Employees have different perception regarding formal and informal training and it affects their performance .This report will provide an insight of what role formal and informal training plays in employee's performance and which type of training program is preferred by employees of bank .
The banking sector of Pakistan is the targeted segment for the collection of primary data through questionnaires, which is designed based on research articles related to the topic. All employees from level OG2 and OG3 would be participants. The survey would be self-administered.and data that would be collected from respondent of nine different banks, Will then be used for statistical work. The instruments used for collecting data for this research consisted of three questionnaires for surveys, two from employees of different banks, which are regarding their perception about formal and informal training, this instruments consists of following contents i-e effectiveness, satisfaction, teamwork, and understanding of organization, decision making and coordination and seconds' questionnaires from their managers /boss about employee's performance. This variable will be measured by performance appraisal form of employees.
There were 250 questionnaires distributed among employees of these banks and out of these 250, 239 questionnaires were returned to the researcher. This means that the sample size of the survey was 239. Some other questions were also asked other than the questionnaire from the HR managers.
It can be concluded that in employees have equal perception regarding formal and informal training. For testing hypothesis, the General Linear Model (GLM) was used to identify the influenced factors based on the p (sig.) value of specific factor and the value of p that was set in the analysis was 0.10.
CHAPTER 1: INTRODUCTION
Training programs are becoming more significant in order to accomplish organizational aims ,objectives and goals competently and successfully .In banking sector a lots formal training program were carry out, but employee are also learned through informal training programs so its important for managers to know which training program is effective and as well as beneficial for them. Employers are continually faced with having to decide whether to make additional investments in training or to purchase skill from outside. (Lynch and black, 1998).Successful organizations recognize that employees are their most valuable resources because of employee commitment to the organization. Accordingly, organization need to retain human capital has become a primary concern for organizations. Organizations can achieve high productivity through effective training program .it may be formal or informal training?
According to the theory of human capital, investments in training lead to increases in worker productivity (Bartel, 2003) .This project will mainly focus on perception of employee regarding employees training and its relation to performance. Does formal and informal training really help employees in enhancing their career or do new employers focus mainly on recruiting qualified employees rather then training them, as there is a problem of high turnover in banking sector. Do these trainings solve the problem of retaining highly qualified and skill full people? We will also discuss which training is preferred by employee's, formal or informal training. This project will be focusing on issues and problems associated with formal and informal training.
DESCRIPTION OF THE BANKING SECTOR
The banking system of any economy is an undeniable determinant of its growth as it provides an efficient channel that route funds from surplus sectors in the economy towards deficit ones. During the lastdecade, the banking sector has gone through a number of changes. The reforms have been implemented in the context of a broader macroeconomic stabilization and structural agenda, providing an essential foundation to financial sector recovery. A major achievement of the reforms process has been the transformation of a primarily state owned and weak banking sector into a healthier, market-based system, owned by the private sector. This has been facilitated by the restructuring of major banks, ongoing consolidation of the sector through mergers and acquisitions, strengthening of the regulatory regime and improvements in transparency, corporate governance and credit culture.
The commercial banking sector in Pakistan has come of age and is now well equipped in terms of technology, skills and financial resources to play an effective role in financial intermediation.
BANKING SECTOR AND ITS RELATIONSHIP TO ECONOMY
Service Sector has been playing a vital role in the growth of Pakistan's economy since last few years. Economic significance of this sector in the country's economy is that it contributes 53.3% to the Gross Domestic Product (GDP) and 3/gth to the real GDP growth of 7% in the fiscal year. Service Sector as a whole contributed almost 60% in the strong economic growth of 2006-2007. Government of Pakistan set the growth target for this sector as 7.1% for the fiscal year 2007-08 while it grew by 8.5% in 2004-2005, by 9.6% in 2005-06 and by 8.0% in 2006-2007 which is primarily attributable to strong growth in the finance and insurance sector, better performance of wholesale and retail trade, as well as social services sector
Finance and insurance Banks, DFI's and insurance companies, account for 98% of value added in this sector. The finance and insurance sector comprises State Bank of Pakistan, all (scheduled domestic and foreign banks) development financial institutes (DFIs), all insurance companies, Modarba/ leasing companies, moneychangers and stock exchange brokers.
SBP has continued to pursue growth accommodative policy stance since 1999-2000, which has helped promotion of competition and deepening of the financial sector while broadening its coverage to include the middle and lower income groups of the population. The impact of this broad based access to institutional credit on the economy was found to be direct as well as indirect, as it has diversified the client base from a narrow focus on government, corporate and foreign trade financing to larger spectrum of financial services extending to consumer finance, small and medium enterprises.
HUMAN RESOURCE MANAGEMENT & TRAINING
Human Resource management came into academic attention in 1980's and early 90's. With the passage of time the concept of Human resource management become a common practice in the corporate sector and frequently used by the practitioners and researches, globally.
It is interesting to note that the last two decades has witnessed a noticeable change in Human resource management especially in those areas, which are concerned with acquiring, developing, promoting and utilizing human resources in the business at an active pace. There could be no two objectives about the fact that the main objective of HRM is to enhance and improve the productivity of the personnel working in any organization.
In the global management scene corporations in the acquisition and upgrading of Human Resources are making huge investments. In more and more businesses, there is a growing realization that money spent on the acquisition of quality human resources and the up gradation of existing human resources is a long-term investment which has a direct payoff in terms of increased business flexibility and competitiveness.
