Unit III Scholarly Activity

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Impact of Training on Employees’ Job Performance:

A Case Study of Malaysian Small Medium Enterprise

Jamsari bin Atan, Santhi Raghavan

Open University of Malaysia, Kuala Lumpur, Malaysia

E-mail: [email protected], [email protected]

Nik Hasnaa Nik Mahmood University Technology Malaysia, Kuala Lumpur

E-mail: [email protected]

Abstract

The objective of this paper is to examine the impact of training on employee job

performance. The study is carried at a Malaysian small and medium enterprise (SME).

This research examines the training factor that affected the job performance of

employees of the company. The functional area which is associated with the effective

human resource management practices of the company selected for the study has been

examined comprising of training and employees’ job performance. 85 employees from

the respective production units of the company voluntarily participated in the survey

using questionnaire. Findings indicate that there is relationship between effective training

and employees’ job performance.

Keywords: Training, Job Performance, Small Medium Enterprise, Malaysia

Introduction

This study focuses on the impact of training on employee job performance. The way an

organization trains people can influence its performance. Organizations can adopt various

training practices to enhance employee job performance as well as motivate them to work

harder towards achieving the set targets. An effective human resource management practices

can be the main factor for the success of a firm (Stavrou-Costea, 2005). Influence of human

resource management and training practices on organizational performance has been a

significant area of research in past 25 years indicating positive relationship between Human

Resource Management practices and organizational performance (Qureshi et al., 2007).

Scholars and researchers were involved in exploring how training and HRM practices

affected employee job performance, and organizational performance. Qureshi et al. (2007)

and Qureshi et al. (2010) identified how HRM practices in training impacts organizational

effectiveness.

Literature Review

This research explores the training practices and their outcomes in Linaco Manufacturing (M)

Sdn Bhd, as well as the impact of human resource management (HRM) practices on

employee’s job performance of Linaco. Research on training and HRM practices has been

studied extensively among manufacturing and small & medium enterprises. These theoretical

and empirical studies have generally focused on HRM practices within western organizations.

Relatively few studies have been done about the impact of HRM practices of training on firm

performance in Asian countries (Zheng, Morrison and O’Neill, 2006). Employee training has

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been a matter of concern and attention by any business field nowadays. Training can be used

to correct the skill deficit. It is also job specific and addresses particular performance deficits

or problems. A fundamental objective of training is the elimination or improvement of

performance problems. To be successful, a training program must have clear stated and

realistic goals (David, 2010).These goals will guide the program’s content and determine the

criteria by which its effectiveness will be judged. Training can also assist in developing

human capital. Also, human resource practices can influence employee motivation by linking

performance with incentives (Huselid,1995), Zheng, Morrison and O’Neill (2006)

The Impact of Training on Employees’ Job Performance

Guest (2002) has demonstrated that the impact of HRM on job performance depends upon

response of worker towards HRM practices, so the impact will move in direction of the

perception of employees by practicing HRM. Ghebregiorgis & Karstan (2007) said that the

perception of the employees provide broader evaluation of HRM systems. He also evaluated

a positive picture of HRM practices including training strategy. Qureshi et al. (2007)

concluded that training are positively correlated with employee’s job performance. Patterson

et al. (1997) has explained that HR practices in training effects the job performance of the

employee provided appropriate skills.

Understanding of Training Effectiveness

Studies suggest that many training and development activities are implemented on blind faith

with only the hope that they will yield resist (Arthur, Bennett, Edens & Bell, 2003).

According to Broad and Newstrom (1992), seldom are training programs rigorously

evaluated to determine their effect on the behavior or job performance of participants.

Therefore, it is important to explore methods to encourage transfer of learning in order to

achieve greater training impact on human resource practices. Mayfield (2011) suggested that

training effectiveness is a good predictor of employee training. This association suggests that

when employees have been trained in a training program, the training effectiveness is likely

to be followed by job behavior (Pelham, 2009). Previous studies also suggest that

demographic variables such as age, degree held, and experience were related to training

impact in some studies (Devins, Johnson and Sutherland, 2010) The focus of previous work

has been on the relationships between training effectiveness and employees’ demographic

variables.

