Training For Most Capable Workforce

Advances In Management
Vol. 3 (12) Dec. (2010)
Case Study:
Training for Most Capable Workforce

Indradevi R.
VIT Business School, VIT University, Vellore 632 014 (T.N.), INDIA
. rindradevi@vit.ac.in
Abstract
The function of the HR Department is changing
with time and with this change, the relationship between
the training function and other management activity is
also changing. Training is a learning process that
involves the acquisition of knowledge, skills, concepts,
rules, attitudes and behaviors of individuals to enhance
the performance of employees. The training and
development activities are now equally important with
that of other HR functions. The days when training was
considered to be futile, waste of time, resources and
money, is gone. Now a days, training is an investment
because the departments such as marketing and sales,
HR, production, finance etc. depend on training for its
survival. Training actually provides the opportunity to
raise the profile development activities in the
organization. TTiis research paper explored employee
capability as a intervening variable between training
and organizational performance with special reference
to IT Industry. Data were collected using a self
administered questionnaire. The questionnaire consists
of thirteen items on training and seven items on
employee capability and seven items on organizational
performance with a Five-Point Scale ranging from
strongly disagree (I) to strongly agree (5). A sample of
100 respondents from 2 IT Companies in Chennai,
constituted as the sample unit for the study. Convenient
sampling technique is adopted to select the sample units
to collect the data. Scale reliability test was conducted
on all the 27 items.
Keywords: Training, employee capability, organizational
performance.
Introduction
Training is a learning process that involves the
acquisition of knowledge, skills, concepts, rules, attitudes and
behaviors that enhance the performance of employees.
Training helps employees to analyze where they stand at
present and where they will be after some time. Training not
only develops the skills of employees but also helps in
optimum utilization of human resource that further helps the
employee to achieve the organizational goals as well as their
individual goals. It also helps in understanding and carrying
out organizational policies.
Bontis and Serenko^ defined that employee
capability reflects an individual's perception of his or her
(49)
own knowledge, skills, experience, network, abilities to

