IMPACTS OF EMPLOYEE TRAINING ON THE PERFORMANCE OF THE COMMMERCIAL BANKS IN NAIROBI COUNTY

By LEONARD AKURE Reg No: Dipsc 0022: DIPLOMA IN BUSINESS SCIENCE

For: DR. OTIENO

A RESEARCH PROPOSAL PRESENTED TO KENYA SCHOOL OF MONETARY STUDIES FOR AWARD OF DIPLOMA OF BUSINESS SCIENCE.

DECEMBER 2011.

DECLARATION This research proposal is my original work and it has not been presented for a diploma award in any other institution.

Signature:Date. Leonard Akure Reg No: Dipsc 0022

This research proposal has been submitted for examination with the approval of my supervisor: Dr. Otieno M.A: Lecturer, Research Methodology Signature..Date..

DEDICATION This research proposal is dedicated to Mr. Geoffrey O. Akure and Juliet A. Amadede.

ACKNOWLEDGEMENT I would like to acknowledge my lecturer of Research Methodology and my classmates in Business science at Kenya School of monetary studies level III-September- December 2011 for the great support and encouragement they offered.

Table of Contents
DECLARATION DEDICATION ACKNOWLEDGEMENT Table of Contents ABSTRACT CHAPTER ONE INTRODUCTION BACKGROUND INFORMATION OF THE STUDY. 1.1 1.2 STATEMENT OF THE PROBLEM PURPOSE OF THE STUIDY

1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10 1.11

OBJECTIVES OF THE STUDY RESEARCH QUESTIONS OF THE STUDY ASSUMPTIONS OF THE STUDY SIGNIFICANCE OF THE STUDY LIMITATIONS OF THE STUDY DELIMITATIONS OF THE STUDY THEIRITICAL FRAMEWORK. CONCEPTIONAL FRAMEWORK. OPERATIONAL DIFINATIONS OF TERM.

CHAPTER TWO LITERATURE REVIEW 2.1 INTRODUCTION 2.2 LITERATURE REVIEW ON VARIOUS PARTS 2.2.1 LITERATURE IN KENYA 2.2.2 LITERATURE WORLDWIDE CHAPTER THREE RESEACH METHODOLOGY 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 INTRODUCTION RESEARCH DESIGN STUDY LOCATION TARGET GROUP SAMPLING PROCEDURE AND SAMPLE SIZE RESEARCH INTRUMENTS PILOTING VALIDITY AND RELIABILITY OF RESEARCH INTRUMENT DATA COLLECTION PROCEDURES DATA ANALYSIS AND PRESENTATION

REFERNCES APPEDICES Appendix I: Introduction Letter Appendix II: Questionnaire

ABSTRACT Employee training is as very critical factor on the performance of commercial banks or in any other financial institution. Commercial banks just like any other financial institutions, accounts for the large percentage of the worlds lending sector hence have a critical role to playing the economics of every country and the worlds economy at large. This research study will therefore focus on the influence of employee training on the performance of the commercial banks in Kenya, Nairobi County in particular. Kenya as a whole has experienced problems with banking performance since independence one of the major being the banks failure (i.e. over 35 banks collapsed as at 1998) one of the major causes of this problem is lack of necessary skills and knowledge by employees in correspondence to the improving technology. This problem can be dealt with by assessing various employee obligations at work place and the level of skills required and thereafter improving the employee skills through training hence improving the organizational performance. All the commercial banks in Nairobi County will be in the study forming a census study. The study will target key informants like the human Resource managers, bank managers and supervisors who have a greater knowledge on operations of the banks. This study will use questionnaires and interview as the primary instruments of data collection

CHAPTER ONE INTRODUCTION BACKGROUND INFORMATION OF THE STUDY. An employee is the one of the most essential resource in any other organization that is working towards meeting its goals. Therefore the level of training and skills of an employee is very critical in the performance of the commercial banks especially with the case of improving technology which requires proportional improvement of employee skills in various departments in the commercial banks (Kithinji and Waweru 2010). Its therefore important to research on the aspects of employee in their place of work and their impacts to the performance and development of commercial banks. Kenya has experienced banking problems from 1980s culminating in the major banks failure i.e. over 35 commercial banks failed as at 1997 (Kadian Wanyama and S.N Mutsotso 2010). Poor employee performance due to inadequate skills was termed the major cause of the problem. In such crisis of failure to a commercial bank; depositors, lenders to the bank, and owners of the bank capital all lose confidence and seek to withdraw their resources and property from the bank.

