Characteristics Of Formal And Informal Learning Management Essay (2023)

In todays knowledge-based, fast changing economy more than ever before, the skills, motivation and activation of employees are crucial preconditions for the sustainable success, productivity and innovation of enterprises.

Training is a set of activities that helps people to acquire and improve job-related skills to meet changing job requirements. Organizations committed to their employees invest in extensive training and development programs to ensure that everyone has always the capabilities needed to perform well[1].

However, the situation of SMEs with regard to training is characterized by a paradox. On the one hand, continuous training and lifelong learning (both for workers and managerial staff) are regarded as crucial elements of competitiveness against the backdrop of globalization. On the other hand however, statistics show that continuous training and qualifications are less likely to be available to employees working in SMEs than to those in large companies, particularly in the Iranian context. The overview of current training status in Iran indicates that Iranian government more than ever is ready to support SMEs in terms of training. There are number of institutions which provide training both for workers and managerial staff. Moreover, many of them provide training services free of charge. However, in spite of the availability of training opportunities the inadequate workforce and staff training remain one of the most problematic factors for doing business in Iran. It is obvious that there should be other reasons that keep employees from training. For the current research paper we have chosen lack of motivation as the main obstacle against training. If organizations motivate their employees by satisfying their needs, the employees will be willing to learn more and perform better.

In addition, ten-year statistics of Iranian SMEs indicate poor performance with low production and profitability indices. Therefore, it is urgent to find new ways of increasing training motivation of employees which may result in continuous improvement of their knowledge and skills, consequently of business performance.

The object and the subject of the research

The object of the current study is Small and Medium Enterprises in Iran, and the factors preventing them from staff training and performance excellence. The subject of the study is an innovative training model the application of which may lead employees to life-long improvement through learning and SMEs to sustainable development.

The goal and problems of the research

The goal of the current research is to introduce an innovative training model which will lead to business performance improvement.

To achieve the goal of the paper we have put forward and solved the following problems:

To identify the training status of Iranian SMEs

To reveal the factors applied by SMEs to motivate their employees

To measure SMEs performance from financial, customer, and internal perspectives

To explore the impact of the factors, applied by SMEs for motivating employees, on training

To explore the impact of training on business performance of SMEs

To introduce an innovative training model for performance improvement based on the analysis results

Theoretical, methodological and informational basis of the research

The scientific works of international organizations and researchers related to the current research subject, as well as publications about different training programs applied in developed countries have been used as theoretical basis for the research.

To find the solutions to the problems suggested by the current research the selected methodological basis are Maslow’s Theory of Motivation and Balanced Scorecard. Maslow’s theory of Motivation has been used to identify the motivation factors for the survey[2]and the Balanced Scorecard System was used to identify the indicators for measuring the performance of the surveyed companies from, financial, customer and internal perspectives[3].

The balanced scorecard is a strategic planning and management system that is used extensively in business worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals. Recognizing some of the weaknesses and vagueness of previous management approaches, the balanced scorecard approach provides a clear prescription as to what companies should measure in order to “balance” the financial perspective.[4]The balanced scorecard suggests that we view the organization from four perspectives, and to develop metrics, collect data and analyze it relative to each of these perspectives: learning and growth, internal-business, customer and financial.

After identifying the corresponding motivation factors and indicators for measuring SMEs performance, the survey questionnaire has been formed.

Finally, the collected data from 714 SMEs have been analyzed. The following hypotheses have been formulated and tested by SPSS 16 (Statistical Package for the Social Sciences):

Hypothesis one: Each of the studied motivation factors has impact on training.

Hypothesis two: All the factors together have relationship with training.

Hypothesis three: Training has impact on business performance from financial perspective.

Hypothesis four: Training is related to business performance from customer perspective.

Hypothesis five: Training has impact on business performance from internal perspective.

Hypothesis six: Training has relationship with the overall business performance.

The effect of motivation on training has been tested by applying Multiple Linear Regression Model. Furthermore, the impact of training on business performance has been tested. First, Chi-square test of independence has been applied to analyze the relationship between training and performance from separate perspectives (financial, customer, and internal) and finally, the effect of training on overall performance has been measured by Simple Linear Regression Model.

