Commercial Bank of Ceylon Plc [CBC] is one of the leading financial institutions in Sri Lanka. The Bank has been able to retain the number one position in the banking industry for consecutively last thirteen years. The Bank offers an array of financial products and services which have captured a sizable market share amidst a sever completion. The Bank considers their employees as the key element in the organization. Having identified the success of the organization depends on employee performance, the Bank invest substantial amount yearly in training and development of the employees. However recently it has been identified there are service gaps and knowledge gaps in the organization. This research has been carried out to find the effectiveness of training and development in the bank in enhancing the satisfaction and performance of the front line employees attached to Colombo South Region.
This study is organized and presented in a systematic manner in order to facilitate better understanding. Chapter one is the Introduction. Chapter two is the literature review that discusses the theories and concepts of training and development and its impact on employee satisfaction and performance. This chapter also discusses the training and development process of Commercial Bank. Chapter three explains the study and methodology used by the writer to carry out the surveyor. Chapter five discusses and analyses the findings of the data survey. According to the analysis the training and development process of the Bank could be rated as average in enhancing job satisfaction and performance of employees. It was further proven that there are gaps between the actual and expected results of some of the training processes of the Bank which could be improved to enhance the effectiveness of training and development. Chapter six finally presents the recommendation of the writer to enhance the effectiveness of training and development to optimize the contribution of the human resource, the most valuable asset of Commercial Bank
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This chapter gives a brief summary of the latest economic situation of Sri Lanka, banking industry and Commercial Bank's presence in the industry. The significance of enhancing the hard skills and soft skills of employees' to achieve a sustainable competitive advantage in the context of a stiff competition is discussed. This chapter discusses the present problem which is the knowledge gaps and service gaps in the organization and the justification why it should be rectified. Finally the chapter provides the research questions and the objectives of the research.
Background of the study
Sri Lanka achieved a remarkable economic growth of 8.3% in 2011, following a growth of 8% in 2009 & 2010 despite the growing unfavorable global situation. Peaceful domestic environment, improved investor confidence, favorable macroeconomic conditions, development of infrastructure and improved economic activities in northern and eastern parts of the country were greatly contributed in achieving this remarkable growth rate. The government debt to GDP ratio also reduced from 81.9% in 2010 to 78.5% in 2011, recording a below 80% after 30 years.
Despite the setback in the agricultural sector due to adverse weather conditions, strong growth in industry and service sectors were visible in 2011. The industry sector achieved the highest growth rate of 10.3% in 2011 after 33years, largely due to industry and construction activities. Service sector maintained the growth momentum and achieve a growth rate of 8.6% of 2011 with notable contributions from wholesale, retail trade, communication, banking and insurance subsectors.
"Both bank and non bank financial institutions displayed improved performance in 2011, reflecting the increase in financial transactions to facilitate the growing economy." (Cental Bank, 2011) The banking sector, which is the most dominant, dominator of the economic system, and systemically important sector in the financial system, remains well capitalized and profitable in 2011. Banking sector has accounted for 55% of the total assets of the financial sector in 2011. Two new banks were also added during the last financial year, enhancing the total number of banks to 33. Finance and leasing institutions which categorized under non bank financial sector also improved their profitability and assets quality in 2011. Therefore stiff completion among the financial sector institutions was visible during the period under review.
It has been identified with the vast spread of information and communication across the globe that the competitive advantage based on technology and other physical resources could only be maintained short period of time until the competitors imitate. Therefore the only source that an organization could achieve a sustainable competitive advantage is to learn faster and develop core competencies than the competitors. One way of achieving competitive advantage is to operate with an efficient and experience staff who will be assets to organizations. This could be achieved through effective and efficient training and development strategies.
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Training and development has been defined by Singh (2010) as "any attempt to improve current or future employee performance by increasing an employee's attitudes or increasing skills and knowledge" Drucker (1993 cited Wilson, 1995, p.11) has stated "training and development enables the value to be reside inside the heads of the employees and much less with in the capital assets of the organization." It has been recognized that unlike capital assets which could be used up or depreciated over the years, the value of individuals could actually increase.