achieve results and room for potential growth. It is believed
that highly satisfied employees perceive themselves to be
more competitive than their less satisfied counterparts.
With the rapid expansion of IT sector and coming up
of major players and new technologies, companies must
provide the necessary tools and other innovations for their
employees to be productive, efficient and informed. A lot of
research has identified a direct link between training
investment of the companies and the market capitalization.
Training has been identified as a major tool to optimize
organization and employee capability. It clearly indicates that
the companies which have successfully implemented training
programs, deliver customer goals with effective results.
Training results in enhancement of employee capability
which in turn, helps the organization in achieving its business
goals.
Review of Literature
Gerhart and Milkovich^ identified a correlation
between training programmes and financial performance.
Bates'* described that training was linked to the longevity of
companies. Bartel^ recognized a positive relation between the
training program given to employees in manufacturing sector
and the growth in productivity. Huselid'" evealed that
investments made in Human Resource Development resulted
in reduced turnover of employees, higher productivity and
increased performance of the organization. Doucouliagos^
found that investment in training was desirable both for the
development of the individual and organization. He added
that Human capital investment is an activity which improved
the quality (productivity) of the worker. Training as an
important component of human capital investment increased
the capability of employees. Barcala, Perez and Gutierrez^
stated that training is considered to be the great aspect of
interest for both the public and the private sector.
Bird and Beechler' investigated the fit between a'
subsidiary's business strategy and its HRM strategy and
higher performance. The study used perceptual performance
measures. In the absence of objective data, self-reported
measures are an acceptable substitute and are also reliable.
Mayo'^ argued that employee capabilities are one of
the most important measures affecting organizational
performance. McCowan et al'^ identified that successful
organizations constantly enhance employee capabilities
through a variety of special programs.
Vol. 3 (12) Dec. (2010)
Atidrew Mayo ' examined the contribution of human
capital to current and future value for stakeholders. The key
implications for such growth are individual capability,
individual motivation, leadership, the organizational climate
and workgroup effectiveness. Each of these was examined in
detail with quantifiable measures. Individual capability or
Employee capability was measured by knowledge/ skill/
experience/ network; ability to achieve results, potential for
growth and their contribution to work. Employee capability is
one of the most important measures affecting organizational
performance.
MacDonald and Colombo'* and DiFrancesco'' argue
the importance of training in Organizations which contributes
to the development of Human Capital. Ballot, Fakhfakh and
Taymaz' discussed the effects of training on wages and
productivity. The empirical evidence suggested that workers
do tiot get all the benefits of training even though human
capital is completely embodied in them and finns got a
significant improvement in productivity in return for their
investment in training.
Paul and Anantharaman'^ developed and tested a
causal model that related Human Resource Management
(HRM) with Organizational performance. The study found
that each and every HRM practices under the study had an
indirect influence on Organizational performance.
Susan et a l " developed a new measurement tool that
assessed the human capital development processes of an
organization, benchmarked the performance against other
organizations and determined the relationship of each process
to business results. Human capital development processes
such as learning or career development lead to improved
performance in human capital capability like employee
engagement or workforce performance. Human Capital
Capability is defined in terms of leadership, workforce
performance, employee engagement and workforce adaptability, ability to change, talent management and human capital
efficiency".
Katou and Budhwar" made a study on the effect of
Human Resource management policies on organizational
performance and found that Human Resource management
practices like training, appraisal, recruitment had a positive
effect on the performance of the organization.
Kumpikaite and Ciarniene'^ analyzed the scientific
literature and empirical research covering 18 organizations of
Lithuania. The study explored training and development of
employees helped organizations to meet their competitive
challenges and environmental changes. Traditionally, training
focused on improving the performance of employees in their
current jobs while development prepared the employees for a
new job. There are numerous theoretical and empirical
research studies on Training. Most of the studies concentrated
on the need for training, training effectiveness and training
(50)
and organization performance. There is not much research

done on training and the implication of training on employee
capability.
Methodology
The study was an exploratory study which explored
the employee capability as an intervening variable between
training and organizational performance. Primary data with
reference to the agreement level of the employees on training,
employee capability and organizational performance were
collected from the respondents by using a well designed
questionnaire with 27 items. A sample of 100 respondents
from IT Companies in Chennai constituted as the sampling
unit for the study. Convenient sampling technique is adopted
to collect the data. Survey was conducted with special
reference to Chennai.
Independent variable - Training Practices: Based on an
extensive review of the HRM literature, a list of 13 items was
compiled which described the training practices followed in
IT Companies. The Alpha value obtained is.77.
Intervening variable - Employee capability: Employee
capability was the intervening variable used in this study and
seven items described the employee capability. The Alpha
value obtained is .75.
Dependent Variable - Organizational performance:
Organizational performance was the dependent variable used
in this study and seven items described the organizational
performance. The Alpha value obtained is .78. The alpha
value for all the variables is higher than the acceptable lower
limit of .6 according to Nunnally'".
Analysis and Interpretation

Data analysis is carried on with the primary data
collected from the field study. It was tried to find out
association between demographic variables like age, gender,
marital status and experience of the employees with that of
training provided to employees and employee capability.
Demographic Variables and Training:
HO: There is no significant association between demographic
variables and training provided to employees
HI: There is significant association between demographic
variables and training provided to employees
It is inferred from table 2 that the significance value
for demographic variables on training is <.O5, so we could
interpret that Null Hypothesis is rejected and alternate
hypothesis is accepted which states that there is a significant
association between demographic variables like age, gender,
experience and marital status and training imparted to
employees.
Demographic Variables and Employee Capability:

