LITERATURE REVIEW - A Study on the Training Needs Analysis of Financial Planners

To serve the study’s need, the following literature review focused on training needs analysis, competency, financial planners’ role and their competency to discuss financial planners’ training needs. This chapter is divided into sections: wealth management, training needs analysis, competency, financial planners’ role and competency.

Definition, Origin, and Development of Wealth Management

According to Directions for Banks Engaging in Wealth Management Business (2008), Financial Supervisory Commission, Executive Yuan, the definition of Wealth Management is a business that provides a variety of financing service by financial planners to keep and create wealth for high net worth individuals according to the needs of client to plan and arrange assets and debts. The client group of wealth management includes both nature persons and legal persons. Financial planners are the person assigned by banks to understand the needs of clients, to plan, and to suggest the products and service accordingly. Financial planners should provide support service and investment opportunity to clients and maintain a close long term relationship. The service provided includes consulting, arranging clients’ assets and debts, and comprehensive financial products and services that consist of (1) all the bank business: such as deposit, loan, investment, financial planning, derivatives, safekeeping, foreign exchange, credit cards, and other financial services. (2) Trust, stock, and bond consulting: such as designated trust capitals for investing foreign funds, bonds, structural financial products and other financial products. (3) Other insurance, stock and bond business:

financial service through insurance companies and securities firm of financial holdings groups.

According to the need of the study, wealth management is defined as an investment advisory business that involves financial planning and specialist financial services. The main objectives are to provide high net worth individuals and families with retail banking services, estate planning, legal resources, taxation advice and investment management to sustain and grow long-term wealth.

Wealth management emerged from private bank service. In Switzerland, wealth management service that distributed and moderately invested clients’ capitals was provided by banks. The focus of banks in Switzerland is on investment management. In the late 1970, banks in the U.S. imitated European banks and establish private bank business, focusing on using personal loan to create wealth or to operate business. Clients’ needs for convenient deposit, loan, and investment have been stimuli that accelerated the development of American private bank service.

The first bank that operates wealth management service was established by the City Bank in 1987 and was the only bank that provided wealth management in the early

development of wealth management in Taiwan. Recently, the wealth management concept and its utilization in Taiwan have been more mature. Both foreign and local banks compete for wealth management market for the following reasons: First, the traditional interest income has contributed less and less for the banks in the environment of liberalization of interest rate.

Second, the number of the high net worth individuals and their wealth has been increasing rapidly. As a result, the market of wealth management has become more and more important for banks. Wealth management centers are generally established in almost every bank.

Training and Training Needs Analysis (TNA)

Introduction of Training Needs Analysis

Training often serves as a way to improve the quality and competency of employees. For the improvement from training is beneficial in improving product or service quality and performance, thus creating more earning and value for all stakeholders. Even more, human resource and talents, as being treated now, are a profitable investment that would bring substantial benefit to the organization and strengthen organization advantages in the era of knowledge worker. To design an effective training, trainers often follow the instructional systems design (ISD) approach, a four-phase approach that consists of assessing training needs, designing training programs, implementing training programs, and evaluating training programs. Training needs analysis then serves as the starting point of training and is a process by which an organization’s HRD needs are identified (DeSimone & Werner, 2006).

Purposes and Meaningfulness of TNA

According to literature review (Anderson, 1993; Brown,2002; DeSimone and Werner, 2006; Noe et al, 2007), scholars often categorize training needs assessment in to three dimensions: (1) organizational, (2) job analysis, and (3) person analysis. Training needs analysis is the first step to train the trainees. To better identify the training needs, it’s necessary to understand the meaning and purpose of training needs analysis.

Brown (2002) pointed out that training needs assessment is a must for designing an effective program. The purposes from a HR point of view can be listed as following: (1) to identify the specific problem areas in the organization, (2) to obtain management support, (3) to develop data for evaluation, (4) to determine the costs and benefits of training. Through understanding the organizational dimension, the appropriateness of training could be

evaluated (Noe et al, 2007).

Generally as proposed by Brown (2002), training need could probably be immediate and remedial, and also, to update and maintain professional knowledge, or others, prepare for job requirement.

Conducting a needs assessment is beneficial in identifying:

1. Organizational goals and its effectiveness in achieving these goals.

2. Gaps or discrepancies between employee skills and the skills required for effective job performance.

3. Problems that may not be solved by training, such as policies, practices, and procedures that need adjustments and corrections.