Training Environment Training environment includes training facilities, site layout, sound lighting, hardware

environment, classroom climate, student involvement of the soft environment. Therefore,

only training of trainers and employees and work together can create a better learning

atmosphere and environment. According to Martin (2010), training environment has an effect

on training effectiveness on human resource practices among employees.

Work Environment

Work environment includes such factors as managerial support, peer encouragement,

adequate resources, opportunities to apply learned skills, technical support, and consequences

for using training on-the-job (Burke and Hutchins, 2008). Managers can show support for

training in a variety of ways ranging from simply allowing employees to attend the training to

participating in the training itself as an instructor (Burke and Baldwin, 1999). Peer support

enhances learning transfer through the feedback, encouragement, problem-solving assistance,

supplemental information, and coaching provided to trainees (Facteau et. al., 1995).

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Methodology

Research’s hypothesis: The hypothesis for this research are as follows;-

H1: There is a relationship between training and employee job performance

H2: There is an impact of effective training practices on employee job performance.

Research Framework: The research framework for this study involved 2 main variables

consists of independent variable and dependent variable. Independent variable consists of

training and the dependent variable consists of employee job performance.

Research Design: This face-to face survey is conducted at Linaco Manufacturing (M) Sdn

Bhd on respondents from all production units. The company’s HR Management was first

consulted for their approval for the survey exercise. Quantitative data was used in this

research. A set of questionnaires were distributed with the support of the company

management to these employees. Initially the questionnaire was formulated to determine the

staff perception. Each set contains 40 questions that can be answered within 15 minutes as

part of company condition for the study approval.

Population and Sampling: The total population of production workers of Linaco

Manufacturing (M) Sdn Bhd consists of 103 workers who are working in the respective 4

sections of production units. The sections involved were Canning Section, Packaging Section,

Kernel Section and Coconut Milk Sections. From 103 workers, only 85 respondents were

selected or (82.52%) from the total production workers by using random sampling.

According to Hair and Bush (2003), target population is said to be a specified group of

people or object for which questions can be asked or observed made to develop required data

structures and information. The percentage of response rate is extremely important in a

survey because it indicates how much bias there might be in the final sample of respondents.

The lower response rate, the greater the likelihood that such biases may distort the findings

and in turn, limit the ability to generalize the findings to the population of interest. A

response rate of about 50% is generally considered adequate for survey research, 60% is

considered a good return rate, and 70% is very good (Babbie, 1995).

Data Analysis asnd Results

It can be seen from Table 1 that 43 (50.6%) of the respondents were male and 42 (49.40%)

of the respondents were female. 57 (67.10%) education level of the respondents were O-level,

20 (23.50%) were certificate holders, 4 (4.70%) were diploma holders and 4 (4.70%) of them

were degree holders. From this table, out from the 85 respondents, 24 (28.20%) of them aged

between18-25, 30 (35.30%) aged between 26-30, 9 (10.60%) aged between 31-35, 14

(16.50%) aged between 36-40, 4(4.70%) aged between 41-45, and 4(4.70%) aged above 50.

The average age of the respondent is relatively young with 63 (74.11 %) of the respondents

were below 35 years old. Table 1 also shows that 19 (22.40%) of them were employed less

than 1 year, 34 (40.00%) employed between 1-2 years, 19 ( 22.40%) employed 3-5 years, 6

(7.10%) employed between 6-10 years and 7 ( 8.20%) employed more than 10 years. It can

also be seen that there is quite high employee turnover rate as indicated by 53(62.40%) of the

respondents having served the company of less than three years despite the fact that the

company has been operating for more than ten years. As can be seen on Table 1, the

distribution of respondents’ salary. Out from the 85 respondents, 27 (31.80%) of them were

paid less than RM900 per month, 33 (38.80%) paid RM900-1249 per month, 20 (23.50%)

paid between RM1250 to RM1499 per month, and only 5 (5.90%) paid more than RM1500

per month. The survey revealed that the average salary of the respondents is relatively low

whereby 60 (70.60%) of them receive RM1,249 or less.

