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Employee productivity and organizational performance: A theoretical perspective

  • Baum Tenpers Research
Employee productivity and organizational performance: A theoretical perspective
Victoria Kenny S
I Introduction
Employee’s performance depends on various factors but the most important factor is training,
which enhances the capabilities of employees (Raja, Furqan & Khan, 2011). Employees who have
more on the job experience tends to perform better because there is an increase in the both their
skills and competencies resulting from more on the job experience (Fakhar & Khan, 2008).
Training also has impact on the return on investment since the organizational performance depends
on employee performance because human resource capital of organization plays an important role
in the growth and development of such organization. So to improve the organizational performance
and the employee performance, training is given to the employee of the organization, whereas,
employees’ development can be defined as a process where the employees with the support of the
employer undergo various training programs to enhance their skills and acquire updated
knowledge and learning (Noe, Hollenbeck, Gerhart & Wright 2004). Consequently, employee
development is a joint initiative of the employee as well as the employer to upgrade the existing
skills and knowledge of the employee, thus competency is enriched by training and development.
On the other hand, organizational performance refers to those attitudes' that have been assessed or
measured as to their contribution to organizational goals (Cook & Hunsaker, 2001). The behaviour
or attitude indicated the approach and skills of the management, especially line management that
helps them to use the resources successfully and professionally with competency. However, the
labour union can act as the bridge between the employees and the management of the organization
by negotiating for better welfare packages for the employees, which include their periodic training,
promotion and development. Existing labour literature has shown that employees tend to put in
their best, work effectively and efficiently if the work environment is conducive and the
management and corporate executives demonstrate the flexibility that they often demand of their
employees (Fernández, 2003). This is based on the contention that the employment challenge does
not only arise due to low levels of education, but also due to a mismatch between skills produced
and skills demanded in the labour market. The challenges associated with the changing nature of
work and the workplace environment is as real for the campus as elsewhere. Rapid change requires
a skilled and knowledgeable workforce with employees who are adaptive, flexible, and focused
on the future. Hence, to address this challenge requires an ‘active and aggressive' intervention on
both sides of the labour market (Webster, et al., 2008).
Training and Development is an important aspect of Human Resource Management. It is important
for organization to get skilled and capable employees for better performance, and employees will
be competent when they have the knowledge and skill of doing the task. Training and Development
would provide opportunities to the employees to make a better career life and get better position
in organization. In doing so, organizations efficiency would be increased. On the other hand,
employees are the resources and assets of an organization if they are skilled and trained would
perform better than those who are unskilled and untrained.
Despite the importance of training and manpower development in employee productivity and
organizational performance, training programs are not sufficiently supported by organizations in
Nigeria (Obi-Anike &Ekwe, 2014). These organizations consider the money they will spend on
their training programs as waste rather than investment. They fail to foresee the desirability of
continuous training and development of their employees in order to promote the efficiency and
effectiveness of their organizations. Those that attempt to conduct trainings for their employees do
so in an ad- hoc and haphazard manner, and as such, training in those organizations is more or less
unplanned and unsystematic. Although there are volume of empirical studies on the effect of
training and development on employee’s productivity and organizational performance, the existing
evidence suggests that research in this area is promising. In Nigeria however, majority of these
studies were conducted outside the educational sector. Meanwhile, most of the challenges that had
threatened the standard of teaching and learning in educational sector in Nigeria had been squarely
blamed on inadequate manpower. In the light of these, it is essential to investigate why and how
labour union can foster systematic and periodic training and development exercise for employees
in an educational sector?
II Literature Review
Conceptual Framework
Employee’s Training and Development
Training and development are complementary parts of the same process. They are interlinked and
interdependent, rather than sequential and hierarchical. Training and development is very crucial
to the employees, the organization and their effectiveness (Devi & Shaik, 2012). Staff training and
development can occur simultaneously or complementary, but the two do not necessarily have
direct relations to each other (Comma, 2008). Therefore, training and development activities are
important elements of the human resource management function of an organization. However,
training and development refers to the practice of providing training, workshops, coaching,
mentoring, or other learning opportunities to employees to inspire, challenge, and motivate them
to perform the functions of their position to the best of their ability and within standards set by
local, state, Federal and licensing organization guidelines.
