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CHAPTER TWO

LITERATURE REVIEW
2.0 INTRODUCTION
The research paper seeks to investigate the impact of training and development on Firm's
performance. Training is an ideal way to learn a job. Management of individual skills is an important
aspect of doing business today, and employee development will likely grow in the future (Noe,1999).
The benefits of employee development extend beyond the actual skills gained and their contribution
to an individual’s productivity (Benson, 2002).Training can be defined as a process of updating the
knowledge, developing skills, bringing about attitudinal and behavioral changes and improving the ability of the
trainee to perform his/her tasks efficiently and effectively. Palo & Padhi (2003)

2.1 DEFINITION OF DEBATE


Organization’s performance depends on training and development. Present day companies, just
like the companies in the past, strive to maximize their profit and increase proficiency by finding
the time and resources to train their workforce. For an organization to become proficient in
offering good services it must:
a) Determine the necessary competence for personnel performing work effecting product
quality.
b) Provide training or take other action to satisfy these needs.
c) Evaluate the effectiveness of the actions taken.
d) Ensure that is personnel are aware of the relevance and importance of their activities and how
they contribute to the achievement of the quality objectives.
e) Maintain appropriate records of education, training, skills and experience”.
This standard requires that the organization identify competency needs for all personnel
whose activities affect product quality. This task will include a large majority of the
organization. Assessments of the training must be conducted and records must be maintained and
easily accessed. These two elements are describing the minimum requirements for establishing
an effective training system .The main purpose of this study was to identify a more efficient and
effective way to manage the Job Specific Training and development system. It is very important
when developing a team that everyone is committed to the issue at hand and this will be only
when an organization's workforce will be trained. Without key factors, it would have been
difficult to implement the training and development system in an organization and it may not
have been as successful in an organization.

