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Training and Skill Development for Employee Retention and Performance

Enhancement in Banks

Article  in  SSRN Electronic Journal · January 2017

DOI: 10.2139/ssrn.2984442

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TRAINING AND SKILL DEVELOPMENT FOR EMPLOYEE RETENTION AND
PERFORMANCE ENHANCEMENT IN BANKS

By Ashish Dikshit1

Trilok Kumar Jain2

ABSTRACT

Private and public sector banks are rigorously competing with one another to face the challenge and also
equipping their employees to successfully transform themselves, a process started in the nineties in the
banking sector. The economies have been profoundly affected across the globe because of the forceful
effect of globalization and deregulation. Training and Skill development therefore is of utmost importance,
as in the banking sector it strengthens the organization on one hand by helping it in realizing objectives,
vision and dreams, and on the other hand helps the employees in performing better. This synergistic
approach helps in meeting out the most critical factor in an organization „Employee Engagement „ which is
considered to be the key measure for organizational performance in the twenty first century. Training and
Skill development thus plays a key role in addressing the issues of talent retention and performance
enhancement by making the employees visualize the gap between what they are currently and what status
they could attain by bridging this gap through training programs. An organization can thus achieve high
levels of business success by having a Workforce which is highly engaged and possesses knowledge,
necessary skills and expertise.

INTRODUCTION

Service sector plays a very crucial role in the development of economy of any country. Banking sector
though facing various challenges and undergoing transformation since nineties contributes majorly to our
economy. Public sector banks accounting for 70 per cent assets of our banking system are the backbone of
our economy. PSBs in their endeavor to deliver their best focus on value creation, which does not means
simply adding skills, abilities and technical knowledge to the human resources but also their development
and retention on a priority basis. Hence the fact, being the back bone of the Indian financial sector, the
Public Sector banks need to retain their valued talent through a well defined Retention policy.

Robert Colman (2003) in a study proved that employee retention was a major challenge for all those
corporate who wanted to compete on the basis of knowledge. The employees of a corporate are the only
assets having knowledge and hence they have to be used in a proper way for organizational benefit. Several
veterans held the same view that organizational performance and employee retention are closely associated.

Invancevich (2008), through a study suggested that Human Resource Management (HRM) is concerned
with the most effective use of people to achieve organizational and individual goals for organizational
success, through a coherent and strategic approach by the management.

1
Research Scholar, Suresh Gyan Vihar University Jaipur ashish.d2410@gmail.com
2
Research supervisor, Dean, ISBM, Suresh Gyan Vihar University Jaipur email: jain.tk@gmail.com

Electronic copy available at: https://ssrn.com/abstract=2984442

HISTORY OF BANKING WITH CURRENT SCENARIO

Banking originated in India in the last decade of the 18th century, dating back to 1786, when the first bank
was established in India. Nationalization of banks took place in 1969 the policy of liberalization was
introduced in 1991. The banking sector comprises of Public and Private sector banks, regional rural banks
and co-operative banks. K.V Kamath is of the opinion that the Banking sector in every economy acts as a
mirror portraying the sequence of happenings in the past.

With a series of reforms since the nineties, the banking sector has highly evolved in the last decade with
highly advanced products like ATMs, SMS Banking, Net Banking and Mobile Banking. Also the banks are
providing a variety of loans and account facilities with plastic money and money transfer facility
worldwide being the technological advancements.

The last decade experienced a complete reform in the financial and banking sector. With the advancement
of technology, banking sector has become easier, fast, and accurate and also time saving, ATMs, Mobile
Banking, SMS Banking and Net Banking is only the tip of an ice-berg. Bouquets of services are at
customers demand in today's banking system. Different types of accounts and loans are facilitated with
plastic money and money transfer across the globe. So that the HRM issues, VRS, Training &
development, empowerment and career plan etc, need to be considered to cope up with the changing
environment.

The banking sector being in the transition phase is facing various problems (also published in FICCI
Report, Annual survey Feb.‟2010‟) like high overhead cost, poaching of skilled quality staff, high attrition
rates and difficulty in hiring highly qualified young staff. Besides all these difficulties the private sector
banks are consolidating themselves through mergers and acquisitions and developing into stronger and
technologically advanced entities while PSB‟s already facing problems of excessive non Performing Assets
(NPA's), excessive governmental equity and excessive manpower shortage are burdened with pressures of
revamping their policies as per the current competitive challenges.

