goals and missions suggests
an implementation role for HRD, but truly strategic HRD should also shape and influence these
missions and goals.

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 HRD policies and plans must be formulated, derived from and
integratedwith business plans and policies

This criterion is one of the most important factors which could influence T&D effectiveness.
Taylor (1996) emphasizes that T&D should be considered an integral part of an organization‟s
investment plan. To ensure successful T&D planning, implementation and evaluation stages,
T&D plans and policies should be linked to, derived from, and integrated with the overall
business plans, objectives and needs. This integration helps to provide the organization with the
competencies required to implement the organization‟s strategies. Hussey (1985) suggests that
all organizations should start with strategy and make a training plan in accordance with it.

Top management support and commitment.

Top management commitment and support is considered a critical factor for a successful T&D
program (Taylor, 1996; Jones, 1990). Top manager roles as key stakeholders, should be active
rather than passive, supportive and involved (Garavan, 1991; Lee, 1996; Harrison, 1997). Grove
and Ostroff (1990) argue that the effectiveness of T&D depends on top management and line
managers' support and understanding of what training hopes to achieve and its potential benefits.
They also argue that top managers and T&D managers should discuss exactly, what needs to be
developed. According to Yeomans (1982), top management support could be verbal and/or
action support. Verbal support is related to words, written documents and reports, while action
support is the most important one; it is about supporting the T&D implementation and evaluation
stages, through planning and allocating the required resources and time in the early planning
stage. So, top management should support and provide T&D activities with all the abilities
required to conduct such activities. In other words, top management needs to be convinced about
the benefits of T&D and the nature of its outcomes, whether they will be measured
financially or non-financially, and identify any potential barriers (Garavan et al., 1995)

Line management commitment and involvement

Line managers are key stakeholders and actors; therefore, they should be involved and work in
partnership with HRD specialists on both operational and strategic issues. In fact, mostly, line
managers do not fully understand the importance of T&D activities, because training means

Page 23
those trainees (their employees) will leave their work and duties to attend the training programs
for a while. Therefore, it is very important to convince line managers of the importance of T&D
in improving the work when the employees come back to their work after training. This is
stressed by Wognum (2000) who emphasizes the importance of fully involving line managers in
any HRD decision-making, so that HRD activity, at the tactical and operational level, is aligned
with HRD policy making at the strategic level. Furthermore, Lee (1996) and Harrison (1997)
stress the need for shared ownership of HRD where line managers and HRD staff work in
partnership over HRD issues. However, the role of the line managers is underdeveloped for a
variety of complex, attitudinal and cultural reasons.

Environmental scanning

This criterion implies that T&D functions and programs should be responsive to any change in
the external or internal organizational environment. Training needs should be based of
organizational environmental scanning. That means that HRD, like any other organizational
function, should explore the external environment to determineany potential opportunities and
threats in order to be up-to-date with the external change, such as technological changes. At the
same time, an organization should scan its internal environment to determine its strengths and
weaknesses. By doing so, it could determine the gap between what it is able to do and what it
should be able to do. Also, it will ensure that training needs are assessedand analyzed based on
organizational, tasks and individuals needs or requirements.

Expanded role of trainers

Garavan (1991) and Talbot (1993) argue that trainers' roles should be expanded to be innovative
and consultative, rather than just simply providing and managing training programs. A trainer's
roles should include adaptor (adapting skills and knowledge of staff to fit with the existing
system), adopter (getting staff to adopt new values and attitude and emphasizing change) and
innovator (informing and influencing organizational change processes). Therefore, trainers
should be well qualified, understand and know how to manage the T&D process and know how
to design and conduct successful T&D programs. They should not be just lecturers or teachers,
but they should play different roles, as adaptor, adopter and innovator.

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 Recognition of organizational corporate culture

Culture in general is defined, according to Schein (2004: p. 17), as: "A pattern of shared basic
assumptions that was learned by a group as it solved its problems of external adaptation and
internal integration, that has worked well enough to be considered valid and, therefore to be
taught to new members as the correct way to perceive, think, and fell in relation to those
problems.” The role of organizational culture is to embrace change as a strategic advantage, to
influence the organization‟s life cycle and facilitate the organization‟s learning process (Garavan
et al., 1995). Culture influences work behavior and the way organizations view things; it
identifies the accepted ways, beliefs, thoughts and feelings in the organizations. Organizational
culture contains tangible and intangible factors that influence work behavior and attitudes, and
affect the organization‟s activities. Top management com commitment and philosophy are some
of the cultural aspects that affect training and development in the organization. T&D requires an
appropriate culture that views it, as a source of achieving the organization‟s objectives by
developing employees' skills, attitude and behavior, rather than, as a cost for which tangible and
direct outcomes are not evident. Two other important cultural aspects that shape and influence
corporate education and training practice are innovation and resistance to change. So, any
organization that innovates and has less resistance to change culture investsmore in
T&D.However, HRD should create a match between an organization‟s culture and
strategy.(Garavan, 1991; McCracken and Wallace, 2000)

Emphasis on evaluation

It is argued that, although training evaluation is a very important phase for a successful T&D
program, this phase is the most neglected one, resulting from a lack of time and resources to
complete the evaluation process, or maybe a lack of top management support, ineffective design
of the evaluation process and unclear evaluation criteria. Thus, the data would be misunderstood,
misused and misinterpreted (Beardwell and Holden, 1994; Houlton, 1996; Combs And Falletta,
2000). Mann (1996) argues that, despite heavy investment in training, organizations can
frequently fail to evaluate adequately the value or success of their training programs.

2.1.2Organizational Performance

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2.1.2.1 What Is Performance Measurement?
Performance measurement is the process of collecting, analyzing and/or reporting information
regarding the performance of an individual, group, organization, system or component. It can
involve studying processes/strategies within organizations, or studying engineering
processes/parameters/phenomena, to see whether output are in line with what was intended or
should have been achieved.

2.1.2.2 What Is Organizational Performance?

For the past many decades, organizations were measuring their performance traditionally.
Traditional performance measurement systems may encourage conservatism and a „playing it
safe‟ attitude: “Managers need to be encouraged to identify defined areas within which a degree
of experimentation and risk-taking might be beneficial. Too often we stifle creativity and
learning by insisting upon good performance from all activities” (Otley 1994).
Measurements like ROI discourage senior managers from innovating, investing in market share
or developing sources of competitive advantage (Dent 1990) and encourage conformity (Roberts
1990). Moreover, strategic planners‟ flexibility and creativity may be inhibited by formal control
systems (Langfield-Smith 1997) which prompt management to engage in systematic planning
(Flamholtz et al. 1985). Control systems create a climate that can act against successful strategy
implementation and formulation processes. Dent (1990) illustrates how MCS could foster or
inhibit innovation depending on their design. The design of an information system and MCS
necessitates several decisions regarding the choice of information measured, omitted and
reported. A design that filters inconsistencies will promote fictitious comfort and clarity and will
confirm conventional reasoning. The perception of managers is limited to the information
available (Flamholtz et al. 1985).
Performance measurement contributes to strategy formulation and implementation by revealing
the links between goals, strategy, lag and lead indicators (Kaplan and Norton 1992, 1996) and
subsequently communicates and operationalizes strategic priorities (Nanni et al. 1992). The role
of performance measurement evolves from a simple component of the planning and control cycle
to an independent process that assumes a monitoring function. This function entails measuring
movement in a strategic direction instead of distance from a goal, which is different from the
planning and control cycle (Nanni et al. 1992).

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Many measures of performance may be more relevant to some sectors than others. When
measuring organizational performance, the choice of measures should be informed by the
sector and business-specific context (Page et al, 2006). Measurement of organizational
performance is not without its challenges. Measures based on accountancy are to some
extent, open to manipulation and therefore may be difficult to compare over time, or between
organizations. Many measures do not necessarily capture the quality of a product or service
and where part-time work is frequent and to be comparable, measures need to take into
account hours worked (Page et al, 2006).

In recent years, many organizations have attempted to manage organizational performance using
the balanced scorecard methodology where performance is tracked and measured in multiple
dimensions. For this study the researcher will also focus this measure.