The main scientific results and novelty of the research

The main scientific results and novelty of the current research consists in the following:

Justified, that motivation has a positive impact on training. It should be noted that very little research has been done that reveals the link between training and motivation, and the factors that are studied in this work are left out of researchers’ attention.

Analyzed the impact of training on customer service and internal-business performance, which has been ignored by the previous scientific research works.

Based on the analysis results a new three-dimensional model has been introduced, which indicates that the motivation factors, identified by the current research, lead to training which in its turn leads to the overall business performance improvement.

Practical significance of the research and its application

Considering the fact that the skilled workforce is a crucial problem in Iranian SMEs today in spite of the availability of training services including those free of charge, the application of the model proposed by the current research may increase the motivation of employees to improve their knowledge and skills continuously. Further, taking into account that both profitability and productivity of Iranian SMEs have tended to decline in recent years, the application of the mentioned model will also lead to SMEs performance improvement through employee training.

The testing and publication of the research results: The main results of the research are reflected in three articles published by the author.

The structure of the thesis: The structure of the thesis reflects the subject, the goal, the problems and the results of the research in the corresponding chapters and sections. The thesis consists of introduction, three chapters, conclusion, reference and three appendices, composed on 112 pages. The reference includes 129 literature items.

CHAPTER ONE

LITERATURE REVIEW

1.1 Training as the Main Component of HRD

Human Resource Development (HRD) is defined as a process for developing and unleashing human expertise through organization development and personnel training and development for the purpose of improving performance[5].

While Human Resource Development is a relatively new term, training the largest component of HRD can be tracked back through evolution of the human race. Anyway, we will not go so deep into studies of history. It is important to recognize the massive development effort that took place in the United States during World War II as the origin of contemporary HRD. Under the name of the “Training within Industry” project[6], this massive development effort gave birth to systematic (1) performance-based training, (2) improvement of work processes, and (3) the improvement of human relations in the workplace contemporary HRD.

The philosophy undergirding the TWI Service was a clear distinction between education and training. Dooley stated, “Education is for rounding-out of the individual and the good of society; it is general, provides background, increases understanding. Training is for the good of plant production it is a way to solve production problems through people; it is specific and helps people to acquire skill through the use of what they learned”.

Today training is defined as the planned and systematic modification of behavior through learning which enable individuals to achieve the levels of knowledge, skill and competence needed to carry out their work effectively[7].

Learning is the process by which a person acquires and develops new knowledge, skills, capabilities and attitudes. As Williams defined it, “learning is goal directed, it is based on experience, it impacts behavior and cognition, and the changes brought about are relatively stable”[8]. Honey and Mumford explained that: “Learning has happened when people can demonstrate that they know something that they did not know before (insights, realizations as well as facts) and when they can do something they could not do before (skills)”[9]. Mumford and Gold emphasized that: “Learning is both a process and an outcome concerned with knowledge, skills and insight.”[10]

There are four types of learning:

Instrumental learning – learning how to do the job better once the basic standard of performance has been attained, helped by learning on the job.

Cognitive learning – outcomes based on the enhancement of knowledge and understanding.

Affective learning – outcomes based on the development of attitudes or feelings rather than knowledge.

Self-reflective learning – developing new patterns of understanding, thinking and behaving and therefore creating new knowledge[11].

The aim of the learning policies and programs of an organization is to provide the skilled, knowledgeable and competent people required to meet its present and future needs. To achieve this aim it is necessary to ensure that learners are ready to learn, understand what they need to know and be able to do, and are able to take responsibility for their learning by making good use of the learning resources available, including the support and guidance of their managers.

Learning is a continuous process that not only enhances existing capabilities but also leads to the development of the skills, knowledge and attitudes that prepare people for enlarged or higher-level responsibilities in the future.