STATEMENT OF THE PROBLEM In the past years there has been reported severe failure and collapsing of commercial banks in Kenya, Nairobi County in particular and employee performance in these banks was termed one of the major causes of the problem of banks failure. This is the basis of this problem of study which is an analysis of impacts employee training on the performance and development of the commercial banks in Nairobi County (Kadian Wanyama and S.N Mutsotso 2010).
1.

Nairobi County being one of the core economy building counties in the country, poor performance of commercial banks in the county affects the countrys economy greatly since the commercial banks play a major role in the economy. Commercial banks play the role main credit facility and deposit facility in the economy therefore if they fail investors will lack source for capital as well as a place to keep their deposits. This qualitative study will therefore examine how employee training impact on the performance and development of commercial banks, what measures should be taken and hoe these measures should be implemented to enhance performance and development of commercial banks in Nairobi county. Commercial banks in the Nairobi County will be surveyed to determine the various employee levels of training in relation to impacts to the performance of the banks. Key word: Employee training, employee productivity and performance
2.

PURPOSE OF THE STUDY

The purpose of this study will be basically to find out issues of employee training and how it affects the performance and development of commercial banks in Nairobi County. Technological changes are very rampant in the banking industry e.g. the introduction of electronic funds transfer, e-banking and mobile banking etc. This has led to the need for improving the employee training in the banking sector as per the improved technology so as to provide quality services to the banks customers as well as to avoid errors that will lead the bank to undergo losses and thereafter failing to meet its customers needs. This will make the customers to lose their confidence with the bank. This study will also help to provide awareness to the banks managements on the qualities of personnel they should hire to provide services to their customers and who will maintain high confidence of the customers as well as keep the organization profitable.

OBJECTIVES OF THE STUDY The objectives of this study are as follow;

3.

To improve the performance of commercial banks and enhance their development in Nairobi county. 2. To ensure quality and effective training among the personnel of the commercial banks. 3. To enhance entrepreneurial activities among the residents of Nairobi County through provision of quality of bank services like lending and deposits hence improving the economy.
1.

RESEARCH QUESTIONS OF THE STUDY This study will seek to answer the following research questions;
4. 1.

What measures are commercial bankers taking to ensure good performance other than failure?

2. 3. 4. 5. 6.

What measures are commercial banks taking to ensure their personnel have attained there quired level of training? What is the common training level among the commercial banks employees? How do technological changes affect daily activities and performance of the commercial bankers? Do commercial banks trains their personnel by themselves of they hire already trained personnel? If commercial banks hire already trained personnel, which training institutions are the main sources of personnel for the commercial banks?

ASSUMPTIONS OF THE STUDY This study will assume that;

5.

The various employees of commercial banks have undergone various different levels of training. 2. Every commercial bank experiences technological changes that require more skilled personnel in its daily activities. 3. Employee performance at various work places affects the banks performance. 4. Every commercial bank employee must have undergone some training at his/her time of hire.
1.

6.

SIGNIFICANCE OF THE STUDY The study will help in bringing into awareness to various stake holders in banking sector how the performance and development of their organization can be affected by the employee level of training and skills. The study will also help the stake holders in the banking sector to plan on how cub the problem brought by technological changes in relation to the need for improved employee training. Through this study the stake holders in the banking sector will be able to plan on how to acquire personnel with that will help achieve their goals (well trained personnel). The study will also help the potential commercial bank employees on the kind of training to go for the better performance of the banks

7.

LIMITATIONS OF THE STUDY 1. This study will cover only commercial banks in the Nairobi County, therefore the findings will not apply to the other parts of the country where this kind of problem exists. 2. The study will only deal with commercial banks, making its findings not applicable to other related financial institutions that might be experiencing the same problem
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3.

The study deals only with employee training, hence other factor that may have the same impacts to the commercial banks as employee training are not looked at.

DELIMITATIONS OF THE STUDY The following are the delimitations associated to this study.
8. 1.

The study will not disclose the names of the employees and their position at work because most individuals would not like their educational and work information to be made public.

THEORETICAL FRAMEWORK. This study is based on the theory of variance in thinking capacity 1859. This theory explains how every individual person is born with different thinking capacity. If different people are given the same task which is totally new to each of them, each of them will come up with his own way of performing that task unless all of them have been trained on doing it in a particular way.
9.

This theory is relevant to this study because even the commercial bank employees are just normal human beings who unless trained on doing something in a particular way, they will do it according to their own thinking which may cause great harm to the organization, like failure. Various activities in banking are carried out in specific models which require well trained and skilled person on it to perform it so as avoid errors which may in turn cause losses.

10.