2.1.2.3 The Balanced Scorecard

To develop a more predictive set of organization performance measures, Professor Robert

Kaplan and Professor David Norton of Harvard University developed a tool called the “balanced
scorecard.” Using the scorecard helps managers resist the temptation to fixate on financial
measures and instead monitor a diverse set of important. Indeed, the idea behind the framework
is to provide a “balance” between financial measures and other measures that are important for
understanding organizational activities that lead to sustained, long-term performance.

the Balanced Scorecard's perspectives permit a balance between short and long term objectives:
between external measures(shareholders and customer) and internal critical processes
(innovation and learningand growth); between desired outcomes and performance derived from
thoseoutcomes; between hard objectives measures and softer more subjective measures
(Kaplan and Norton, 2000; Wongrassamee et al., 2003).

The balanced scorecard recommends that managers gain an overview of the organization‟s
performance by tracking a small number of key measures that collectively reflect four
dimensions:

1. Financial Measures

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Financial measures of performance relate to organizational effectiveness and profits. Examples
include financial ratios such as return on assets, return on equity, and return on investment. Other
common financial measures include profits and stock price. Such measures help answer the key
question “How do we look to shareholders?” Such measures have long been of interest to senior
management and investors.

Financial performance measures are commonly articulated and emphasized within an

organization‟s annual report to shareholders. To provide context, such measures should be
objective and be coupled with meaningful referents, such as the firm‟s past performance. For
example, Starbucks‟s 2009 annual report highlights the firm‟s performance in terms of net
revenue, operating income, and cash flow over a five-year period.

2. Customer Measures

Customer measures of performance relate to customer attraction, satisfaction, and retention.

These measures provide insight to the key question “How do customers see us?” Examples might
include the number of new customers and the percentage of repeat customers.

Starbucks realizes the importance of repeat customers and has taken a number of steps to satisfy
and to attract regular visitors to their stores. For example, Starbucks rewards regular customers
with free drinks and offers all customers free Wi-Fi access. Starbucks also encourages repeat
visits by providing cards with codes for free iTunes downloads. The featured songs change
regularly, encouraging frequent repeat visits.

3. Internal Business Process Measures

Internal business process measures of performance relate to organizational efficiency. These

measures help answer the key question “What must we excel at?” Examples include the time it
takes to manufacture the organization‟s good or deliver a service. The time it takes to create a
new product and bring it to market is another example of this type of measure.

Organizations such as Starbucks realize the importance of such efficiency measures for the long-
term success of its organization, and Starbucks carefully examines its processes with the goal of

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decreasing order fulfillment time. In one recent example, Starbucks efficiency experts challenged
their employees to assemble a Mr. Potato Head to understand how work could be done more
quickly. The aim of this exercise was to help Starbucks employees in general match the speed of
the firm‟s high performers, who boast an average time per order of twenty-five seconds.

One key aspect for organizations producing physical goods (as compared to services) are supply-
chain management indicators. Both Wal-Mart and GM are examples of the increased profits that
can result from effective management of the supply chain through initiatives such as “just-in-
time”‟ supply-chain management. Of course, to reduce supply inventory, data must be both
timely and accurate (or else you run out of key parts and the production line stops…). In the
1990s (pre-Internet) Wal-Mart acquired their own satellite system that allowed them to collect
sales by item and ordered replacement to restock their shelves every eight hours, while GM kept
only enough tires for four hours of car assembly at any one time!

4. Learning and Growth Measures

Learning and growth measures of performance relate to the future. Such measures provide
insight to tell the organization, “Can we continue to improve and create value?” Learning and
growth measures focus on innovation and proceed with an understanding that strategies change
over time. Consequently, developing new ways to add value will be needed as the organization
continues to adapt to an evolving environment. An example of a learning and growth measure is
the number of new skills learned by employees every year.

One way Starbucks encourages its employees to learn skills that may benefit both the firm and
individuals in the future are through its tuition reimbursement program. Employees who have
worked with Starbucks for more than a year are eligible. Starbucks hopes that the knowledge
acquired while earning a college degree might provide employees with the skills needed to
develop innovations that will benefit the company in the future. Another benefit of this program
is that it helps Starbucks reward and retain high-achieving employees.

2.1.3 Models That Link Organizational Performance With T&D.

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The knowledge and skills of workers acquired through training have become important in the
face of the increasingly rapid changes in technology, products, and systems (Thang, Quang
and Buyens, 2010). Most organizations invest in training because they believe that higher
performance will result (Alliger, et al. 1997:50; Kozlowski, et al. 2000). Devanna, Formbrun
and Tichy (1984) proposed the Michigan School model also known as the „soft‟ Human
Resource Management (HRM). This model‟s emphasis is on treating employees as a means
to achieving the organization‟s strategy. Its assumption is that „what is good for the
organization is equally good for the employee‟. According to Devanna, Fombrun, and Tichy
(1984), training and other HRM activities aim to increase individual performance, which is
believed to lead to higher organizational performance. Although the Michigan School model
acknowledges the importance of motivating and rewarding people, it concentrates most on
managing human assets to achieve strategic goals (Pinnington and Edwards, 2000).

A second „soft‟ HRM theoretical model to show how Human Resource Management (HRM)
policies can affect employees and organizational outcomes was developed by Guest. The
central hypothesis of Guest‟s model is that if an integrated set of HRM practices is applied
with a view to achieving the established goals, employees‟ performance will improve. It also
assumes that this will translate to increase in organizational performance. The strength of
Guest‟s model is that it is a useful analytical framework for studying the relationship between
HRM policies and organizational performance. This is because it expresses pathways for
more careful, clear and ease of empirical testing. Guest also saw the goals of linking
employees with organizational performance as important to ensure the high quality of products
and services. He thus opines that training policy play an important role in HRM and contributes
to improved strategic integration, employee commitment, flexibility and quality. He further
asserts that HRM outcomes can lead to high job performance, high problem solving activity,
high cost effectiveness, and low turnover, reduced absences and fewer grievances.

Similarly, Kozlowski and Klein (2000) offered an excellent analytical framework, which uses
a multi-level approach to training. This model bridges the gap between theoretical models of
training needs assessment, design, and evaluation, and the higher levels at which training
must have an impact if it is to contribute to organizational effectiveness (Kozlowski and Salas
1997). The model focuses on training transfer. There are two types of training transfer

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namely horizontal and vertical transfer. Horizontal transfer concentrates on traditional models
of training effectiveness, while the vertical transfer examines the link between individual
training outcomes and organizational outcomes. The vertical transfer processes are
composition and compilation. Composition concentrates on individual contribution at the
same content, while compilation focuses on individual contribution at the different or diverse
content.
Thang, Quang and Buyens (2010) contend that similarities exist between the normative (hard
and soft) models of HRM. According to these authors, training has been put on a set of HRM
policies and it is considered as an important and vital policy for improving knowledge, skills,
attitude and motivation of employees.

This review of theoretical models linking training to organizational performance suggests that
it explicitly recognized that no organization can attain its goals or organizational strategy
without employees that have the right knowledge, skills, abilities, behavior, and attitudes.
Thus, training plays an important role in improving the quality of employees directly and
affecting organizational performance through HR outcomes (Thang, Quang and Buyens,
2010)

2.1.4 T&D Contribution To Organizational Performance

T&D is one of the most important HRM functions, though criticized in terms of its relevance to
the key business processes and outcomes. It is suggested that unless training is targeted at results
that make a difference in measuring the significance to the organization, it will not be valued or
valuable. However training would deliver great value if it could provide measurable results.
Providing training effectiveness is so important not only for justifying its expenses but also to
justify the reason for caring it out. The big task for many organizations is to make the T&D
function affects the organizations corporate strategies. That depends on the ability to measure
and demonstrate training benefits for organization`s success.

However, measuring the effectiveness that results from training is probably the most difficult and
problematic task of all the training stages. It is described by Foxon(1986) as “ the art of the
impossible! A survey carried out by Hum Res Management International Dgest indicates that
only 35% of UK companies have measured the effectiveness of their education and T&D

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programs (Tennnant et al, 2002). There are different reasons that make measuring T&D impact
on organizational performance difficult. The benefits of training often arrive gradually over a
long period of time. In addition, it is difficult to separate variables influencing an individual
performance, in other words, there are many other organizational issues that could affect
individual and organizational performance, such as reward, encouragement, performance
management, motivation, recognition, leadership, organization culture and so on.