There were many positive outcomes of training and development. Effective


Implementation was limited, as the training and development were not integrated within the
culture and process of the organization. Staffs generally rate such training as a high priority
(Raynes and Sampson, 1987; Sturmey, 1992). The main purpose is to increase the understanding
regarding organization's performance in relation to training and development. The other factors
are remuneration and elements such as participation, feedback, fairness, responsibility, the
theoretical framework includes training and development, financial as well as non-financial
remuneration and research done in later years regarding participation, feedback, fairness,
responsibility, development and Work-atmosphere connected to organization's performance..
Companies today are forced to function in a world full of change and complexity,
and it is more important than ever to have the right employees in order to survive the
surrounding competition. New companies and business are blossoming, new technologies
are constantly developed and the knowledge and perception of how much your employees
actually mean to your organization is greater for every day. Most companies are looking for the
right expertise in different areas, and human resources are therefore an important competitive
factor that needs to be taken into consideration while managing business (Ljungberg & Larsson,
2005).For this most of the companies arrange training and developments for their employees.
Organizations’ have to balance both production effectiveness as well as efficient workforce to be
successful. Even though a company has managed to find the right employees, this is not enough.
A crucial factor is to make employees best and reduce the turnover rate.
Talented employees can be a source of advantage for an organization (Siegler (1999),
but how to achieve this may be a major challenge. What do employees want from their
organization in order to feel committed? The answer is they need security of their future that is
only with the training and development. The primary reason for working is to obtain money
(Jackson and Carter, 2007), but could employers do more in order to retain their employees? Or
even more important, what do employees want from their employer in order to feel committed
willing to stay? Since there may be a difference between how employers try to give employees
regarding to how employees actually would prefer to be stay their and satisfy with the job.
Throughout research we find indications that training and development is a major
element for firm, performance. Job satisfaction is affected by the worker and the work itself
(Chen, 2008). In older literature the focus has been on the relationship between training and
development and job satisfaction as well as remuneration. In the 1940’s, 1950’s and 1960’s
several studies were made (Ohio, Michigan and the Hi-Hi leader).Employee’s satisfaction builds
on elements such as a higher participation, feedback, fairness, responsibility, development and
work-atmosphere (Hytter, 2007). It is important that employers give access to relevant
development. The personal need is less important in this case and rewards is not that necessary,
which is quite the contrary to what Shields (2007) and Hansson (2002) describes. They say that
reward is necessary to make development function. Could it be that way that employee thinks
that development is a kind of reward itself that Shields (2007) describes as extrinsic reward.
They think that training and development is better for job satisfaction. It is obvious that
satisfaction with possible future career development and satisfaction in current career
development are of importance for employee. The result in relation to previous research adverts
at the importance in giving employees possibility to develop (Tobia, 1999). We could see that if
an employee felt satisfaction with his or hers work, he or she was taking training and
development from the company. Mitchell etal (2001) describes the importance of satisfaction in
relation to training and development. They discovered a connection between satisfaction and
training and development; According to us companies have to improve their training and
development level through making employees feel job satisfaction. This issue must be one of
their main objectives because it increases the possibility to handle competition in the market. By
having competent employees companies may save a lot of money which also is important
throughout business administration.
2.2 THEORITICAL DEBATE
According to the survey there is a correlation between job satisfaction and training and
development. If the employee feels appreciation because he thought that company give training
and development for the betterment of his career he will satisfy from the job. Employee
development and training are two important elements especially if combined with performance-
related job satisfaction to create a good work group there has to be a good working environment
This arises when group members feel trust and confidence and as a result they treat each other
with respect and this may only because of training and development.
The training and development applications should be useful to industrial personnel in preparing
them for delivering improved performance on the job. The applications will help them
understand the options and the impact of decisions. These applications have the potential to
improve industry performance by reducing the learning curves of the workforce. Staffs of the
Training and Development Unit are available to assist managers or individual staff to identify
training needs and can advises on appropriate ways to meet identified needs. These include
mentoring, coaching, attendance at an internal or external course, or completion of a
qualification. Any staff member may contact TND staff directly for confidential advice, and
assistance can be provided on a one-to-one basis.
All training must be related to the mission and performance goals. The selection of
employees for training is made without regard to political preference, race, color, religion,
national origin, gender, marital status, age, disability, and with proper regard for their privacy
and constitutional rights as provided by merit system principles set forth in 5 U.S.C. 2301(b)(2)
(1996).A full range of options may be used to meet mission-related organizational and employee
development needs, such as classroom training, on-the-job training, technology-based training,
distance learning, self-development activities, coaching, mentoring, career development
counseling, details, rotational assignments, cross training, and developmental activities at retreats
and conferences. Government and non-government training facilities may be used. (Prior
regulatory constraints regarding use of non government training facilities and time restrictions
such as 1 year in 10 have been eliminated. 5 U.S.C. 4107(a) (1996) prohibits training to obtain
an academic degree in order to qualify for appointment to a particular position or for the sole
purpose of providing an opportunity to an employee to obtain one or more academic degrees.

Training for employees who report to them. Training involving the acceptance of a
contribution, award, or payment (in cash or in kind) of travel, subsistence, and other expenses.
Academic degree training to relieve recruitment and retention problems in occupations in which
the agency has or anticipates a shortage of qualified personnel. An Individual Development Plan
(IDP) is a written plan used to systematically identify and record appropriate training and
development activities that enhance an employee’s performance in a current or projected future
assignment. All employees and supervisors must complete or update an IDP each year within 30
days of the annual performance appraisal. The IDP should include input from both the employee
and supervisor. Using the IDP form designated by their agency, REE employees and supervisors
should record the following: identified developmental needs, activities proposed to meet the
needs, dates of the activities, and any direct costs required to meet the needs (tuition, travel,
materials, etc.).
Other research demonstrates the impact of training on outcomes other than job performance
or on variables that serve as antecedents to job performance This study related organizations’
training policies (e.g., functions assumed by the of training, and how training is valuated) with
four types of organizational-level benefits: employee satisfaction, customer satisfaction,
owner/shareholder satisfaction, Benefits of training have been documented for variables other
than organizational performance training methods. Several studies in each of these two domains
provide information on Research on training design and delivery can be categorized into two
general themes: research on new approaches to engage learners in meaningful learning
processes and research on specific how to maximize the benefits of training. Researchers
are also exploring the impact of novel training technologies on outcomes other than learning.
Research on moderators of the training transfer relationship has focused primarily on workgroup
factors. The organizations that are able to realize the benefits of training that are documented in
this review are able to move away from viewing the training function as an operational function
or cost center to one that is value driven We take the point of view that training leads to
important benefits for individuals and teams, organizations, and society
Managers and other decision makers in these organizations prefer information and data
on business-related results to make decisions about how to allocate resources, including
resources for training activities (Mattson 2005). Training for the sake of training, an approach
that focuses on developmental ideals and supportive organizational environments, is not aligned
with today’s business realities, including compressed career progression pathways, budgetary
cuts and constraints, highly competitive environments, and market-driven economic
philosophies(McGuire et al. 2005). Designing, delivering, evaluating, and clearly documenting
the benefits of training using the information included in this review will allow the human
resource management function to be a strategic, organizational player and to move away from
the negative connotations (e.g., “welfare secretaries”) associated with this function in the
twentieth century (Hammonds 2005, Jacoby 2004, Kraiger et al. 2004.
A company's budget dictates the kinds of training that may be considered. Unfortunately,
the training budget is most often cut off first whenever the budget becomes tight. Training
methods vary in cost. Usually methods that require human relations are more expensive than
those that don't.

