Benefits of Continuous Workplace Training

Abstract

Training is widely used as a learning process whereby employees acquire new skills, knowledge and competence. In this fast changing world, training can be both an anchor and a lifeline. An anchor if it has a clear, focused objective, and a lifeline if it enables employees to keep up with the pace of change and allows companies to survive or even succeed.

However, investment in training appears to be under-utilized. Many companies do not evaluate the impact of training programs. Many Human Resources Department (HRD) believe that they have fulfilled their duty of care after organizing training courses for employees. After an extensive literature search, it was found that many companies do not have a system of evaluation or follow-ups to ensure that trainees put into practice the knowledge and skills acquired during training programs. Human Resource (HR) managers believe that it is the responsibility of the trainer and the Head of department to ensure that employees put the learning into practice. But both of them deny this responsibility and hold the HRD accountable.

It is in this context that the aim of this study is to investigate the effectiveness of training at the Hong Kong and Shanghai Banking Corporation Ltd (HSBC). This study uses exploratory as well as descriptive research designs. Survey research was conducted by way of a questionnaire among a sample number of employees who followed training courses and a face-to-face interview with the Recruitment and Development manager. The interview was audio taped, and the data obtained from the questionnaire was analysed using Statistical Package for the Social Sciences (SPSS) version 16.

The study reveals that while the employees including the Recruitment and Development manager acknowledge the importance of training, unfortunately there is not a specific evaluation system and follow-ups ensuring that the learning is transferred back into the workplace. It is also discovered that while HSBC is planning to use more e-learning as a method of training, most employees prefer classroom-based, raising serious concerns over training effectiveness at HSBC. Focusing only on this study, it can be concluded that training at HSBC is not completely effective. However more in-depth research could be conducted to compare the effectiveness of different training methods available at HSBC

1.0 Introduction

A hundred years ago, change was slow, like the steady flow of an untroubled river. The world is now a much different place to what it was even ten years ago. Most of the time the changes are unpredictable. The current global financial crisis is a vivid proof that the world does not stand still. With approximately eighteen banks currently operating in Mauritius, the banking sector is exposed to increasing levels of international and domestic competition. To innovate and become competitive, its human resources have to innovate in everything they do, be it their minds, their thinking, their skills and competence.

While in the manufacturing sector, employee performance failures end up in the reject pile, in the service sector such as the banking sector; employee performance failures are external failures. Those mistakes are visible to the customer and thus every failure has a direct impact on customer satisfaction. Therefore, investing in people through training is a prerequisite. Employees who have the necessary skills can create powerful business advantages that can be very difficult for competitors to duplicate.

Countries like Japan are trying to substitute human beings with robots. Indeed, human beings are non substitutable because they possess intelligence and potential that can never be equaled and their inventions proved it. The Taj Mahal, the Eiffel Tower, the Pyramids, the Great Wall and now the computer are all the creation and invention of humans.

In Mauritius, government wants to make the Knowledge Hub another pillar of the economy. However, Mauritius is currently suffering from a massive brain drain. Many who are emigrating are highly skilled, such as Doctors, Accountants and IT Developers. School leavers who go abroad for further education rarely come back. As such, the best and brightest are lost to their home country, resulting to a lack of young and skilled people to drive the expanding market place. Therefore, the Human Resources Development Council is offering training grants where employers can recover up to 75% of training costs to encourage companies to provide training to a maximum number of employees.

However, it is still debatable whether the training grant is being used effectively since measuring training effectiveness has often been neglected. But simply having all employees attend a training event does not necessarily translate into an improved workplace. The main challenge for any training program is to ensure that the learning is transferred back into the workplace.

1.1 Structure of Dissertation

This study is structured as follows:

• Chapter 1 provides a small overview of HSBC.

• Chapter 2 offers a theoretical and critical background of the literature review.

• Chapter 3 summarizes the research approach to conduct the study.

• Chapter 4 provides a thorough analysis of the data obtained from the survey.

• Chapter 5 consists of recommendations and provides concluding comments.

1.2 Benefits of the Research

The findings of this study are of major importance to HSBC as well as other companies as they assist them in adding value to their company by improving their position as an employer of choice through the delivery of effective training. The findings may also prove useful to lecturers, university students and anyone else with an interest in effectiveness of training programs.

2.0 Company Background

2.1 The HSBC Group

HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. The Group serves customers from around 9,500 offices in the main regions of the world such as Europe, Asia-Pacific, America, Middle East and Africa. With assets of US$2,527 billion at 31 December 2008, HSBC is one of the world’s largest banking and financial services organizations.