Moreover it is difficult to isolate the influence of other organizational activities on

organizational performance from training intervention, which implies that training is not working
in isolation from organizational activities, but working in harmony and in a contingent way.
Training outcomes are normally difficult to quantify because, for most os the time training
outcomes are about to change trainee`s behavior, attitudes, skills and knowledge which could not
be measured easily (McCracken & Wallace, 2000; Reshadow, 2000). In this regard, Reshaw
(2000) contends that other internal and external factors could positively or negatively influence
the relationship between training and organizational performance. Other organizational activities
includes such as, marketing, marketing forces, competitive activities, new technology,
legislation, the economy, industrial actions, resistance to change. Reshaw(2000) suggests that to
overcome the above problems, line managers should be involved in evaluating training
effectiveness, organizations should not try to evaluate effectiveness of the organization as a
whole , bur break the evaluating down into smaller workable fields.

Moreover, Yeo(2003)claims that it is difficult to measure the relationship between training and
organizational performance because the cause and effect relationship are not necessarily
straightforward and hardly ever clearly defined. He points out there is another thing which could
determine or affect T&D and organizational performance relationship. It is phenomena known as
“Myopia of Learning” which occurs when organizations tend to ignore the long run results
ignore the larger picture and overlook failure (Levin Thal and March, 1993).

Training professional has been challenged to document or demonstrate the results of training
using organizational performance impact measures, such as return on investment, change in
productivity, customer satisfaction, and quality market share. In this regard , Muhlemeyer &
Clark(1997) also argue that it is difficult to measure the correlation between the implementation
of TD and the overall success of the organization, especially in the case where the organization`s

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success is measured in financial terms, because there is a little evidence that training
performance can improve the financial performance(Ashton & Fe & lsted, 1995). However, may
studies show that the higher performance HRM practices used the better the performance that
occurs in respect of productivity, skills flexibility, labor turnover and financial indicators (Guest
1996; Deancy and Huselid, 1996; MacDuf, 1995).

In measuring training contribution to organizational performance, Cameron (1986) also

advanced a useful framework, Later modified by Bramley(1986) which suggested four main
categories for organization performance resulting from training interventions.

1) Achieving goals

The most commonly used measurement of organizational effectiveness focuses on the extent to
which targets/goals are met. These goals and targets could be sales achieved, units produced,
profit generated and quality improvement. In successful organizations, there are sub-
organizational processes that are designed to monitor and measure such activities. Therefore, it‟s
easy to identify and agree the elements which training interventions are likely to bring. Here line
managers and HRD staffs can already determine the other factors which could influence success,
such as the effect of advertising and competitive activity.

2) Increasing Resourcefulness

The focus within this measurement in on activities designed to make organizations more
effective. Comparison is made with other similar organizations or with the previous years.
Criteria may include things such as; increasing employee‟s versatility or flexibility; increasing
expertise; broadening the market base; increasing production capacity; improving production
economy; increasing ability to respond. However, most of these achievements occur in the long
term and it is difficult to isolate them from other functions interventions but by planning the
assessment phase that could be easily made.

3) Satisfying the Customer

The emphasis within this measurement is on the extent to which an organization meets the
expectations of its customers` needs and demands. Criteria could include such as accuracy of

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customer order, efficiency or speed to respond to customer order or service on time deliveries,
repeat business and customer compliant.

4) Improving Internal processes

Organizational effectiveness could be defined in terms of the effectiveness of its internal

processes. So an effective organization is an organization which has a low level of internal strain
and where everything runs smoothly. Evaluation could be based on hard data such as employee
turnover, which could be assessed via positive elements such as team work, job satisfaction,
motivation and commitment, and negative criteria such as absenteeism, grievance, industrial
action and disciplinary actions. Improvement in internal processes resulting from training is
difficult to assess but again, most organizations monitor this thing with prior planning and joint
agreement.

2.2 Empirical Literature Review

Studies have sought to isolate whether high skills are contributory factor behind successful
and higher performing firms (Tamkin, 2005). These studies have identified a significant
association between a highly skilled workforce and organizational performance, most
commonly measured by the level of labor productivity. For example, Haskel and Hawkes
(2003) have shown that the top performers in UK manufacturing are hired workers with, on
average, an extra qualification level compared to the lower performers. These studies also
found that higher skill levels support innovation and more sophisticated production processes
and were associated with the production of higher quality products (Penny, 2005).
Haskel, Hawkes and Pereira (2003) showed that more productive UK firms hired more
skilled workers. Their finding showed that skills were positively related to total factor
productivity (TFP) and the skill gap between the top- and bottom-performing firms explained
some 8% of the productivity gap. Similarly, Lynch and Black (1995) found in the US, that an
extra year of education raised productivity by between 4.9 and 8.5% in the manufacturing
sector and between 5.9 and 12.7% in the services sector. Other research has suggested that a
more highly skilled workforce can bring other benefits such as enhancing company survival.
Reid (2000) opined that a more skilled UK workforce was related to a greater commercial

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orientation and strategic awareness and propensity to innovate and to retain competitive
advantage.

An OECD study looked at innovation in UK SMEs and found that higher qualification levels
of both managers and staff boosted innovation (Albaladejo and Romijn, 2001). Higher
training expenditure per employee was also associated with higher technological complexity
and originality. Perhaps, some of the most influential work in this area has focused on the
investment in skills and training and the association between skills and productivity. A clear
connection between higher skills and higher productivity has been identified particularly at
the intermediate skills level. The studies found that the higher average levels of labor
productivity in firms in continental Europe were closely related to the greater skills and
knowledge of their workforces.

Within manufacturing firms, lower skills levels in the UK were found to have a negative effect
directly on labor productivity and on the types of machinery chosen (Keep, Mayhew and Corney,
2002). There is evidence that skill levels are associated with innovation performance (Tamkin,
2005).Several studies have highlighted the performance benefits associated with increasing
training activity, the type of training provided and the depth. Dearden and Van Reenen (2000)
analyzed the impact of training on performance for a variety of measures including value added
output, profits and wages for a group of British industries between 1983 and 1996. They found
connections between more training and higher labor productivity across a number of sectors.

In essence, manufacturing firms undertaking training were found to be more productive, to

have higher capital intensity, to conduct more research and development and have a more
highly qualified workforce (Penny, 2005). A study in France (D‟Arcimoles, 1997) found that
the more training given, the better the economic performance.

Training was permanently and clearly associated with an increase in profitability and
productivity. Raising the proportion of workers trained in an industry by 5% points (say, from
the average of 10% to 15%) was associated with a 4% increase in value added per worker and a
1.6% increase in wages. They note that this level of increase has also been found by other
researchers like Blundell et al. (1996) and Booth (1991). Collier et al. (2002) have found that

Page 35
increasing investment in training reduces the chance of firm closure. For small firms it was the
training of craft and manual workers that made the difference, for larger firms it was training of
professional, clerical and secretarial employees. Others have found evidence on benefits from
training in terms of motivation and attitude; Booth and Zoega (2000) suggested that training
fosters a common firm culture and helps attract good quality workers; Green and Felstead et al.
(2000) found that training had a downward impact on employee turnover.

Thus, with their perspective, there is recognition of the importance of having superior human
resources. There is little doubt that organizations will need to invest heavily in their human
resources in order to be competitive during the twenty- first century.

Management scholar Edward Lawler has described this investment requirement as follows: To
be competitive, organizations in many industries must have highly skilled, knowledgeable
workers. They must also have a relatively stable labor forces since employee turnover works
directly against obtaining the kind of coordination and organizational learning that leads to fast
response and high-quality products and services.

Contemporary management practices indicate that many leading companies have recognized the
strategic importance of human resources and have adopted an investment perspective towards
these resources.

2.3 Conceptual Framework

The following conceptual framework would be developed from reviewing different

literature and articles.

Independent Variables Dependent Variable

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(Training and Development) (Organizational Performance)

Training Need Financial

Assessment Outcome
Customer
Internal
Business Process
Learning And
Training Evaluation
Growth

Source: Own Review

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 CHAPTER THREE

RESEARCH DESIGN AND METHDOLOGY

3.1 Introduction

This chapter deals with methodology part of the study whereby research approach and method,
the source of data, the population of the study, sampling technique and sample size, method of
data collection, method of data analysis and research ethics are discussed.