Effective learning is more likely to be achieved if learners have learning goals. They should have targets and standards of performance that they find acceptable and achievable and can use to judge their own progress. They should be encouraged and helped to set their own goals. The learning outcome must be clear. Learners need a sense of direction and feedback on how they are doing. They should receive reinforcement of correct behavior. Self-motivated individuals may provide much of this for themselves, but it is necessary to have a learning facilitator, e.g. a mentor, who is available to encourage and help when necessary. Learners usually need to know quickly how well they are doing. In a prolonged program, intermediate steps are required in which learning can be reinforced. The content of the learning program may therefore need to be broken down into small modules or elements, each with an objective.

The learning goals and the particular needs and learning style of the learner should indicate what learning method or methods should be used. Specific goals and understanding of individual needs help to select appropriate learning methods. It should not be assumed that a single learning method will do. A combination of methods is likely to produce better results. The use of a variety of methods, as long as they are all appropriate, helps learning by engaging the interest of learners. Learning is “personal, subjective and inseparable from activity”[12]. It is an active, not a passive process. As far as possible, therefore, the learning process should be active, although this may take more time than passive methods in which the learner is at the receiving end of some form of training, e.g. instruction.

The more complex the skill to be mastered, the more active the learning methods need to be. Learning requires time to assimilate, test and accept. This time should be provided in the learning program. Different levels of learning exist and these need different methods and take different times. At the simplest level, learning requires direct physical responses, memorization and basic conditioning. At a higher level, learning involves adapting existing knowledge or skill to a new task or environment. At the next level, learning becomes a complex process when principles are identified in a range of practices or actions, when a series of isolated tasks have to be integrated, or when the process is about developing interpersonal skills. The most complex form of learning takes place when learning is concerned with the values and attitudes of people and groups. This is not only the most complex area, but also the most difficult. Blending different but appropriate types of learning produces the best results such as mixture of informal and formal learning.

Informal learning is experiential learning. Most learning does not take place in formal training programs. People can learn 70 per cent of what they know about their job informally, through processes not structured or sponsored by the organization. A study by Eraut et al established that in organizations adopting a learner-centered perspective, formal education and training provided only a small part of what was learnt at work[13]. Most of the learning described to the researchers was non-formal, neither clearly specified nor planned. It arose naturally from the challenges of work. Effective learning was, however, dependent on the employees’ confidence, motivation and capability. Some formal training to develop skills (especially induction training) was usually provided, but learning from experience and other people at work predominated. Reynolds notes that: “The simple act of observing more experienced colleagues can accelerate learning; conversing, swapping stories, co-operating on tasks and offering mutual support deepen and solidify the process. This kind of learning – often very informal in nature – is thought to be vastly more effective in building proficiency than more formalized training methods”.

The advantages of informal learning are that: learning efforts are relevant and focused in the immediate environment; understanding can be achieved in incremental steps rather than in indigestible chunks; learners define how they will gain the knowledge they need – formal learning is more packaged; learners can readily put their learning into practice. The disadvantages are that: it may be left to chance – some people will benefit, some won’t; it can be unplanned and unsystematic, which means that it will not necessarily satisfy individual or organizational learning needs; learners may simply pick up bad habits.

Formal learning is planned and systematic and involves the use of structured training programs consisting of instruction and practice. The comparison of informal and formal learning is presented below.

Table 1.1 Characteristics of formal and informal learning

Informal

Formal

Highly relevant to individual needs

Relevant to some, not so relevant to others

Learners learn according to nid

All learners learn the same thing

May be small gar between carrent and

target knowledge

May be variable gaps between current and target knowledge

Learner decides how learning will occur

Tranee decides how learning will occur

Immediate applicability Just-in-time learning

Variable times, often distant

Learning readily transferable

Problems may occur in transferring learning to the workplace

Occurs in work setting

Often occurs in non-work setting

Source: Armstrong, M. A Handbook of Human Resource Management Practice, 2006.

