Effects of training needs assessment in enhancing employees’ skills and firm performance

Purpose Work-based learning is critical for enhancing employees’ skills and contributing to the firm’s performance. This paper aims to establish the effects of needs assessment on the relationship between training intensity as part of learning and how employees’ skills are reflected in firm performance. Design/methodology/approach The paper used the World Bank Tanzania Employees Skills Survey (TESS) dataset, which contains 424 firms. This paper estimated the moderated mediation model through partial least squares structural equation modelling (PLS-SEM) and employed the index of moderated mediation to determine if the model was correctly specified. Findings The results show that among three skills, i.e. technical, interpersonal/communication and work ethic skills, only the level of technical skills mediated the relationship between training and the firm’s performance. The index of moderated mediation suggests a threshold point for the firm’s training needs, above which the indirect effect of training on performance through technical skills starts to decrease. The negative correlation between the firm’s training needs and the indirect effect suggests that employees’ essential human capital qualities, viewed from the angle of their training needs, are among the key factors for executing effective training. Research limitations/implications This paper’s conceptual model is limited because it does not incorporate an education variable for the trained employees. In addition, it only conceptualized the perceived most important skills of interpersonal communication, technical skills and work ethic, despite there being other skills that could have been considered. Moreover, the data only measured the present skill level at three on the Likert scale, providing limited room for skill level variance. Practical implications Those who decide which training programme deserves priority given limited resources and the firm’s goals need to understand that training is an addition to what their employees already have and, thus, should make extra efforts to equip them with more knowledge relating to their assignments. Moreover, this understanding should extend to the employees themselves. Originality/value The paper introduced and showed the necessity of training needs assessment to increase the value of training in enhancing the firm’s performance. We propose a model for assessing training intensity through process analysis. The respective model depicts a threshold point for the firm’s training needs, below which the training will work.