Trade Union
Jones and George (2003) asserted that trade unions exist to represent workers’ interest in
organizations, given the fact that managers have more powers than the rank and file workers and
those organizations have multiple stakeholders. There is always the likelihood that management
might take steps that benefit one set of stakeholders such as shareholders, while hurting another
such as employees. Thus, employees unionize for a number of specific reasons, ranging from the
need for job security or safe work environment. They may also be dissatisfied with some
management policies, while finding it difficult to communicate their concerns to their bosses. The
doctrine of unionism has been in existence from time immemorial.
Organizational performance
According to Farlex (2012), it is the actual output/results of an organisation obtained when
measured against its intended outputs (goals and objectives). Richard et al. (2009) propose that
organizational performance encompasses three specific areas of organizations’ outcomes financial
performance (profits, return on assets, return on investment, etc.); product market performance
(sales, market share, etc.); and shareholder return performance (total shareholder return, economic
value added, etc.), which are the three primary outcomes of corporate organisations being
analyzed. However, production capacity performance is another factor of analysis for
Unions role in Employee’s Training
Some empirical literature outlines the role of unions for training of employees. According to some
researches unions are also taking interest in workers training, education and awareness either
pursuing government or employers to arrange training or arranging training programs themselves
to build their skill and enhance the earning capacity of workers (Khan, 2010). Therefore Aidt and
Tzannatos (2001) wrote that unionized workers tend to receive more training than their non-
unionized counterparts, especially company-related training. Similarly a study of Boheim and
Booth (2004) showed positive relations of union recognition with training in private sector. Altman
(2001) develops a theoretical argument for the existence of a positive union effect by building on
the concept of X-inefficiency.
Theoretical Review
Theories on Motivation of Transfer
Motivation to transfer was hypothesized in Holton’s et al (2005) model to connect learning with
individual performance change. Motivation to transfer can be described as trainees’ desire to use
the knowledge and skills mastered in the training program on the job. Behavioral change will likely
occur for trainees who learn the material presented in training and desire to apply that new
knowledge or skills to work activities. To support the degree of transfer of training desired, it is
important to understand why individuals choose to apply their knowledge, skills, and attitudes in
their workplace. Several theories of human behavior help us understand and predict behaviors that
contribute to performance at work, as well as clarify the motivation to transfer factor in Holton’s
model. They include the theories of expectancy, equity, and goal setting.
Expectancy Theory
Vroom’s original presentation of expectancy theory placed it in the mainstream of contemporary
motivation theory (Moorhead & Griffin, 1992). Vroom (1964) defined expectancy as “a
momentary belief concerning the likelihood that a particular act will precede a particular
outcome”. His formulation suggested that job performance (P) is the result of the interaction of
two components, force (F) and ability (A), with ability representing the potential for performing
some task. The force to perform an act is the algebraic sum of the products of the valences of all
outcomes (E) and the valence or rewards of those outcomes (V). In equation form, the theory reads:
P= f(F*A) (cited in Kilgore, 1997). Vroom’s model emphasizes an individual’s capacity or ability,
rather than willingness, to perform a specific task. Since it was first introduced, the model has been
refined and extended. An exception is the version of expectancy theory presented by Porter and
Lawler (1968, as cited in Moorhead & Griffin, 1992), which takes a novel view of the relationship
between employee satisfaction and performance. Although the conventional wisdom was that
satisfaction leads to performance, Porter and Lawler argued the reverse: if rewards are adequate,
high levels of performance may lead to satisfaction. The Porter-Lawler extension includes abilities,
traits, and role perceptions (how well the individual understands his or her job). At the beginning
of the motivation cycle, effort is a function of the value of the potential reward for the employee
(its valence) and the perceived effort-reward probability expectancy).
