The Impact of Staff Training and Development on Organizational Productivity
A Study of Selected Commercial Banks in Nigeria
Scientific Essay 2012 5 Pages
Title: The Impact of Staff Training and Development on Organizational Productivity: A Study of Selected Commercial Banks in Nigeria.
* (1) Ezemenike M.S., (2) Nnabuife E.K (Ph.D), and (3) Akpan L.P. (Ph.D)
* The corresponding author
Employees and managers who must adapt to the myriad of changes facing organizations must be trained and developed continually in order to maintain and update their capabilities and for managers to enhance their leadership skills and abilities (Cole, 2004). Staff training and development are concerned with activities related to the management of an organization; its aim is to better the performance of groups and individuals in an organizational setting (Armstrong, 2009). The present day economy is very much dependent upon the various functions of banking practices; it is unthinkable for the country’s economy to maintain its growth, sustenance and development without the role of the banks. Banks have the responsibility to nurture small-scale companies to blue chip (large companies) with a multiplier effect on job creation, business for insurance practitioners, research workers, as well as playing some other corporate social responsibility roles within the society. The role of banker is essentially carried out by the people and therefore it is essential to have a well-trained and motivated staff to manage the banking operations. Success of the banking operations depend upon the employees and the effectiveness of the employees also depend on the training input given to them.
Today, it is disturbing however, that a sizable number of commercial banks in Nigeria have failed to live up to their expectations (such as; increase in total deposits, Net interest margin and total asset of banks) as some of them have gone distressed, while most of them have entered into merger and acquisition for survival. Also, for some years now, it appears that training and development practices in these selected commercial banks of the study were haphazard, unplanned and unsystematic and several of their employees such as machine and computer operators, customer care units, field engineers, marketers and many other categories of workers did not read banking course or other related courses. Most of them came from other fields of study. Such as education, fine art, surveying, pharmacy, law, mass communication and so on but are not well trained to key into the professionalism area of the banking system. Even when they are trained, they cannot easily cope due to the poor training system used. The training sometimes does not come with incentives. This has resulted to lots of deficiencies in the entire training exercise in the banking sector and these problems are believed to have led to high labour turnover and low productivity in these organizations. The main purpose of this study therefore, is to determine the impact of skill acquisition on organizational productivity.
The literature explores a range of theoretical foundations of training and development. This has become important in the discussion of the organizational productivity. Thus, there abound various views as opined by prominent school of thought and scholars on the subject matter. However, central and more significant is the theory of the operant conditioning method of learning which was developed by B.F. Skinner in 1938 it upholds that people choose to behave in ways that result to rewards and discourage punishment (Nnabuife, 2009). This view maintains that there is reinforcement of the behaviour by a reward or punishment (Kearns and Miller, 2007). Another theory of learning is congnitivism approach which came in a publication in 1929 by Bode Kelvin, a gestalt psychologist. Cognitive theories look beyond behaviour to explain brain based learning. Cognitivists consider how human memory still works to promote learning, (that is, a process of skill acquisition) for example, the physiological processes of sorting and encoding information and events into short-term memory and long-term memory. Skill acquisition is a form of prolonged learning about a family of events.
Many previous works by some scholars on this topic like the work of Lanre (1998), Okoli (2001), Kalu (2005), Azike (2006) and few others recognize that training has a significant effect on organization profitability and performance. But, none of them conducted proper assessment of needs analysis to identify a training model as a guide for training and development practices. This research work covered those areas and used an empirical approach to depict how training and development contribute to economy growth of a country like the growth of gross domestic product (GDP), technology advancement, unemployment reduction and increase in capacity utilization of the populant in an economy.
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Figure 1: Stages of instructional design
Source: Raymond A.N., John R.A, Barry G., and Patrick M.W. (2004:201), Fundamentals of Human Resources Management, New York: McGraw-Hill.