HO: There is no significant association between demo-
Vol. 3 (12) Dec. (2010)
graphic variables and increased employee capability.
HI: There is significant association between demogra|.
variables and increased employee capability.
for demographic variables on employee capability is <.O5, so
Null Hypothesis is rejected and alternate hypothesis is
accepted which states that there is a significant association
between demographic variables like age, gender, experience
and marital status and increased employee capability.
Demographic Variables and Organizational performance:
HO: There is no significant association between demographic
variables and organizational performance
HI: There is significant association between demographic
variables and organizational performance
for demographic variables on organizational performance is
<.O5 for age, experience and marital status but for age, the
significance value is greater than .05 Hence it is interpreted
that Null Hypothesis is rejected for age, experience and
marital status which stated that there is a significant
association between them and null hypothesis is accepted for
gender which denotes that there is no association between
gender and organizational performance. After finding out the
association between demographic variables with training,
employee capability and organizational performance, the
intervening effect of employee capability between training
and organizational performance was found out. Regression is
run to find out the impact of training on employee capability
and employee capability in performance of the organization.
Training and Employee Capability

The significance of the model is analyzed by looking
to the p-value of the F-test (Table 5.1). With a p-value of zero
to three decimal places, the model is statistically significant.
The R-squared is 0.535 (Table 5) which means that
approximately 54% of the variability of employee capability
is accounted for by the variables in the model. In this case,
the adjusted R-squared indicates that about 53% of the
variability of employee capability is accounted for by the
model, even after taking into account the nutnber of predictor
variables in the mode!. The coefficients of the variables
indicate the amount of change one could expect in employee
capability (Table 5.2), given a one-unit change in the value of
the independent variable training. The following regression
equation brings out the relative impact of the independent
variable on the dependent variable employee capability:
Employee Capability =.1.631-i-.6O8 (training)
Training and Organizational performance

to the p-value of the F-test (Table 6.1 ). With a p-value of zero
(51)

approximately 46% of the variability of organizational
performance is accounted for by the variables in the model. In
this case, the adjusted R-squared indicates that about 45% of
the variability of organizational performance is accounted for
by the model, even after taking into accourrt the number of
predictor variables in the model! The coefficients of the
variables indicate the amount of change one could expect in
organizational performance (Table 6.2), given a one-unit
change in the value of the independent variable training. The
following regression equation brings out the relative impact
of the independent variable on the dependent variable
employee capability:
Organizational Performance =.1.356-t-.694 (training)
Employee Capability
performance
and
Organizational

to the p-value of the F-test (Table 7.1). With a p-value of zero
approximately 46% of the variability of organizational
performance is accounted for by the variables in the model. In
this case, the adjusted R-squared indicates that about 46% of
the variability of organizational performance is accounted for
by the model, even after taking into account the number of
predictor variables in the model. The coefficients of the
variables indicates the amount of change one could expect in
organizational performance (Table 7.2), given a one-unit
change in the value of the independent variable employee
capability. The following regression equation brings out the
relative impact of the independent variable on the dependent
variable employee capability:
Organizational Performance = .699-I-.843 (employee
capability)
Conclusion
This study highlights the fundamental role of
training as a powerful instrument for the improvement of a
employee capability. Training with procedural knowledge
impacts employee capability and subsequent performance.
The regression coefficient shows the existence of positive and
mediocre associations (.608), between training activities and
employee capability and at the same time training and
organizational performance (.694). But the result shows that
when employee capability is applied between training and
organizational performance, there is a positive and high
association between employee capability and the performance
of the organization (.843). The direct impact of training on
organizational performance is-less compared with the impact
of training on employee capability and inturn on performance
of the organization. This study reveals that training imparted
to employee.s increases the efficiency of employees in the
Vol. 3 (12) Dec. (2010)
form of employee capabilities which in turn increase the