In 2002, HSBC launched a campaign to differentiate its brand from those of its competitors, with that pithy phrase: “ The world’s local bank”. In July 2009, HSBC was named “Best Global Bank” by Euromoney magazine. In addition, HSBC was awarded the “Best Global Debt House” and the “Best Global Transaction Banking House”.

2.2 HSBC in Mauritius

In Mauritius, HSBC operates 11 full-service branches and an offshore unit, which for many years has played a leading role in facilitating cross-border investment activity. It offers a wide range of products and services to diverse domestic and cross border customer base, from accounts services to credit cards, savings, investments, loans and custodian services. Through its locally incorporated subsidiary, the HSBC Bank (Mauritius) Ltd (HBMU), the bank is able to offer many of its global customers more sophisticated financial products and structures that benefit from the extensive range of international double taxation avoidance treaties that Mauritius has negotiated.

In addition, HSBC Mauritius is a leading provider of financial services to local companies across the whole spectrum from SMEs to local Top 100 companies as well as locally listed conglomerates. For three consecutive years, 2005-2007, HSBC has been bank of the year. It is also the second largest credit card issuer in Mauritius. As HSBC Mauritius continues to expand, it has decided to bring together all its non-retail

operations under one site in the fast growing Ebene Cybercity in 2008. In May 2009, HSBC Mauritius has launched two Islamic banking products. It becomes the first bank in Mauritius to offer Syariah-compliant banking services.

• HSBC vision:

To be a key value creator by identifying, developing, designing and delivering learning and employee development solutions for business success.

• HSBC mission:

• Partnering with our business lines to create value for our shareholders and our external customers.

• Maintaining a learning culture that energizes and motivates employees to maximize their full potential.

• Aligning training and employee development support with HSBC strategic imperatives.

• Core business principles:

• Outstanding customer service

• Effective and efficient operations

• Strong capital and liquidity

• Prudent lending policy

• Strict expense discipline

• • HSBC Values:

• Perceptive

• Progressive

• Responsive

• Respectful

• Fair

3.0 Literature Review

3.1 Definition of training

Training has been defined many times over the years. The Manpower Services Commission (1981 cited by Armstrong 1999) defined training as a planned process to modify attitude, knowledge or skills to achieve effective performance. Similarly, the Chartered Institute of Personnel and Development (CIPD) defined training as “an instructor-led and content-based intervention leading to desired changes in behaviour.”

For Armstrong (2003, p.549), training is “ the use of systematic and planned instruction and development activities to promote learning.” Moore (2005) found the importance of retaining staff through training by defining training as not only a way to achieve a specified standard of staff competence, but also about investing in employees to retain them. Similarly, Cartwright (2003) viewed training as an investment in people.

3.2 Definition of effectiveness

Being effective implies producing powerful effects. According to Bartol et al. (1997), effectiveness is the ability to choose appropriate goals and to achieve them. Similarly, Fraser (1994) defined effectiveness as a measure of the match between stated goals and their achievement.

Often, there is confusion between “effectiveness” and “efficiency” because there is a degree of inter-relationship. This relationship can best be understood by considering effectiveness as doing the right thing and efficiency as doing things the right way. According to Hunter (2005), efficiency and effectiveness are often mutually exclusive. The latter viewed efficiency as a measure of speed and cost and effectiveness as a measure of quality. For Hearn Wendy, effectiveness comes from taking the time to stop and evaluate, rather than running faster and faster. According to her, people should work smarter not harder. Similarly Ferriss (2007) believed that what people do is more important than how they do things. He also saw efficiency as useless if it is not applied to the right things.

3.3 Objectives of training

The main aim of training is to bring about suitable changes in employees to equip them with the skills required to do their work properly. According to Armstrong (2003) the main objective of training is to achieve companies’ human resource development strategies by ensuring that the employees have the skills, knowledge and competence to meet present and future needs.

3.4 Importance of training

Training is crucial to a company’s success. It plays a large part in determining the effectiveness and efficiency of the establishment (Sharma 1997). The latter agreed that training is a must and that management has no choice between training and no training. According to him, the only choice is to select a suitable training method. Similarly, Truelove (1997) believed that workplace skills have to be refreshed from time to time just as professional soldiers and top sports people train regularly to maintain their skills.