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Table 1 Respondents Demographic Analysis

Frequency Percent Range

Gender Male 43 50.6

Female 42 49.54

Education O-Level 57 67.1

Certificate 20 23.5 Diploma 4 4.7 Degree 4 4.7

Age 18-25 24 28.2

26-30 30 35.3 31-35 9 10.6 36-60 14 16.5 41-45 4 4.7 50 above 4 4.7

Employ period Less 1 year 19 22.4

1-2 34 40 3-5 19 22.4 6-10 6 7.1 More 10 yrs 7 8.1

Salary Less RM900 27 31.8

RM900-RM1249 33 38.8 RM1250-RM1499 20 23.5 RM1500 above 5 5.9 85 100

Reliability Test

The perception level of production operators of Linaco Manufacturing (M) Sdn Bhd. were

surveyed based on the 2 items of research questions consists of training and job performance

as the result presented on Table 2. Table 4.8 shows that Cronbach’s alpha for training

instrument is (α=.741), and acceptable for the purpose of analysis (Sekaran, 2005)

Table 2 Cronbach’s Reliability; training

Cronbach's Alpha N of Items

.741 11

Table 3 shows that Cronbach alpha for employee job performence is (α=.811), and good for

the purpose of analysis (Sekaran, 2005).

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Table 3 Cronbach’s Reliability of Job Performance

Cronbach's Alpha N of Items

.811 23

Mean Score for Training

Table 4 shows that the mean score for training is 3.2459 and the survey revealed that the

mean score for training was relatively moderate.

Table 4 Mean statistics of training

MeanT

N Valid

85

Missing 0

Mean 3.2459

Mean Score for Job Performance Level

As shows on Table 5, the mean score for job performance is 3.6784, and based on the

indicator this score is relatively moderate.

Table 5 Mean statistics job performance level

MeanJP

N Valid 85

Missing 0

Mean 3.6784

Pearson Correlation (Relationship Between HRM Practices and Job performance)

The hypothesis for this research are as follows;-

H1: There is a relationship between training and employee job performance

Pearson Correlation Statistic was used to test the relationship training and job performance.

Result of the analysis in Table 6 shows a moderate and significant correlation between

training (r=.341)) and job performance. Thus, hypothesis 1 are accepted.

Table 6: Pearson Correlation Statistic (relationship training and job performance)

Training Job Performance

Sig. (2-tailed) .085 .001

N 85 85

Training

Pearson Correlation 1 .341 **

Sig. (2-tailed) .001

N 85 85

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Job Performance

Pearson Correlation .341 **

1

Sig. (2-tailed) .001

N 85 85

The Impact of Training on Employees’ Job Performance.

Multiple regression analysis was used to examine the impact of training on employees’ job

performance. Result of the multiple regression analysis in Table 7 shows that HRM practices

contributed 24.5% to employees’ job performance. Thus, it can be concluded that effective

training lead to employees’ job performance. Therefore, hypothesis 2 is also accepted.

Table 7 Multiple regression (Impact of Training on Employees’ Job Performance)

Model R R Square Adjusted R Square Std. Error of the

Estimate

1 .495 a .245 .217 2.67999

a. Predictors Training

ANOVA Results

F statistic (8.763) as shows in Table 8 revealed a positive and significant correlation between

training on employees job performance.

Table 8: ANOVA a

Model Sum of Squares df Mean Square F Sig.

1

Regression 188.817 3 62.939 8.763 .000 b

Residual 581.771 81 7.182

Total 770.588 84

a. Dependent Variable: Performance2

b. Predictors: (Constant) Training

Coefficient Results

Table 9 shows about Beta coefficient of training. The result shows that training is the

contributor to employee’s job performance based on the perception survey of β= 0.300.

Therefore, if the company increase one unit of training, employee job performance will

increase to 0.3 unit.

Table 9: Coefficients a

Model Unstandardized Coefficients Standardized

Coefficients

t Sig.

B Std. Error Beta

1 (Constant) 11.609 7.448 1.559 .123

Training2 .348 .114 .300 3.050 .003

a. Dependent Variable: Performance2

In conclusion, the finding shows that there is a correlation training and retention strategy

with job performance. The study also shows that there is an impact of effective training on

employees’ job performance.

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Discussions

Eemployees’ Perception to HRM Practices Related to Training: The survey revealed that the

employees perceived the training as provided to them as moderate. From the survey based on

the HRM function of training, the employees on one hand expect better efforts to improve

their job performances. They are aware of the strength and weakness of the function of

Linaco’s HRM practices. It is of no doubt that the HRM practices adopted by Linaco is of a

moderate quality, which helped the company to reach where it stands now and may continue

its contribution to Linaco in future. But in the small medium enterprises (SME),

developments in different areas are taking place continually and it is no exception for human

resource management practices. With the changing world, the perceptions of the employees

are also changing. Now they look at a job from different dimensions. Across time their

demands get a diversified shape.