Priti Jain (2006), in her study has suggested that if any organization aspires to be growth oriented, then the
employees in their team need to be trained, motivated, rewarded, recognized and empowered to perform to
their best capacities.

PUBLIC AND PRIVATE SECTOR BANKS – NOTABLE DIFFERENCES

Chakrabarty (2012) in his study suggested that Management of Risk and Management of People are the
two major challenges faced by the banking industry. He also suggested that during this decade (2010-20)
lacs of people will be retiring, Retiring Decade‟ so it will be the best time to focus and reframe the HR
policies so that the banks will be well equipped to face the challenges.
Kamath 2003, Bharati 2007 in a study pointed out the major issues faced by the banks; succession
planning, performance appraisal, talent management (acquisition and development), Staffing and
promotions, leadership Gap, compensation and incentives and leadership Gap.

Shalini Shukla(2014) has through a study found out that Private sector banks are better in performance than
public sector banks (IBA, 2008), have less HRM issues than PSB‟s, give more importance to the
performance of employees and are more successful in implementing the various HRM initiatives ( Selvaraj
(2009).

Private sector banks have been very effective in managing their workforce in a competitive manner as can
be seen from the continuous decrease in their cost per employee whereas the public sector banks have been
suffering from the problem of high cost per employee hence less effective. Besides these HRM challenges
the banks are also facing problems like high Attrition rate, skill shortage and low quality of workforce,
high employee turnover and difficulty in succession planning causing detrimental growth of the banks.

Electronic copy available at: https://ssrn.com/abstract=2984442

Public and Private Sector Banks Employee Retention
S. No. Public Sector Banks Private Sector banks
1 Well defined employee retention Proper policy to retain valuable talent is
Policy is lacking present with all private banks

2 The traditional approach of workforce
management that causes brain drain is
still dominant in the HR policy
3 Some not so encouraging employee
retention schemes are present.
4 PSB‟s are facing increasing and
continuous problem of Employee
turnovers.
5 The high employee turnover is
resulting in increase in the cost
per employee.
The HR policy is framed as per the market
scenario and changes are incorporated
according to environmental and strategic
changes occurring from time to time.
The bank adopts proper employee retention
schemes to prevent employee turnover and
retain their talent.
Here the Employee turnover is not
increasing and is not at all a big problem for
banks to face.
As Employee turnover is not increasing
hence the cost per employee is decreasing
year by year in private sector banks.

In the case of Public sector banks the traditional approach of managing and retaining their employees is
still prevalent hence even if the HR manager decides the case of an employee hiring and firing cannot be
carried out as the power of hiring and firing is centralized. Hence in PSB‟s the HR practices do not have
much of relevance due to the centralized policy formulation.

In the case of private sector banks more autonomy exists hence due to this decentralized approach the HR
manager has liberty to make changes in the HR policies as per the requirement. He can also take decisions
like changing of job location, job profile and increase or decrease in the salary, looking into the matter of
attrition of an employee or need of the hour. Hence the best talent can be retained without any rigidity. The
private sector banks thus have a good HR alignment strategically because of decentralization and
accountability prevailing in the system.

The Public sector banks do not have such competitive and market linked HR policies which is the need of
the hour in keeping the various issues encountered during workforce management on day to day basis.

RELEVANT THEORIES

Theories that are relevant as per the study include:

Herzberg two-factor theory:

Herzberg et al (1959) propounded the two factor theory as cited by Bormann (2004), is an important theory
explaining employee retention in terms of what satisfies or dissatisfies employees. The two-factor theory or
the motivator-hygiene theory propounds that there are some job factors that result in satisfaction while
there are other job factors that prevent dissatisfaction, forming the crux of the theory. Hygiene and
motivator factors were the job factors classified by Herzberg et al. (1959)

The hygiene factors represent the physiological needs of an individual which the individual wants
necessarily to be fulfilled as per his expectations. These factors work as the motivators at the workplace,
they do not result in positive satisfaction on a long term basis but if they are absent at the workplace they
definitely lead to dissatisfaction for an individual. These factors in fact form the basic job environment or
the workplace environment of an individual.
Pay or salary is the first important hygiene factor, which should be equal to those in the same industry and
reasonably good. The company policies should not be too rigid but be clear, transparent and fair for the
employees. The employees should be provided flexible working hours, breaks, vacations and a dress code.
The employees should also be offered health care and insurance plans for self and family members. The
working environment should be clean, hygienic and safe. The equipment and machinery should be well
maintained and in good working condition. The employee should have a family like atmosphere, good and
healthy relationship with peer, superiors and subordinates with no conflicts.