3.1 Description of the study area

The study to be undertaken will be at the Commercial bank of Ethiopia, under West Addis
Ababa District where branches from various grades will be targeted for investigation. This
district was chosen for having three major advantages of the quality research outcome. First
WAAD is the geographically the largest of all the districts, which enables to gain a more
representative sample size. Second it is the second biggest profit generating district under CBE,
which helps to investigate the relationship of T&D and organizational performance better.
Finally, the researcher has better exposure and understanding than all other districts.

3.2 Research Design& Approach

Since, the main objective of this research is investigating the relationship of T&D and
organizational performance of CBE under WAAD, the researcher deployscross- sectional
explanatory research design. In line with this design the researcher used quantitative approach.
The purpose of using this approach is to evaluate objective data consisting of numbers with the
aim of achieving high levels of reliability in terms of data analysis. A structured questionnaire
was administered to all the target respondents. Quantitative research is based on attempts to
apply the methods to facilitate data analysis. Its strength is that it provides data that are easily
quantifiable and based on reasonably objective evidence that lends itself torigorous analysis.
Moreover, results can be reduced to numerical statistics and interpreted in short statements.

This research design is suitablefor this study because it is an efficient way of collecting
information from aselected number of respondents being targeted from a given population.

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Cross-sectional studies involve data collection from a population, or a selected subset, atone
specific point in time (Cooper & Schindler, 2006).

3.3. Population Of The Study, Sampling Method And Sample Size

3.3.1. Population Of The Study

According to CBE`shuman resource department 2017 data, the total size of the target population
for the study is 1640 (N= 1640) employees, where there are one hundred seven (107)branches
under WAAD, with varying levels of grade depending ontheir performance – grade four, grade
three, and grade two.

Due to convenience, time constraint and budget constraint the researcherused sampling survey
and selected fifteen (15) branches from all the three grades so as to keep representation of the
total population in order to a miniature cross-section.

3.3.2. Sampling Method

For the purpose of this study proportionate stratifiedsimple random sampling method was
deployed. This is because it enabled the researcher stratifying branches based on their grade
level, and proportionate numbers of employees from each branch were selected randomly.
Simple random sampling has been preferred as it gives equal chance for the representatives of
the population. Furthermore, the respondents are similar in characteristics and there is
homogeneity among the respondents.
3.3.3. Sample Size
Among the different methods of the sample size determination, the one which developed by
Carvalh (1984) will be used by the researcher to determine the number of respondents to be
include in the study for employees. Accordingly, to have as good representative as possible, the
researcher will use high sample size.
Table 3.1 Carvalh sample size determination
Population Low Medium High
51-90 5 13 20
91-150 8 20 32
151-280 13 32 50

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281-500 20 50 80
501-1200 32 80 125
1201-3200 50 125 200
3201-10000 80 200 315
10001-35000 125 315 500
35001-45000 200 500 800
Source: Carvalh 1984

Note: Given the total population of WAAD, 1640, the researcher will select 125 respondents
based on Carvalh`s sample determination table.

Table 3.2 Sample unit taken from each Branch

Branch grade Total population Sample Proportion
Grade 4 270 21 16%
Grade 3 132 10 8%
Grade 2 1238 94 76%
Total 1640 125 100
Source: CBE HR WAAD,2017

3.4. Data Sources & Type And Instrumentation

3.4.1 Data Sources & Type

The methodologies used and their justification for conducting the research is primaryand
secondary sources of data and can be examined as follows.

A primary source of data was chosen because there was the need to obtain information unbiased
and original data at first hand from the selected respondents to ensure objectivity with the data
analysis within CBE, under WAAD. Also, secondary source of data was selected to obtain
information for literature review ofthe research work which consists of mainly published text
books, training and development publications and other human resource publications.

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A structured questionnaire for the respondents was prepared for data collection. The
questionnaires to the respondents were distributed by the researcher at the respective HRD and
branch offices. In addition to this the researcheranalyzed the organization`s annual report for the
last five years.

3.4.2 Data Collection Instrument

In business research, the most common method of generating primary data is thesurvey. A
survey method involves studies that are normally quantitative andendeavor to provide a broad
overview (Mouton, 2001). In other words, a surveydesign provides a quantitative or numerical
explanation of trends, attitudes orviews of a population, by studying a sample of that population
(Creswell, 2009).

Data for this study was obtained from primary sources. The primary data werecollected through
the use of a structured questionnaire. The questionnaire was adopted from A. Eshikhati (2014)
and A. Badenhorst (2013) with some modification. The data collected were qualitative in nature;
a five point Likert scale was used.

The data collection method was questionnaires. Questionnaires are preferred sincethey are easy
to analyze and save time in data collection (Oso and Onen, 2011).The questionnaires were self-
administered by the researcher through drop and picktechniques.It also has an advantages
oversome other types of surveys because it often have standardized answers that make it simple
to compile the questions. Moreover, questionnaire permits a respondent a sufficient amount of
time to consider answers before responding.

For this study, the researcher used a structured close ended pre coded questionnaire for CSO`s,
SCSO`s and for a concerned body, HRD to collect data. A structured question format allows for
the use of closed questions that require the respondent to choose from a predetermined set of
responses or scale points.It is sub dividedinto four sections; the first part sought general
information about the employeerespondent. The second part focused on assessing the T&D
practices adopted by the company. The third part contained questions aimed at determining
therelationship between T&D and organizational performance andthe last part focused on factors
affectingT&D effectiveness. (See Appendix). Thus, before data collection, the researcher had

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obtained authorization letterfrom the university that is used to gain access to the company under
consideration.

3.5 Data Collection Procedure

Upon receipt of an official support letter from Addis Ababa University School of Commerce, the
researcher presented it to the concerned staffs who are working for the selected branches of
Commercial Bank of Ethiopia in West Addis Ababa district. Subsequent appointments were
secured with the concerned authorities to get permission to administer the questionnaire to
selected employees. Once gaining the approval from the authorities, the researcher distributed
the questionnaire with a covering letter to the respondent staff andcollected the filled out
questionnaire after 10 – 15 days.

3.6. Validity And Reliability.

As lack of reliability is a serious drawback of an outcome measure as it indicates errors in

measurements (Pellissier, 2007),Cronbach‟s Alpha reliability analysis as conducted in order to
determine the reliability of the instrument used. Reliability is inversely proportional to a random
error (Pellissier, 2007).

To test the validity and reliability of the research instruments, a pilot test wasconducted.
According to Mugenda and Mugenda (2003), the number involved inthe pilot test should not be
large. A pretest sample of between 1% and 10 % isgood depending on the sample size. In this
study, a total of 10 questionnaires were distributed using systematic random sampling and
collected afterwards foranalysis. Based on pilot test results some modifications were made with
thequestionnaires to increase understandability which increase response rate.

The questionnaires were coded in SPSS version 21 and Crocbach was computedand compared
with the threshold value of 0.7 an overall value of 0.909 wasobtained which implied that the
research instruments were reliable.

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Table 3.3 Cronbach‟s Alpha statistics for the survey questioner

Reliability statistics for the survey questions

Measures Cronbach’s Alpha value No. of items
T&D practice .836 6
Organizational performance .892 8
Factors affecting T&D
.856 7
effectiveness
All measurement items .909 21

As indicated in table 3.1 above the Cronbach‟s Alpha test reveals that theinstrument‟s internal
consistency as 91% which is well above the acceptable value(i.e 70%). Therefore, the research
instrument is reliable and the forthcomingfindings & conclusions are acceptable

Validity is concerned with whether the findings are really about what they appearto be about
(Anol 2012). Validity defined as the extent to which data collection method or methods
accurately measure what they were intended to measure (Anol,2012).

Therefore, to come up with a valid conclusion, the researcher haddeveloped an appropriate

research design aligned to the identified research problems, the research questions posed and the
objective to be achieved.

Numbers of different steps were taken to ensure the validity of the study:The data was
collected from the reliable sources, from the company whoadopt training practice (TNA
& Training evaluation).
The survey questionnaire were standardized and used by previous researchers.

3.7 Analysis Of Data

The research hypothesis is a sensitive and complex one and establishing viable results
would demand varied but effective analytical tools.

The questionnaires were first checked for accuracy, consistency and completeness.Thereafter,
the data was edited, coded, classified and tabulated for ease ofinterpretation and further analysis.

