The Impact of On-the-Job Trainings (Outsourcing) on Employee Performance at Maskan Bank (the Housing Bank)

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International Journal of Advanced Biotechnology and Research (IJBR) ISSN 0976-2612, Online ISSN 2278–599X, Vol-7, Special Issue3-April, 2016, pp1382-1389 http://www.bipublication.com

Case Report

The Impact of On-the-Job Trainings (Outsourcing) on Employee

Performance at Maskan Bank (the Housing Bank)

Batoul Faghiharam1,BaharehTahvildari2

and Reza Ali Tarkhan3

1

Assistant Professor, Department of Educational Administration, Islamic Azad University, Islamshahr Branch,

Tehran,Iran(*faghiharam1388@gmail.com) 2

Postgraduate Student in Educational Management, Islamic Azad University Islamshahr Branch, Corresponding Author: btahvildari5@gmail.com

3

PhD Student in Curriculum,

Faculty of Psychology and Education Tehran University, Iran

ABSTRACT

Education outsourcing is defined as the continuous transfer of management and execution of one of more educational processes to an external service provider. Accordingly, the outsourcing of educational activities allows organizations to focus on their internal activities more. In addition, due to rapid changes in technology, many human resource sectors lack internal sources and enough skills to adapt to these changes continuously. Therefore, using education outsourcing can ensure that employees stay up-to-date. The aim of this study was to investigate the impact of on-the-job trainings (outsourcing) on employee performance at Bank Maskan (the Housing Bank). This quantitative study is an applied-descriptive survey aimed at identifying differences. The statistical population includes all the employees working at the central headquarters of Bank Maskan. The simple random sampling method and the Morgan table were used to select 175 subjects as the sample. They filled out a researcher-made questionnaire which was based on Ashridge model (1986) to measure five components such as application, innovation, skill, knowledge and attitude. The content validity and reliability (78%) of the questionnaire were acceptable. In this study, statistical tests like the univariatet-test and paired two-sample t-test were conducted to analyze data. The results indicated that outsourced trainings had a desirable impact on employee performance. Based on the outsourced trainings, it was also indicated that employees had very acceptable performances in all components, except for application.

Keywords: Outsourcing, Ashridge Model, Performance, Headquarters of Bank Maskan

INTRODUCTION

One of the very obvious variations in management efforts in the world is the attention and emphasis given to the education and development of employees by organizations. As known, the management is responsible to provide employees with necessary training and motivation to learn how to do the job in running the affairs in an organization. The management should also explain the executive operations to them (Abtahi, 2004, p. 132). Research and development need to educate qualified and

competent human resource. In fact,

comprehensive development is not possible

without having educated and civilized

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The Impact of On-the-Job Trainings(Outsourcing) on Employee Performance at MaskanBank (the Housing Bank)

one of the most important measures which can be taken to revive and improvehuman resource education. Known as a continuous and structured process, on-the-job training can be used in different areas (Seyf, 2007). It is worth mentioning that increasing the efficiency of organizations is subject to increasing human resource efficiency which depends on education, development of knowledge and skill and creation of appropriate behavior to work successfully. However, purposeful, continuous and profound trainings can increase efficiency.

Such trainings should be planned and

implemented by experienced experts, academics and instructors. These trainings can improve human resources of an organization along with developments in science and technology and influence improvements in the quantity and quality of their jobs. Therefore, the necessity of continuous, purposeful and planned trainings should be mainly taken into account in management along with developments in science and technology (Iran Nejad, 2013). Basically, on-the-job trainings can serve as the best solution to compensate for all the deficiencies. Thus, previous experiences indicate that it is inevitable to change the professional paths of jobs and the ways of using on-the-job trainings. Paying attention to educating human resource development along with these changes is merely a bridge which can lead us from today’s world towards the changing world of tomorrow (Abtahi, 2004, p. 121).

Problem Statement

The majority of management and educational planning experts agree that the key to the balance between implementation methods in organizations and meta-organizational changes, developments and innovations is to use efficient mechanisms for on-the-job training. Therefore, few organizations or institutions do not have a special sector named on-the-job training nowadays (FathiVajargah, 2013).Jan F. May defines on-the-job training as the continuous and

systematic improvement in employees’

knowledge, skills and behaviors which help them and their organization with welfare. Therefore, the aim of on-the-job training is to

create more production power and increase the efficiency of the current job in order to acquire better qualifications for higher positions (Abtahi, 2014).Peters (1997) states that on-the-job trainings include those educations which are meant to improve employeeperformance and increase organizational efficiency as a result.