The hygiene factors are satisfiers and cannot be regarded as motivators (according to Herzberg et al.
(1959). These factors being inherent to work help the employee in giving a superior performance congenial
to the workplace. The motivational factors depict psychological needs and give positive satisfaction and
additional benefits to an individual.

Motivational factors include recognition, i.e., praise for exemplary work by the seniors; secondly the
employee should have a feeling of achievement for his good performance. The organization must have a
growth path hierarchy wise for the employee to remain motivated and give a good performance at
workplace. The managers should depute or give responsibility of work to the employee but make him
accountable. The work should be challenging and interesting for the employee to keep him motivated and
perform well. The theory is relevant and explains what satisfies or dissatisfies employees and gives
guidelines for reduced turnover and employee retention.

Abraham Maslow’s Hierarchy of Needs Theory

The hierarchy of needs is Maslow‟s most widely accepted theory of satisfaction and motivation (Weihrich
and koontz, 2001). Maslow (1943) propounded that a person has various levels of motivational
requirements, once a level of needs is satisfied, motivation and satisfaction can only be achieved by
activating the next higher level. Maslow identified five levels of needs hierarchy wise: physical needs,(
food, clothing, shelter, sex), these represent the first level and are the basic requirements of an individual;
safety needs which means physical protection, this represents the second higher level; social needs which
involves developing close associations with others, this is next higher or third level; self- esteem needs,
that is prestige given by others, this is the fourth level and self-actualization, which is self-fulfillment and
accomplishment through personal growth, this is the highest level achieved by a person.( Winger &
Norman,2010).

The role of the organization is very crucial in identifying the needs of an individual and helping to satisfy
those needs. If particular needs have been satisfied then they should not be over satisfied as this creates an
imbalance between the needs. Also, it has been argued that if the order of achievement of needs is
disturbed then it affects employee performance as he might strain to achieve the need by looking for better
opportunities with better pay package and benefits that are satisfying. Safety at workplace is motivating too
as it relaxes a person mentally and allows him to focus on his goals by giving his best performance. The
various hindrances in safety include lack of fire exits, poor maintenance of machines, poor ventilation, poor
sanitation, lack of drainage and slippery floors.

The 5 steps represented by Maslow‟s motivation theory are: Physiological needs - such as hunger, thirst,
and sleep, representing first step. Safety needs - such as security, protection from danger and freedom from
pain, which is the second step. Social needs - sometimes also referred to as love needs such as friendship,
giving and receiving love, engaging in social activities and group membership, representing the third step.
The fourth step represents Esteem needs - these include both self respect and the esteem of others. It also
includes recognition and appreciation and the desire for self-confidence and achievement. Finally we have
Self-actualization which is the fifth step depicting the desire to develop and realize your full potential and
to be what you really wanted to become, (Worlu & Chidozie, 2012).

Vroom Expectancy theory

The theory suggests that the behavior of an individual is the final choice from amongst the alternatives
which helps in maximizing pleasure and minimizing pain. (Wininger & Norman, 2010)
Victor Vroom along with Edward Lawler and Lyman Porter suggested that the relationship between an
individual‟s behavior at workplace and their goals was not as simple as was first imagined by other
scientists, based on their study. Vroom suggested that an employee‟s performance is based on factors such
as knowledge, experience, abilities, personality and skills.
Vroom in his theory suggested a very good correlation between efforts, performance and reward i.e.
individuals may have different sets of goals but if they believe that there is a positive correlation between
efforts and performance then they can be motivated strongly for a desirable reward by performing well, and
this reward will satisfy an important need.
Nzuve, 2009 suggested that if the desire to satisfy the need is strong enough then it will make the effort
fruitful.

The following beliefs form the basis of this theory: VALENCE: the emotional orientations people have
with respect to outcomes (rewards). How strong the want is for extrinsic [money, promotion, time-off,
benefits] or intrinsic (satisfaction) rewards. The management must find out what the employees‟ value and
should act accordingly. EXPECTANCY: Employees have different expectations and they know how
capable they are of performing i.e. they are aware of their confidence level. Management must analyze and
find out what training, supervision and resources are required by the employees. INSTRUMENTALITY: It
is how the employees perceive whether what they desire they will actually get, even if it has been promised
by a manager or a person in authority. It is the duty of the management to ensure fulfilling promises of
rewards and this should be the awareness of employees. Vroom suggests that the psyche of an employee is
the result of interaction of his belief about Valence, Expectancy and Instrumentality.