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This researcher used both descriptive and inferential analysis. Frequencies and percentages were
used to analyze background data on employees, and means were also used to achieve the first
and the second objectives of the research while correlation analysis was used to determine the
relationship between the independent variable (T&D practice) and dependent variable
(organizational performance). The findings of this study were presented using tables. Every
table were be accompanied by result interpretation.The data analysis were done using current and
available SPSS version 21 software package.

3.8 Ethical Considerations

The research undertaken is harmless and in line with the common good. Besides, it maintains the
private information of the individuals who participated in the study.

Consequently, ethical considerations identified in connection with this study included the need to
provide information about the purpose and confidentiality of the data collected, theprotection of
the anonymity of the respondent and their free participation, includingthe right to withdraw their
consent to participate. The completed questionnaire will never be shared by the researcher with
anybody within or outside the organization. Confidentiality and anonymity is reinforcing by the
fact that the results are always presented – whether in these thesis or when discussing them with
anybody in a collective manner.

This chapter has presented a description of the methodology used in this study. Ithas covered the
choices and motivations regarding research design, population andsampling techniques,
instruments of data collection, methods of data analysis,validity and reliability of the research
and research ethics.

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 CHAPTER FOUR

DATA ANALYSIS AND DISCUSSION

4.1 Introduction

This chapter presents an analysis of data collected and discusses the findings on the
relationship between T&D practices and organizational performance in the case of CBE,WAAD.

4.2 Overall Response Rate

The survey was conducted in 10-15 days‟ time. From the total 125questionnaires distributed 114
were returned from which 6 were not correctly filledand rejected. Therefore, 108 were
effectively used for analysis that shows responserate of 87%. Table below shows the overall
response rate.

Table 4.2 Overall Response Rate

Sample Number Percent
Number of questionnaires
125 100%
distributed
Returned questionnaires 114 91%
Incomplete questionnaires 6 6%
Total usable questionnaires 108 87
Source: Survey Result

4.3Demographic Information Of The Respondents.

Table, below shows the general characteristics of the respondents of current position,
age, gender, qualification and service year in the organization. The data collected from
the respondents was analyzed as follows.

Table 4.3.1 Employee’s Current position

Measurement Frequency Percent

CSO/Maker 49 45

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CSO/ Checker 38 35
SCSO/Accounts 11 11
SCSO/ Audit 6 5
SCSO/ Chief Cashier 4 4
Total 108 100
Employee age
21-25 Years 75 69
26-35 Years 23 21
36-45 Years 6 6
46- 55 Years 3 3
56 Years and above 1 1
Total 108 100
Employee gender
Male 76 70
Female 32 30
Total 108 100
Employee Qualification
Diploma 2 2
First Degree 101 94
Masters 5 4
Above Masters - -
Total 108 100
Employee Service Year
1-5 Years 95 88
6-10 Years 7 6
11-15 Years 3 3
16- 20 Years -
21 Years and Above 3 3

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Total 108 100
Source: own questioner

As shown in the above table, 49(45%) of employees are CSO/maker,38(35%) of respondents are
CSO/checker, 11(11%) of respondents are CSO accounts, 6(5%) of respondents are CSO/auditor
and 4(4%) were SCSO/ Chief Cashier. This indicates that the research comprises the majority
(CSO/maker and CSO/checker) which are very important positions inthe service delivering
process of the bank.

As shown in table 4.3.1, 75(69%) of employees are between 21-25 years,23(21%) of respondents
are between 26-35 years, 6(6%) respondents arebetween 36-45 years, 3(3%)respondents are
between 46-55 years and 1(1%) respondents are 56 Years and above years. The data shows
majority of the respondents are young andyounger employees are demanding more training,
since they are on the early path of the carrier, Meadows (2003).

As shown table 4.3.176(70%) of respondents are maleand 32(30%) of the respondents are
female. The data shows majority of the respondents are male.

As shown in the above table 4.3.4, 2(2%) of respondents are diploma graduates,101(94%) of
respondents are degree graduates and 5(4%) of respondents aremasters graduates. This implies
that respondents were professional and had at leastdiploma.

As shown in the above table 4.3.1, 95(88%) of currentemployee respondents had served between
1-5 years, 7(6%) of respondents had served from 6-10 years,3(3%) of respondents had
served from 16-2 and above 21 years, each. This implies that majority of the respondents had
served less than 5 years. From this it is possible to generalize that majority of employees who are
engaged on the service delivery of the bankdemand training.

4.4 AnalysisOf Findings

The statistics used to summarize the basic features of data setsis through measures of central
tendency and dispersion. It allows the researcher to describe variables numerically (Saunders et
al., 2001). Frequency, percentage and meanswere the descriptive statistics tools used for
analyzing the first and second objectives of the study.

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 4.4.1 Extent OfT&D Practice Efficiency

The study sought to establish the extent of T&D practices implementationefficiency inCBE,
WAAD. Respondents were requested to state the extent of adoption of indicatorsof elements of
T&D practices where TNA and training evaluations are the concern. A 5-pointLikert scale was
used to rate the extent of adoption of the elements of these indicators whereby 1 was accorded to
„never‟, 2 to „rarely‟, 3 to „sometimes‟, 4 to „mostly‟ and 5 to „always‟

This section, relating to section B of the questionnaire, presents and analyses thecollected data
regarding how effectively T&D practicesare, specifically how TNA and training evaluation are
conducted in CBE,WAAD. Therefore, two parts are included: the training needs assessment
(TNA) and training evaluation, elements.

Walton (1999) in his “why training lacks efficiency” literature explains: some organizations do
not analyze T&D needs properly and evaluate the training program outcomes. It is an ignored
element or they just get focused on the implementation element, alone. Similarly, Armstrong
(2003) argues that T&D will fail to obtain its objectives and affectorganizational performance if
it is based on a piecemeal basis and is used in isolation, instead of applying the systematic
approach.

4.1.1.1 Training Need Assessment (TNA)

This part of the analysis is concerned with part I of section B in the questionnaire,which is
related to how often the bank conductTNA , the way training need is determined and indicators
to assess training needs for which training is provided to the employees.

Basically, training needs analysis answers the questions ofwhich people need training and what
kinds of training they need. This, therefore, includes when shall organizations asses training
needs to ensure whether there is a specific skill or knowledge gap, who needs what specific skills
& knowledge to perform his/ her job well and how it should be done ( Stone (2002) and Latham
and Wexley (1991)).

Table 4.4.1.1:Training Need Assessment (TNA) practices

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I Measurement Level of Agreement Mean SD
t
e N R S M A Value
m
1 How often does your bank F 56 17 17 16 2 1.69 0.691
conduct TNA? % 51% 16% 16% 15% 2%
2 TNA indicators
F 9 10 10 56 24 3.18 0.860
Poor performance % 8% 9% 9% 52% 22%
Lack of knowledge F 19 3 73 12 3.41 0.813
% - 18% 3% 68% 11%
New work tool F - - 19 19 70 3.82 1.041
% - - 18% 18% 64%
Poor service quality F 21 42 14 11 42 2.08 0.703
% 19% 39% 13% 10% 39%
Low profitability F 3 57 42 5 - 1.99 0.684
% 3% 53% 39% 5% -
High turnover/absenteeism F 8 58 6 35 1 2.40 0.722
% 7% 54% 6% 32% 1%
3 TNA conducted in your bank
Questionnaire F 6 9 16 13 64 3.13 0.859
% 6% 8% 15% 12% 59%
Face to face interview with F 12 9 68 18 1 3.09 0.809
supervisor % 11% 8% 63% 17% 1%
Through specialist training F 14 31 23 35 5 1.46 0.619
committee % 13% 29% 21% 32% 5%
Performance appraisal results F 12 41 24 21 12 1.82 0.673
% 11% 38% 22% 19% 11%
Source: Questionnaire

Note: A = Never, R= Rarely, S = Sometimes, M = Mostly, and A= Always..

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For the sake of simplicity Alwaysand Mostly were merged together to regularly conduct and
Never and Rarely were merged together Rarely conduct so that to test the mean value of the
output.