4. Condition under which the training and development activity will occur.

Training needs assessment can be a reactive way to solve the current competency discrepancy or gap with the organization. Werner and DeSimone (2006) suggested that needs assessment is the very first phase in the HRD process. Also, Training needs highlight the difference between actual and required human performance (Anderson, 1993). Needs

assessment can be defined as a process by which an organization’s HRD needs are identified.

In order to identify the training need and gap in the organization, such as poor performance or the shift of the role, needs assessment facilitates these activities. (1) Establish priorities, (2) Define specific training and objectives, and (3) Establish evaluation. Also, needs assessment identify (1) organization’s goal and the effectiveness in reaching them, (2) discrepancies or gaps between employees’ skills and the required ones, (3) discrepancies or gap between current skills and the skills needed to perform the job successfully in the future, and 4. the conditions under which the HRD activity will occur.

Contrasting to the reactive approach, some scholars supported that HRD should be proactive and future oriented. According to Robert Brinkerhoff, the discrepancy or gap concept of training need is not holistic enough. He proposed other two ways to examine

training needs.

The first one is the diagnostic needs, which focused on factors that influenced

performance. Its goal is to determine how effective performance is gained. The second one is analytic needs, which aimed to identify new and better ways to execute the job. Without diagnosis there can be no solid prognosis. Training needs analysis is the diagnostic part of the whole training process (Anderson, 1993).

Due to the requirement of several legal issues, compliance needs are also added to training needs assessment. According to the law, it is necessary to have mandated training program such as safety training.

According to Rosset (1989), there are two ways to assess training needs, macro assessment and micro assessment. Macro assessment deals with inquiries about issues that contribute to organization’s goal, including receiving opinion from leaders and employees, and understanding organizational strategies and planning. This assessment searches for (1) competency, (2) criticality, and (3) frequency; Micro assessment tries to answer questions such as (1) what do you need to know in order to do the specific job? (2) which knowledge or skills are most essential to doing the job? (3) will training help? (4) are there other

interventions? The purposes of training needs assessment are (1) finding optimal performance, (2) finding feelings about the subject, skills, new system, or new technology, (3) finding causes of the problem.

Advantages for identifying the training needs are as follows (Anderson, 1993):

1. Ensure that the needs contribute to organizational objectives.

2. An audit can be made of the existing training provision.

3. It derives the training acceptance, actual and potential blockages to acceptability.

4. Sound data is gathered

5. Problem identification and priorities can be set as need always outweighs resources.

With the same logic, the researcher agreed with the above-mentioned rationale and

deemed Training Needs Analysis (TNA) as a process that identifies the needs of

organizational human resource development, a process necessary to provide quality training, attempting to improve performance and quality and to promote development in both personal and organizational level. When organizations make decisions to training, a specific and detailed training needs assessment is required for it greatly make training more effective and appropriate. TNA, to sum up, is an analysis that aimed to identify and solve current and future problems. It helps to identify organizational goals and its effectiveness, competency discrepancies, problems that should not be solved by training, how effective performance is gained, and better ways to execute the job. It, too, helps make an audit of the existing training and derive training acceptance.

According to literature review, scholars often categorize training needs assessment in to three dimensions: (1) organizational/strategic analysis, (2) job analysis, and (3)

personnel/person analysis. Each of them is discussed as follows:

Organizational Analysis

Organizational analysis can be defined as a process used to better understand the characteristics of the organization to make decision about where training and HRD

interventions are needed and the conditions within which they are conducted (DeSimone and Werner, 2006). According to Goldstein and Irwin (1993), an organizational analysis identify:

(1) organizational goals, (2) organizational resources, and (3) organizational climate, and (4) environmental constraints. The critical elements are explained as follows:

1. Organizational goals: understanding the organizational goals gives direction to training efforts. In this way, the completion of the training effort leads to the completion of the organizational goals and strategies.

2. Organizational resources: organizational resources include budget, knowledge, facilities, experts and other resources (DeSimone & Werner, 2006). Other information is also

required: (1) organization, (2) products/services/ operations, (3) labor force, (4) quality/quantity/output, etc, (5) training.

3. Organizational climate: it’s a critical factor that affects the success of the training development.

4. Environmental constraints: constraints such as legal, social, political, and economic issues are included.

Goldstein and Irwin (1993) provide a series of questions to do the organizational analysis:

1. Are there any unspecified organizational goals that should be translated into training objectives or criteria?

2. Are the various levels in the organization committed to the training objectives?

3. Have the various levels or participating units in the organization been involved with developing the program, starting with the assessment of the desired end results of training?