As mentioned earlier, learning is a continuous process, and much of it arises from day-to- day experience in the workplace. But this learning may be haphazard, inappropriate and fail to meet the short and longer-term needs of either the individual or the organization. A laissez-faire approach by the organization could be highly unsatisfactory if it does not ensure that these needs are met by whatever means are available. Experiential learning will be enhanced if the climate in the organization is supportive, and an important aspect of a learning and development strategy will be creating such a climate. But it will also be extended if individuals are helped to identify their own learning needs and provided with guidance on how they can be met using various means. As described below, the learning program can concentrate on making the best use of workplace learning opportunities, ensuring that people are aware of what they need to learn and providing them with encouragement and support, and enhancing learning through coaching or mentoring. These activities should be used as part of a blended approach, which is discussed below.

Learning opportunities occur all the time and the challenge is to ensure that people make the most of them. Some will need no encouragement. Others will have to be helped. Line managers or team leaders have a crucial role in encouraging and supporting learning. They can do this within the relatively formal setting of a performance and development review. Or, better still, they can consciously promote learning from day-to-day events when they discuss how a task might be done, when they analyze information on outcomes with individuals, and when they ask individuals to tell them what they have learnt from an event and what it tells them about any additional learning required. But it is necessary to ensure that line managers are aware of the need to promote learning and have the will and the skills to do it. It is necessary to ensure that people are aware of what they need to learn to carry out their present role and to develop in the future.

This starts with induction and involves the specification of learning programs and the planning of learning events, with an emphasis on self-directed learning accompanied by a blend of other learning approaches as appropriate. It continues with performance and development reviews that identify learning needs and define how they will be met, again by self-managed learning as far as possible but making use of coaching, mentoring and formal training courses as required.

Self-directed or self-managed learning involves encouraging individuals to take responsibility for their own learning needs, either to improve performance in their present job or to develop their potential and satisfy their career aspirations. It can be based on a process of recording achievement and action planning that involves individuals reviewing what they have learnt, what they have achieved, what their goals are, how they are going to achieve those goals and what new learning they need to acquire. The learning program can be “self-paced” in the sense that learners can decide for themselves up to a point the rate at which they work and are encouraged to measure their own progress and adjust the program accordingly. Self-directed learning is based on the principle that people learn and retain more if they find things out for themselves. But they still need to be given guidance on what to look for and help in finding it. Learners have to be encouraged to define, with whatever help they may require, what they need to know to perform their job effectively.

They need to be provided with guidance on where they can get the material or information that will help them to learn and how to make good use of it. They also need support from their manager and the organization with the provision of coaching, mentoring and learning facilities, including e-learning. Self-directed learning can also be described as self-reflective learning[14], which is the kind of learning that involves encouraging individuals to develop new patterns of understanding, thinking and behaving. It is a process which was described by Argyris (1992) as double-loop learning[15], which is based on an examination of the root causes of problems and can create a new learning loop that goes far deeper than the traditional learning loop provided by “instrumental learning” (i.e. learning how to perform a job better) which tends only to focus on the surface symptoms of a problem.

The Industrial Society defines coaching as: “The art of facilitating the enhanced performance, learning and development of others.”[16]It takes the form of a personal (usually one-to-one) on-the-job approach to helping people develop their skills and levels of competence.

Hirsh and Carter state, that coaching is aimed at the rapid improvement of skills, behavior and performance, usually for the present job.[17]A structured and purposeful dialogue is at the heart of coaching. The coach uses feedback and brings an objective perspective. The need for coaching may arise from formal or informal performance reviews but opportunities for coaching will emerge during normal day-to-day activities. A common framework used by coaches is the GROW model: “G” is for the goal of coaching, which needs to be expressed in specific measurable terms that represent a meaningful step towards future development. “R” is for the reality check – the process of eliciting as full a description as possible of what the person being coached needs to learn. “O” is for option generation – the identification of as many solutions and actions as possible. “W” is for wrapping up – when the coach ensures that the individual being coached is committed to action. Coaching will be most effective when the coach understands that his or her role is to help people to learn and individuals are motivated to learn.