Bird (1993) also saw training as important to give employees the necessary knowledge to bring about quality improvement across the company. Batten (1992 cited by Vermeulen and Crous 2000, p.61) described the importance of training by the following words: “ Train, Train, Train!” If people are to do things better, they must have the skills and knowledge to do so. If employees cannot do their jobs because they have not been trained, that will reflect in the department’s performance. This is supported by Miller et al. (1998 cited by Moore 2005, p.200):

When good training is lacking there is likely to be an atmosphere of tension, crisis and conflict all the time, because nobody is quite sure how the various jobs are supposed to be done and who is responsible for what.

Similarly, Smith et al. (2003) viewed training as an essential ingredient for the success and longevity of teams. Eder (1990) wrote about the successful opening of the Mirage mega-casino in Las Vegas due to the training imparted to employees months before the opening of the casino. Clegg (2000) believed that developing staff to their full potential is important and is doubly required during hard times. According to an article published in the journal of “ Development and Learning in Organizations” in 2004, it is exactly when times are tough and businesses are sailing through rough seas that companies need to update employees’ skills since to do otherwise is like throwing the lifeboats overboard to save on weight.

Yet, despite a higher profile for training, there is still little evidence showing that a large number of employers accept the importance of training to organisational success.

According to Clegg (2000, p.2), employees are unlikely to mention training as the most important department of the company. The author observed that:

• Many training departments have a bad image.

• Many companies will say that training is among their top priorities but almost always they change their mind when money is short.

• Too much training that is currently undertaken has very little impact on what the trainees do when they return to the workplace at the end of the course.

• Too much training is uninspiring.

As rightly said by Hallier and Butts (2000, p.397), in many companies “ Training is perceived to be a less varied sphere of activity and not necessarily essential to the running of the organization.” Indeed, in any economic environment, it makes no sense to throw money at training because training is still regarded as an unnecessary function.

3.5 Benefits of training

Even though training costs money, in most cases the benefits outweigh the costs. Sloman (2005) believed that investing in staff through training bring long-term benefits. Sharma (1997) inferred that training provides the following benefits:

• Increase in productivity

• Improve individual and business performance thus obtaining a competitive edge.

• Improve morale of employees.

• Reduce supervision

• Reduce dissatisfactions, complaints, absenteeism and turnover

• Less accidents and wastage

• Enable employees to obtain job satisfaction and to progress within the organisation, thus helping the organisation to retain its workforce.

• Increase in organisational stability and flexibility.

• Avoid human obsolescence

3.6 Training: an investment or a cost?

Sutherland (1999) stipulated that the most important of all capital is that invested in human beings. Law (1998), Vermeulen and Crous (2000) and Sloman (2005) took a position very similar to Sutherland (1999) by stating that people are indeed the most valuable asset of any enterprise. Sharma (1997, p.244) rightly stated: “There is no greater organizational asset than the trained motivated personnel.” Buzan and Keene (1996) in their book “ The Age Heresy” argued that humans could appreciate in value whilst machinery depreciate in value fast and become redundant. Simarly, Law (1998) commented that human capital is more valuable than property or fixed assets.

In contrast to many authors’ opinion about employees being the most important asset, many companies still consider the development of people as a discretionary cost rather than a necessary investment. For many economists, the worth of something is not determined by its purpose but to its price. Prahalad (1972, p.169) rightly stated: “ To most line-managers, training has been by far an optional extra, to be indulged in when profits are good and to be dispensed with during lean periods.” He further added that traditional accounting practices considers all intangibles such as “ organizational capability and worth of human resources as expenses” but all tangibles such as investment in plant and equipment as investment.

Cunningham (2002, p.90) commented that for many organisations training is “ nice to have”, but not an essential. The training budget is the easier option when a company has to reduce costs. As such, companies tend to cut corners which render the training ineffective (Clements and Josiam, 1995).

This is an oxymoron. On the one hand, we have companies stating that employees are the most important assets but on the other hand, the same companies contradict themselves by viewing training as a cost rather than a worthwhile investment. All companies talk a lot about people development. But the moment things get tough; companies reduce training budgets, which may be a very short-sighted policy. If companies really believed about employees’ development, this is the one thing they would ring fence (Clegg 2000).

Managers often complain about giving them a better class of workers and their problems will go away. Brown (1992) argued that employers are already equipped with a pretty good class of workers since after all they chose them. Indeed it is managers’ responsibility to help employees improve.