Empirical Review
Ojokuku and Adegbite (2014) examined the impact of capacity building on staff performance in
selected organisations in Nigeria. The study employed descriptive and inferential statistical
technique of data sourced through questionnaire. The study found that there is a strong positive
relationship between capacity building and staff performance in an organisation.
Malaolu and Ogbuabor (2013) investigated the effects of training and manpower development on
employees’ productivity and organizational performance using First Bank of Nigeria Plc. as a case
study. The study applied structured questionnaires to a sample size of 75 drawn by simple random
sampling. The data generated was analyzed using descriptive statistics. The findings of the study
show that training and manpower development has significantly enhanced employee efficiency
and job productivity in the bank. Also, Gunu, Oni, Tsado and Ajayi (2013) examine whether
employees’ training and development enhances work efficiency in the banking industry. Primary
data were used for the study were generated through the use of questionnaires. The study employed
a sample of 395 respondents from a population of 35,386 from the five banks used as case study.
Simple random technique was used to select the respondents and data collected were analyzed
using descriptive statistics, and Pearson’s moment correlation. Multiple regressions were
employed to test the hypothesis. They found evidence that organizational commitment to training
and development, frequency of training and development, and reward for best performance
significantly improve organizational performance in the Nigeria banking sector.
AL Damoe et al. (2012) asserted in their study that highly skillful and knowledgeable staff is very
necessary for the improvement of the organization. Training increases the productivity of
employee, improves the services of the employee and brings the positive change in the
organization. Training gives the outcome in the shape of tangible and intangible. Similarly, Raja,
Furqan and Muhammad (2011) assess the impact of training and development on organizational
performance using primarily sourced data from 100 employees of different organizations in
Pakistan. The study employed descriptive statistics and found that training are regarded as costly
but the advantages of employee training are much more than its disadvantages since training and
development has positive effect on organizational performance.
Anyanwu (2002) studied the effects of training on employee productivity. The paper provides a
review of the current evidence of such a relationship and offers suggestions for further
investigation. They reviewed extensive the literature in terms of research findings from studies
that had attempted measuring and understood the impact that training have on employee
productivity across various sectors. The focal point of their review was on training practices and
employee productivity and their relationship. The outcome of their findings varied. While some
studies reported a positive association between training and employee productivity, some reported
negative and some no association whatsoever. Also, Rastogi (2000) examined the role of training
and development on workers’ productivity in both public and private organizations in Nigeria. The
study also pointed out the problems of human resource management and personal manager. The
study found that training and development is a long term and very sensitive function of an
Overall, most of these empirical results clearly indicated the importance of people management
practices in predicting company performance. They suggest that, if managers wish to influence the
performance of their companies, the most important area they should emphasize is the
management of people.
Gap in Literature
Even though there are volume of empirical studies on the effect of training and development on
employee’s productivity and organizational performance, the existing evidence suggests that
research in this area is promising. In Nigeria however, majority of these studies were conducted
outside the educational sector and without controlling for the effect of trade union. Meanwhile,
most of the challenges that had threatened the standard of teaching and learning in educational
sector in Nigeria had been squarely blamed on inadequate manpower and incessant labour strike.