There are two general kinds of training methods described in this paper. First is the word of
mouth (WOM) training which teaches through direct human interaction (Galletta et. al., 1995)
and the second is Technology aided training which is self-learning aided with training tools.

Kinds of Training

1.WOM (Word of mouth ) This is presently the most common method of training. This is the
kind of training where speech and human interaction is key. Whether the instructor is an
outside contractor, inside IT professional, or a trained peer co-worker, what distinguishes this
from computer based training is human interaction and feedback.. The kinds of WOM training
are:

i. Person-to-Person This training involves an individual trainee paired with an individual


instructor. The trainee's attention and concentration is mostly guaranteed to be in the task and
in the training. The trainer can give personal attention to the trainee as well. This method can
be expensive because of the individuality of it.

ii. Group/Classroom

This type of training is cost-efficient since it takes advantage of one trainer for multiple
trainees. The benefit of structured learning is another positive aspect of this method. A
consequence of this method is that since everyone is different, some trainees may get lost in
the process and pacing is different.

b. Technology Aided Training

This kind of training is cost efficient. This method usually involves self-training, self-
study, and self-guidance. Examples of this method are the tutorials, manuals, web tutorials,
video tapes, and computer based training (CBT). CBT is growing rapidly in use because of its
flexibility of integrating text, graphics, sound, animation and video (Scott & Violette, 1996).
The cost of technology aided training can range anywhere from $600 to $1000, but can be
used repeatedly by numerous employees. Most of the time, trainees can pace themselves
according to their capabilities using these methods, but there is a lack of feedback and
guidance. Trainees, if not knowledgeable and if lacking the proper educational background,
may confuse themselves even more.

2. Instructors

The kinds of instructors are also considered in the budget. There are contracted outside
instructors that companies may hire. The advantage to this is that they are focused on training as
their task, have experience in training , and therefore can be considered experts. They may be
expensive and there may be a chance that they do not know the company culture. They may not
accurately customize their training to the needs of the company.

The IT division of a company may be trainers as well. This is a more cost-efficient


way, and they may know the company culture. There are times when IT specialists do not want
to be bothered by training duties because they'd rather be doing technical duties, or they may not
be familiar with the training needs of the trainees.

Certain chosen employees can serve as instructors. A study by Fitzgerald and Cater-
Steel (1995) considers these trainers. Having these kind of instructors present lower costs, easier
adaptation to the demands of the workplace, and rapport with the trainees. Since they are "one of
them", trainees do not feel as intimidated. These trainers gain more responsibilities added to
their present workload. Training others may be burdensome and may take them away from their
initial duties.