To Wellington, the human resource

empowerment in organizations through the implementation of on-the-job training courses for employees is done by a sector of executive organizations which prepare their employees for activities and train them to accept different training responsibilities (NekooyMoghadam and Mir Rezaei, 2014). However, statistics indicate that although many manufacturing and service organizations pay attention to this important fact, they have not dealt with it correctly. Therefore, not only have they lost their resources and opportunities, but also they have encountered a lack of motivation in human resource. Since human resource is the most important capital which an organization has to achieve its goals, organizations have to create different structures and provide conditions to make the most of extensive facilities existing externally, i.e. outsourcing, in order to preserve this capital and adapt to the sudden growth and development of sciences. This issue is becoming more extensive every day (Lotfiet al., 2009). Generally, outsourcing is defined as the practice of handing over the minor activities of an organization to external contractors (Majewsky, 2003). Shaw and Fair believe that outsourcing is a form of contracting activity which has already been implemented in an organization, and they have now been handed over to others (Shaw S., 1997; quoted by Pour Sadegh, 2008).Van Mieghem (1999; quoted by Jamshidian, 2008) defined outsourcing as the practice of handing over the management of a process or activity

from internal units to an external

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implementation of one or more educational processes to an external service provider. Cushing (2008) believes that outsourcing occurs when an organization signs a contract with another organization to provide services. In this process, a job, which is usually done inside an organization, is handed over to an external service provider. However, it should be noted that outsourcing is different from cooperation or mutual investment in which sources are provided unilaterally by a provider for a user (Belcourt, 2014).

The researchers of human resource management stated that the outsourcing of educational activities would allow organizations to focus on the internal activities in an organization as well as the fact that many human resource factors lack internal sources and enough skills to continuously adapt to the rapid changes in

technology. Therefore, using education

outsourcing can ensure that employees stay up-to-date (Walther, Schweri and Wolter, 2014). Nowadays almost all the organizations perform outsourcing, a trend which is still growing. If organizations need experts and cannot hire them or train their own employees properly, outsourcing can solve the problem. In other words, many managers think of outsourcing as a proper solution. They have realized that they should pay attention to the correct training of their employees in order to stay in competition and improve employee performance in global markets (Jacob, Walker, 2003; quoted by

Ghahermani, 2012). For instance, many

American and European large organizations have handed over the training of their employees to universities and educational institutions. Therefore, educational activities have been greatly outsourced along with the internal development of educational infrastructures (Guini, Brian; 2012). In addition, reviewing the literature indicates that there are three main reasons for the outsourcing of human resource activities: cost, expertise and capacity.

Cost

One of the main reasons for the outsourcing of human resource activities is to reduce the costs. With the development of technology, many companies seek to use the facilities of large

educational centers to increase their employees’ learning and decrease the costs.

Expertise

Many organizations lack educational experts to adapt to the rapid changes of technology. Outsourcing increases the accessibility of an organization to a wide range of experts.

Capacity

Education outsourcing enables an organization to increase its internal capacity in response to the rapid changes of the surrounding world (Simon and Gibson, 2008; quoted by Belcourt, 2014).According to Campbell (2014), some of the education outsourcing methods are as follows:

1.Utilizing external experts’ knowledge:

sometimes, an organization encounters

employees who are not knowledgeable enough to do their specialized tasks. In other cases, an organization may have to need a special kind of educations. In both cases, inviting external experts can meet the need. The speed of acquiring the necessary skill, saving money and reducing the likelihood of the presence of other service providers as rivals are the most important features of this approach.

2.Cooperation with universities: identifying the academic staff or collegiate experts and exploiting their knowledge to resolve the scientific problems of an organization are the instances of cooperation. Some of the most important features of this approach can be stated as obtaining skills, creating expertise and fixing scientific gaps in organizations.