The main reason for the organizations to reduce training and development in the past is that the same has been considered as cost rather than an investment. Reducing the expenses on training and development is relatively easy for many organizations, when there are pressures on budgets, as the consequences are not immediately apparent. However Wilson (2005, p 12) disagrees with reducing the training and development budget since the value of training and development is more closely aligned to organizational strategy and achievement of objectives. However, in recent years increased attention has been devoted by organizations for training and development with the realization that the well trained and experienced employees are a major contributory factor in achieving organizational goals successfully.
According to recent surveys, it has been found that almost all private sector and public sector organizations conduct human resource training and development programs periodically. Banking sector which dominates the financial sector in Sri Lanka is not exempted from the human resource development. Since the banking system involves lot of inherent risks in processing, delivering and approving financial transactions, a greater knowledge and skills of employees is very essential, to carry-out the day to day operations.
Introduction to company
The company subject to research study is Commercial Bank of Ceylon Plc (CBC), a leading financial institution in Sri Lanka, established since 1969.
The Bank consists of 214 island wide customer net work points inclusive of Branches, Customer Service points and "Minicom" centers. All branches and customer service points are interconnected, fully computerized and equipped with 500 ATMs island wide of Commercial Bank and over one million ATMs of Cirrus (Master Card network) and Visa networks worldwide to provide on line real time service to its valued customers. The Bank has also seven branches in Bangladesh. The Bank is focused on expanding the delivery channels further to provide a superior service to the customers. The staff strength of the Bank is 4329 by end of 2011.
The Bank's policy has been to deliver optimum value in a manner that is consistence with the highest levels of fairness and transparency. For the bank it has not been a case of building financial value and enhancing the bottom line at any cost, but rather participating in a process of creating value through fair and ethical means. Building sustainable value for all stakeholders is a paramount corporate goal.
Figure 1.1: Overview of Business Strategy
Grate Place to bank
Grate place to work
Grate Place to invest Aspiration
Most respected & aspiration
Living our rules
What makes the Bank Unique
& guides Bank's long term strategy
Stability and fairness to all stakeholders
Stable ConvenienceBrand Expansion
Strategic focus areas
Build high performance culture
Achieve profitable assets & liability growth
Focus on innovation
Becoming a client driven Bank
Over the past ten years the Bank has managed to perform with remarkable consistency, which reflects from the consistence increase in deposits, advances & profits of the Bank.
Table1.1. - Summary of performance from 2009-2011 (Rs Mn)
Pre Tax Profits
Post Tax Profits
It has continued to deliver value to all its stakeholders with composure and in varying social and political conditions. It is not just the financial performance that has been remarkable, but building remarkable customer relationships, developed cutting-edge products, generated an imaginative and dynamic human resource base and empowered marginalised communities.
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Taking this fact in to consideration, Commercial Bank has imparted the innovative concept of Knowledge Management as a strategic tool to make the Bank be more adapt to discontinuous environmental changes. The aim is to enhance the employee performance and enable the staff to deals with today's situations and effectively envision their future. The HRD will use this opportunity to capture, retain and re-use knowledge for imparting, understanding how it fits and how to convey it meaning fully to fellow staff members.
At recent management meetings and at various discussions it has been revealed that customer complaints have increased in the recent past. This has become a matter for concern for the Bank as continuous increase in customer complaints could have a negative impact on organizational performance in the future. Most of the branches maintain customer complaint registers and files. Reduction of customer complaints is one of the objectives of the Branch Managers given under key performance ratios. Customer complaints said to be received by randomly selected six branches of Commercial Bank during the period of 2009 to 2011 are as follows
Table1.2. - Statistics of complaints received from 2009-2011
Customer complaints are mainly of
Inconsistency in handling customer requests in branches
Lack of knowledge in banking products
Poor service quality
Negative attitudes of employees
Lack of proper telephone etiquettes
Increased customer turnaround time
For example loan proposals of some of the clients have rejected by the branch (I) after going through the primary evaluation process whilst the same clients have managed to obtained the approval for the same proposal from the branch (II) which is in the same region of branch (I).