Three groups of theories, which mention the role of training in companies can be identified (Smith
and Hayton, 1999):
- Human capital theories – Economists traditionally look to the construct training in terms of
investment. Human Capital Theory has established training in terms of increased productivity
(Becker, 1964; Mincer, 1974; Strober, 1990). The Human Capital theory developed the terms
general and specific training. In the mid-1980s the neo-human capital approach states that
companies train their employees in order to improve the adaptibility and flexibility of the
workforces and their responsiviness to innovation (Bartel and LichtenBerg, 1987)
- Human resource management theory has viewed training and employee development as a
means of engaging the commitment of employees to the enterprise (Rainbird, 1994; Heyes
and Stuart, 1996). The initial formulation of a theoretical framework for Human Resource
Management came from the Harvard Business School in the early 1980’s (Beer et al., 1984).
Training appears as one of a number of strategies for managing the human resource flow of
an enterprise which, together with other Human Resource policies, produce the ‘four C’s’ of
Human Resource outcomes; commitment, competence, congruence and cost-effectiviness.
- Training and high performance organization - studies of skills trajectories in Britain and the
USA have suggested that a process of polarization is at work, with some occupations
becoming more skilled and others less skilled over time (Gallie and White, 1993; Cappelli,
1993). Studies of high-performance work practices and strategic HRM have been brought
together in the concept of human resources ‘bundles’ (MacDuffie, 1995; Dyer and Reeves,
1995) which emphasize the importance of implementing a number of HRM practices together
in ‘bundles’ in order to achieve a performance improvement for the enterprise. Training is
always cited as a critical measure within the bundle.
2.3 EMPIRICAL DEBATE
The most used definition of training in relation with organizational commitment is ‘a
management practice that can be controlled or managed to elicit a desired set of unwritten, reciprocal
attitudes and behaviours, including job involvement, motivation and organizational commitment’
from Sparrow (1998) and Bartlett (2001). Bases on this common use, this definition will be applied
in this thesis as well.The adoption of quality management practices has long been associated
with an increase in the provision of employee training. The founders of quality practice in
manufacturing emphasised the importance of employee development, education and training
for the improvement of quality performance and firms seeking to implement quality
management have consistently found it necessary to improve their training effort (Deming
1982, Ishikawa 1984). Firms pursuing a quality strategy have found it necessary to invest in
'human-capital-enhancing' activities such as training, in order to enhance performance
improvements in productivity and customer satisfaction (Youndt, Snell, Dean and Lepak
1996).
Employees require some training in order to manage the enlargement of their work
role following the delegation of responsibilities for quality, they also require some training in
non-technical skills to be able to participate in quality improvement activities and they need a
broader range of skills in order to flexibly respond to changing customer and market
requirements (Schonberger 1994). Training for quality management requires the development
of specific skill sets that support quality management practices. Such
training is important, not only to ensure the successful adoption of quality practice, but also to
ensure the achievement of the broader quality mission of improved firm competitiveness
(Dertouzos, Lester and Solow 1992). The success of the quality strategies adopted by the firm
and the effectivness of the quality management system employed within the firm, are
dependent upon the supply of appropriately skilled labour (Mason, van Ark and Wagner
1996, Prais 1995).

