The Relations between Investment in Employees' Development and Organizational Productivity and Service Quality

Abstract

Human resource management (HRM) is directed to managing human potentials of a company in order to achieve organizational goals, and at the same time, goals of employees. One of the very important part of this process is training and development, as a group of activities aimed at improving employees knowledge, skills, and abilities (KSA), in order to be more successful in job, but also with the aim of creating a base for further development of an organization as a whole. The main aim of the research was to explore the effects of investment in employees' development, measured by number of training days and percentage of operating costs invested in development and training, on the level of organizational productivity and service quality. The subject of the research is the relationship between two main indicators of employees' development program, and organizational level productivity and service quality. The methodology used in the research obtained the application of two-way multivariate analysis of variance (MANOVA) on the data from 160 companies from one Southeast European country, gathered during 2015 and 2016. The results indicated that there is an interaction effect between training costs and number of training days on the combined dependent variables, productivity and service quality in the observed organizations.