This objective emerged from industrial relations, personnel administration and personnel management. Human resource management is not merely a fad because it aims to create a completely organizational culture, a culture which binds the workers to the company's objectives with full professional commitment, integration, dedication and above all quality performance.
21st century holds a bag full of opportunities in the days to come. However, these opportunities will bring a lot of pressure with them. The company's organization will have to change their attitude radically. Their productivity will not improve and sustain until and unless they treat their workers as human beings. This is the reason that human resource act as a major tool of increasing efficiency, productivity and prosperity of the organization concerned.
The sate of HRM is Pakistan at present is vastly improved and the last two decades have witnessed significant in this field. However, it would be wrong to say that HRM in our country is at par with the current international standards or is adequate for Pakistan.
But unfortunately an approach of working with full enthusiasm and dedication has long been missing in our country. It is just a matter of routine lacking the personal touch which plays the magic. In such an accelerated pace of progress only those organizations would be able to survive who is change oriented. The competitive success of any organization involves HRM in an integrated manner. It demands proven capabilities from the HR specialists because their role shifts from a mere facilitator to a functional peer. HR specialist is someone who injects vitality in the organization.
TRAINING AND ITS RELATION TO EMPLOYEES PERFORMANCE
Training involves an expert working with learners to transfer to them certain areas of knowledge or skills to improve in their current jobs. Employee performance is everything about the performance of employees in a firm or a company or an organization. It involves all aspects, which directly or indirectly affect and relate to the work of the employees. This variable will be measured by performance appraisal form of employees
Training can be defined using two dimensions - one for the degree of formality and one for the balance between self-directed and other-directed learning. Formal training is typically more expensive than other approaches, but is often the most reliable to use for the learner to achieve the desired knowledge and skills in a timely fashion. Self-directed, informal learning can be very low-cost; however the learner should have the capability and motivation to pursue their own training. Training may take longer than other-directed forms. (McNamara, 2007)
These two sets of choices result in four overall approaches. That is, one can take an informal approach to self-directed or "other-directed" learning. Similarly, one can take a formal approach to self-directed or "other-directed" learning.
The decision about what approach to take to training depends on several factors. These factors include the amount of funding available for training, specificity and complexity of the knowledge and skills needed, timeliness of training needed, and capacity and motivation of the learner
Emphasizing and implementing powerful training and development programs are becoming more critical in order to accomplish organizational objectives and goals efficiently and effectively. Organizations continue to struggle with the specific issues of employee retention and work force shortages. Accordingly, there has been an increased interest in organizational commitment. Successful organizations recognize that employees are their most valuable resources because of employee commitment to the organization. Accordingly, organization need to retain human capital has become a primary concern for organizations. Organizations can achieve high productivity through employee training.
RELATIONSHIP BETWEEN TRAINING AND EMPLOYEE PERFORMANCE:
Employee performances may be associated to many factors within the place of work, such as job satisfaction, understanding, and management. However, there is an exact relationship between training and performance, as training programs can address several problems that narrate to poor performance. Training programs boost person's job knowledge. A boost in job knowledge means that the employee will consider more comfortable doing his work and will achieve at a high position .Job satisfaction can come from feeling comfortable within the institute, job skill and even from the knowledge that an person can work hard and get encourage. Training programs can add to all of these factors and lead to more happy employees who perform at outstanding levels. Trained employees about the understanding of organization, where each person fits in the organization. In other words, employees who have a knowledge structure, convey through training, are innovative in solving problems, both in the short and long term. When training programs are accessible as a method to enhancement in one's career, they also have an outcome on how an employee performs individuals who know they have a prospect with the organization are more likely to be good performers. Efficient training fills the gap between what is expected and what is currently being done. This employees performance direction, especially if convey through training, makes an employee aware of her aim and how employees will achieve them.
EFFECTS OF TRAINING ON EMPLOYEE PERFORMANCE:
Training affects the lives of employees from the initial day of a job until the day of retirement. Knowledge is convey in surroundings that starts from a formal classroom to experiment by fire in the office, using planned lesson plans, survival of the fittest .The training type must be coordinated to the participant and task in order to achieve highest results. Individuals are more likely to benefit from their work, produce preferred results when they know what is estimated of them, and have the tools and knowledge to perform the task. Job satisfaction is improved by pleasure in results that meet and exceed hope. Cross training is a wonderful method to train staff to assist when work pressure increase in one area or to cover for holiday or sickness. When employees are cross-trained, they can also use their knowledge to bring new thoughts to another position .Specific skills will be required in order to perform at the subsequently level. These can include technical skill and the soft skills of employees. Employees who are trained correctly not only make fewer errors, but they can also blemish the reasons for mistake. Training can transform the approach from pointing fingers to recognize the steps needed to progress a condition
STATEMENT OF THE PROBLEM: Employees have different perception regarding formal and informal training and it affects their performance.
The main objective of this research is to analyze employee perception regarding formal and informal training. This research study will mainly conclude that, in employee perception how formal and informal training affects employee's performance by focusing on these points:
- The level of employee satisfaction after formal and informal training.
- The level of increased competence; by increasing employee's skills and abilities
- The change in employee's behavior and attitude after formal and informal training.
- The impact on their decision making capabilities
- The change in employee's behavior in dealing with internal and external pressures after formal and informal training.