This study is therefore motivated by the need to assess the effect of union induced manpower
training and development on organizational performance in a tertiary institution in Nigeria. This
study will also add to available literature on the subject matter with unique reference to educational
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Purpose The threshold regression framework is used to examine the effect of foreign direct investment on growth in Sub-Saharan Africa (SSA). The growth literature is awash with divergent evidence on the role of foreign direct investment (FDI) on economic growth. Although the FDI–growth nexus has been studied in diverse ways, very few studies have examined the relationship within the framework of threshold analysis. Furthermore, even where this framework has been adopted, none of the previous studies has comprehensively examined the FDI–growth nexus in the broader SSA. In this paper, within the standard panel and threshold regression framework, the problem of determining the growth impact of FDI is revisited. Design/methodology/approach Six variables are used as thresholds – inflation, initial income, population growth, trade openness, financial market development and human capital, and the analysis is based on a large panel data set that comprises 45 SSA countries for the years 1985–2013. Findings The results of this study show that the direct impact of FDI on growth is largely ambiguous and inconsistent. However, under the threshold analysis, it is evident that FDI accelerates economic growth when SSA countries have achieved certain threshold levels of inflation, population growth and financial markets development. This evidence is largely invariant qualitatively and is robust to different empirical specifications. FDI enhances growth in SSA when inflation and private sector credit are below their threshold levels while human capital and population growth are above their threshold levels. Originality/value The contribution of this paper is twofold. First, the paper streamlines the threshold analysis of FDI–growth nexus to focus on countries in SSA – previous studies on FDI-growth nexus in SSA are country-specific and time series–based (see Tshepo, 2014; Raheem and Oyınlola, 2013 and Bende-Nabende, 2002). This paper provides a panel analysis and considers a broader set of up to 45 SSA countries. Such a broad set of SSA countries had never been considered in the literature. Second, the paper expands on available threshold variables to include two new important macroeconomic variables, population growth and inflation which, though are important absorptive capacities but, until now, had not been used as thresholds in the FDI–growth literature. The rationale for including these variables as thresholds stems from the evidence of an empirical relationship between population growth and economic growth, see Darrat and Al-Yousif (1999), and between inflation and economic growth, see Kremer et al. (2013).
In this paper, I test the long-run monetary model of exchange rates determination for a collection of 22 Sub-Saharan African countries. My approach is in two phases. First, I perform a country-by-country analysis. Results obtained fail to lend considerable support for the model in most countries analysed. Following this failure, I resort to the second phase and employ panel techniques to test the validity of the monetary model. Interestingly, and in sharp contrast with the country-by-country analysis, I find some convincing partial support for the model, which suggests that relative money supply and relative real output play significant roles in exchange rates determination in Sub-Saharan Africa. The results yield cointegrating coefficients with correct signs and significance as predicted by the theoretical model and are generally robust to an array of estimation techniques, but the estimated elasticity of relative money supply is mostly less than unity – which explains why the support is partial.
In this paper, we draw on the Hansen (1999) threshold regression model to examine the empirical links between leverage and firm performance by means of a new threshold variable, firm size. We ask whether there exists an optimal firm size for which leverage is not negatively related to firm performance. Accordingly, with a panel data of 101 listed firms in Nigeria between 2003 and 2007, we explore whether the ultimate effect of leverage on firm performance is contingent on firm size; that is, whether the type of impact that leverage has on the performance of a firm is dependent on the size of the firm. Our results show that the negative effect of leverage on firm performance is most eminent and significant for small-sized firms and that the evidence of a negative effect diminishes as a firm grows, eventually vanishing when firm size exceeds its estimated threshold level. We find that this result continues to hold, irrespective of the debt ratios utilized. In line with earlier studies, our results show that the effect of leverage on Tobin’s Q is positive for Nigeria’s listed firms. However, our new finding is the evidence that the strength of the positive relationship depends on the size of the firm and is mostly higher for small-sized firms.
The matter of human resources activities have been commonly used to observe organizational performance. One of the distinctive features of HRM is that better performance is achieved through the people in the organization. In recent years significant remarks have been recorded in identifying the Human Resources Management (HRM) – performance relationship. The relationship between HRM practices and organizational performance has been well documented by the previous studies. However, authors have called for the interrogation of the mediating role of HRM Outcomes such as employee retention in the relationship between HRM practices and organizational performance. Thus, the major objective of this study is to investigate the mediating effect of HRM Outcomes (employee retention) on the relationship between HRM practices and organizational performance. Based on the evidence derived from the literature, the paper concludes that employee retention is likely to mediate in the relationship between HRM practices and organizational performance. Keywords: Human Resources management, employee retention, Human Resources management practices, organizational performance