🌱 1. Introduction to Orientation, Training & Development in HRM.

In today’s competitive and technology-driven world, organizations depend heavily on the skills, attitudes and behaviors of their employees. Human Resource Management (HRM) has therefore become a strategic function that focuses on developing people so the business can grow. Among all HRM activities, orientation, training and development together called OTD play the most important role in shaping employee capability and motivation from the first day of work until they become leaders.

This introductory article explains why OTD is important in HRM, how different industries use these practices, the main theories that guide them, and why LB Finance PLC (LBF) is an ideal case to study in the Sri Lankan financial sector.

1.1 Why Orientation, Training and Development Matter

OTD practices help organizations answer a basic strategic question:

“How do we build people who can build the business?”

Orientation helps employees understand their role, their team and the culture. Training builds the technical and behavioral skills required for high performance. Development prepares people for future roles and long-term organizational success. Together, these practices influence employee performance, engagement, retention and leadership effectiveness.

The AMO Model (Appelbaum et al., 2000) explains this clearly. Employees perform well when they have:

1.           Ability → gained through orientation and training
2.           Motivation → strengthened through support, expectations and development
3.       Opportunity → created when organizations provide career paths and autonomy

Therefore, OTD activities are not only supportive tasks they are foundational elements of HR strategy that shape how employees behave and contribute to organizational goals.

1.2 HRM Theories That Explain Why OTD Works

OTD practices are not random activities they are supported by well-established HRM theories. These theories help us understand why orientation, training and development are effective.

1. Psychological Contract Theory (Rousseau, 1995)

Changes in the psychological employment contract - by Denise Rousseau

This theory explains the unwritten expectations between employees and employers.

During orientation, employees form beliefs about:

·       Whether the organization is fair

·       How managers will support them

·       Whether learning and growth are possible

A positive psychological contract increases trust and commitment. A negative one leads to dissatisfaction or turnover.

2. Organizational Socialization Theory (Van Maanen & Schein, 1979)

This theory explains how new employees adjust to the organization.
During orientation, socialization helps employees:

·       Understand the culture

·       Learn acceptable behaviors

·       Feel part of the team

Effective socialization reduces anxiety and increases early performance.

3. Human Capital Theory (Becker, 1993)

Lectures on Human Capital by Gary Becker

This theory views skills and knowledge as investments that increase performance.
Training increases employees’ economic value by making them:

·       More skilled

·       More productive

·       More adaptable

Organizations benefit because skilled employees create better results.

4. Experiential Learning Theory (Kolb, 1984)

Kolb argues that learning happens in four stages:

1.     Concrete experience

2.     Reflective observation

3.     Abstract concepts

4.     Active experimentation

Training programmes that use practice, reflection and application lead to deeper learning and better performance.

5. Adult Learning Theory (Knowles, 1984)

Adults prefer learning that is:

·       Self-directed

·       Based on real-world problems

·       Relevant to their goals

·       Respectful of their experience

This theory supports LBF’s move towards blended learning, digital modules and practical sessions.

6. Resource-Based View (Barney, 1991)

RBV explains that competitive advantage comes from valuable, rare and hard-to-copy resources.

A skilled workforce is one of the most difficult resources to imitate. Therefore, development programmes especially leadership pipelines strengthen long-term competitiveness.

7. High Performance Work Systems (Lepak & Snell, 1999)

HPWS suggests that performance improves when HR practices (training, development, performance management) work together in a coordinated system. Development at LBF is aligned with performance appraisals, promotions and leadership programmes an example of HPWS in practice.

These theories will guide the analysis of LBF in the remaining articles of the series.

1.4 Introducing LB Finance PLC (LBF)

LB Finance PLC (LBF) is one of Sri Lanka’s most established and fastest-growing non-bank financial institutions, employing a large workforce of 4,407 people and operating 216 branches across the country (LB Finance PLC, 2025). The organization maintains a balanced workforce with 47% female and 53% male employees and places strong emphasis on building a “highly engaged and motivated workforce”, demonstrating that employee contribution is central to its business model (LB Finance PLC, 2025). Its mission further highlights a commitment to developing “an empowered and committed group of employees”, showing that people development is considered a key strategic priority rather than a supportive function (LB Finance PLC, 2025). These indicators reveal that LBF is a strongly people-driven organization, where employee capability, behavior and leadership directly influence customer trust, service quality and overall business performance.

 

References

P. Appelbaum, E., Bailey, T., Berg, P. & Kalleberg, A.L. (2000) Manufacturing Advantage: Why High-Performance Work Systems Pay Off. ResearchGate. Available at: https://www.researchgate.net/publication/265380870_Manufacturing_Advantage_Why_High-Performance_Work_Systems_Pay_Off (Accessed: 26 November 2025).

Barney, J. (1991) ‘Firm resources and sustained competitive advantage’, Journal of Management, 17(1), pp. 99–120. Available at: https://josephmahoney.web.illinois.edu/BA545_Fall%202022/Barney%20(1991).pdf (Accessed: 26 November 2025).

Becker, G. (1993) Human Capital: A Theoretical and Empirical Analysis. University of Chicago Press.

Knowles, M. (1984) The Adult Learner: A Neglected Species. Houston: Gulf Publishing.

Kolb, D. (1984) Experiential Learning. Englewood Cliffs: Prentice Hall.

LB Finance PLC (2025) Annual Report 2024/25. Colombo: LB Finance PLC.
(pp. 9, 24–26 used)

Lepak, D. and Snell, S. (1999) ‘The human resource architecture’, Academy of Management Review, 24(1), pp. 31–48.

Rousseau, D. (1995) Psychological Contracts in Organisations. Sage.

Van Maanen, J. and Schein, E. (1979) ‘Toward a theory of organisational socialisation’, Research in Organizational Behavior, 1, pp. 209–264.

Wright, P. and McMahan, G. (1992) ‘Theoretical perspectives for strategic human resource management’, Journal of Management, 18(2), pp. 295–320.

Gary Becker (n.d.) Lectures on Human Capital [YouTube playlist]. Available at: https://www.youtube.com/playlist?list=PL9334868E7A821E2A (Accessed: 26 November 2025).

FNEGE (2014) Changes in the psychological employment contract – by Denise Rousseau [YouTube video]. Available at: https://www.youtube.com/watch?v=EKGYUyFn6rA (Accessed: 26 November 2025).

Business school 101 (2024) What is Resource-Based View (RBV)? | From A Business Professor [YouTube video]. Available at: https://www.youtube.com/watch?v=Vh9rKENm6Zo (Accessed: 26 November 2025).

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