RESEARCH SCOPE & LIMITATIONS:
The scope of this research project is to analyze that how different banks are dealing with their employees and what is employee's reaction to formal and informal training how they perceive it. This perception can be used by employers in designing the next training strategy for employees and can take corrective actions to be more effective and efficient. By updating their employees those companies can have a better competitive advantage than other banks and this research will show the employers perspective that what they expect from the employees and in their opinion where they are lacking in employees performance so the upper management can take corrective actions
This project is about banking sector and there are numbers of banks included in this survey. The major limitation while completing this project was of time as we were given just 2 semesters to complete this project as due to the shortage of time perspective of more employees and employers could not be taken. Second major limitation was of contacts that employers sitting at higher position were not ready to cooperate and share any sort of data, that create a problem in reliability of data but some of the HR managers helped a lot thus the project is been completed in time with limited but all reliable data. Some other questions were also asked to HR managers other than the structured questionnaire.
The report is been divided in several parts. The first part is an introduction that has been given which gives an insight into the report. The second part consists of literature review that includes the research that is already been done related to this topic that is also divided into three parts: The Banking Sector, Human Resource Management and formal and informal Training. The third part will give the analysis of formal and informal training that will include an overview of some of the chosen banks, it will also include the method of conducting the survey, and an analysis will be given in perspective of employees as well as employers. Some main points focused by HR managers are also included. It will also include some recommendations based on the analysis
H1: Employee's have positive perception of formal training.
H2: Employee prefers formal training will perform better than employee prefers informal training.
H3: Formal training is preferred by employee than informal training.
H4: Satisfaction and Coordination have significant impact on the performance of employee in the case of formal training.
H5: Satisfaction has positive impact in performance of employees in the case of formal training
H6: coordination has slightly negative impact in performance of employees in the case of formal training.
CHAPTER 2: LITERATURE REVIEW
Bank is the financial institution that accepts deposits and gives loans, and thus earning profit through the difference between interest paid and received.
The banking system of any economy is an undeniable determinant of its growth as it provides an efficient channel that route funds from surplus sectors in theeconomy towards deficit ones. During the lastdecade, the banking sector has gone through a number of changes. The reforms have been implemented in the context of a broader macroeconomic stabilization and structural agenda, providing an essential foundation to financial sector recovery. A major achievement of the reforms process has been the transformation of a primarily state owned and weak banking sector into a healthier, market-based system, owned by the private sector. This has been facilitated by the restructuring of major banks, ongoing consolidation of the sector through mergers and acquisitions, strengthening of the regulatory regime and improvements in transparency, corporate governance and credit culture.
The commercial banking sector in Pakistan has come of age and is now well equipped in terms of technology, skills and financial resources to play an effective role in financial intermediation
The impact of (HRM) guiding principle and practice on performance is an significant topic in the fields of HRM, industrial relations, and industrial and managerial psychology (Boudreau, 1991; Jones & Wright, 1992; Kleiner, 1990).
Human Resource management came into academic attention in 1980's and early 90's. With the passage of time the concept of Human resource management become a common practice in the corporate sector and frequently used by the practitioners and researches, globally.HRM practices manipulate employee skills through the achievement and advance of a firm's human capital. Recruiting actions that give a large pool of competent candidate, harmonizing with a consistent and suitable collection treatment, will have a significant control over the value and type of task new employees possess. Providing formal and informal training programs, such as fundamental skills training, on-the-job experience, coaching, mentoring, and management development, can extra persuade employees growth. (Huselid, 1995)
It is interesting to note that the last two decades has witnessed a noticeable change in Human resource management especially in those areas, which are concerned with acquiring, developing, promoting and utilizing human resources in the business at an active pace. There could be no two objectives about the fact that the main objective of HRM is to enhance and improve the productivity of the personnel working in any organization. (Ms. Farooqi, 2007)
In the global management scene corporations in the acquisition and upgrading of Human Resources are making huge investments. In more and more businesses, there is a growing realization that money spent on the acquisition of quality human resources and the up gradation of existing human resources is a long-term investment, which has a direct payoff in terms of increased business flexibility and competitiveness. (Zarar, 2007)
The attitude of employees within organization has significant implications for organizational
Performance and that HRM can affect employee performance through their authority over employees' skills and motivation and through organizational planed that allow employees to improve how their tasks are performed. If this is so, a firm's HRM practices should be linked to at least two magnitude of its performance. First, if HRM practices boost employees' unrestricted effort, such as turnover and productivity.Second, if the profits from investments in HRM practices go beyond their true costs, then lower employee earnings and greater efficiency should in turn enhance performance. (Huselid, 1995)
This objective emerged from industrial relations, personnel administration and personnel management. Human resource management is not merely a fad because it aims to create a completely organizational culture, a culture which binds the workers to the company's objectives with full professional commitment, integration, dedication and above all quality performance. (Ms. Farooqi, 2007)
.21st century holds a bag full of opportunities in the days to come. However, these opportunities will bring a lot of pressure with them. The company's organization will have to change their attitude radically. Their productivity will not improve and sustain until and unless they treat their workers as human beings. This is the reason that human resource act as a major tool of increasing efficiency, productivity and prosperity of the organization concerned. (Ms. Farooqi, 2007).
The effectiveness of even high performance employees will be narrow if employees are not motivated to perform, however, and good HRM practices can influence employee motivation by give confidence them to work both harder and smarter. (Huselid, 1995)
Resource-based theories of the firm argue that HRM can provide a basis of continuous competitive advantage when four basic requirements are fulfilled. First, levels of individual performance must matter. Second, the skills the firm search for must be exceptional. Since employees performance is generally distributed, Wright and McMahan noted, all human resource meet both of these condition. The third is that the human capital investments a firm's employees represent cannot be easily copy. Although human resources are not subject to the same degree of imitability as, investments in firm-specific human capital can further diminish the chance of such replication by qualitatively discriminate a firm's employees from those of its contestant. Finally, an organization HRM must not be subject to alternate by technological progress or other alternate if they are to provide a basis of sustainable competitive advantage. (Barney's, 1991)
According to human capital assumption, investments in training lead to boost in employees productivity. In order to test the legitimacy of this statement directly, researchers need data on investments in training and on-the-job productivity. In the absence of such data, on the other hand, early research on this topic used information about the shape of wage sketch to make supposition about the relationship between human capital investments and productivity (Mincer, 1974).