Whilst the association between the adoption of quality management practices and the
enhancement of the training effort in the firm has long been observed, little attention has been
paid to the relationship between quality management, employee training and firm
performance. Two competing explanations have been put forward to explain the effect of
quality management and employee training on firm performance and this
study seeks Some studies have suggested that employee training directly enhances firm
performance by raising the general level of skills. As employees become more highly
motivated and more highly skilled, so their task performance improves and organizational
effectiveness is directly enhanced (Bartel 1994, d'Arcimoles 1997). Employee training may,
in this view, be seen as a discrete or stand alone management practice, one that directly
enhances the human capital of the firm and so directly leads to performance improvements.
Other scholars argue, however, that employee training has a mediated rather than a
direct affect upon firm performance. These scholars argue that employee training is more
effective when used in conjunction with other management practices and that compatible sets
of practices are more effective in raising performance, than any individual practice. This
argument suggests that training, whilst effective in raising general skills, is more effective
when it develops firm specific skills and so supports the operation of the particular business
process systems within the firm. Training, when used to support quality management
practices, should contribute to the effectiveness of the quality management system . Training
should enhance the integrity of these systems, rather than merely raise the general level of
employee skills (Gee and Nystrom 1999, Jayaram, Droge and Vickery 1999).
This study seeks to unpack some of the relationships between quality practice,
employee training and firm performance by examining the direct and the mediated effects of
quality practice and training practice. The study seeks to determine whether the provision of
employee training alone directly affects performance or whether training is more effective
when mediated by the quality management system. In order to address these questions, data
from the Australian Manufacturing Council (AMC 1994) survey of Australian manufacturing
firms is examined and the impact of training and quality practice on key performance
outcomes such as productivity, customer satisfaction and employee morale is analysed.
There are well established links between the provision of employee training and use of
quality management practices but there is some debate about the extent to which the two
practices may work together to enhance
performance outcomes. Several empirical studies of enterprise training and performance have
found no necessary link between employee training and the use of other management
practices (d'Arcimoles 1997, Bartel 1994, Holzer, Block, Cheatham and Knott 1993). These
studies suggest that training, in and of itself, can enhance the performance outcomes of firms.
Snell and Dean (1992) found that the use of advanced manufacturing technology (AMT) and
the use of quality practices were both associated with the 'comprehensiveness' of employee
training but they found no interaction effects from the use of these practices in combination.
Bartel (1994) examined job redesign, performance appraisal and employee involvement,
finding that training was 'unaffected' by the implementation of these practices, in its
performance enhancing effects. Bartel used a value-added measure of productivity based upon
net sales per employee and found that the introduction of new training programs led to a
productivity gain of 18.86% over three years. Significantly, this gain applied across the board
to low performing and high performing companies, leading Bartel (1994:422) to observe
that: "the implementation of formal employee training programs can enable businesses that
are operating at below-expected levels of labor productivity to eliminate this gap."
Holzer, Block, Cheatham and Knott (1993) studied the effect of training grants on firms
training effort and found that the one off training grants led to a doubling or tripling of the
training effort during the period of the grant. This increased training effort was associated
with a 0.5 to 0.7 percentage points decline in the scrap rate, a gain which persisted after a
decline in the training effort. It was the extent of the training effort that seemed to influence
improvements in quality outcomes rather than any necessary use of quality
practices. d'Arcimoles (1997) examined the effects of employee training upon the financial
performance of 61 French firms and found that there were significant immediate and lagged
effects. Expenditure on training by firms was associated with 'immediate and permanent'
improvements in productivity and profitability, leading d'Arcimoles (1997:865) to find that:
"substantial training expenses seem to be a good sign of future
economic performance."
Training, some would suggest, has a direct effect on productivity, internal quality and
financial outcomes for firms, by raising the general level of skills and enhancing the human
capital of the firm. This effect is seemingly independent of the application of quality
management and other management practices. Employee training, in this view, is a stand
alone practice that leads to effective task performance on the part of employees and this is
reflected in enhanced firm performance. The implication to be drawn from treating employee
training as a stand alone practice is that the effect of
training upon performance is discrete and not necessarily the product of the interaction of a
comprehensive training and development system with a quality management system. The
direct effectivness view does not position any systemic benefits arising from the strategic
alignment of quality practices and training practices, but rather seeks to identify stand alone
benefits that are derived from the training effort itself.
One of the difficulties with this position, however, is that it does not seek to distinguish
between firm investments in different types of human capital through the provision of
different types of training program. There is no distinction made between investments by the
firm in general or firm specific skills (Becker 1997). Any effort to augment the human capital
of the firm by the provision of employee training is seen to be effective, whether that consists
of investments in general, transferable vocational skills or firm specific
skills that complement the technical and human requirements of the individual firms quality
system. The proposition that general skill development, achieved via stand alone training
programs has a direct, positive effect upon firm performance, is one that we seek to exaime
here.

Employee training has frequently accompanied the introduction of Total Quality


Management programs. A survey of Fortune 1000 companies in 1993 (Lawler, Mohrman and
Ledford 1995:16) found that 72% of US firms had provided some training in problem solving
skills and 63% had provided some training in the use of quality tools, when introducing
quality management practices. Australian firms, likewise, have implemented employee
training programs in order to support the introduction of quality management practices. A
recent survey of Australian manufacturers (Allen Consulting Group 1999:vi) found that
improvements in quality (93%) and competitiveness (88%) were the most common objectives
of firms implementing training, whilst Smith and Hayton (1999:264) in their survey
of Australian firms, found that an emphasis upon quality improvement was "a consistently
significant driver of enterprise training."