In order to go into the fundamentals of this study, the period of 1990 – 2011 was selected and applied. Selected commercial banks in Nigeria were used for this study. Data were derived from Central Bank of Nigeria (statistical bulletin), World Bank Development Report (various issues), and Human Development Index (HDI) reports. The ordinary least square (OLS) estimation method was used in the study. The objective of the study is to determine the impact of skill acquisition on organizational productivity. In order to guard against bias and equally achieve complete linkage of variables in the study, this tool of analysis is preferred. The equations are logged so as to provide direct estimation and interpretation of the coefficient.
The model for this study is specified as follows: SKA = f (P, INV, WC,UNEM, GDP, CAPU) et (i)
Viewed from an econometric stand point, we have:
SKA= a0+a1LP+a2LINV+ a3LWC+ a4LUNEM +a5LGDP+a6LCAPU+et … (ii)
et = represents error term (stochastic term)
a0 – a 6 are parameter estimates in respect of skill acquisition equation.
LSKA = log of skill acquisition (capacity building proxied by education)
LINV = log of investment
LP = Log of profit
LWC = log of working capital
LUNEM = log of unemployment – registered unemployment.
LGDP = log of gross domestic product
LCAPU = log of capacity utilization.
The empirical result and related statistics associated with the implications of training and development on organizational productivity are as presented below:
Table 1: Regression Analysis for the Model
illustration not visible in this excerpt
Source: Gretl Regression Output (2012)
The equation of this model regresses skill acquisition on profit, investment, gross domestic product, unemployment, working capital and capacity utilization. The estimated coefficient, P-value and adjusted R2 are all presented together with the t-ratio and standard error. Thus, from a careful examination of the regression result and related statistics in table 1 above, the following facts emerged: The coefficient of the constant term carries a negative sign (-534172). The t-value is statistically significant at about 0.01 per cent. This reveals a positive relationship between skill acquisition and organization productivity. This confirms Armstrong (2009) assertion that “when employees are constantly trained and developed, they get equipped with great skills, knowledge and abilities (SKA’s) required for them to carry out their job’s efficiently and effectively”.
Unemployment rate in the economy is reduced as banks become more productive. Thus, the coefficient of unemployment is positive and t-value is statistically significant at better than 0.1 per cent. This shows that commercial banks expand and recruit more employees as they make favourable annual earnings.
The coefficient of gross domestic product is positive and t-value is fairly significant at 0.1 per cent. This shows a linkage between organizational profit and gross domestic product (GDP) of a country. The management implication is that continuous training and development of employees leads to greater organizational productivity which subsequently brings about positive changes and improvements in the economic growth of a country. Hence, training and development perform diverse role that are important for the growth and development of Nigeria economy.
The coefficient of capacity utilization is positive and statistically significant at better than 0.02 per cent. This depicts that an increase in annual returns of the commercial banks will enhance the workers capacity inputs as more incentives will be allotted to the employees and more training activities be conducted to boost their skills. This also concurs with Hendry (2007:232) who opined that training and development contribute in optimizing the utilization of human resources that further helps the employee to achieve organizational goals as well as their individual goals.
The adjusted R2 of 0.994124 is instructive and indicates a good fit for the model. Simply put, about 62 per cent of the relationship is accounted for by the model indicating the contributions of the variables in the model to organization productivity.
From the study, it is evidently proved that organizational productivity depends largely on staff training and development. The econometric facts emerging from the study indicates that there exists a functional affiliation between profit and investment, unemployment rate, capacity utilization and gross domestic product of a nation.
This paper therefore advocates that to institute proper training and development programmes, the commercial banks and any other institution in Nigeria should follow a systematic training process and initiate a policy for motivation attached to the training.
This study recognizes the fact that several variables apart from skill acquisition, training and development are strong predictors of organizational productivity and performance. The foregoing shortcomings of this study therefore, uncover potential areas for further research.
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Corresponding author: Ezemenike Martin Somtochukwu.