The employees should have the theoretical and realistic information of the work he is requisite to do. The theoretical information can be increase in learning institutions but for the practical knowledge taking is required. In this way, the training acquaints the employees with the real condition of the work and helps him in the perfect achievement of the work. (Puranki, 2010)
According to Jucius, "The term training is used here to indicate only process by which the aptitudes, skill and abilities of employees to perform specific jobs are increased."
In this word of Dale S. Beach, "Training is the organisation procedure in which people learn knowledge and / or skill for definite purpose."
In this way, training is the organized procedure by which the knowledge, ability, competence, skill, personally and productivity are increased
Training makes known the employees with the purpose of the organisation and work he had to perform, employees learn to operate equipments resourcefully and increase their efficacy in the organisation. Employees are familiar with the real situations of job. Its equipment, people, and surroundings, they have to work. They are not necessary to follow 'trial and errors' method for proficient performance of job like untrained employees. Employees are trained to work properly in the actual situations of job. Employees employed in the factory belong to different parts of the state. They are new with each other. Training is necessary to modify their behaviour, loom and philosophy. It in addition helps in bring harmonization among employees. The learner learns to work the up-to-date technology and equipments. He also be trained the methods of work. Trained employees be familiar with their jobs well and they are happy with their work. The satisfaction increases their confidence. (Puranki, 2010)
Training is a process through which individuals are helped to learn a skill or technique. Development places emphasis on the growth of the individual. It relates to acquiring a very broad range of soft skills through planned activities and experience. Management of people, handling work relationships, and leadership are typical of broad ranges of skills that are developed.
It is not enough to make the selection of right man for the suitable jobs, but it is necessary to explain them with the real situation of work and effective methods of doing jobs. Training is the only way to attain this end. It imparts the practical knowledge of the work. It is also necessary to make employees alert and active. Training is useful for both employers and employees. It increases performance of the employees and the output for the organisation. A trained employee has academic and realistic information of his job. He develops self-confidence and works with overall command of condition. The satisfactions due to successful achievement of the job boost his self-confidence. Trained employee be familiar with his job well and he can easily move from one organisation to other organisation Due to enhanced quality of employees work, cost of production is cheap; appropriate use of capital also results in economy. The economical strength of the organisation becomes better than other organisation. All these issue help in the growth of the business. (Puranki, 2010)
Employee awareness, skill and thoughts will modify by the implementation of a training program, but this does not always end in that way. If the employee thinks, there is perfection in his knowledge and skills; it may be secure to also assume that, there will be a raise in the individual performance. Through training the employees, competencies will be resistant and will enable him or her to perform the tasks give effectively and efficiently. (Sahinidis & Bouris, 2007)
A persons training needs are derived from two major sources. The first comes from the corporate training plan, and from this, it is possible to decide those people both individually and as groups who need to be trained now, or at some time in future. This analysis can be done in three ways. First, from an analysis of change-, the organization must change if it is to successfully meet new conditions and so must the operations conducted within the organization. Second from an Analysis of work problems, as inefficiencies and problems within the organization often indicate that the jobholder has been inadequately trained. Thirdly, training needs can be derived from an analysis of work force wastage date. The second method from which individual training needs can be derived compare the performance by the jobholder to what actually is required from him? (Turrell, 2000)
In this study training is defined "as the planned intervention that is designed to enhance the determinants of individual job performance" (Chiaburu and Tekleab, 2005,) Training is connected to the skills believe necessary by the management of an organization, that must be acquired by the employee of that organization, in order to improve the probability of achievement of its goals. Training obtainable to employees may help them decrease their worry or frustration, brought on by work demands, that they are not known with, and they are lacking the skills to handle effectively (Chen et al., 2004).
Employees feeling less than capable to do a task are more likely to leave the organization (Chen et al., 2004), or if they decide to stay, their performance would be suboptimal (Kanelopoulos & Akrivos, 2006). The larger the gap between the skills required and those possessed by the employees, the greater the lack of job satisfaction of the employees and the turnover Intentions.
First, it should be considered that how training needs is identified, usually referred to as training needs analysis. Then it should be considered how to plan a training program, highlighting the ingredients available to satisfy those needs that have been identified. When training is designed and implemented there is need to be aware of the different learning styles that individuals prefer. (Martin, 2004)
Change also put the spotlight on training and education as a means of equipping workers with the tools they need to adapt to changing skill requirements, organizational change and increasing complexity in the external environment.
The following issues and changes in an organization many indicate the need for employee training:
- Employee's request
- Employee survey results
- Evaluation deficiencies
- Individual development plan
- Law and regulation changes
- Need to develop new leaders
- New employee
- New equipment
- New manager
- New program
- New technology
- Safety issues
A positive environment for learning is always critical for success, whether it is the environment of a classroom or the environment of an organization. The learning environment provided by an organization is a function of the organizational culture. Organizational culture means the values, attitudes and beliefs reflected in the mission and goals, and practices of the organization.