EMPLOYEE TRAINING

Bernard (2012) has suggested through a study that „Training‟ is a process in which by the addition of
knowledge, skills and competencies there is a change in behavior, thought and actions. Hence by an
investment in human capital whether by an organization or an individual, training and development widen
an individual‟s compatibility with opportunities for advancement depending upon his ability to
competently tackle new levels of responsibility and challenges. Training corrects deficiencies in
performances of an individual by providing him with specific skills. Development is an effort by an
organization to provide employees with abilities useful for an organization in the future, Ng‟ethe et al
(2012, as cited in Chew, 2004). Training helps in keeping up with rapidly changing technology which
quickly renders skills obsolete, hence helps in updating an individual.

Ng‟ethe et al, (2012) specifies the purpose of training as the process to develop the abilities of the
individual so as to meet the current and future manpower requirements of the organization successfully.

Dessler (2008), suggests training as the equipping of employees with the relevant knowledge, skills and
abilities so as to enhance their performance and perform well as per their job requirements. Training has
short term goals whereas development which is imparting of skills, knowledge and abilities for career
development and taking up higher responsibilities is to meet long term goals, ( Ayodo, Namusonge, 2014).

Cole (2007) has defined training as a process of learning which is aimed at imparting knowledge and skills
to enable the employee to execute his tasks and responsibilities in a better way. This helps the employee to
acquire new knowledge with respect to technological advancement and other external emerging challenges.
Training has been recognized as the central role of the management to be performed, by leading
researchers. It is still to be established whether job training to be based on extra relevant qualifications,
accumulated seniority and whether based on the right criterion, leading to employee performance is still
debatable.

According to Doeringer & Piore (2007), in order to develop skills and abilities specific to the company, its
significant from an organizational perspective to train employees in accordance with the company‟s
specific skills and abilities as required, (Armstrong, 2009).
Organizations can by providing training and development enhance the quality of the current employees.
Russell and Powers (2005) through a study indicated that beneficial outcomes for a firm can be obtained by
investing in the training of employees in problem-solving, interpersonal relations and teamwork.
Jacoby (2004) and Morishima (2006) suggested through a study that especially in the case of stable
employment training programs increase the level of individual performance and organizational
commitment and also influence the behavior and attitude of employees through motivation.
Pigors and Myers (2008), emphasized on training and encouraging those employees who make a successful
effort to enhance their knowledge and skills for achieving personal and organizational success.
Bramley (2001) indicates that improvement in the performance of employees can be achieved through
effective training which is an important constituent of staff development.
According to Bogonko & Saleemi (1997), cited by Njiru (2008) training when properly planned and
executed proves to be highly effective.

For the Training Program to be highly effective, the following activities have to be meticulously
undertaken: training to be properly planned and the employees for the training purpose should carefully
screened and shortlisted, Training methods must be appropriate to the level of employees, the nature of
tasks and purpose of training and lastly the efficacy of a training program should be evaluated so that
necessary improvements may be made in it from time to time, keeping in mind the future challenges.

DESIGNING AN EFFECTIVE TRAINING EVALUATION PROCESS

Wendy F. Carr (1999) in today‟s environment of increased accountability, the training evaluation process is a
critical component of an organization‟s training program, for judging the effectiveness.

Organizations administering the training program not only are accountable for what employees learn, they are
also accountable for ensuring that employees utilize their knowledge to their work performance, hereby
contributing to organizational success. Traditionally the training evaluation methods used to focus on
assessment of training delivery and how to improve it, but today information is collected to determine whether
training is assisting the organization to improve its business performance effectively.
Training Evaluation Approach
The Evaluation methods should be implemented judiciously based on two important aspects namely: the goals
of the training process and should meet the demands of the various stakeholders involved with the business
entity. Each and every organization has multiple stakeholders and not everyone within the organization has the
same information needs but vary as per their involvement. Normally organizational stakeholder groups include
the business units, employees and the training department. The information requirements fall into two
categories: whether the competencies have been learned and whether the learning‟s have to be applied towards
improved performance, as per the market scenario.

Assessment of Competency Learning

The assessment of competency learning is best conducted at the individual level and the reactions at the
individual level help in the best assessment of employees. If the reaction of the employees is negative then it is
less likely that whatever has been learnt will be transferred to work but if it is positive then the new or improved
knowledge, skills etc will be utilized which is the basic aim of conducting a training session.