The emphasis placed upon training by Australian firms to achieve quality objectives is
supported by the available case study evidence (Rimmer, Macneil, Chenhall, Langfield-Smith
and Watts 1997, Dawson 1994, Dawson and Palmer 1995) and survey evidence (Park, Erwin
and Knapp 1997, Smith and Hayton 1999). Park, Erwin and Knapp (1997:789), for example,
surveyed 47 of the largest firms in the Australian telecommunication industry and found that
89% provided training in problem solving skills and 81% provided training in the use of
quality tools.
The implementation of quality management programs has been an important driver of
the training effort of manufacturers but whether and how quality management programs and
employee training programs jointly act to lift performance remains unclear. Does training
have a discrete effect upon performance or do training and quality practices reinforce each
other to jointly lift performance? Some scholars hold that human resource management
practices and production practices do reinforce each other and that the provision of training is
not as important as the strategic targeting of that training to the achievement of business
objectives (Pfeffer 1998). In the case of training, the type, amount and level of employee
training, it is argued, should be closely aligned to the objectives of the training and these
objectives should be consistent with overall business strategies (Arthur 1994, Becker and
Gerhart 1996, Lado and Wilson 1994). Training should only be undertaken where it is
strategically important to do so and where the training effort can have maximum effect.

Training delivers greater benefits, some scholars argue, if management focuses upon
the strategic effectiveness of that training rather than simply upon its ability to enhance
employee task effectiveness. Employee training is of greater value to the firm in developing
human capital if its affect is mediated by the quality management system. If firm specific
skills are developed that not only improve the skills of individual employees but also enhance
the effectivness of the quality management system... skills should .This line of argument
posits a mediated effect as an explanation for the effect of training upon performance,
as a counterpoint to the direct effect examined above. The strategic effectiveness thesis holds
that there are benefits to be derived from employee training, if that training is part of a
consistent set of human resource management practices (Brown, Reich and Stern 1993) and
that set of human resource management practices
is aligned to production practices for the achievement of strategic business objectives. If there
is internal consistency in the work and production systems of the enterprise, then this
generates a systemic benefit that is reflected in higher performance (MacDuffie 1995). In the
case of quality, the strategic effectiveness thesis holds that the training effort should be
targeted to the type of quality management program being implemented and that the training
should be supported by mutually reinforcing human resource management
initiatives, such as employee involvement in problem solving.

There is some evidence that manufacturers implementing quality management


programs do strategically target their training effort (Monks, Buckley and Sinnott 1998).
Many manufacturers, it seems, do provide training that is tailored to the type of quality
management program that is introduced. The more extensive the quality management
program, the more comprehensive is the training. Skills are developed that underpin the
integrity of the quality management system Gee and Nystrom (1999:20) studied the levels of
skill training in 342 US manufacturing plants and found that "different levels of skills training
are strategically related to different levels of quality management practices." Limited and one-
off training programs were associated with quality by inspection whilst comprehensive
employee training was associated with the adoption of full Total Quality Management
(TQM) programs.

2.4 THEORITICAL FRAMEWORK


Jayaram, Dorge and Vickery (1999) in their study of 57 first-tier component suppliers
in the US automotive industry likewise found that the training effort of these manufacturers
was strategically targeted to achievement of operational priorities. Employee training was
targeted to the achievement of priorities such as cost, quality, flexibility and timeliness and
was also associated with performance improvements in these areas.

There is thus some support for the strategic effectiveness thesis. Manufacturers do
seem to strategically target their training efforts. They focus their training and development
programs upon areas of strategic priority and reap benefits from this in the form of
performance improvements. In order to further research the strategic effectiveness thesis, in
order to determine whether the implementation of comprehensive training and development
practice has effects upon performance outcomes for the firm when used in conjunction with
comprehensive quality practices.
The final facet of knowledge and skill development climates examined
in our modeling is the emphasis placed by management on performance
feedback. The extensive literature on task performance feedback is wrought
with persistent and unresolved questions about the complex nature and
conditions under which feedback to employees influences their behavior and
performance (see Kluger & DeNisi, 1996 f or a thorough review and
assessment of this literature) . A basic thesis of the literature, nonetheless, is
that behavior is goal directed and that employees need task performance
feedback so that they can evaluate and adjust their performance in light of
performance goals or standards articulated by management. It follows that
climates within which employees receive more regular and meaningful
feedback from their supervisors about how well they are doing in light of
what super visors are seeking to achieve in their respective work areas, the
better able ar e employees to evaluate their competencies and the importance
of doing their jobs well on the success of their work areas. The greater the
effort management is seen making to provide meaningful feedback,
moreover, the stronger is the sense employees will have that management is
committed both to achieving continuous improvements in performance and to
having employees fully participate in achieving their work area’s performance
goals.