Many complaints have been received of the lack of knowledge of the banking products of the counter staff of certain branches. When customers visit branches for further clarifications on new products which are advertised in papers and media, it has been complained that most of branch staff are clueless of those products. Some of the complaints are that branch staff does not have proper knowledge in creating and passing certain entries in the system and as a result customers are held at the counters for long time. Many complaints have received with regard to opening of Certificate of Deposits. Customers have also complained that of the delays in obtaining credit facilities from the Bank. Poor service quality, negative attitudes of employees, lack of proper telephone etiquette etc., are other areas that received frequent complaints.
Further preliminary interviews with several Branch Managers of the Bank reveled that employees when transferred to another branch or department find difficult to work in the new branch initially since they had been adhering to different guidelines and practices in the previous branch which has affected the smooth operations of branches. Despite the Bank has introduced different formats to be adapted in different request and requirements to ensure carrying out uniform practices in the Bank, certain branches have deviated in adopting the acceptable formats and practices. Therefore it is observed that they are knowledge gaps and service gaps between employees of Commercial Bank, which could create future constraints for the Bank.
Banking sector is a highly competitive industry in Sri Lanka. According to Central Bank of Sri Lanka (2012) the banking sector comprised 24 License Commercial Banks and 9 License Specialize Banks by end of 2011. They face many challenges due to competition, changing economic environment, global changes etc. To ensure smooth functioning of the banking system, face challenges and to be competitive in the market, Banks' in Sri Lanka pays more emphasis on continuous process of upgrading the skills, knowledge and abilities of employees.
In this competitive environment there is an enormous pressure for the corporate management in Banks to provide their products and services at competitive prices and improve their quality standards. In the modern context, employees in service sector organizations are required to understand more of the requirements and changing needs of the customers. Most researchers are of the view that organizational profitability depends on potential employees and management should endeavor to put them in the center of development and retain the employees who are assets to organizations.
Increasingly training and development is becoming a critical strategic tool for sustaining competitive advantage. Training and development will play a key role in how to create knowledge workers, manage and integration of knowledge to achieve organizational goals. Most organizations conduct strategic planning to obtain maximum outcome from employees by identifying and recognizing their potentials and efforts. Taking this in to consideration CBC has imparted with this innovative concept of Knowledge Management as a strategic tool making the Bank adopt to discontinuous environmental changes. Through this process, the Bank anticipates the enhancement of the Bank's collective wealth of knowledge and thereby to provide superior service to its valued customers. The values of knowledge management relate directly to job satisfaction and productivity and enable the staff to deals with today's situations and effectively envision their future.
According to CBC (2011) they have enhanced in providing training totaling to 118,394 man - hours in 2011 compared to 100,361 & 84, 039 man-hours in 2010 & 2009 respectively. Further the Bank has increase the investment on training and development from Rs 22.2Mn in 2009 & Rs 36.032Mn 2010 to Rs 46.151Mn in 2011. The investment in training and development in 2011 is an increase of 28.08% compared to the investment on training development in 2010.
Graph 1.1 - Investment on Training from 2009-2011
However, HRD functions of the Bank are under pressure to provide their worth and to justify the money they spend. Hence the training and development of the Bank should be in line with the Banks corporate strategy and make training an investment rather than expenditure.
The Staff Development Centre of CBC has been providing the supportive role to the entire staff of the Bank assisting them to face challenges more effectively while helping in promoting the spirit of "One Bank One Family" within the "Com Bank" team members. The Bank should concentrate on maintaining standard set of guide lines and uniform practices throughout the entire bank net work to ensure smooth functioning of banking operations, enhance productivity and performance of employees to provide better service to the customers. It is also essential that the Bank tailor the entire training activities in building the right ability and the capabilities in the work force to ensure receipt of expected returns of the employees.
The Bank should constantly look for ways in developing the staff, improving the quality of their training interventions and check their contribution in order to optimize the human resource, the most valuable asset available.