The information about competency learning has to be given to the Training department so that the effectiveness
of training delivery and approach could be ascertained and the information received can be helpful in revising
and redesigning the training session so as to make it more effective and useful for the stakeholders associated
with the organization.

The information can be obtained through:

Questionnaires This is a structured tool providing both quantitative and qualitative information through
employee feedback regarding training content and delivery. The feedback on content will help in ascertaining
whether the training material provided would be useful in enhancing the job performance of the employee and
making him knowledgeable. Similarly the feedback on training delivery section would be helpful in
ascertaining whether the information was presented in logical order with appropriate level of details and in an
appropriate format so as to make the training session more worthwhile else the training material needs to be
revised and vendor training list updated with ratings of best and least effective for future engagement.

Knowledge Review It is a means to determine whether the training content has been imbibed by the employee.
Here the employee reads the questions and responds in writing as a group assessment tool.
The questions are developed as short answer or multiple choice questions as tools given for assessment at the
start and end of the training session. The tool is used to assess the learning objective of the training. The
assessment helps in judging the knowledge transfer after each training session and is helpful to the training
department in making improvement in the course material as per the requirement.
Observation This evaluation method gives a feedback about the employee reactions regarding the training
program. The employee‟s response to the course content, level of involvement with the training instructors
and his interaction should be closely observed by the training department team. This evaluation can be
informal giving general information regarding the training but can also be highly structured with the use of
a checklist with the observation of specific points.
The stakeholders with the business entity will benefit by having a clear understanding of their own
strengths and weaknesses and also by understanding the training process and how their strengths and
weaknesses have been taken care of through the training process. This information can be procured through
the use of:
Employee Portfolio This is an important means of getting information about the employee‟s mastery on kills,
abilities and knowledge after the training session and is not associated with the performance evaluation of the
employee.
The implementation of this concept involves the development of a work sample within a time span of 60 days
by the employees and it should be based on the learning objectives of the training session. The review of the
work sample, which demonstrates the application of their learning, should be carried out by a manager. The
business unit manager should provide feedback to the employee on strengths and areas for improvement after
carrying out the review.
Skill Gap Analysis - This is another method by which the business unit managers assess the employee‟s level
of skills and abilities and knowledge gained through the skill development program in accordance with the level
required for successful performance in their current position. A survey instrument can be helpful in carrying out
the Skill Gap Analysis. When an employee is rated lower in level to the skills that the position requires, a skill
gap occurs. This assessment should not be linked to the employee evaluation process. The process helps the
employees in keeping a track of their skill development over a period of time.
Assessment of Competency Application

The competency application assessment can be very well carried out at the organizational level and the
assessment related to performance changes and the training costs incurred can be justified. The changes in
employee behavior on the job give a positive impact of the training however the level of performance
improvement justifies the expenditure incurred. The information about how the competencies are being applied
on the job after going through the training session can be useful for the business units in making sound business
decisions and determining training priorities. This information can be procured through:

Analysis of Organizational Performance Measures – The tracking of the performance of an

organization can help in evaluating trends and areas requiring further attention or interventions and also
help in gauging the success of the organization. The changes in organizational performance measures
should be compared to the employee Skill Gap Analysis which will help in identifying the relationship and
will also help the business unit managers in identifying performance strengths and areas for improvement
and make decisions about where additional training may be required for employee betterment and further
organizational success. These measures make the business units managers more result-oriented and
business-focused in their prioritization of training requirements for their team members.
Analysis of Training Return on Investment (ROI) - ROI is a measure of the investment in a training program
and the monetary benefits achieved by an organization over a period of time. The information obtained hereby
can be used effectively to assign and apply resources to ensure organizational success and improve
performance. ROI is calculated by obtaining measurements of the costs and benefits associated with a training
program. ROI is also used to justify a planned investment.
An organization by designing an effective training evaluation process can reap a number of benefits like: it
can get information for a focused and continuous organizational improvement, the information can help in
improving both training program delivery and business performance and it can also provide information to
multiple stakeholder groups.
Employee promotion leading to Retention

Promotion refers to entrusting with higher level of assignment from a lower level with an increase in pay
and a better status.
Promotional opportunities are those where the employee perceives his or her chances to grow and be
promoted within the organization to higher level because of better performance due to training and skill
development or due to work experience, putting in a certain number of years of service. Employees
definitely want to be retained and work in organizations where the opportunities to be promoted to new and
challenging positions are immense.

Bashir & Ramsay (2008) strongly advocate the concept of a growth path that is the people should not only
be rewarded financially but they should also be offered new and challenging positions to grow. Employees
are generally demotivated with stagnant positions with no growth opportunities.