1.1 CONCEPTIONAL FRAMEWORK.

11.

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12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36.

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As mentioned on the assumptions of this study, every employee hired by any commercial bank must have some sort of training. However in the course of operations of the bank, there arise some factors that will require improvement in the training of the employees. These factors which form the inventing variables of the study include: Technological improvement/changes Increased productivity Increased customer etc. When these factors arise employees are subjected to greater obligations which require more skills. Unless trained further, employees will find it difficult to undertake this added obligation thus causing underperformance. This will cause negative effects to the bank such as:

Decline in productivity Decreased customers Decline in profits This will in turn lead to underperformance of the bank hence failure and collapsing of the bank.

On the other if those factors arise and they are embraced by the management of the bank through subjecting their employees to further training, it would result positively to the bank i.e; Improvement in productivity Increased customers Increased profits These will then lead to improved profitability hence development of the bank.

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OPERATIONAL DEFINITIONS OF TERM. Employee training---- the amount of skill an employee has in relation with his/her specialized job
37.

Technological improvement---advancement in equipment and ways of operations due to introduction of new innovations Employee productivity----the measure at which an employee accounts for the productivity and development of the an organization

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CHAPTER TWO LITERATURE REVIEW 2.1 INTRODUCTION The issue of employee training and commercial banks (or any other entities associated with labour) development is not a problem only in Nairobi neither its in Kenya only but globally. Therefore this section of this proposal provides discussion based on the following topics; Literature in Kenya Literature worldwide

2.2 LITERATURE REVIEW ON VARIOUS PARTS As mentioned above, this will provide discussions of literature of similar studies that had been done specifically in Kenya and globally. 2.2.1 LITERATURE IN KENYA Employee productivity depends on the amount of time an individual is physically present at a job and also the degree to which he/ she is mentally present or efficiently functioning while present at a job and the functionality of an employee at work will depend b on his/her skills (Kadian W. Wanyama and S. N. Mutsotso). In this study to verify the Relationship between capacity building and employee productivity on performance of commercial banks in Kenya, its evident that the major cause of the crisis of banks failure in Kenya in the past years was under performance of the employees due to minimal training especially in department that faced fast technological changes. Another literature of this proposal is based on the study of Technology and service quality in the banking industry (Thomas Ogoro Ombati, Peterson Obara Magutu, Stephen Onserio Nyamwange and Richard Bitange Nyaoga). This study states that technology change is not only on machinery but also on human skills. That is for effective utilization of improved technology there should be a well trained man power to run it (for banking industry to effectively embrace technology, should ensure well trained personnel).

2.2.2 LITERATURE WORLDWIDE

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Training is one of the most important strategies for organizations to help employees gain proper Knowledge and skills needed to meet the environmental challenges (Goldstein and Gilliam, 1990; Rosow and Zager 1988). This derived from the study done in Nigeria i.e. Productivity as a Driving Force for Investment in Training and Management Development in the Banking Industry (Isiaka Sulu Babaita 2010). This study further stated that, no matter the way one looks at training and development, they help employees to learn how to use the resources in an approved fashion that allows the organization to reach its desired output. Training and development has grown concerned not only with helping individuals to adequately fill their positions, but also with helping whole organizations and sub departments grow and develop. Training and development, though primarily concerned with people, is also concerned with technology, the precise way an organization does business.

CHAPTER THREE RESEARCH METHODOLOGY

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INTRODUCTION This chapter presents how this study will be conducted in terms of location, research methods, sample size, data analysis and presentation.
1.

RESEARCH DESIGN This study will be guided by descriptive survey design to establish the relationship between variables especially the relationship between the development and the average level of employee training on organizational performance.
2.

Descriptive survey design is more preferable for this study because it will help to capture and explain the details of the relationships of various variables of the study. E.g. the level of a bank performance at a given average level of employee training. STUDY LOCATION The study will be carried out in the commercial banks across Nairobi County. All the commercial banks in the county will be used in the study forming a census study.
3.

One of the key objectives of this study is to ensure better banking services to the economy thus ensuring better economy. And Nairobi County being the major economic centre in the country was selected as the best location for the study.

TARGET GROUP This study targeting the key informants like the Human Resource managers, bank managers and supervisors who have skills and understanding on the operations of the commercial banks. This target group understand very well the productivity of each employee in the organization and their various levels of training hence they able to give the relation between various employees performance and heir level of training
4.

The total estimated population of the study is 86 people, that is at least two officers from each commercial bank in the county provided the there are 43 banks in the county. Note: only the main branch (headquarters) of each commercial bank in the county will be surveyed.

