The Mediating Role of Employee Competence Between Training and Performance Evaluation.

Abstract

This study investigates the mediating role of employee competence between training and performance evaluation in the banking sector of Sindh, Pakistan. In highly competitive service environments, banks increasingly invest in employee training programs to enhance knowledge, develop skills, improve performance and achieve organizational goals. However, the effectiveness of training in translating knowledge into measurable performance outcomes largely depends on employees’ ability to apply acquired skills effectively. Using a quantitative research design, data were collected from 350 employees across six major banks, including HBL, UBL, MCB, Standard Chartered, Bank Alfalah and Faisal Bank, employing a stratified random sampling technique. Structural Equation Modeling (SEM) and bootstrapping methods were utilized to test the hypothesized relationships.

The results indicate that training has a significant positive effect on employee competence (β = 0.45, p < 0.001), confirming that well designed and competency focused training programs enhance employees’ technical, behavioral and problem solving skills. Employee competence was found to have a strong positive impact on performance evaluation outcomes (β = 0.52, p < 0.001), highlighting the critical role of competence in achieving high performance ratings. While training also has a direct effect on performance evaluation (β = 0.18, p = 0.011), the mediation analysis revealed that competence partially mediates the relationship between training and performance evaluation (indirect effect β = 0.23, p = 0.001), suggesting that the application of acquired skills is key to translating training into improved performance. The total effect of training on performance evaluation was substantial (β = 0.41, p < 0.001). These findings emphasize the importance of competency-oriented training programs, aligned performance appraisal systems and continuous skill development initiatives to optimize employee performance.

This study contributes theoretically to Human Capital Theory, Social Cognitive Theory and the broader field of human resource development by demonstrating that employee competence serves as a critical mechanism linking training to performance outcomes. Practically, the results provide insights for bank management, HR professionals and policymakers to enhance training effectiveness, design competency based evaluation systems, and foster organizational productivity in the banking sector.