Armstrong (2006) advocates the promotion policy of an organization to enable the management to recruit
the best talent for higher positions from within the existing talent hereby giving an opportunity of career
advancement based on own abilities from within the talent already present.

Chew (2005) suggests that performance based promotions help in staff motivation and retention. It helps in
satisfying an individual on the basis of achievement and recognition needs. He promotes that promotion
based on performance signals the employees that high performing staff are duly recognized and
distinctively rewarded through attractive pay packages and career growth. Career growth motivates an
employee to plan for the future to be well equipped with the required skills to be eligible for higher
positions.
Whenever the vacancies are created employees must be given equal opportunity and necessary
encouragement to apply alongside external candidates for higher positions within the organization without
any discrimination.

Ng‟ethe, (2013) suggests that employees tend to grow and build a career with an organization, hereby
informing their decision to stay with the organization when they find opportunities to be promoted.

Lepak et al., (2006), states that people will remain retained and put in hard work if they realize that this
will ensure their future promotion. The motivation with the employees will be zero if they find that better
prospective opportunities have been reserved for external talent. Promotion therefore helps the organization
to match the requirement on the basis of skills with the employees desirous of applying the skills developed
through training.

Employee Retention

An effort by the employers to have the valued employees remain with the organization is known as
Employee retention. Using an effective recruitment and selection strategy and workforce plan helps in
attracting the right talent to the organization and retaining it. According to Armstrong (2009) once the right
talent has been attracted, retention is possible using some good strategies.
Employees work and stay in an organization if the work environment is quite friendly, favorable and
encouraging. Hence such an organization is an employer of choice and the benefits to the employees are
several like : good prospects of training leading to growth of an individual due to good performance,
individual needs are taken care of, timely appraisal and presence of a good boss who coaches, guides and
encourages taking responsibilities, Cole (2002).

Armstrong (2009) suggests that retention of an employee can be attributed to factors like good working
environment, good reputation of an organization, opportunities of learning and skill development, location,
terms and conditions of employment and good career opportunities.
Employee retention is necessary because employee turnover incurs cost and it hinders the progress of an
organization. Retention strategies should be well planned beforehand at the initial stages of recruitment and
selection, keeping in view the retention issues of the organization.
Armstrong (2009) suggests for a congenial work environment to fix the issues related to retention.

Cole (2002), suggested risk analysis to measure the gravity of losing key talent. Risk analysis includes
identifying potential risk areas, key talent likely to leave, ease with which replacement could be fulfilled
and replacement costs and how serious the effects of a loss would be on the business.

The turnover could be attributed majorly to: career growth opportunities, better working conditions,
training and development opportunities and attractive remuneration. Some reasons could also be identified
through exit interviews, but more importantly attitude opinions or surveys to identify any areas of
dissatisfaction can be more reliable.
Ng‟ethe,( 2012) suggested that the retention plan should include actions focusing on areas leading to lack
of commitment and dissatisfaction in the long run. Retaining talented people requires carefully planned and
concerted effort along with encouragement and value recognition for the contribution made by the existing
talent.

Staff retention is very crucial for an organization because of the high turnover related problems.
Cole (2002), advocated retention of employees to be associated with work environment, performance
management, remuneration, employee development, career opportunity, flexible timings and family
benefits.

Gaiduk et al (2009) suggested through a study that an employee‟s intention to remain with an organization
is influenced by three major variables: the nature of an employee‟s current job, adequate working
arrangements including such aspects as the quality of current supervision, opportunities for promotion,
available training and development, and quality of communication within the organization and employee‟s
personal characteristics such as gender, age and position level.

Earlier researchers have identified several factors related to employee retention both employee related and
organizational such as opportunities for advancement, existence of challenging and meaningful work,
empowerment, new opportunities, responsibilities and managerial integrity
and quality, ( Birt et al.,2004).

Walker (2001) through a study identified seven factors for retention: provision of challenging work,
opportunities to learn, positive relationships with colleagues, recognition of capabilities, performance
contributions, good life work balance, good communication within the organization and compensation and
appreciation of the work performed.

Armstrong, (2009), specifies that learning and development process is a strong retention activity when
combined with selective promotion and salary action.
Hytter (2007) suggested that workplace factors that have indirect influence on retention are : career
opportunities, training and development of skills, physical working conditions, work life balance, rewards
and leadership style.
Arnold (2005) has also reiterated the fact that employee retention can be enhanced by providing
opportunities to learn and develop and providing effective training.