Table 4.4.1.1-I: TNA practice category of mean value

Response Mean value
Rarely 1.00-2.50
Sometimes 2.51-3.00
Regularly 3.01-5.00
Source: own survey
1. Conducting TNA

For T&D to be effective, TNA should be conducted at a variety of times and should be
flexible to include any urgent need. Moreover, Table 4.4.1 and 4.4.1-Ishows about 7% of the
participant said that theirorganizations conduct TNA regularly. Similarly, 16% of the
participantsassertedthat their organizations conduct TNA sometimes and, 77% of the participants
revealed that their organizations rarely conduct TNA.The mean value of the output is 1.69 and it
is close to rarely conduct. Therefore, it`s possible to conclude that there is poor conduction of
TNA. This seems consistent with Stone (2002) argument training needs assessment is the most
neglected process of the whole training process that HR staffs see it as aprivilege to conduct or
not.

2. TNA Indicators

Table 4.4.1 and 4.4.1-Ishows that introduction of new work tools(82%), lack of knowledge(79%)
and poor performance(74%) representing with mean value of 3.82, 3.41 and 3.18respectively,
were regarded as the regularly used indictors taken into account when assessing training needs.
Whereaslowprofitability (56%), highturnover/absenteeism (61%) and poor service quality (58%),
were said to be used rarely as indicated in the mean output 1.99, 2.40 and 2.08,respectively. This,
therefore, indicates that in CBE, TNA will be, mainly, undertaken when there is an introduction
of new work tools, lack of knowledge and poor performance.

3. TNA Methods or Approach

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 Table 4.4.1 and 4.4.1-Ishows that as the output of the mean indicated questionnaire77(71%) is
the most popular and regularly(always) used method of conducting TNA followed by face to
face interview with supervisors 68(63%) which is mostly used method. Performance appraisal
information 53(63%) & TNA determination through a specialist training committee 45(49%)
were regarded as rarely used methods of conducting TNA discovered to be used
rarely.Therefore, using the mean output it can be generalized questionnaire(3.13) is the most
regularly used method of conducting TNA.

In essence, it can be generalized, there exist poorly conducted TNA in CBE, where questionnaire
is a mainly method of conducting it. Thus TNA is rarely conducted when there is
lowprofitability, highturnover/absenteeism &poor service quality whereas when an introduction
of new work tools or lack of knowledge or poor performance is experienced the bank conduct
TNA.

4.1.1.2 Training Evaluation.

This part of the analysis is related to part II of section B in the questionnaire, which is
the evaluation stage. To understand how this stage is conducted questions were asked in the
questionnaire. Thus, this part includes, determining whether or not training evaluation is made or
not, analysis of the importance of the evaluation and the evaluation outcomes.

Table 4.4.1.2: Training Evaluation Practices

I Measurement Level of Agreement Mean

t
e N R S M A Value
m
1 Training evaluation F 46 18 35 4 46 2.39 0.722
% 43% 16% 32% 4% 43%
2 Importance of evaluating T&D F - 5 40 18 45 3.92 0.935
% - 5% 37% 16% 47%
3 Evaluation outcome for further F 39 58 3 7 1 1.83 0.672
improvement % 36% 54% 3% 6% 1%
Source: Questionnaire

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Note: A = Never, R= Rarely, S = Sometimes, M = Mostly, and A= Always.

For the sake of simplicity Alwaysand Mostly were merged together to regularly conduct and
Never and Rarely were merged together Rarely conduct so that to test the mean value of the
output..

Table 4.4.1.2 -I : Training Evaluation Practice category of mean value

Response Mean value

Rarely 1.00-2.50
Sometimes 2.51-3.00
Always 3.01-5.00
Source: own survey

As organizations are spending more and more on training, evaluating the effectiveness of these
programs hasbecome critical.It is argued that, although training evaluation is a very important
phase for asuccessful T&D program, this phase is the most neglected one, resulting from
different reasons/ factors.Thus, the data would be misunderstood, misused and misinterpreted
(Beardwell and Holden, 1994; Houlton, 1996; Combs And Falletta,2000).

1. Training Evaluation

Evaluating the effectiveness of T&D programs is the hardest and most critical
stage in the training cycle. It requires specific tools, models, methods and financial
resources.Table 4.4.2 and 4.4.2b shows that almost 9(9%) of the participants said T&D programs
are evaluated on a regular basis. Whereas 35(32%) of the participant said T&D programs are
evaluate sometimes. Even though, 64(59%) of the respondent reveals that the bank has never
evaluated its T&D practices. The mean value of the output is 2.39 and it is close to rarely. From
this it can be generalized that the bank poorly evaluate its T&D practices which proves
(Beardwell and Holden, 1994; Houlton, 1996; Combs And Falletta, 2000) statement training
evaluation is the most neglected one, and similarly Mann (1996) argument`s, despite heavy
investment in training, organizationscan frequently fail to evaluate adequately the value or
success of their trainingprograms.

2. Evaluation importance

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The evaluation stage is the most critical one in the training process cycle; it reflects
the ways by which the effectiveness of T&D programs will be judged or assessed. Therefore, it is
unsurprising that Table 4.4.2 and 4.4.2b-I revealed that 63(58%) of the participants asserted that
training evaluation is a very important element and 40(37%) of the participants affirmed it as a
relativelyimportant stage where as 5(5%) regard it as somehow important.The mean value of the
output is 3.92 and it is close to always Therefore, it can be concluded that majority of participant
views T&D as always important element. This complies with Hesseling (1966)it could be argued
that evaluating trainingeffectiveness is the starting point when talking about T&D benefits and
contributionsinany organization. Training is a tool used to change people's behavior,
whileevaluating training effectiveness is centered on measuring that change.

3. Evaluation Outcomes for further improvement

Table 4.4.2 and 4.4.2b show that 8(7%) of the participants asserted that theirorganizations
always viewed training evaluation outcomes for further improvement and 3(3%) of the
participants said that their organizations sometimes consider evaluation outcome for further
improvements. However 97(90%) of the participant affirmed that evaluation outcomes are never
used for further improvement.The mean value of the output is 1.83 and it is close to rarely. From
this it can be concluded that evaluation outcomes are never used for further improvement.
Therefore, if the data has never been used forfurther improvement, it conforms what has been
indicated by (Beardwell and Holden, 1994; Houlton, 1996; Combs And Falletta, 2000) the
data(evaluation outcome)would be misused and misinterpreted. .

4.4.2 Factors Affecting The Effectiveness Of T&D

The respondents were asked to indicate the extent to which their organizations
experience factors that would likely affect the T&D practices` effectiveness. Even though there
are many other factors, not included at this study, discussed by many different scholars, as per
the pilot test madeto refine the questionnaire, earlier, the researcher has redesigned itas the under
mentioned factors wereidentified influential than others. Therefore, these influential factors are:
integration of T&D policies with the business objective, top management support and
commitment for T&D implementation and evaluation, line management‟s commitment and
involvement, cooperation & coordination between the various departmentsand the T&D division,

Page 53
 environmental scanning, the role of trainer`s and evaluating T&D outcomes has taken in to
account for the case undertaken. Therefore, using a 5-point Likert scale respondent`s rate of
response is used to rate the extent to which affection has been experienced by each factors.

Table 4.4.2 : Factors affecting the effectiveness of T&D

I Measurement Level of Agreement Mean SD

t
e NA SE ME GE VGE Valu
m e
1 Integration of T&D policies and F - 10 30 8 60 3.64 0.859
plans with an % - 9% 28% 7% 56%
organization‟sbusiness strategy
and Objectives
2 Top management support and F - 30 10 58 16 3.62 0.818
commitment for T&D % - 28% 9% 54% 9%
implementation and evaluation
3 Line management commitment F 16 20 23 9 40 2.89 0.801
and involvement % 15% 18% 21% 9% 37%
4 Co-operation and co-ordination F 40 10 32 8 18 2.18 0.761
between the variousdepartments %
and the T&D department 37% 9% 3% 7% 17%
/division.
5 Environmental F - 8 40 20 40 2.74 0.794
Scanning(Internal and external) % - 7% 37% 19% 37%
6 Role of trainer‟s F 40 10 30 8 20 2.09 0.703
% 37% 9% 28% 7% 19%
7 Evaluate training and F 9 - 32 27 40 3.60 0.860
development outcome % 9% - 30% 25% 37%
Source: Questionnaire

Note: NA = Not at all, SE= Small Extent, ME = Medium Extent, GE = Great Extent, and VGE =
Very Great Extent.

Page 54
For the sake of simplicity Very Great Extentand Great Extent were merged together to Great
Extent and Not at all and Small Extent were merged together to Small Extent so that to test the
mean value of the output.