This perception is similiar with Maslow’s theory of the hierarchy of needs in acknowledging

different types of motivational needs within each individual. Maslow argued that some

people appear to be content with lower level needs, but only until these are satisfied; they

would then strive for the next level (Maslow, 1943). As indicated, the employees’

perceptions will change about some particular training they are getting from the company and

Maslow’s model is considerably related to the employees’ perceptions in regards to HRM

practices at Linaco. Thus, if the company failed to identify those aspects of thinking

expectations, it can be said that the company has failed to bring adequate adjustments in their

human resource management practices, it may reduce employesss satisfaction. Trainings are

considered as key factor for managing attitude of the employees and have a great influence

on the level of employee’s job performance.

The Level of Employee’s Job Performance: The success of any organization mainly depends

on the level of employee’s job performance. The firms, whose employees are performing in

its full efficiency level, are working as comparative advantages. Employees of an

organization play the key role for performing better and better. Human resources

management practice is the key tool to improve the level of employees’ job performance.

According to Caliskan (2010) competitive advantage of an organization can be achieved by

the HR practices. It is assumed that HRM practice has a significant and positive relat ion with

the performance level of employees. Organizations are improving HRM systems to ensure

optimum level of employees performance in order to achieve its profits. Datta et al. (2003)

mentioned that there is a highly positive correlation between the level of employees job

performance with HR practices and firm efficiency.

From the literature review stated in this study, researchers have identified several HR

organizing practices that considerably discuss the level of employee’s job performance. One

of them is Pfeffer (1994) and he identified that better level of performance can be achieved

through sixteen HRM-related activities. Seven human resource practices that are directly

correlated to level of performance have been identified by Delery and Doty (1996). Several

researchers have opined that better level of employee job performance can be achieved

through mixed HRM practices than those of individual practices (Arthur, 1994), (Baron and

Kerps, 1999), (Huselid, 1995) (MacDuffie, 1995). So it can be said, a useful service of those

specific practices consequences in high performance from corner to corner in all nature of

organizations. Several researchers opined that performance evaluation has a strongly positive

relationship with the level employee job performance (Becker and Huselid, 1995) and when

an employee is evaluated as excellent means he is performing strongly and when an

employee is ranked as poor rated means he is performing weakly.

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The Relationship Between Training and Job Performance: Many respondents spoke highly of

the trainings; they thought the trainings are helpful, well planned in long-term view and well

implemented. The findings showed that a majority of respondents indicated that training was

useful to improving their skills, efficiency, effectiveness and their level of knowledge:

subsequently affecting their overall performance on the job. From the survey the respondents

also considered trainings encourages them to perform better in their work fields. Result from

the surveys shows that there is a significant relationship between training and job

performance. Thus, the higher efforts of Linaco to improve the employees knowledge about

their job and related work skills, subsequently may reduce the poor employees’ job

performance of the organization.

This is relevant with the statement that was made by Saleh & Ndubisi (2006) and Aris (2007), that lack of right skills may affect the ability of the employees to deliver the expected standard of job

performance. In doing so, employees are able to learn new work concepts, refresh their skills,

improve their work attitude and boost productivity (Cole, 2002). Thus, having a workforce that is well equipped with the right skills and is well prepared will ensure that business will not lose out due to the lack of ability to compete both nationally and internationally (Tomaka, 2001). The

intention of this area is to build a pool of successors and talented employees who would be

effective and efficient in their workstations. The implication of this is that the skills/

competencies of employees need to be updated regularly to meet the new challenges facing

Linaco. To achieve this, training and development programs must be aligned with the future

goals of Linaco. This will help achieve the right focus for the training and development

efforts. It is important that Linaco provides training and development which is allied to its

strategic imperatives.