Organizations have made retention of employees their strategic priority because of the high costs
associated with employee turnover. Retention is preventing people from leaving the organization to work
elsewhere because of better opportunity and benefits. The task of retention is not easy and it requires the
analysis of the market opportunities which the employees want to have and the working environment they
are seeking for in order to be retained. This has to be judiciously planned and implemented by the
management of the organization and the stakeholders in order to retain the talent. (Armstrong,2009).

Udi, (2010) suggested that the employees leave because of lack of career development in terms of
promotion and lack of adequate reward and compensation

Kipyegon ( 2014), suggested through a study on employee engagement in the banking industry in Kenya
that remuneration packages was the highest contributor towards employee retention in the banking industry
in Kenya, the other variables being personal development, performance management and workplace
recreation.

Omollo ( 2015) through a study suggested the effect of motivation on employee performance of
commercial banks in Kenya. He researched on job enrichment, training and team building
Activities and monetary rewards and found out that monetary rewards play an integral part in overall
employee performance and staff retention.
Akala (2012), studied and established the relationship between career growth and employee retention in his
research studies. He also attributed employee retention to factors like, employee promotions by merit, clear
definition of employee career path, succession planning practices, staff mentorship and coaching programs
and institutional support for staff career growth

Training and Skill Development ---->Performance Enhancement

Training and Skill Development as coaching and mentoring is important for performance enhancement of
employee as well as it provides several benefits to the organization. Coaching and mentoring add value to
the employee in the form of: ability, skills/knowledge, positive attitudes, professional/personal
development and confidence of the employees. Additionally it also provides various benefits to the
organization: employee retention, increase service/product quality, team efficiency, market growth and
revenue and profitability.
Coaching & Mentoring

----------------------------------------------

Employee Performance Organizational Benefits

Skills/Knowledge Revenue and Profitability
-Abilities
„Market Growth‟
-Attitudes „Employee Retention‟
-Confidence „Team Efficiency‟
-Personal/Professional
„Service/Product Quality
Development
Landy,(1985) on the basis of a study based on Hawthorne studies on worker‟s productivity have
proved that employees who are satisfied with their job will remain retained with the organization
giving a higher or best performance than those employees who are dissatisfied with their jobs. It
has also been proved that employees who are de-motivated or dissatisfied with their job will
never give a good performance.

Kinicki and Kreitner, (2007) through a study have suggested that employees who are happy and
satisfied with their job give a higher performance and it is easier for organizations to attain their
targets by motivating such high performers.
Satisfaction can be achieved by employees when they feel competent to perform their jobs and
this competency can only be achieved by equipping them with the required skills and giving
them training.

For an organization the employee‟s performance is of utmost importance and every effort has to
be made to help the low performing employees to achieve the stipulated goals. Normally the five
elements or phases namely: Planning, monitoring, developing, rating and rewarding are the five
phases of the performance cycle. The Planning process consists of setting goals, developing
strategies, and outlining tasks and schedules to accomplish the goals in a systematic manner.
Monitoring is the analysis phase wherein the goals are scrutinized to see how well the employee
is working to achieve his goals. Monitoring means gauging the performance continuously of the
employees and workgroups in line with the set standards and also providing them with the
relevant feedback just to make sure that the efforts are in the right direction for achieving the
goals. Any irrelevant standards which cannot be achieved have to be reset from time to time. The
Developing phase helps the employee in improving his performance if any gaps have been
observed during his working phase with the company. The Planning and Monitoring phase,
work upon the deficiencies or gaps in performance of the employees and handles them critically.
The Rating compares and analyses the employee performance with the set standards. This is
beneficial for the employee as the rating is done on the basis of comparison of performance with
the other employees. Hence at the end of the entire performance cycle the Organizations reach
the Reward stage which is ascertained on the basis of outstanding behavior and performance of
the best performing individuals.

Most of the training programs are designed in a manner to take care of knowledge, skills and
aspects related to enhancing the performance of the employees but there are certain factors that
play a key role in judging the employee performance, namely organizational commitment,
motivation and job satisfaction. Less of study or work has been done to identify whether proper
training interventions could be instrumental in affecting the workers attitude.

Lang (1992) made it clear through a study that training should be oriented towards developing
organizational commitment in employees.