Further more, employee perceptions about performance feedback


influence and are influenced by other facets of knowledge and skill
development climates. On the one hand, the more or less employees perceive
they get meaningful performance feedback, the more or less they will
(1) Perceive they are secure
(2) Perceive they have good opportunities to improve their skills
(3) Be receptive to new technologies
(4) Perceive a need to continually learn new skills
(5) value learning new skills.
On the other hand, the more or less favorably employees perceive each of
the above facets to be, the more or less they will perceive they get meaningful
performance feedback. In addition to creating a climate of knowledge and skill
development as part of its KB workplace strategy, a firm must also decide
how best to create broader workplace conditions that serve as foundation
factors supporting and reinforcing its efforts to optimize the performance
capacities of its employees. Pertinent to such foundation factors are
experientially-based perceptions or beliefs employees have about the work
they perform and the condition s under which they perform their jobs. As
discussed earlier, we found no distinguishing differences in staffing, selection,
due process, and pay incentive practices across our sample of eight firms.
Thus we do not include foundation factors that depict these practices as they
are essentially controlled for by our sampling. Instead, in our
conceptualization of Workplace Foundation Factors we include employee
perceptions about meaningfulness of work, self-determination, working
conditions, and intensity of work effort.
The more or less positive the perceptions or beliefs employees have about
these factor , the more or less positively they With respect to meaningfulness and
self-determination, the psychological empowerment literature holds that
employees who find greater meaning, intrinsic reward, and importance in the
work they do (meaningfulness) and who enjoy greater control in how they
perform their assigned tasks and routines ( self-determination) will be more
satisfied with the work they do and more motivated to perform their jobs well
(Spreitzer et al ., 1997).
It follows that jobs and routines yielding greater meaningfulness and
self-determination will over time induce employees to improve their
competencies and attach greater importance to having a positive impact on their
work area’s performance Drawing on the high-involvement, high-commitment
HRM strategy and implicit contract literatures, a third factor that can be
expected to influence employees’ performance capacities are working
conditions. Employees’ commitment to organizational goals, that is, is conditioned
by employee perceptions about management’s concern for employee well-being,
which in part is manifested in working conditions. For instance, working
conditions under which employees are treated more or less fairly by
supervision and in which health, safety, and the like are given more or less
priority concern by management, are likely to be viewed more or less
favorably by employees. The more or less favorable these working conditions are
perceived to be, the more or less employees will be motivated to continually
improve their competencies and be inclined
Another foundation factor and one conceptually similar to ‘working
conditions’ is the intensity of work per formed. On the one hand, greater
intensification of work can be expected to directly lead to greater labor productivity
as a result of greater effort made by employees. Thus, employees will perceive
that they are both more competent and have a greater impact on the
performance of their work areas. On the other hand, higher levels of exhaustion,
physical pain, and tension are likely to diminish both an employee’s
satisfaction with work and motivation to continuously improve performance.
As a consequence, greater work intensity will diminish employees’
psychological states of competence and impact. Whether greater intensity has
more of a positive or negative effect on employees’ performance capacities,
therefore, requires an empirical answer. Workplace foundation factors are all
expected to have reciprocal relationships among themselves, as well as with
each of the facets underlying knowledge and skill development climates.
Because our primary focus in on identifying and understanding the complexity
of various facets of knowledge and skill development climates and for the sake of
brevity, we do not elaborate on these expected reciprocal relationships. In
estimating our model, nonetheless, we specify reciprocal cause-effect
relationships among all workplace foundation factors and between these and
the various facets underlying knowledge and skill development climates.