The contributions of employees are often taken for granted though employees contribute a lot. Managers tend to believe in things that are visible to them but those whose contributions they cannot see tend to be neglected by them. Cartwright (2003,p.6) rightly stipulated:

Consider what Mickey Mouse is worth to Disney or what a gifted program writer is worth to Microsoft. The value may be impossible to calculate in absolute terms, but it is likely to be many times the conventional worth of either asset.

Barrows and Power (1999 cited by Moore 2005, p.200) believed that the alternative to training, that is not to train may even be more expensive because this lead to poor customer service. A lost customer may never return. As such, the lost revenue from poor service exceeds the costs of training a worker properly.

3.7 Effective Training

Porter and Parker (1993,p.19) identified four features for successful training:

1. Training must be viewed as a continuous process.

2. Training must be focused so that people receive appropriate courses at the appropriate level of their needs.

3. Training must be planned for the future to include the development of total quality skills and techniques.

4. Training materials must be made customized to suit the particular organization.

Organizations tend to believe that training “ delivered en masse will mean that they have fulfilled their duty of care” (Shuttleworth 2004,p.62). The symptoms of ineffective and poor training are many. The most self- evident are dissatisfied customers, haphazard work, performance and quality standards not met, untidy work, low productivity, high

production costs, excessive waste, employee dissatisfaction, poor discipline and high labour turnover.

In fact, the most effective way to develop people is quite different to conventional skills training, which let us face it most employees regard as a pain in the neck. Clegg (2000) argued that it is no longer good to rely on the way things have always been done and the only way to make training more effective is to be creative. Sloman (2005) suggested that if an effective training program is in place, it could help employees realize their potential and thus benefit both the employees and the organization.

According to Vermeulen and Crous (2000), for training to be effective, it must not only be planned in a systematic and objective manner but it must also be continuous to meet changes in technology, changes involving the environment in which an organisation operates, its structure and most important of all, the employees who work there.

However, Harris (1995) concluded that managers tend to select training programmes according to budgets and time available, but not according to the needs of employees. Conversely, Cunnigham (2002) argued that if training remains focused on the needs of employees, important changes in developing the performance of the organization might be missed out. As such, it can be inferred that creating effective training programs require balancing the needs of the learner and the needs of the organization.

In addition, Sloman (2005, p.349) commented:

Training is not about constructing courses based on identified training needs. It is about making a whole series of interventions that encourage a climate in which committed learners are willing and able to acquire relevant knowledge and skills.

If employees take part in training half-heartedly, it may prove costly for the organization. Even the best-planned training sessions may prove ineffective if employees are unwilling to participate.

Similarly, Barrett and O’Connell (2001) observed that a company can provide training to its employees, but the extent to which the training courses are then applied at work depends on the extent to which employees devote effort to learning and apply the new skills. The values projects model of learning also emphasized the importance of motivation, where the employees are willing to implement their learning.

(Action)

(Motivation)

(Skills)

(Knowledge)

3.8 Training Cycle

For training to be effective, companies must complete the full training cycle. But as Beardwell and Claydon (2007) rightly said, the popularity of the training cycle is more evident in the rhetoric of the literature than in organizational reality.

3.8.1 Identification of training needs

Arthur et al. (2003, p.236) stated that it is important to carry a Training Needs Analysis (TNA) before providing training because “it provides a mechanism whereby the questions central to successful training programs can be answered.” Prior to training, companies must have a clear idea of what it wants to achieve (Shuttleworth 2004) and whether the organisation’s needs, objectives and problems can be addressed by training (Arthur et al. 2003).

Matens (HRfocus 2005b, p.11) suggested that companies should ask these key questions:

• Where are we now?

• Where do we want to go?

• How do we get there?

• How can we get commitment from key individuals?

McGehee & Thayer (1961) recommended a three-tier approach to determine training needs. Arthur et al. (2003) three-step process for assessing training needs is similar to McGehee & Thayer (1961). They are as follows:

• Organisational analysis:

Where training should be emphasized within the organization and which organizational goals and problems can be achieved and solved through training.

• Operational analysis or Task analysis:

The skills, knowledge and attitudes necessary for employees to perform their jobs at the desired level.

• Man analysis:

How well the employees are performing their tasks, who needs to be trained and for what.

In the process of TNA, managers have to identify relevant training needs through the use of annual performance appraisal procedure to examine the individual’s aspirations, how their jobs may change and what training is required (Hallier and Butts 2000). According to HRfocus (2005b), companies should get input about what employees want to be trained in. Although TNA is time-consuming and expensive, it provides greater financial, organizational and individual benefits.