The Impact Training on Employees’ Job Performance: Yogeesvaran (2005) found that there is a serious problem in the majority of the SME firms surveyed in Malaysia and supported the notion that job performance of employees in the service sector SMEs tend to be low due to lack of right skills

(Saleh & Ndubisi, 2006) which may affect the ability of the employees to deliver the expected

standard of job performance. The study on the impact of employees’ job performance at Linaco

revealed that the employers tend to have high expectations concerning employee job performance by continuously monitoring the job performance of the employees through various performance

management activities as earlier mentioned by Dessler (2011). Thus, having the right workforce doing the right job, and well equipped with the right skills lead towards improving employees’ job

performance.

lmplications on Knowledge and Skills: Human resource practices are the primary means by

which firms can influence and shape the skills, attitudes, and behaviour of individuals to do

their work and thus achieve organizational goals (Clark, 2003). HR practices are designed to

improve the knowledge, skills, and abilities of employees; boost their motivation; minimize

or eliminate loitering on the job; and enhance the retention of valuable employees. Further, a

study by MacDuffie (1995) provides support for such arguments as they found that bundles

of HR practices were significantly related to workers’ productivity and firm financial

performance. Huselid’s (1995) approach also involved the combination of HRM practices,

combining a number of practices into ‘High Performance Works Systems’ Training

environment that includes: training facilities, site layout, sound lighting, hardware

environment, classroom climate, student involvement of the soft environment. According to

Martin (2010) training environment has an effect on training effectiveness on human resource

practices among employees. Training facilitates the updating of skills and lead to increased

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48

commitment, well–being, and sense of belonging, thus directly strengthening the

organization’s competitiveness (Acton and Golden, 2002).Training has the distinct role in the

achievement of an organizational goal by incorporating the interests of organization and the

workforce (Stone, 2002). Thus, it implies that quality and effective training implementation is

required to improve the employees’ job performance.

Implications on Employees’ Motivation: Since the average age of the respondent is relatively

young with 74.11 % of the respondents were below 35 years o ld, the HRM at Linaco must

have a better understanding on the impact of massive size of “Gen Y” in Linaco. Since they

are sharing power in the production unit, the HRM of Linaco need to reconsider their impact

for the long term of company’s business. Effective human resource management is critical for

every firm’s success. Peters and Waterman (1982) believe that management is the difference

between successful and unsuccessful business organizations, thus what the HR Manager

needs to understand about Gen Y besides the well-known fact is that they are the most

technically literate and technologically savvy generation.

Gen-Y, who are seen as confident, independent, ambitious and achievement-oriented, when

they enter the workforce, they have high expectations of their employers, and seek out new

challenges. This generation is a team-player, family-centric and willing to trade high pay for

fewer billable hours, flexible schedules and a better work-life balance. In reaching out to Gen

Y, the HR Manager must know how to connect with them and understand that this generation

has different ways of their pursuing value. The HR manager need to convince the Top

Management of Linaco about the requirement to have a better understanding of the Gen Y

and plan out their training strategy, job scope and human resource policies differently.

Conclusion

Based on the above discussion and implications it can be concluded that effective training

lead to improving employees’ job performance. The rationale of this study is to examine the

relationship between the HRM practices of training in the production units of Linaco. The

hypothesis is accepted. The HRM practices and employee job performance has positive and

significant relationship in this study. These results are in accordance with the scholars’

previous study. The regression results show that HRM practices of training are significant.

Employees are the key players for the organization and SMEs’ development. This study can

facilitate Linaco as well as others small medium enterprises(SMEs) to appropriately describe

that HRM practices can generate higher job performance of the employees. The adoption of

this practice has lead to higher productivity and increased the employees’ morale. There is no

doubt that there have been major changes in the world of work and those who work in it.

Therefore, the functions of training in HRM practices is becoming more important and is

growing rapidly and no doubt the company should carefully consider as a matter of priority.

Gen Y plays an important role in the future development of Linaco. Because of more work

experience and better education, Gen Y workers are more mobile, and move easily from one

employer to another if they are unhappy with the work. To retain these workers, HR

managers with the collaboration from all of the head of the departments need to do a better

job in training and career development opportunities. To mitigate the challenges faced by the

small medium enterprises (SMEs) in Malaysia, it can be concluded that the SMEs should

seriously consider expanding and enforcing the use of sound training in human resource

management practices across all its departments as numerous benefits accrue to the company,

the employees and the larger community it is mandated to service.

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49

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