4. Are key individuals in the organization ready to accept the behavior of the trainees, and also to serve as models of the appropriate behavior?

5. Will trainees be rewarded on the job for the appropriate learned behavior?

6. Is the training being used to overcome organizational problems or conflicts that actually require other types of solutions?

7. Is top management willing to commit the necessary resources to maintain the organization and work flow while individuals are being trained?

Sources of data for organizational needs analysis are (1) organizational goals and objectives, (2) human resource inventory, (3) skills inventory, (4)organizational climate indexes, (5) organizational climate indexes, (6) analysis of efficiency indexes, (7) changes in system or subsystem, (8) management requests or management interrogation, (9) exit

interviews, (10) work planning and review systems (Moore & Dutton, 1978).

To conclude, organizational analysis explores both the organization and the training in the organization. On one hand, it identifies organizational goals, resources, climates, and constraints. On the other hand, it identifies training issues such as goal specification, management support, staff involvement, training acceptance, reinforcement of training transfer, training appropriateness, and organizational support to their training.

Job Analysis

Job analysis is a method that gathers, organizes, evaluates, and reports work-related information (Brannick & Levine, 2002; Fine& Cronshaw, 1999). It is a method for

determining the knowledge, skills, tools, conditions, and requirements needed to perform a job (Callahan, 1985; Shepherd, 1985).

Job analysis can be defined as a systematic collection of data about a specific job or group of jobs to determine what an employee should be taught to achieve optimal

performance (Moore & Dutton, 1978). Job analysis sets the standard of the appropriate, desired standards of performance. How tasks should be performed should be specified. What competencies that employees should possess are analyzed. Resource of job analysis could be (1) job descriptions, (2) job specifications, (3) performance standards, (4) perform the job, (5)observation, (6) reviewing literature concerning the job, (7)asking questions, (8) training committees/ conferences, (9) analysis of operating problems (downtime reports, waste, repairs, late deliveries, quality control), 10)card sort.

Job analysis is conducted to determine responsibilities and tasks necessary to perform a job (Gupta, Sleezer, & Russ-Eft, 2007). According to Jacobs and Jones (1995), job analysis contains two basics: a set of well-defined behaviors (task behavior) and the performance outcomes led from behavior. Task behaviors are the thoughts, actions, and decisions that staff must make to do the job. There are eight characteristic sets of behavioral patterns for

analyzing tasks: (1) procedure, (2) troubleshooting, (3) decision making, (4) inspecting, (5) adjusting/revising, (6) calculating, (7) planning and (8) comprehending.

Performance outcomes are useful standard to evaluate the adequacy of task.

It’s quite common for practitioners to use task statements to capture the information of task behaviors and performance outcomes. It can be utilized to communicate the training content and outcomes to trainers and trainees. Task statements represent a distinct set of behaviors and performance outcomes.

Jacobs and Jones (1995) suggested that job analysis is the process of explicitly defined behaviors, performance outcomes, prerequisite knowledge, skills, attitudes, and other job relevant information. The abovementioned are products of job analysis that can help (1) specify training objectives, (2) organize task behaviors, and (3) develop performance tests.

Job analysis can also be named as operational analysis. It should be job centered. Norms for the job would be established by extrapolating knowledge, skill and attitudinal

requirements of the experienced employees. It is useful to highlight training gaps (Anderson, 1993).

To sum up, job analysis is a method that collects and analyzes job requirements such as skills and tools, and competencies that an employee should be taught to achieve optimal performance. The outcomes of it are a set of well-defined behaviors and performance outcomes let from the behavior. Both of the outcomes help to specify training objectives, organize task behavior, and develop performance tests.

Person Analysis

Goldstein and Irwin (1993) suggested that when doing person analysis, the focus should be on how well the staffs should execute their job, namely the evaluation of their

performance. Person analysis focus on two questions: Who need training? What kind of training is needed? In this level, self insight and analysis are assessed, using the critical incident technique and other techniques (Anderson, 1993).

A person analysis consists of two components; they are summary person analysis and diagnostic person analysis. The former involves determining the overall success of individual performance while the latter involves discovering the reasons for an employee’s performance.

Therefore, outstanding performers would be a good source on how to improve performance, whereas ineffective performers can be a source that identifies what help are needed to improve performance (See table 2.1.)