Table 4.4.2- IFactors affecting the effectiveness of T&Dcategory of mean value

Response Mean value
Small Extent 1.00-2.50
Medium Extent 2.51-3.00
Great Extent 3.01-5.00
Source: own survey

In order to be effective from the training program, offered by the organizations for their
employees,T&D should play a strategic, proactive andinfluencing role, rather than just simply an
implementing and reactive role. Consequently, organizations should identify and works
proactively against factorswhich relates to the main organizational factors influencing T&D
effectiveness, with their own importance, integration and interrelation, (Walton, 1999; Stone,
2002)

Thus, the above table4.4.2 and 4.4.2-Irevels CBE has experienced these factors as influencing
it`s T&D effectiveness, although with differing magnitude. Integration of T&D policies and
plans with an organization‟sbusiness strategy and Objectives,Evaluating training and
development outcome and Top management support and commitment for T&D implementation
& evaluation greatly affect the T&D effectiveness in CBE with mean value 3.62, 3.63 and 3.60,
respectively. On the other hand, Environmental Scanning (Internal and external) and Line
management commitment &involvement had moderately affect the T&D effectiveness with
mean value of 2.89 and 2.74 respectively. Finally,Co-operation and co-ordination between the
various departments & the T&D department /divisionand the role of trainers is found to have a
small affecting role in the effectiveness of T&D practices in CBE, WAAD, with mean value of
2.18 and 2.09 respectively.Therefore, it can be generalized that there are three major factors
affecting the T&D effectiveness in CBE. These are

Lack of integration of T&D policies and plans with an organization‟s business strategy
and Objectives. This phenomena is similar with `Myopia of learning' of Yeo(2003),
which occurs when organizations tend toignore the long run results, ignore the larger
picture and overlook failure. (Levinthaland March, 1993), training is in misalignment

Page 55
 with the organization‟scorporate strategies and policies. If training is focused on one
restricted area of theorganization it will not influence the organization‟s outcomes. So,
when design
Lack of Evaluating T&D outcome. This proves (Burrow and Berardinelli,
2003).it is not easy to measurethe direct relationshipsbetween training interventions and
the organizational performance outcome (quality, customer satisfaction, ROI, and market
share).
Lack of Top management support and commitment for T&D implementation &
evaluation greatly affect the T&D effectiveness. This phenomenon complies with
Hussey (1985) in order to overcome any potential problem in assessingtraining
effectiveness and gettop management support and involvement, T&D objectives need to
be determined bytop management, line managers and HRD staff. He argues that
topmanagement should review training objectives whenever a switch in strategy is
planned. Latham and Wexley (1991) also stress that T&D objectives should be
customizedto the people who will participate in the training events, based on their needs
assessment.

4.5 Correlation Analysis

In order to facilitate the analysis of the third objective of the study, i.e. the relationship between
T&D practices and organizational performance of CBE, respondents were requested to score for
indicators of organizational performance (financial , customer, internal business process and
learning & growth performance) which are experienced due to adopting T&D practice (Training
Need Assessment and Training evaluation).

The researcher tried to accomplish this goal, the relationship analysis, of the study by deploying
an inferential analysis throughapplying Pearson correlation analysis. It is the most widely used
methods ofmeasuring the strength and direction of relationship between and among variables.

4.5.1 Relationship Between T&D Practices And Organizational Performance

It is argued that the role of T&D activities in theBalanced Scorecard is demonstrated through
customers, internal processes andlearning and growth perspectives. In this regard, Rogers and

Page 56
Wright (1998) argue thatthe Balanced Scorecard has been advocated as a way for T&D to
demonstrate its impacton organizational performance.The Balanced Scorecard literature
indicates that learning and growth areas enable the internal business process (innovation) which
will, in turn, allow the achievement of specific customer objectives and, finally, affectthe
financial results. In this regard, Kaplan and Norton (2000) stress that, in order toget superior
customer satisfaction and successful internal processes, in addition to theability to compete
globally, the fourth perspective of Balanced Scorecard, `learningand growth' perspective, should
continually improve the organization‟s capabilitiesfor delivering value to customers and
shareholders. Thus, organizations should investmore in reskilling employees or, in other words,
in T&D, enhancing informationtechnology and systems and aligning organizational procedures
and routines. Theseobjectives are articulated in the learning and growth perspective.

Therefore, in order to test this empirically, in CBE- WAAD, Pearson Correlation analysis was
used to determine the relationship betweenindependent variables (Training Need Assessment and
Training Evaluation) and dependent variable organizational performance. Accordingly, the
Pearson Correlation results range between 1 (perfectly linear positive correlation) to -1 (perfectly
linear negative correlation). When the correlation value is 0, no relationship exist between the
variables understudy and when the correlation value lies in the middle between 1 & -1
(excluding 0) the below interpretation guide (table 4.1b) developed by Field, 2005 becomes
handy. Accordingly, this guide has been used to interpret the result which is summarized in the
coming sections.

Table 4.5.Correlation result interpretation guide

Correlation value in range Interpretation

0.10 - 0.29 Small correlation
0.3 – 0.49 Medium correlation
0.5 – 1 Strong correlation
Source: Field, A. (2005)

Page 57
Table 4.5.1 Correlation between T&D practice and organizational performance

Organizational
Performance
TNA Pearson Correlation .695**
Sig. (2 tailed) .000
N 108
T. Evaluation Pearson Correlation .820**
Sig. (2 tailed) .000
N 108
Organizational Pearson Correlation 1
Performance Sig. (2 tailed)
N 108
**Correlation is significant at the 0.01(2 tailed)
Source: SPSS Output

As can be witnessed on table 4.5.1 above, which depicts the relationship betweenT&D practice
(Training Need Assessment and Training valuation) and organizational performance, all Training
Need Assessment and Training valuation are found to have significant correlation with
organizationalperformance since two-tailed significance test values are less than 0.01.
Further,the Pearson correlation value illustrates that TNA (r=.695) and Training evaluation
(r=.820)have strong positive correlation with organizational performance.

Page 58
 CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1 Introduction

In this chapter, an attempt is made to give a summary of the research findings,conclusions,

recommendation and suggestion for further research. The mainpurpose of this study was to
determine if there exists a relationship betweenT&D practices and the organizational
performance of CBE. Data foranalysis was obtained by use of questionnaires adopted from
Ikhlas Ibrahim(2014)and A. Badenhorst (2013) with some modification. Information obtained
wasanalyzed quantitatively with the aid of statistical package for social sciences(SPSS) version
21 computer software.

5.2 Summary

From data analysis in chapter four, the study summarized the major research
findings as follows where a 5-point Likert scale was used to rate the extent of adoption of these
elements.

5.2.1 Extent Of T&D Practice Efficiency

The need to evaluate the effectiveness of training programs is as important asdetermining the
need for training and the best program that fits such needs,according to (Donald Kirkpatrick
1998).

Therefore, the study sought to establish the extent of T&D practices implementation efficiency
inCBE, WAAD. Respondents were requested to state the extent of adoption of elements of T&D
practices, where TNA and training evaluations were the concern. As a result, the findings
revealed

TNA is rarely(77%) conducted and only (9%) training evaluation is made

regularly.Furthermore,while conducting TNA, it is mainly, conducted when there is an
introduction of new work tools(82%), lack of knowledge(79%) or poor performance is

Page 59
 experienced(74%) whereas, low profitability(56%), high turnover/absenteeism(61%) and
poor service quality(58%), were rarely usedindicators to assess TNA.Thus,
questionnaire(71%) is the regularly used approachfollowed by face to face interview
with supervisors(63%) which is mostly used method and performance appraisal
information(49%) & TNA determination through a specialist training committee(42%)
were regarded as rarely used approaches.
Regarding training evaluation 64(59%) of the respondent reveals that the bank has never
evaluated its T&D practices, 35(32%)sometimesevaluated and 9(9%) the participants
said T&D programs are evaluated on a regular basis. Even though, 63(58%) of the
respondent asserted it as important element, 40(37%) relatively important and 5(5%)
regard it as somehow important.. Regarding evaluation outcomes, it is found 97(90%)
evaluation outcomes are never used for further improvement,8(7%)always and 3(3%)
sometimes training evaluation outcomes are used for further improvement.