Also, training must be top-down, starting with the top team and cascading down the organization to show management commitment and to create an effective, healthy and versatile workforce. While in some organisations, training is considered to be for managers only, in other organisations managers think training is only relevant to workers, but not for them. Indeed, both these attitudes are wrong because training is for everybody (Reynolds, 1994). Similarly, Matens (HRfocus, 2005b) agreed that commitment and support from top management is vital. According to him, management has to show up for classes too.

3.8.1.1 The skills gap

It is important for managers to identify skills gap, which is the difference between the skills needed to perform the required task and the skills employees already possess.

Skills needed

Skills already

acquired

3.8.2 Plan of training required

Using a variety of training methods, the skills gap can be filled. In fact, Barrett & O’Connell (2001) observed that different training methods could encourage or discourage employees to participate in training programs. Similarly, The Learning and Skills Council (2004 cited by Beardwell & Claydon 2007, p.317) commented that companies tend to choose inappropriate training methods which are “ costly, time consuming, have a deleterious effect on employees’ perceptions of the value of training” and ultimately do not lead to increase skills levels in organizations.

3.8.2.1 Matching skills or tasks and training delivery methods

Skills and tasks can be classified into three broad categories (Farina and Wheaton 1973; Fleishman and Quaintance 1984; Gold-stein and Ford 2002; cited by Arthur et al. 2003, p.236):

1. Cognitive

This relates to the thinking, idea generation, understanding, problem solving, or the knowledge requirements of the job.

1. Interpersonal

This relates to interacting with others in a workgroup or with clients and customers, which entails a variety of skills including leadership, communication, conflict management and team-building.

1. Psychomotor

This relates to physical or manual activities involving a range of movement from very fine to gross motor coordination.

For a specific skill or task, a given training method may be more effective than others. This relationship has been backed by studies from Wexley and Latham (2002) who emphasized on the need to consider skills and task characteristics required to determine the most effective training method.

3.8.2.2 Training techniques

• On-the-job

It is the most popular training method because it is job-specific, relevant, immediate and flexible. A 2006 study by CIPD conveyed that 56% of learning and development professionals agree that on-the-job training is the most effective way for people to learn in organizations (Beardwell and Claydon 2007,p.308).

Conversely, Smith et al. (2003) commented that training delivered internally by employees who carry other duties apart from their responsibilities of training might lead to ineffective training because they have not received much training in how to train. On-the-job training includes the following:

• Demonstration

It involves telling or showing trainees how to do a job and then allowing them to get on with it. It is the most commonly used training method (Armstrong 2003) because it is immediate and accessible to most employees. This method is effective if the person giving the demonstration clearly defines what results have been achieved and how they can be improved.

However this method can result in the passing of bad or even dangerous working practices. Also, it does not provide a structured learning system where trainees understand the sequence of the training they are following.

• Job rotation

The aim is to increase employees’ experience by moving them from job to job or department to department. It can be an inefficient and frustrating method of acquiring additional knowledge and skills if it is not carefully planned and controlled (Armstrong 2003). For this method to be effective, a program has to be designed stating what trainees are expected to learn in each department or job. Also, there must be a suitable person to assess whether the trainees are given the right experience and the opportunity to learn.

• Coaching

It is a person-to-person technique to develop individual skills, knowledge and attitudes (Armstrong 2003). It can be very effective if it takes place informally as part of the normal process of management. Coaching consists of providing guidance on how to carry out specific tasks to help individuals learn rather than force-feeding them with instructions on what to do and how to do it.

• Mentoring

It is the process of using specially selected and trained individuals to provide guidance and advice to develop the careers of the employees (Armstrong 2003). The aim is to complement learning on the job. The mentor provides personal support and should not be an immediate superior to enable the employees to talk openly about problems and discuss any concerns frankly.

• Secondment or attachment

It involves the employees widening their skills or learning other skills by visiting other departments. It can also be used to increase awareness and understanding of other departments’ roles and concerns.

• Off the job

It usually takes place in training areas or centres, away from the employees’ immediate work positions. It includes lectures, case study, seminars and role-playing amongst others. This method is mainly theoretical. As rightly criticised by Beardwell and Claydon (2007, p.322) this method is

frequently pigeon-holed as the old way of doing things and typified as teacher centred, classroom based, process-focused and providing learning that is difficult to