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