perforinance of the organization. The study had also
identified a positive association between demographic
variables of respondents like age, gender, marital status and
experience and employee capability and training. This
indicates that all HR Managers of IT Companies should
concentrate on the regular training imparted to employees to
increase their efficiency. The HR Managers should
concentrate more on planning for the training program,
learning by newcomers, senior management involvement,
briefing and debriefing on the role of training in order to
develop the capability of employees which leads to the
increased performance of the organization. Study concludes
that employee capability intervenes between training and
organizational performance with a high impact value.
Table 3
ANOVA - Demographic Variables and
Employee Capability
. .- F
Gender
4.518
Sig.
.000
Marital Status
6.449
.000
Experience
7.449
.000
Age '
8.999
.000
Table 4
ANOVA - Demographic Variables and
Organizational performance
Gender
.603
Sig.
.882
Age
2.539
.001
Table 1
Cronbach's Alpha Coefficient for Scales
'
-,
S.N.
Variable
Alpha
Experience
1.924
.017
Training
0.77
Marital status
3.225
.000
Employee Capability
Organizational performance
0.75
0.78
Table 5
Model Summary
Table 2
ANO VA Demographic Variables and Training
F.
Gender
. .
Model
R Square
Adjusted R
Square
.731 (a)
.535
.534
Sig.
1.821
.036
Marital Status
6.149
.000
Experience
3.369
.000
Age
3.098
.000
Std. Error of
the Estimate
.27382
a Predictors: (Constant), training.
Table 5.1
ANOVA (b)
. Model
1
Sum of Squares
Df
Regression
36.348
36.348
Residual
31.639
422
.075
.. ^ Mean Square
Sig.
484.799
.OOO(a)
Total
67.987
423
a Predictors: (Constant), training; b Dependent Variable: employee capability.
Table 5.2
Coefficients (a)
Model
1
Unstandardized Coefficients
B
Std. Error
(Constant)
1.631
.110
. training
.608
.028
Standardized Coefficients
Sig.
Beta
.731
14.773
.000
22.018
.000
a Dependent Variable: employee capability.
References
Industrial Relations, 44 (3), 473-495 (2006)
I. Ballot G., Fakhfakh F. and Taymaz E., Who Benefits from

Training and R & D, the Firm or the Workers?, British Journal of
2. Bartel A.P., Productivity gains from the implementation of

employee training programs. Industrial Relations, 33 (4), 411 (1994)
(52)
Advances In Management.,.
- r ; a Vol. 3 (12) Dec. (2010)

Table 6
Model Summary
Model
R Square
Adjusted R Square
.675 (a)
.456
.455
Std Error of the Estimate

.36591
a Predictors: (Constant), training
Table 6.1
ANO VA (h)
Model
1
Regression
Sum of Squares
47.333
Residual
Total
df
1
. Mean Square
47.333
56.501
422
.134
103.834
423
F.
Sig.
353.527
.OOO(a)
Table 6.2
Coefficients (a)
Model
1
B
Std. Error
1.356
.147
(Constant)
training
.694
Standardized Coefficients
Beta
.037
.675
'
, t ' : . '
Sig.
9.196
.000
18.802
.000
a Dependent Variable: organization performance.

Table 7
Model Summary
. Model
1
R Square
Adjusted R Square
Std. Error of the Estimate
.683 (a)
.466
.465
.36254
a Predictors: (Constant), employee capability.

Table 7.1
ANO VA (h)
Sum of
Squares
df
Mean Square
Sig.
Regression
48.368
48.368
367.997
.OOO(a)
Residual
55.466
422
.131
Total
103.834
423
Model
1
a Predictors: (Constant), employee capability; b Dependent Variable: organization performance.
Table 7.2
Coefficients (a)
Model
Standardized
Coefficients
B
Std. Error
(Constant)
.699
.179
employee'capability
.843
.044
Sig.
3.914
.000
19. i 83
.000
Beta
.
.683
a Dependent Variable: organization performance.

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(53)
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551-559(1990)
Vol. 3 (12) Dec. (2010)
.608
Traming
.843
Employee
capability
.: - Organizational
performance
.694
Graph 1: Training - Performance framework

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(Received 16* September 2010, accepted 30* October 2010)
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