Performance Capacities . Adopting standard items from Sprietzer (1995),


‘Competence’ was based on questions such as “I am capable of performing
all of my various job tasks.” However, we included one negatively stated
question in this construct, “I have not mastered the skills necessary for my
job.” ‘Impact’ was based questions such as “I t is important to the success of my
work area that I do my job well.”
Knowledge and Skill Development Climates . This composite construct had
six interrelated sub-constructs. The latent variable ‘Value Learning New
Skills’ is intended to capture the degree to which employees placed
importance on learning new skills; for example, asking “Learning new job
skills is important to me.” ‘Need to Learn New Skills’ was based on several
questions about one’s perceived need for additional skill development,
including one item that was negatively stated, “I have more skills than I
need to perform my current job well.” ‘Receptivity to New Technologies’ was
based on questions about the perceived effects newer technologies had had on
working conditions, learning new skills, and promotions to higher level,
higher paying jobs. Our ‘Opportunities to Improve Skills’ construct was
designed to measure employee perceptions about a firm’s human capital
investment commitment based on how good employees’ opportunities were to
receive training and improve skills (e.g., “I have good opportunities to
improve my skills here.”) . The ‘Employment Security’ construct was based
on question s asked about one’ s expectation of long term employment and a
company’s efforts at keeping employees working full time. Lastly, our
‘Performance Feedback’ construct was based on questions about the degree to
which employees received meaningful feedback and knew how well they were per
forming regardless of the formality of any such feedback.
Workplace Foundation Factors . Under this composite construct ar e four
sub-constructs.Adopting standard items f rom Spreitzer (1995), ‘Meaningfulness’
was based on questions such as “The work I do is important to me.” and
‘Self-Determination’ was based on questions such as “I get to decide how
best to do my job.” Our ‘Working Conditions’ construct is intended to capture
respondents’ fairly general perceptions about having been treated fairly (e.g., “I
am treated fairly.”), and satisfaction with working Looking at the right hand
side of our model, the endogenous variables employed were taken directly from
Spreitzer’s (1995) construct of psychological empowerment.
That construct has been found to be highly reliable and validated as
an antecedent to measurable performance outcomes. As such it is reasonable
to conclude that had we been able to estimate the effects of employees’
psychological states of competency and impact against actual performance
measures, we would have found the expected linkage between employees’
cognitions and their work area performance. Such a conclusion is further
bolstered by Collins and Smith’s ( 2006) finding that performance was
strongly related to their inter mediate outcomes construct “knowledge exchange
and combination”, a construct much like our intermediate outcome construct
“performance capacities”.
Given that only Collins and Smith (2006) and we in the present
analysis have attempted to articulate and test the associations between these
intermediate outcomes and workplace climates, much remains to be done
theoretically and empirically towards developing these intermediate outcome
constructs that link climates to performance. From a strategic HRM
perspective, the contribution of employees to performance over time is a
product of their competencies and their motivation to optimize both their
competencies and the opportunities available to utilize those competencies. It
is this set of intermediate psychological states that lead to actual performance
outcomes. The literature would benefit, therefore, by further inquiries ref ining
the bases of these intermediate psychological states. Here we recommend
that future research develop the bases of these intermediate psychological
states of performance by combining the elements of both Spreitzer’s and
Collins and Smith’s constructs. Although both capture well employee
motivation and perceived effectiveness, Spreitzer’s construct captures best the
psychological state of competence, whereas Collins and Smith’s construct
captures best the opportunities that can be exploited by employees to have an
impact on performance. Upon looking at the left hand side of our model,
more questions are raised than answered. Because there is very little variation
in observable HRM practices across and
We find that the effective performance of channel functions by a distributor can
significantly enhance customer perceptions of relationship quality. Compared to the often-
investigated construct of interdependence structure, the impact of marketing channel function
performance in explaining variations in relationship quality is significant and substantial. Indeed,
we find it to be one of the primary drivers of relationship quality. In addition, we find that the
impact of channel function performance on relationship quality is moderated by the
interdependence structure of the distributor-customer dyad.
Marketing channel functions and services are managerially actionable variables that are
central to channel structure and coordination decisions. Our results show that distributors can
improve their relationships with organizational customers by performing their channel
functions effectively. A clear managerial implication of our study is that distributors should
focus on effectively performing channel functions, as a means of salvaging and strengthening
relationships with their customers. These efforts should be concentrated on customer
relationships where superior channel function performance has the greatest impact on
relationship quality. Based on our results, a distributor can get the greatest “bang for its
buck” by focusing on customer relationships characterized by relatively higher levels of
interdependence as well as those in which the customer is relatively dependent on the distributor
but the degree of relative dependence is low.
2.4 Conceptual framework
The framework explains the individual effects of training on performance of distributors
in the telecommunication section these is effected by a number of dependent/independent
variables as shown on the figure 1.0 below.
Figure 1.0

Financial and price setting


policies

Promotional information

Personnel

Customer satisfaction

Customer trust

Customer satisfaction