Role of training & development on employee retention and

organizational commitment in the banking sector of Pakistan

Muhammad Aleem a, Zulfiqar Ahmad Bowra b
a Hailey College of Commerce, University of the Punjab, Lahore, Pakistan
Email; aleem12884@yahoo.com
b Hailey College of Commerce, University of the Punjab, Lahore, Pakistan
Email; zulfiqar.hcc@pu.edu.pk
1.ABSTRACT
The finding of the study clearly indicates that training & developments have
significant affiliation and effect on employee retention and commitment. The
training & development play a very vital role in employee career growth,
compensation, skills enhancement and capacity building to provide quality
services to the clients to achieve organizational objectives.
.2 Introduction
Employee Retention is a mixture of different procedures, arrangement and
policies which can retain the staff for a longer period . It is helpful to improve
competitive advantages and increased the intellectual capabilities of the
organization by reducing unnecessary expenditures on staffing and training. The
retention of employees is the greatest challenge for the 21st century which should
be addressed properly . In the developing countries, lower retention level is
common due to many pull and push factors , thus there is a need to focus on
retention practices in these countries.
The issue regarding retention of staff is also faced by Pakistan being a developing
country . The retention of staff is helpful for the organization in many ways i. In
the current era, every organization is pugnacious stiff to design such type of
appropriate strategy that is helpful to reduce turnover and increase retention rate.
Training & development has been greeted as a fundamental organizational
strategy to influence human capital growth and employee retention .
Human capital includes imperceptible resource time, efforts and ability that staff
invests for the success of the organization. 4 M’s in the organization which are
very important for the organization i. Training whether mentally, intellectually,
socially, physically are very important to facilitate the process to increase
productivity as well as the development of staff in any organization. Training &
development is a continuous process and take place in the organization on or off
the job and increase the productivity and quality services to the clients.
Training & development is very important and crucial factors to retain the
employees in the organization for the long term. When an employee is leaving the
organization, the knowledge gap is created. Moreover, the organization also faces
the issue regarding the reduction in productivity of the organization . Thus it is in
the best interest of the organization to analyze the situation why employees are
leaving the organization.
Training plays a very important role to increase employee loyalty and commitment
towards the organization because it is helpful for career growth. There is a dire
need for the organization to train its employees to enhance productivity and
efficiency. Thus the current study explores the intricacies of training &
development of the staff working under fervent competition in the banking sector
for staff retention to compete in the modern era. The major objective of the study
is to explore the training practices and their role in employee retention and
organizational commitment in the banking sector of Pakistan.
.3 Literature Review
Some years ago, many organizations were not interested to invest in the training
due to involvement of high cost but due to recent competitive development, the
alternative job opportunities are available in the market and that is the reason the
organization focusing the need of training in the current era . The retention of
staff is better than the hiring of staff in the organization because it is the most
appropriate strategy to encourage all employees to work in the organization for
the long term .
It is a major loss for any organization when trained employees leave the
organization and it also affects the loyalty and commitment of other staff.
.4 Training & Development
Training & development is one of the most important retention strategies and it is
very useful for companies working in the modern era . The continuous training
programs in the firms give a message to the staff that the organization is giving
weightage to them for increase their skills which ultimately enhances
commitment and retention level toward the current organization . Review of
Economics and Development Studies, Vol. 6 2020, 639-650 and enhancement of
employee’s skills which have a significant impact on employee retention .
The suitable training practices increase the retention of staff because it
strengthens them.
H1: Training & development has a significant role on employee retention in the
banking sector of Training & development is one of the major factors effecting
organizational commitment and there is a strong association between these
variables . The training practices of the organization create a good image and
repute of the firms to fascinate the preeminent applicants to join it . When the
organization is investing in the employee in the shape of training, it gives a
message to the staff that the organization is committed to enhancing employee
skills for competition. The following hypothesis is developed to find out the role of
training & development.
5. Methodology
managers and managerial level employees working in the banking sector of
Pakistan. The data was collected from the major eight banks of Pakistan including
foreign, Islamic, private and public sector. 24 interviews were carried out form the
HR managers through purposive sampling techniques by selecting three managers
from each category of the bank. The quantitative data was collected with the help
of adapted questionnaires by using multistage sampling techniques.
The Cronbach alpha value of the questionnaire was more than 0.70 which
indicated that the instrument was reliable for data collection.
6. Findings of the study
Qualitative analysis
The question was asked from the respondents whether the bank is making an
investment in the shape of training & development and what is its role for
retention and commitment of staff in banks. « After getting new skills and training,
the employee feels motivated because he considers that the management has
trusted him to enhance his skills to increase his performance. Due to training his
commitment and loyalty also increase because they feel that the bank gives them
a priority by giving them training». «The bank is spending a lot of money on
employee training.
The banks also ensured that in case of leaving the employee he will bear the
training expenditures. The training plays a very important role to increase
employee loyalty, satisfaction, motivation and commitment because training has a
direct link with the monetary benefits in terms of promotion and career growth.
The manager of the foreign bank stated their bank is giving due importance to the
training to enhance employee commitment and retention.»The training &
development facilities are helpful to provide guidelines, policies, product
knowledge, grooming, rules & regulation. The following figure 1 indicates the
factors which have a direct and indirect effect to increase the retention level of
employees in the banking sector of Pakistan.
Figure 1: Role of training & development .If an employee has poor knowledge
about products and services then it is very difficult for him to satisfy and retain
the customer with the bank for a long time.
Retention
Retention 1 . There is a direct association between these variables which means
that change in training will effect directly on employee retention.
Regression Analysis The following table provides the results of the regression
equation.
The P-value is significant at less than 0.01 which clearly indicates that training &
development has a significant role to increase employee retention and we accept
the alternative hypothesis.
7. Discussion
In the banking sector of Pakistan, the training & development practices are the
regular exercise to enhance employee knowledge, skills and experiences.
However, there is a need of proper assessment before arranging training programs
instead to repeat the training programs again and again. The staff feels motivated,
committed and secured when they get training on the expenses of the banks
which give a clear indication of their importance for the bank, which ultimately
has a significant effect on their retention and commitment.
8. Implication
Training & development practices have a substantive effect and association on
commitment and employee retention, thus there is a dire need to invest in the
training to increase commitment and retention in the banking sector of Pakistan.
The foreign banks decide on the basis of performance appraisal regarding training
which should be adopted to other banks. The survey should also be conducted
after the training whether it improves the employees’ skills and capabilities and if
there are no changes then there is a need to revise the training schedule as per
proper need assessment.
9. Conclusions
It is concluded from the above discussion the human capital is one of the most
important .Review of Economics and Development Studies, Vol. Training develops
a feeling of obligation in the employees and reciprocally employees make
committed to the organization. Due to training, the staff feels that the
organization has trust and supports them which decrease employee turnover
intention. The training is an investment that ultimately provides the return to the
organization.
10. Future Direction
job security, leadership, working environment, compensation etc. should also be
considered to identify its role on retention and commitment. The demographical
variables are also important in commitment and retention which have been
ignored in the current study.