SAMPLING PROCEDURE AND SAMPLE SIZE The sampling procedure that will be applied to this study is judgmental sampling. That is an expert judgment will be employed to select on who will be included in the sample frame.
5.

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Only senior employees and those that hold the positions of a human resource manager, bank Manager or bank supervisors in the 43 commercial banks in the county will be selected. This sampling procedure suits this study because the selected sample will be having a better understanding of the various operations of the bank as well as various employees performance and their level of training. This study sample will also help to avoid biased information as some employees at lower ranking may tend to provide false about their performance in their jobs and their levels of training. Some individuals may not be willing to disclose their levels of training hence provide false information. RESEARCH INTRUMENTS This study will use questionnaires as the primary instrument of data collection. The questionnaire will contain demographic information of the respondents in terms of age, job status, gender and work experience; key variables of the study like employee productivity, employee level of training and organizational performance.
6.

Questionnaires is the more preferable data collection instrument for this study because the respondent are almost always busy during working hours thus making difficult to fixed time for interview. Also senior of organizations would not like to be observed while they are working thus making the observation method not suitable for this study. People also tend to give a lot of unbiased information while answering the questionnaire in private than when being interviewed.

7.

PILOTING

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To test reliability of the instrument, a pilot study using some student studying banking at the Kenya School of Monetary studies has been done. Despite that this student dont have enough experience and skill as the target group, they were able discuss and sagest some modifications to the instrument and were able to convince that the suggestions should be adopted. VALIDITY AND RELIABILITY OF RESEARCH INTRUMENT From the response on piloting and the discussion with the supervisor the research instrument was found valid and reliable for the study.
8.

DATA COLLECTION PROCEDURES Data for the study will be collected by the researcher with the help of research assistants. The research assistance will be trained on how to administer the research instruments to the respondents under the supervision of the researcher.
9.

The data collected by individual research assistants will then be compiled and generalized together to determine the general outcome.

ANALYSIS AND PRESENTATION The analysis of this study can be done using both descriptive and inferential statistics. When using Inferential statistics Pearsons coefficient of correlation can be used to establish the relationship among the variables, Simple and multiple regression analysis can also be used since it shows the interactive effect of the independent variables on the dependent variable. In the case of descriptive statistics, frequency tables, pie charts, bar graphs, mean, mode, standard deviations, variance will be used.

10. DATA

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REFERNCES Kadian W. Wanyama and S. N. Mutsotso, (2010)-Relationship between capacity building and employee productivity on performance of commercial banks in Kenya, Masinde Muliro University of Science and Technology Shikha N. Khera, (2007) Human Resource Practices and their Impact on Employee Productivity: A Perceptual Analysis of Private, Public and Foreign Bank Employees in India

Isiaka Sulu Babaita, (2010), Productivity as a Driving Force for Investment in Training and Management Development in the Banking Industry, Nigerian Institute of Management

Thomas Ogoro Ombati, Peterson Obara Magutu, Stephen Onserio Nyamwange and Richard Bitange Nyaoga (2010), Technology and service quality in the banking industry, University of Nairobi, School of Business and Narok University College, Faculty of Commerce

Central bank of Kenya prudential guidelines, (2010)

William Ashton, Ph.D. York College, CUNY

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APPEDICES Appendix I: Introduction Letter ATTENTION: BANK MANAGER RE: REQUEST FOR DATA COLLECTION FROM YOUR BANK I am a diploma student at Kenya School of Monetary Studies in Nairobi. I write to request for your permission to collect data from your bank on a study am carrying on (impacts of employee training on the performance of commercial banks in Nairobi County). This study is a requirement for the award of my diploma in business science. I will therefore require administering questionnaires to the following members of your staff; the Bank Manager, Human resource managers and the supervisors. The research findings of the study will be shared with your institution, treated with utmost confidentiality and used for academic purposes only unless with direct permission to use it elsewhere for the interest of the public. Your response and support will be greatly appreciated. Yours faithfully, Leonard Akure. leonardakure@rocketmail.com

Appendix II: Questionnaire A STUDY ON IMPACTS OF EMPLOYEE TRAININING ON PERFORMANCE OF COMMERCIAL BANKS IN NAIROBI COUNTY. GENDER: AGE (optional). NAME OF THE BANK: JOB POSITION: (tick one) Human Resource manager/bank manager/ bank supervisor For how long have you been in your current job position?
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 Say something about your experience in banking.. What do think of employee concerning what? You must be specific in your organization? What performance related problems do the bank experience with its employees? Why do you say so? . ..

What do you think is the average employee training level acceptable by your bank

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