Opportunities to learn happen all the time. Organizational cultures that support learning recognize learning as an ongoing process, not an event. A new piece of legislation may be used as a learning tool for all staff. A proposed special event may become a learning opportunity for an employee who has expressed an interest in event management.
An organization shows that it values learning by including employee training and development in the annual budgeting process. Items included in the annual budget reflect the priorities of the organization. Opportunities to learn are made available for everyone in the organization from top to bottom.One way that an organization shows that it value learning is in its approach to mistakes. "Failure is critical to the learning process and must be considered in the context of the individual's role, potential, and future success. When we fail, we might react in one of three ways: learn from the mistake, continue to fail, become reluctant to try again. In today's workplace environment, leaders must develop a culture that removes the punishing effects of failure to help people to take risks, be creative, and to grow." (Laurie Hillis)
It is important to encourage people to learn from mistakes rather than being afraid to admit their mistakes for fear of disciplinary action.
A policy on employee training and development shows that the organization values learning. Professional development policies usually include guidance on:
- how often employees are expected to take formal training - once a year, once every two year, etc.;
- the types of development programs that are acceptable;
- When and how employees will be reimbursed for off-the-job programs.
Time for learning in the workplace is important for the success of an employee development program. This means giving employees time to learn without the interruptions of every-day activity. Learning does not end when the activity is over. Opportunities to use the knowledge and skills they have learned on-the-job will ensure that people retain what they have learned.
The benefits of employee training are:
- Employees are better prepared to help the organization achieve its goals
- Staff are more productive
- Employees are more motivated
- Well trained staff require less supervision
- A pool of employees are ready to replace others who leave
- Staff that engage in continuous learning are better able to meet the challenges of changes in the organization
- Staff are able to manage/work on new programs
- Your organization will be more successful at attracting and retaining employees.
Formal training program includes programs related to a employee's current or future job. These courses and programs have a structured planed whereby a learner, guided by a trainer or teacher , follows a designed program and receives several form of formal acknowledgment upon end, such as a certificate, diploma or degree. Formal training is usually more expensive than other approaches of training, but is often the most reliable to use for the employer to achieve the desired information and skills in a timely style. On the other side, highly difficult and changing job often require more complete and formal means of growth, which can be very expensive as a result. (McNamara, 2007)
Formal training might include following steps :
- declaring certain learning objectives (or an extent of knowledge, skills or abilities that will be reached by learners at the end of the training),
- using a variety of learning methods to reach the objectives and then
- applying some kinds of evaluation activities at the end of the training.
The technique and resources of assessment might directly link with the learning objectives, or might not. For example, courses, seminars and workshops often have a form but it's questionable whether or not their training methods and evaluation methods really assess whether the objectives have been met or not.
As formal training program is Systematic, so proceeding through the following phases:
- Assessing what knowledge, skills and /or abilities are needed by learners
- Designing the training, including identifying learning goals and associated objectives, training methods to reach the objectives, and means to carefully evaluate whether the objectives have been reached or not;
- Developing the training methods and materials;
- Implementing the training; and
- Evaluating whether objectives have been reached or not, in addition to the quality of the training methods and materials themselves (McNamara, 2007)
A formal training program is goal-oriented that why expectantly, to create results for the organization and/or learner), with the results of each stage being used by the next stage. Generally, each stage provides ongoing evaluation feedback to other phases in order to improve the overall system's course.
Not all formal methods are systematic. Some courses, workshops, and other training sessions have objective, process and assessment, but they are not linked, or even integrated. The methods, in whole, do not lead the employee toward attain the training objective. The evaluations are too often, of how an employee feels about the learning experience, rather than of how well the learning experience achieved the aim of the training program.
In formal training, there is no specified training objective as such, nor are their ways to assess if the training actually accomplished these objectives or not. Informal training is somewhat casual and incidental that many people probably are not aware that they are in a training experience at all because this type of training occurs so naturally .Probably the most well known form of informal training is learning from experience on the job. Examples of informal training are , book discussion groups informal discussions among employees about a certain topic, , journal articles about a topic and reading newspaper A further modern approach is sending employees to hear famous speakers, sometimes warmly called "the parade of stars".
Informal training is less effective than formal training if one should purposely be learning a specific area of knowledge or skill in a suitable way. However, this form of training often provides the deepest and richest learning because this form is what occurs naturally in life Hardly any idea is put into what learning is to occur and whether that learning occurred or not.
Informal training is less planned and more incidental. There are a large number of informal training methods. Theses methods are so common that they are possibly not considered as training methods at all. These are few Examples:
- verbal and written communications,
- reading books,
- Any other learning activities that do not involve explicit training goals that will be evaluated.
- giving of directions,
Informal training in the place of work can avoid miscommunication and lack of coordination because more than one employee will know how to carry out each method required by the company. Any employee that does not have a support for their job becomes a single-point disappointment and therefore a weak spot in the organization of any company or corporate structure. Mentoring is one of the most important form of informal training .Mentoring is a strategy that matches a more experienced employee with a less experienced employee to provide normal day to day chance for sharing of advice and knowledge. Ad hoc training sessions by staff members are also taken in organization and considered as informal training .In which a staff member who has strong skills in a particular area, such as a computer application can provide ad-hoc training to co-workers on the job. Intranets and internal publications are valuable methods of informal training which keeping employees informed and providing way in to various resources that help advance skills. The Internet offers terrific resources for learning, Organizations can also set up technical and specialized libraries and circulate journal to encourage self-learning amongst employees. Informal learning was conventionally considered as being "part of the job." However, screening workplace informal learning as part of the job masks the beginning of an complete set of workplace expertise and knowledge as well as the importance of its capability. Due to fast place of work changes, researchers are come across more and more into conceptualizations of workplace facts base that resulted from alternating, more constant forms of learning. (Boud and Middleton, 2003). The concept of self-directed learning and its implication for human resource development. She recognizes the benefits of self-directed learning in the workplace as applicable to both organizations and individual employees. (Ellinger, 2004)
ANALYSIS OF FORMAL NAD INFORMAL TRAINING
In this thesis, Employee perception about formal and informal training will be measured in the following dimension.