Gaertner and Nollen (1989) proposed through a study that effective and greater employee
performance can be achieved by incorporating HR practices like career development and training
opportunities and succession planning and promotional avenues.
Cheramie et al. (2007) through a study argued that the management of an organization is most of
the time hesitant in investing in its human resource due to obvious reasons like although the
organization provided effective and timely training but still the employees seek greener pastures
outside due to their own market value and employment opportunity and thus willingness to
changeover because of higher pay packages results in the training provided being a cost rather
than a benefit to the organization.
Baruch(2006) through a study propounded that the hesitation by the organization in providing
training to its human resource also results in the employees investing into themselves for their
own benefit, better performance and for achieving their own career goals.

CONCLUSION & RECOMMENDATIONS

In the current era of changing technologies and rigorous competition it is meaningless to say that
I have current and up-to-date knowledge because what one has today becomes obsolete with the
passage of time. An individual who has the quest for knowledge and the organization he is
working for is progressive and has prioritized training and development, will be able to achieve
its goals.

Chew (2004) has rightly defined training as a process that provides employees with specific
skills and helps in correcting deficiencies in their performance while development equips the
employees with abilities that will be required by the organization in the future.

Recruitment and hiring of individuals for various positions in an organization is mandatorily

followed by training so that they could be assigned specific job responsibilities. The training
should make the new employee comfortable in the role assigned to him and also with the work
environment. Training and development has to be an on-going process enabling the employee to
perform well in his present assignment and also to equip him for entrusting higher job
responsibility in the future. The employee has to be well equipped both in knowledge and skills
to keep pace with the expansion and diversification plans of the company.

Human Resource Management has a very crucial role to play in integrating strategically all
activities in meeting out organizational objectives and employee development. While catering to
the organizational interest it is initially an Investment rather than a cost to the organization
through HRM perspective. The rest of the resources are directed towards training and
development of human resource which is vital for improving organizational productivity. Jobs
have become more complex in the banking sector owing to the changing banking environment
and hence employee training has become more crucial. Resources have to be committed towards
training and development in order to have a well equipped workforce.

The banking sector has necessarily to focus on three aspects of training and development:
developing a good employee behavior which is helpful in improving the productivity, providing
personality development which is helpful in strengthening superior – subordinate and peer
relationship and to inculcate a positive feeling towards training and development in employees
for meeting the dual goals of customer satisfaction and enhancing productivity.
The Human resource department in the Banking sector has to proactively involve into:

- Rigorous and continuous training to the employees who can perform well in the ever-
changing environment
- Making training an ongoing process perceived as helpful in changing attitudes, developing
skills, evolving ideas and reinventing organizations in a profitable manner.
- Making training and development perceived as a necessity for both employer and employee.

Huselid (1995), has emphasized that providing training and job security by the organization are
important determinants of employees Retention in the current competitive world.

Wan (2007), has also asserted that comprehensive training and development is the only strategy
to be adopted by organizations to radically enhance their workforce productivity and promote
retention.

Employees who are not trained have a bleak future and stand no chance of being promoted to
higher level and thus they look for other options where training is prioritized for individual
growth and organizational development.

Samuel and Chipunza (2008), have suggested through a study that employees are motivated to
stay in an organization that offers growth opportunities through training and development and
education, considered as most crucial by the employees for their career growth and goal
attainment. The employees feel morally obliged and their determination and commitment to stay
with the company becomes stronger when the staff training is funded by the organization.

Huselid (1995), has suggested through a study that training of employees with required skills
increases employees‟ productivity and minimizes job dissatisfaction, ultimately resulting in
employee retention.

Promoting training and development of the staff internally results in minimizing the cost to the
organization of selecting, hiring and recruitment from the open market. Employees too
reciprocate favorably by staying with the company and taking up higher challenging job
responsibilities when they find that the organization is striving hard to further their market value
through rigorous training and development.

Barringer (2005), has provided a very good comparison between rapid- growth firms and slow
growth firms. He has confirmed through a study that rapid-growth firms have used training and
development of employees as a tool to achieve their objectives and hence the emphasis on staff
development to a significantly greater extent have given them the competitive advantage as
compared to the slow-growth firms.
The banking sector comprising of Public sector and Private sector banks should design and share
training and learning techniques on a common platform using standardized and uniform training
methodology so that the young entrants do not get confused by different banks different training
strategies. The aim of the training program should be the same everywhere i.e. to acquire
relevant skills, knowledge and attitude for developing a good personality, achieving career goals,
develop job satisfaction and prestige and recognition by giving their best performance.

These findings have clearly proved the positive relationship between training and development
and staff retention and performance enhancement.

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