Table 2.1.

Component of the Person Analysis Process Summary Person Analysis It is a global analysis; an overall evaluation of an individual’s performance; a classification of an individual as a successful versus unsuccessful performer.

Diagnostic Person Analysis It is a analysis that determines why results of individual’s behavior occur and how

individual’s KSAOs, efforts, and environmental factors combine to yield the summary person analysis.

Source: Herbert & Doverspike, 1990.

Performance Analysis in Person Analysis

Performance analysis is commonly complicated and a core issue in organization which provides analyzed data for managers to make strategic decisions. It’s more suitable for those who evaluate employees regularly to do this analysis. More often than not, staff and their supervisors are involved in this analysis. General steps are as follows: (1) evaluate performance completely and correctly, (2) identify the gap of actual behavior and desired performance, (3) identify the cause of performance gap, and (4) choose appropriate intervention to bridge the gap (See figure 2.1).

Figure 2.1. A Model of Performance Appraisal in the Person Analysis Process

Source: Herbert & Doverspike, 1990.

Person analysis data are often used to define developmental needs for maintaining and increasing the knowledge, skills, and abilities of each employee. It can also prepare employee for future job responsibilities. A skills inventory helps identify the needs for training,

assessing individuals KSAOs and examining their education, training, experience, certification, performance reviews, and recommendations. Some would analyze person analysis data to determine the best strategy for developing their human resources.

Appraise individual

Internal factors External factors

Integrate information from organization, job, and person analyses Select intervention

Knowledge, skill or ability

deficiency Inadequate equipment,

adverse conditions

Competency

McClelland (1973) purposed that competency should predict job performance, and should be assessed through the use of criterion samples and the identification of operant thoughts and behaviors causally related to successful outcomes. This notion then dominated the following competency researches. Boyatzis (1982) later defined competency as an underlying characteristic of a person which results in superior or effective performance in a job. Spencer and Spencer (1993) wrote, “A competency is an underlying characteristic of an individual that is causally related to criterion-referenced effective and/ or superior

performance in a job or situation” (page 17). They also proposed that competencies can be divided into threshold and differentiating competencies: threshold competencies are the essential characteristics such as knowledge or basic skills that everyone in a job needs to meet the minimum criteria. Comparatively, differentiating competencies are factors that distinguish superior from average performers. They then categorized competency into five characteristics and further proposed that “knowledge and skill competencies tend to be visible, and relatively surface: characteristics of people self-concept, trait, and motive competencies are more hidden, “deeper,” and central to personality” (page 20). They five characteristics are as below:

1. Motives: A drive that causes a person wants consistently and takes action to acquire it.

2. Trait: physical characteristics and consistent responses.

3. Self-Concept: Attitude, values, or self-image

4. Knowledge: information a person has in specific content areas 5. Skill: the ability to perform a certain physical or mental task.

They deemed that knowledge and skill competencies are relatively easy to develop through training. But core motive and trait competencies are more difficult to assess and develop. Then, it is most cost-effective to select for these characteristics rather than to train.

Competency-based assessment aims to identify knowledge skills, and attitudes for superior job performance. It helps to determine qualities that distinguish average from superior performance and to provide information about current and future predictors of job performance. A competency is a knowledge, skill, attitude, or behavior that enables a person to perform effectively the activities of a given occupation or to function to the standards expected in employment (International Board of Standards for Training, Performance, and Instruction®, 2005). The concept is introduced by White (1959), McClelland (1973), and Spencer and Spencer (1993). The purposes of it are as follows:

1. Identify the necessary competencies for superior job performance.

2. Create a composite picture or best-practice model.

3. Define incompetency and determine the knowledge, skills, attitudes, and behaviors that should be avoided for optimum performance.

Competency focuses on the superior performers and seeks to identify the knowledge, skills, attitudes, and behaviors the performer needs in order to excel in a job (Gupta, 2007;

Russ-Eft, 2007; Sleezer, 2007). This approach has benefits as follows:

1. It establishes the qualities or characteristics that distinguish average from exemplary performance.

2. In-depth information about current and future predictors of job performance.

3. It helps to increase job satisfaction by showing what is expected from them.

4. It helps to create standardized training and development programs.

5. It helps to develop standards and assessments for certification.

Several limitations of this approach are that it is a time-consuming assessment that involves many parties and that It’s costly to implement.

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