- Understanding of organization
- Team Work
- Decision Making
The factor effectiveness shows that, what employee thinks to what extent the formal and informal training program is adequate to the tasks and to the job, the formal and informal training program increases their skills, it affects their attitude towards the job and to what extent it increased the competence of employees dealing with others.
The effective firms are at make condition that encourage and motive employees to give importance and to believe there is a need to constantly learn new skills, the better firms are able to build active capabilities and avoid the attrition of their supply of knowledge. The more employees giving importance to learning new skills, the higher their performance capacities can be predictable to become over time .Although the greater the perceived need to learn new skills will have a negative effect on employees' perceptions about their performance capacities, At the same time, the more employee's value learning new skills, the more likely they will perceive a need to continually learn new skills. (Cooke & Meyer). The effectiveness of even high performance employees will be narrow if employees are not motivated to perform, however, and good HRM practices can influence employee motivation by give confidence them to work both harder and smarter. (Huselid,1995)
The factor satisfaction shows that, what employee thinks about the satisfaction level of employees after formal and informal training program. In this area most of the literature has paying attention on the impact of education and skills on job satisfaction rather than the effect of training as such. One exception is Siebern-Thomas (2005) who, analyzing 13 countries in the European Community Household Panel, he originate that job satisfaction have a tendency to be higher where there was access to workplace training. The connection between skill achievement and job satisfaction is not simple. First, there is the difference between general and specific skills. The portability of general skills may increase job satisfaction, as it is easier to shift to other jobs where satisfaction is higher. In contrast, specific skills connect the employee to the firm and may reduce satisfaction by creating a barrier to exit, as workers will drop a portion of the return on such skills if they shift. This lead on to the question that the matching of person skills and levels of education with job requirements. If person are mismatched in terms of skill and education requirements, this may lower job satisfaction. In fact, most studies have focused on over- and under education rather than over-skilling and under-skilling. Thus, for the USA Hersch found that over-educated workers were less satisfied than adequately educated workers (Hersch, 1991) and that over-educated workers received less on-the-job training, but were more likely to be promoted (Hersch, 1995). Battu in his study found a negative relationship between over-education and promotion for UK graduates and no proof of employer's improvement tasks given to the over-educated. The same authors found that over-educated graduates had significantly lower job satisfaction than those who were in graduate-level jobs (Battu et al., 1999). cross-section of workers that job satisfaction was lesser for both over-educated and under-educated workers in their British sample (Green and Tsitsianis 2005),. In addition, Buchel found no significant difference in job satisfaction between over-educated and effectively educated employees in his study of German firms. In one of the few studies to focus on skilling, differentiated between education and skill mismatches, finding only a weak relationship between the two. Importantly, they found a significant negative relationship between skill mismatch and job satisfaction, whereas the link between education mismatch and job satisfaction was insignificant. Using the European Survey on Working Conditions cover all EU member states, found that involvement of workers in High Performance Work Organizations was associated with higher job satisfaction.( Bauer 2004). Employees dedicated to learn showed a higher level of job satisfaction with a positive effect on their performance. Job satisfaction has been defined as "pleasurable or positive emotional state resulting from an appraisal of one's job or job experiences" (Locke, 1976,). It would be secure to assume that, employees that recognize their training useful will be more satisfied than those who get no training or training of no value.( Sahinidis and Bouris,2007).
This factor shows that, what extent employees think that formal and informal training enhance their capability of working in a team and it also help in avoiding irrelevant disputes. The organization has altered over the last some decades as organizations have move to team-based work systems, where two or more employees interact interdependently toward a common and valued objective and they have been assigned specific roles or functions to perform (Ilgen, Major, Hollenbeck, & Sego, 1993). "with more than 80% of Fortune 500 companies utilizing work teams expansively within their organizations (Robbins, 2003).
Organizations feel that teams are more effective than individuals are because team members can split the workload, monitor the performance of their coworker , and join their special areas of skill (Mathieu et al., 2000). In the typical organization, there are many different types of teams and each type of team has different distinctiveness and, therefore, different training needs. Production teams, for example, have moderately stable membership and tend to perform a small range of tasks repetitively. These types of teams would benefit most from training on task- and team-specific competencies (Salas et al., 2002), such as knowledge of team members' characteristics and specific compensation strategies (Cannon-Bowers et al., 1995). In contrast, the life span of action teams is often one work-cycle. Teams and teaming have become hot topics" (Guzzo,1995,) Team members with specific skill are brought together to tackle a particular task and often split up upon completion. Because action team members perform a multiplicity of tasks with a constantly changing set of team members, there is a require for more general competencies that are transportable across teams and tasks (Salas et al., 2002)
Understanding of Organization:
This factor shows that, what employee thinks about the impact of formal and informal training on employees understanding of organizations culture. Person job performance is also influenced by the organizational culture and structure, by the job design, the compensation systems used to encourage employees and the politics and power that exist in the organization and the cluster procedure. Individuals may not reach their goals and thus not perform well, due to problems connected with the reasons above and not necessarily due to lack of skills. (Wright and Geroy, 2001) due to these reason employees need training which filled that gap.