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enough to identify good providers of educational services, negotiate with them well and evaluate them appropriately. In addition, managers should be able to identify the best methods of education outsourcing. Cushing (2015) states that education outsourcing is significantly in favor of managers because it lets them find appropriate experts and decrease the costs. The theoretical foundation of the current study is about on-the-job trainings based on the structural hypotheses of Ashridge model (1986; quoted by FathiVajargah, 2013) with an emphasis on the effectiveness of trainings in five dimensions including application, innovation, skill, knowledge and attitude among employees after the implementation of trainings. Ashridge believed that on-the-job trainings should at least make some changes in the five abovementioned components; otherwise, the efficiency of provided trainings would not be confirmed. The applicability of on-the-job trainings refers to an emphasis on the utilization of trained methods and techniques in the implementation of tasks assigned to employees (Peters, 1997; quoted by Poursadegh, 2008). The continuous and comprehensive improvement and innovation emphasize the regular exploration of new

methods and responses to the assigned tasks, and the organizational pressures and changes

emphasize innovation (Chaychi, 2010).

Moreover, skill is a capability which should obtain results at a certain reliance and with minimum energy or time. On-the-job trainings should play efficient roles in the improvement and enhancement of specialized skills of the jobs undertaken by employees (FathiVajargah, 2013). Knowledge is a structured component meant for the production and organization of findings on a specialized profession in the form of testable explanations and predictions. Some of the important features of on-the-job trainings include improving employees’ knowledge of the professional area (FathiVajargah, 2013). Attitude means a combination of beliefs and emotions which make individuals ready to accept a job or professional tasks beforehand so that they can look at activities from a positive or negative perspective. In fact, attitudes direct the future actions or behaviors of employees. Some of the important components which can be expected from on-the-job trainings include changes in the positive attitudes towards the professional area and tasks assigned to human resources.

Figure 1.The Dimensions of On-the-Job Training Based on Ashridge Model (1986; quoted by FathiVajargah, 2013)

Accordingly, the aim of this study is to investigate employee performance at the headquarters of Bank Maskan after providing on-the-job trainings in the outsourced educations sectors (implemented by the private sector) with respect to the five components of the Ashridge model. According to the above model, this study

attempts to investigate the changes and enhancements in employees’ professional performances and behaviors. Therefore, this study was conducted to answer two main

questions including the dimensions of

Ashridgemodel:According to the dimensions of

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performances at a desirable level after providing them with on-the-job trainings implemented by the sectors outside the organization?According to the Ashridge model, are there any significant differences between employees’ performances before and after the implementation of on-the-job trainings?

Research Methodology

This quantitative study is an applied-descriptive survey. In other words, the researcher did not make any changes in the current conditions. However, the changes had already been made. In fact, the researcher only measures and compares them in order to find out the differences. This study is a survey because a questionnaire was used to collect data. The statistical population include all the employees

working at the headquarters of Bank

Maskan(320 subjects; 210 mean and 110 women). The simple random sampling method

the Morgan table were used to select 175 subjects as the sample (110 men and 65 women). They filled out a researcher-made questionnaire based on the Ashridge model in order to evaluate the impact of on-the-job trainings (outsourced) on the employee

performance at Bank Maskan.On-the-job

training experts were asked to evaluate the validity of the questionnaire. They resolved the ambiguities and confirmed the validity. Moreover, Cronbach’s alpha was calculated (78%) to evaluate the reliability of the questionnaire, which was also confirmed. Then the univariatet-test was conducted to investigate the impact of on-the-job trainings (outsourced) on employee performance. Finally, the paired two-sample t-test was carried out to compare employee performances on each of the components.

Findings

Descriptive Statistics

Table 2.Descriptive Statistics of Research Variables Pertaining to On-the-Job Trainings

Variables Min Max Mean SD Skewness Kurtosis

Application 0.00 5.00 4.4814 1.54781 -.487 .042

Innovation 0.42 4.58 3.1417 1.32547 -.514 .351

Skill 0.08 4.92 2.5414 1.95782 -.521 .394

Knowledge 0.29 4.71 3.0158 1.34578 -.639 .4178

Attitude 0.00 5.00 3.0070 1.54217 -1.219 1.392

The univariatet-test and paired two-sample t-test were conducted to confirm the descriptive data and generalize the research results to the population from which the sample was extracted. The results can be seen in the following tables.

 Are the employees’ performances at a desirable level after

providing them with on-the-job trainings implemented by the sectors outside the organization? Considering the five abovementioned components, the univariatet-test was used to answer this question.