They should be aware that their present level of knowledge or skill or their behavior needs to be improved if they are going to perform their work satisfactorily. Individuals should be given guidance on what they should be learning and feedback on how they are doing and, because learning is an active not a passive process, they should be actively involved with their coach who should be constructive, building on strengths and experience. Coaching may be informal but it has to be planned. It is not simply checking from time to time on what people are doing and then advising them on how to do it better. Nor is it occasionally telling people where they have gone wrong and throwing in a lecture for good measure. As far as possible, coaching should take place within the framework of a general plan of the areas and direction in which individuals will benefit from further development.

Mentoring is the process of using specially selected and trained individuals to provide guidance, pragmatic advice and continuing support, which will help the person or persons allocated to them to learn and develop. It has been defined by Clutterbuck as: “Off-line help from one person to another in making significant transitions in knowledge, work or thinking.”[18]Hirsh and Carter suggest that mentors prepare individuals to perform better in the future and groom them for higher and greater things, i.e. career advancement. Mentoring can be defined as a method of helping people to learn, as distinct from coaching, which is a relatively directive means of increasing people’s competence. It involves learning on the job, which must always be the best way of acquiring the particular skills and knowledge the job holder needs. Mentoring also complements formal training by providing those who benefit from it with individual guidance from experienced managers who are “wise in the ways of the organization”. Mentors provide people with:

advice in drawing up self-development programs or learning contracts;

general help with learning programs;

guidance on how to acquire the necessary knowledge and skills to do a new job;

advice on dealing with any administrative, technical or people problems individuals meet, especially in the early stages of their careers;

information on “the way things are done around here” – the corporate culture and its manifestations in the shape of core values and organizational behavior (management style);

coaching in specific skills;

help in tackling projects – not by doing it for them, but by pointing them in the right direction: helping people to help themselves;

a parental figure with whom individuals can discuss their aspirations and concerns and who will lend a sympathetic ear to their problems.

There are no standard mentoring procedures, although it is essential to select mentors who are likely to adopt the right non-directive but supportive help to the person or persons they are dealing with. They must then be carefully briefed and trained in their role.

Blended learning is defined by Sloman as: “An approach to training design that involves the use of a combination of delivery methods and in some cases learning methodology.”[19]Schramm describes it as: “The combination of different modes of delivery that take into account the learner’s environment, motivation and learning styles with different theoretical approaches. This creates a multi-layered and richer palette of learning methods.”[20]Blended learning aims to make the different parts of the learning mix complementary and mutually supportive in meeting learning needs. Recognition of the need to blend learning avoids the pitfall of over-reliance on one approach. It means using conventional instruction, e-learning and self-directed learning as well as experiential learning. The aim is to inspire and motivate learners over extended periods of time and through an appropriate mix of inputs and outputs, individual and collaborative study, formal and informal processes, and a blend of face-to-face and virtual contact. Focus on the learner is achieved by taking special care to provide them with support and guidance from their managers, coaches and mentors and to complement this with the provision of e-learning material. A blended program might be planned for an individual using a mix of self-managed learning activities, e-learning facilities, group action learning activities, coaching or mentoring, and instruction provided in an in-company course or externally.

Generic training for groups of people might include e-learning, planned instruction programs, planned experience, and selected external courses. Within a training course a complementary mix of different training activities might take place; for example a skills development course for managers or team leaders might include some instruction on basic principles but much more time would be spent on case studies, simulations, role-playing and other exercises.

1.2 The Impact of HR Practices on Firm Performance

The assumption underpinning the practice of HRM is that people are the organization’s key resource and organizational performance largely depends on them. If, therefore, an appropriate range of HR policies and processes are developed and implemented effectively, then HR will make a substantial impact on firm performance. The goal sought by many commentators on human resource management is to establish that a clear positive link between HRM practices and organizational performance exists. There has been much research over the last decade or so that has attempted to answer two basic questions: “Do HR practices make a positive impact on organizational performance?” “If so, how is the impact achieved?”

Ulrich pointed out that: “HR practices seem to matter; logic says it is so survey findings confirm it. Direct relationships between investment and attention to HR practices are often fuzzy, however, and vary according to the population sampled and the measures used.”[21]Huselid, states that productivity is influenced by employee motivation, while financial performance is influenced by