The reasonable next steps and part of an organizational needs analysis, would be establish whether differences in perceptions of culture are harmful to organization's mission ,So that training and development program can be planned to deal with desired change. Detection of differences in perception of culture elements that may intimidate the organization mission would assist in the design of effective training and development programs. For management and efficiency enhancement intention(Wiener & Vardi,1990),mapping the organization member's perception of the culture and identifying difference in perceptions of elements of culture that are harmful to the organization's mission must take place before training and development programs are set up to effect significant change (daft,1989)
A border framework for understanding the organizational perspective is provided by Evans et al. (2006),who quarrel on the base of extensive research in more than 40 organizations, that involvement need to deal with both employee and employer desires. The contribution of employee representatives add to the appearance of employees' interests and can encourage them that gains in efficiency will not have a harmful impact on jobs and conditions of employment, where this is authentically the case (Rainbird et al. 2003).
This factor shows that, what extent employees think that formal and informal training impact in their decision-making capabilities. Problem solving and decision-making are significant skills for commerce and practical life., and decision-making is especially important for organization and management. There are method and system to improve decision-making and the quality of decisions. Decision-making is more usual to certain individuality, so these people should focus more on improving the quality of their decisions. People that are less natural decision-makers are often able to make quality assessments, but then need to be more decisive in acting upon the assessments made. Decision-making is closely connected to problem solving and each requires creativeness in identifying and developing options, for which the brainstorming technique is particularly useful.. Good decision-making requires a combination of skills: imaginative development and classification of options, clarity of judgments, determination of decision, and efficient implementation. For group decision-making, harmony is required, training help, within which you can incorporate these tools and process as appropriate.
This factor shows that, what employee thinks about the level of coordination among employees after the formal and informal training program. Co-ordination is the amalgamation, combination, harmonization of the efforts of group members to provide unity of act in the search of common goals. It is a hidden strength, which combine all the other functions of management. "Co-ordination is systematically arrangement of group efforts to provide unity of action in the pursuit of common goals". (Mooney and Reelay)
Management tries to achieve co-ordination through its basic functions of planning, organizing, staffing, directing and controlling. That is why; co-ordination is not a separate function of management because achieving of accord between persons efforts towards achievement of group goals is a key to success of management. Co-ordination is the soul of management and is understood and intrinsic in all functions of management. "Co-ordination is the integration of several parts into an orderly hole to achieve the purpose of understanding". (Worth)
Coordination is about taking a systematic approach to figuring out if you are doing what you wanted to be doing or not. It is the part of planning after you have decided what you wanted to be doing.In its most basic form, an organization is two or more people working together to reach a goal. Whether an organization is highly practical or varying and self-organizing, the organization must exist for some cause, some idea, some mission or it isn't an organization at all. The organization must have some goal, aim, objectives .Identifying this goal requires some form of planning. Reaching those objectives means identifying some strategies .These strategies are agreed upon by members of the organization through some form of communication, and then employees act in agreement with what they agreed to do. They may change their minds, fine. However, they need to distinguish and recognize that they're changing their minds.
This form of ongoing communication to reach a goal, tracking activities toward the goal and then successive conclusion about what to do is the essence of management coordination. It needs to exist in some manner.
Training and employee Performance:
Training has positive relationship with the employees' performance. Training is a formal & systematic alteration of behavior through learning which occurs as result if education, instruction, development, & planned experience (Michael Armstrong, 2000). Because of the practical allegation of training, it is important to have training that is useful. Studies have proven that more costly but effective training can save fund that is wasted on cheap but inefficient training (Ginsberg, 1997). The aim behind training employees is "attaining cost effective high performance" and good performance brings quality, higher quality implies lower costs and increased productivity, which in turn provides the firm with a greater market share and enhanced competitiveness levels. (Deming, 1982 ).This idea supports the conclusion reached in a number of empirical studies dedicated to manufacturing and service organizations (Flynn et al., 1995) Thus, training shows that impacts on performance and hence are related to each other. Training may influence workplace performance directly by raising output per worker, or be measured indirectly through its impact on the wage on the assumption that this is equal to the marginal productivity of labor. However, this will not be the case if there are imperfections in the product or labour markets. (Dearden et al. 2006) .High performance employees are resources to any organization. These employees set the standard, which can be follow by other; represent the company in the in front of customers, retailer and the community; and turn out results that go beyond to expectations. While the good employees reveal distinction in different workplaces, good performers without doubt have strong, good communicators. They can get their voice across orally and in script in a variety of situations. Using these skills, the good performance employee symbolizes the company sound in a multiplicity of situations. Whether the workplace has 500 or more than 500 employees, good associations make work easier and more efficient. Good performers will always develop good relationships with their bosses, co-workers, peers and external stakeholders.. The good performers always have a lucid understanding of organization, mission and goals as drivers of company decisions and actions. Top performers use the aims; objectives to evaluate options and identify those that are most likely to impel the organization .They are always looking for ways to get better themselves and the people around them. High performers are active in the organization and society in order to recognize trends and competition. This networking also improves company picture and contribution in the society.