Table 4. The Results of Univariatet-test

Component

Test Value = 3

t Degree of

Freedom Sig. Mean Difference

Application .618 174 .236 0.5186

Innovation 2.21493 174 .01 -1.4383

Skill 4.54127 174 .01 -2.3786

Knowledge 3.1784 174 .01 -1.6942

Attitude 3.9286 174 .01 -1.993

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 Are there any significant differences between employees’ performances before and after the implementation of on-the-job trainings? Given the five abovementioned components, the paired two-sample t-test was used to answer this question.

Table 5. Descriptive Statistics for Insourced and Outsourced Trainings

Gender Quantity Mean SD

Application Before Implementation 175 3.7702 .69565

After Implementation 175 3.9930 .62496

Innovation Before Implementation 175 3.6315 .53250

Skill Before Implementation 175 2.8592 .63723

Knowledge Before Implementation 175 2.7660 .87378

Attitude Before Implementation 175 1.0260 .54708

Table 6. The Results of Paired Two-Sample t-test

Component Paired Two-Sample t-test

t Degree of Freedom Sig.

Application -0.271 174 0.224

Innovation -2.905 174 .004

Skill -2.364 174 .019

Knowledge -3.102 174 .002

Attitude -3.418 174 .001

The above tables indicate that the significance level of employee performance did not differ significantly before and after the implementation of outsourced trainings with respect to application. However, there were significant differences in employee performance in terms of the other four components.

CONCLUSION

Basically, intellectual capitals are considered the foundation of success instead of financial capitals in organizations nowadays (Galanakiet al., 2015). Since educational activities are meant to develop intellectual capitals (Gainey and Klass, 2013), organizations focus on investment in training employees and improving them (Brooks and Nafukho, 2013). In other words, the more comprehensively organizations act in training their employees, the better competitive position they will achieve (Leimbach, 2014).

Given the importance of education,

organizations have implemented plans to increase the capabilities, capacities and capabilities of their employees. One of the measures of planning, implementing and evaluating on-the-job trainings is a set of outsourced activities. Outsourcing is discussed

as one of the key tools to the development of

human resources and improvement of

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trainings provided by reputable education centers outside the police command had better effectiveness. Moreover, the results of this study showed that employees believed that outsourced trainings were effective with respect to the four components of Ashridge model (innovation, skill, knowledge and attitude). Galankiet al. (2015) and Zafarghandi (2015) also believe that organizations choose education outsourcing because of its advantages including reduction in costs, access to better education methods, minimization of investment costs, saving time, improvement of educational quality and improvement of employees’ trainings. However, Gainey and Klaas (2013) conducted a study to investigate the disadvantages of trainings provided by the private sector for the organizations in USA. They stated that the providers of training services might not be able to understand the culture of an organization; therefore, the trainings might not be in proportion to the organizational culture. In other words, it is always assumed that service-providing organizations may enter the market as a rival. In addition, education outsourcing may decrease the ability of organizations to increase their internal skills. However, they emphasized the utilization of training capacities provided by the private sector. The results of this study also indicated that there were significant differences in employee performance before and after implementing outsourced trainings, and the mean of employee performance was higher after implementing them. Put another way, the employee performance was totally better after implementing outsourced trainings than before executing them in all dimensions. Inviting external experts and handing over trainings the educational centers of the private sector can meet the needs of organizations. Various factors can influence this problem such as taking advantage of different teaching methods and utilizing technologies influencing the process of learning which can increase the speed of achieving necessary skills. Moreover, saving money in different organization costs and decreasing the likelihood that training service providers may enter the market as rivals are among the most important features of this

approach. Based on the research findings, some suggestions can be made in order to benefit from the advantages of education outsourcing in on-the-job training. Given the macro outlook and guidance of the central headquarters of Bank Maskan, codifying strategies for handing over on-the-job trainings to the private sector (outsourcing) can be an appropriate model for the headquarters of other provinces. It is also suggested that organizations should have international interactions to take advantage of international academics in the form of handing over trainings to international education institutes in the specialized areas as well as the new banking methods. Moreover, given the fact that the educational institutions of the private sector are more up-to-date to compete with other institutes and companies providing educational services and utilizing modern teaching methods, the predictions of consulting groups can be pointed out to identify the future needs. Finally, it can be concluded that if some parts of the on-the-job training process, including training need assessment or implementation, to the private sector in the form of outsourcing, the effective achievement of organizational goals can be expected more than ever before.

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