5.2.2Factors Affecting T&D Effectiveness

Once the researched has go through the T&D practices implementation effectiveness, among the
various factors that affect the T&D effectiveness, as per the pilot test made earlier, the researcher
has recognized andidentified these six factors as an influential than others.

. Integration of T&D policies with the business objective(63%) and top management
support and commitment for T&D implementation and evaluation (62%) are found to
have great influence whereas line management‟s commitment and involvement (49%),
and environmental scanning (57%) are identified as having medium influence. Finally,
cooperation & coordination between the various departmentsand the T&D division (46%)
andthe role of trainer`s(46%)are regarded as having smaller influence on the
effectiveness T&D practices, in CBE.

5.2.3 Relationship Between T&D Practices And Organizational Performance

Pearson correlation analyses were used to investigate the relationship between T&D practices
and organizational performance of CBE. The dataobtained from the respondents indicating the
extent of adoption of T&D practices are correlated with elements of organizational performance.
Page 60
The correlation analysis which were found to be significant showed that both
T&D practice (TNA r=.695 & Training Evaluation r=.820) have strong correlation
with organizational performance. Further, both T&D practice havesignificant strong positive
correlation with all organizational performance elements under BSC, i.e. financial performance,
customerperformance, internal business performance and learning & growth performance.

5.3 Conclusion

From the foregoing discussion it can be concluded that CBE had adoptedT&D practices to
perceivable levels. However, there exist considerable levels of inefficiency in its TNA and
Training evaluation elements (poor training need assessment and training outcome evaluation),
where integration of T&D policies with the business objective, top management support and
commitment for T&D implementation and evaluation are found to have great influence over the
T&D practices efficiency.

According to the Pearsoncorrelation analysis, these T&D practices (TNA & Training
Evaluation) tended tohave strong positive relationship with financial performance, customer
performance, internal business process performance and overall organizational performance.
This confirms what many studies indicated.the higher quality T&D practices used, the
better the performance that occurs in respect of productivity, skills flexibility, labor
turnover and financial indicators (Guest, 1997; Delaney and Huselid, 1996; MacDuff,
1995).T&D has become an important means to improve organizational performance
and effectiveness through a critical feature related toproductivity, product development, market
share and sales growth (Koch and McGrath, 1996; Kallenberg and Moody, 1994). Similarly,
other studies, Horwitz (1999) contends that T&D contributes to the organization‟sperformance,
success and competitiveness through providing the capacity to enhanceindividual abilities and
competencies as necessary requirements for effectiveorganizational performance.

5.4 Recommendations

In order to tackle the main problems and challenges of the T&D and achieve
effectiveness, the TNA and training evaluations needs to be a systematically linked and

Page 61
 derived from the overall organizational strategies, plans and policies,rather than being
piecemeal, standalone activities, designed to react to the currentorganizational conditions.
In order to come up with effective T&D practices, specifically in TNA and Training
evaluation practices of the bank,these activities should be taken seriously as a necessary
ratherthan a prestige activity and/or a cost to be minimized and T&D staff need to
beresponsible and able to convince the organizations‟ people of thestrategic importance
of every T&Dactivities for the overall organizational success.
Since, it is hard to connect training interventions to the organization‟s performance
measurements directly; these measurements need to be revised, refined and resized to
document the impact of planned learning (T&D) on organizational performance.
For a systematic accurate TNA process, there is a need to link T&D with a
promotion,reward and punishment system, so that the output will be as strong as feasible.
Involving employees in training evaluation activities and taking inputs for future similar
activities and documenting best practices to scale up in similar settings, will help the
bank to take the evaluation outcomes for further improvement.

5.5Limitation Of The Study

This study is believed to have certain constraint. Primarily, it is worthkeeping in mind

that the sample of the study was limited to one district, WAAD, where there may exist
minor difference in practices.. There should be cautiontaken when making generalization
of the study
Self-reported data is going to be a major limitation of the study, because it
rarely can be independently verified that the researcher is going to take what the
respondentssaid at face value

5.6 Suggestion For Further Research

Further studies should be conducted on the key determinants and drivers of every element of the
whole T&D process.Similarly further study should be conducted on the strategic position of
T&D and organizational performance.

Page 62
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 APPENDIX

Questionnaire
Addis Ababa University School of Commerce
Graduate Study for Masters of Art in Human Resource Management

Dear respondents: -

This questionnaire is designed for preparing a thesis on The Relationship of Training &
Development Practices and Organizational Performance in the case of Commercial Bank of
Ethiopia. The outcome of the study will be used in order to suggest possible solutions for
problems identified while conducting the study. I would like to, kindly, request you to spend
some time to fill the questionnaire as frankly and reasonably as possible. Your participation in
this survey is highly appreciated. I confirm that, the information you provide will be consumed
for academic purpose only and will be kept confidential.

Instructions on the completion of this questionnaire will follow before each section. The
questionnaire is designed to make completion as easy and quick as possible. Most of the
questions can be answered by simply put a circle (O) mark.

Thank you for your co-operation!

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Instruction

1 Please circle ”O” one of the correct answers

2 Answer all questions.

Section A: Demographic factors

1. Branch name ------------------------

2. Your current position

CSO/makerCSO/checker SCSO/Accounts SCSO/Auditor SCSO/Cashier

3. Age

21-25Years 26-35 Years 36-45 Years 46-55Years Above56 Years

4. GenderMale Female
5. Qualification
Diploma First Degree Masters Above Masters
6. Service year
1-5 years 6-10 years 11-15 years 16-20 years 21 and above

SECTION B: TRAINING AND DEVELOPMENT PRACTICES

Indicate the extent to which your bank has implemented the following T&D practices. There are
five options to answer.

N R S M A
Never Rarely Sometimes Mostly Always

Please put check mark circle “O” on the box provided that reflect your idea

I Training Need Assessment (TNA) N R S M A

1 How often does your bank conduct TNA? 1 2 3 4 5
2 Indicators to asses training needs in your bank

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 Poor performance 1 2 3 4 5
Lack of knowledge 1 2 3 4 5
New working methods 1 2 3 4 5
Poor service quality 1 2 3 4 5
Low profitability 1 2 3 4 5
High turnover/ absenteeism 1 2 3 4 5
3 How is formal TNA conducted in your bank
Questionnaire 1 2 3 4 5
Face to face interview with supervisors 1 2 3 4 5
Through specialist training committee 1 2 3 4 5
Performance appraisal results 1 2 3 4 5
II Training Evaluation
4 Does your bank evaluate T&D programs? 1 2 3 4 5
5 How important is evaluating T&D programs? 1 2 3 4 5
6 Are evaluation outcomes used for further improvement? 1 2 3 4 5

SECTION C

In your opinion, to what extent does your organization experience the following factors
influencing T&D effectiveness? There are five options to answer

NA SE ME GX VGE
Not at all Small Extent Moderate Extent Great Extent Very GreatExtent

Please put circle mark “O” on the box provided that reflects your idea.

Factors affecting T&D N SE ME GE VG

A E

1 Integration of T&D policies and plans with an organization‟s 1 2 3 4 5

business strategy and Objectives
2 Top management support and commitment for T&D 1 2 3 4 5
implementation and evaluation.

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3 Line management commitment and involvement 1 2 3 4 5
4 Co-operation and co-ordination between the various 1 2 3 4 5
departments and the training and development department
/division.
5 Environmental Scanning(Internal and external) 1 2 3 4 5
6 Role of trainer‟s 1 2 3 4 5
7 Evaluate training and development outcome 1 2 3 4 5

SECTION D: ORGANIZATIONAL PERFORMANCE

To what extent has your firm experienced an increase in the following performance outcomes as
a result of T&D practices?

NA SE ME GX VGE
Not at all Small Extent Moderate Extent Great Extent Very GreatExtent

Please put circle mark “O” on the box provided that reflects your idea.

Financial Performance measures NA SE ME GX VGE

1 Increasing profitability 1 2 3 4 5
2 Cost saving 1 2 3 4 5
Customer measures
3 Efficiency to respond to customer order/request 1 2 3 4 5
4 Customer satisfaction 1 2 3 4 5
Internal Business Process measures
5 Improved work efficiency 1 2 3 4 5
6 Reduction in errors 1 2 3 4 5
Learning & Growth measures
7 Innovation and change 1 2 3 4 5
8 Improved knowledge skill and attitude 1 2 3 4 5

THANK YOU VERY MUCH FOR YOUR COOPERATION!!

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