The idea that employee performance has allegation for firm-level result has been common among intellectual and practitioners for many years. Attention in this field has recently strengthen, however, as intellectual have begun to quarrel that, together, employees can also provide a distinctive source of competitive advantage that is complicated for its competitors to imitate. (Huselid, 1995)
CHAPTER 3: METHODOLOGY
There are two types of sources available for data collection regarding research purpose i.e. primary and secondary data. In this research study, both primary and secondary sources are utilized to complete the study. Secondary data is obtained from the books, journals, articles and internet while primary source is dependent on the questionnaire survey. The researcher depends on both the sources for theoretical and empirical data according to the requirement. Because of the limited information and material available on employees perception regarding formal and informal training and its impact on employees performance in the banking sector of Pakistan, researcher had to rely on questionnaire survey results for empirical data.
RESEARCH & TESTING INSTRUMENTS
The instruments used for collecting data for this research consisted of questionnaire for surveys and SPSS as testing tool. During the analysis of data in SPSS, researcher has used technique of General Linear Model (GLM) model, because the instrument has both, nominal and ordinal types of date. Therefore, GLM model is the best tool to evaluate this kind of data.
The banking sector of Pakistan is the targeted segment for the collection of primary data through questionnaires, which is designed on the basis of research articles related to the topic. The instruments used for collecting data for this research consisted of three questionnaires for surveys, two from employees of different banks, which are regarding their perception about formal and informal training, and seconds' questionnaires from their managers /boss about employee's performance. The survey would be self-administered. This means that employee's perception regarding formal and informal training is been judged in terms of these factors:
The factor effectiveness shows that, what employee thinks to what extent the formal and informal training program is adequate to the tasks and to the job, the training program increases their skills, it affects their attitude towards the job and to what extent it increased the competence of employees dealing with others. This factor include question 1, 2, 3, 4 and 5.
The factor satisfaction shows that, what employee thinks about the satisfaction level of employees after formal and informal training program. This factor includes question 6 and 7.
This factor shows that, what extent employees think that formal and informal training enhance their capability of working in a team and it also help in avoiding irrelevant disputes. This factor includes question 10 and 11.
Understanding of Organization
This factor shows that, what employee thinks about the impact of formal and informal training on employees understanding of organizations culture. This factor includes question number 12 and 13.
This factor shows that, what extent employees think that formal and informal training impact in their decision-making capabilities. This factor include question 14 and 15.
This factor shows that, what employee thinks about the level of coordination among employees after the formal and informal training program. Question 16 and 17 are included in this factor.
A questionnaire testing was conducted to detect weakness in design and instruments. According to Malhotra (2003), pre-testing refers to the testing of the questionnaire on a small sample of respondents in order to identify and eliminate potential problem. Here, the researcher intended to conduct a testing to evaluate the questionnaire for clarity, bias, ambiguous questions, and relevance to the study. For this reason, the researcher filled out 50 questionnaires from the employee of Soneri bank, standard charated bank , NIB bank . Burns and Bush (1998) suggested that a pre-test of 5-10 representative respondents is usually sufficient to identify problems with a questionnaire.
For this thesis, the banking sector of Pakistan is the targeted segment for the collection of primary data through questionnaires. A questionnaire was filled out by 250 respondents (employee of banks e;g Soneri Bank ,Standard Charated Bank, NIB, RBS,KASB,UBL Meezan bank ,Bank alfala, Dawood Islamic bank ). Not every respondent got equal chance to become the part of this research and the sample was drawn based on convenience i.e. Convenience sampling method was followed.
The sample size for my research is 239 respondents, which includes
- Male / Female
- Age group: 18 or above
- Employee of private banks
- Karachi based.
CHAPTER 4: ANALYSIS & RESULTS
From the above analysis it can be concluded that majority of the banks in Pakistan consider both formal and informal training an important issue to improved the performance of employees and for organization as well. Both formal and informal training helps in keeping an employee up to date with latest trends and technology and thus making him or her competitive enough, thus improve their performance. This also contributes to the development of an organization.
As the analysis was divided into six factors and mainly on gender, age wise and marital status analysis; it is observed and recommended that
CHAPTER 5: DISCUSSION
The banking system of any economy is an undeniable determinant of its growth as it provides an efficient channel that route funds from f surplus sectors in theeconomy towards deficit ones. During the lastdecade, the banking sector has gone through a number of changes. The reforms have been implemented in the context of a broader macroeconomic stabilization and structural agenda, providing an essential foundation to financial sector recovery.
It can be concluded that these days Human resource Management has become an important issue for all organizations in Pakistan so for the banks as well. Nowadays banks are giving high priority to formal and informal training thus to increase the capabilities and competence of employees and for the betterment of organization.
From the complete analysis of the data that is been collected regarding employee perception regarding formal and informal training and its impact on employee performance in the case of formal training is that Satisfaction mostly has positive impact the of employee performance .It does increase their skills towards the job. It also affects their behavior towards the job and attitude towards others. Most of the employees are satisfied with both the training provided in their organizations, they think that the both formal and informal training provided are in line with the objectives of the tasks. Therefore, we can say that employees have equal perception regarding formal and informal training and their impact on their performance .from study we came to know that mostly males are interested in the formal training and females show less interest towards it. Therefore, a plan should be developed to make females more comfortable. There should organized same more formal training programs regarding decision making and team work as they are the most important issue for employees performance and organizations growth.
These days both Formal and informal training program are organized by the banks but still there is a room of improvement, so the management must design a formal training program that makes employees familiar with the latest trends and technology. More emphasize should be done on decision-making and organization understanding as these are also very important issues of employees performance. Some strategy should be design to involve employees of all ages because most of OG3 officer are not interest in attending formal training program ,they think informal training is enough and top-level employees must understand the importance of formal training program.