THE IMPACT OF EFFECTIVE HUMAN CAPITAL MANAGEMENT PRACTICE ON ORGANIZATIONAL GROWTH

CHAPTER 1                  

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Human capital management is that aspect of management that is concerned with all aspect of managing the human resources of an organization. Human Capital management involves the management of human capital at work irrespective of the type of organization in question, its products, size or structure, philosophy of its management must procure human resources of it to achieve its stated objectives. Human capital management practices spreads all the aspect of co-operate and organization activities. It therefore becomes the responsibility of all those who manage people in the organization as well as being a description of work of those who are employed as a human capital specialist. More especially, human capital management involves determining the organization and the use of human resources, recruiting and selecting the best available employees acting as liaison between the union and the government organization and handling other matters relating to employees will being.

However, many organizations have paid little or no interest in the effective human capital management which has resulted to how productivity high rate of employee interest and other ugly social menace, thereby hindering the organization growth. The growth of any organization lies solely on the growth and development of his employee. In a case where human capital management is not well practiced in any organization the growth of the employees will not be achieved and the result is that a stunted growth or declining profit will be recorded.

A satisfied work force is the cove strength of an organization and to maintain a satisfied work force the organization must be organized. For human resources that have been acclaimed, it must be vital and must be a useful resource among the organization resources. Any organization that must achieve its objectives must first develop its human factors or resources.

But, it is ironical that many organizations have no plan for growing their human resources. But budget of millions of naira and even Dollars have been spent in the growth of many organization. Billions is been spent on infrastructural capacity building, information communication, technology, but little or none is budgeted on the human resources that will control the infrastructural and the information communication technology. This remains the core reason why the infrastructure and the technologies acquired is not performing the purpose for which they were designed to do.

Comparing the practice of human capital management in both public and private sector, they are nothing to write home about, no structure of policy frame work can be identified, designed, grow and develop human resources in the center of the economy. This has been observed to be the main causes of the fall in the standard and quality of output in the economy and lack of compatibility strength with their foreign counterpart.

Growth and productivity is the only solution to persistence rise in the price of commodities in the economy together with the infrastructural and technological delay. This problem should be avoided by ensuring effective human capital management practice in the organization.

Organizations spend more time needed on infrastructural capital building and information communication technology believing it as the sure way to achieve the organizational growth objective. Infrastructure collapse upon infrastructure and technology failure is no longer news but a normal occurrence in the economy of Nigeria. Allocation of resource from one end to other is now the order of the day with no man to be held accountable for a crime. The entire shareholder in the industries running from pillar to pole asking what the problem is? The question that normally arises is “does effective human capital management practice leads to organization growth”.

Like every aspect of human life, human capital management as we have seen did not start today, it has been since decades ago and it presently functions in every organization.

        Although the modern theory of human capital has been developed over the past half century. The concept of human capital has been traced at least far back as the 17th century. Around 1691, Sir William Petty placed a value on labourers, estimated the value of human capital to demonstrate the power of England and estimated the cost of life lost in wars and other deaths.

        In 1853, William Farr proposed that the present value of a person is not future earnings, which he defined as earnings  less living expenses, represented wealth in the same way as did physical properly and should be similarly taxed.

        In working at the evolution of human capital management W.F Casio (1989:38), noted human capital management is a combination of a lot of other discipline and listed that it emerges from none related sources. They are as follows;

a)   Rapid technological changes that increase the specialization of labour associated with industrial revolution.

b)  The emergence of collective bargaining with constraints established for both Union and employees.

c)   The scientific management movement.

d)  Every industrial psychology.

e)   The government human capital practices growing out if the establishment of the civil service commission.

SCIENTIFIC MANAGEMENT: Fredrick Taylor was concerned with systematic study of management techniques and procedure. He believes in the philosophy of, “The one best why” of performing each job to achieve maximum efficiency and productivity. Once labour and management understands themselves, the conflicts occurs between them will disappear.

HUMAN RELATION MOVEMENT: Much of the foundation work of this movement was done by How Throne work plant of the Western Electric Company in Chicago during the late 1920 and the early 1980. The research which was headed by Elton Mayor, sought to determine the effect of Illumination and other condition upon which workers and productivity are based. The human relation movement therefore grew out of the reaction against the impression ability of the scientific management school of thought. Human relation movement therefore advocate that workers are human beings and not just ordinary machines, that proper treatment of work force and also function is relatively new in the country as far as the late 1950. The countries wages employment in Nigeria like in many other countries such as Africa was a novelty. Economic activities centered on the family where there was no need for external recruitment of labour. But the advent of Europeans and the attainment of commercial activities gradually altered this picture; wage employment becomes the order of the day. It is through wages employment that human capital function evolved in Nigeria today.

MAN POWER PLANNING: Magginson (1981:121) defined manpower planning as a process of translating overall organization activity plans and programs into an effective work force to achieve a special performance. This definition suggests that there should be plan for them so that the set goals and objectives can be achieved. It also suggests that manpower planning is futurist in nature.

        According to Stainer (1991), manpower planning is defined as a strategy for the acquisition, utilization, improvement and preservation of enterprises in human resources. Manpower planning aims to maintain the ability and improve the organization in order to achieve corporate objective, through the development of strategic and enhance the contribution of manpower at all time in the foreseeable future. The foregoing points show the fact that manpower is a continuous process and should be evaluated constantly because there is always a change in the society and within the organization itself.

Furthermore, Maggison proposed step in manpower planning and stated that, it operates as two organization level where range objectives and plans are made and sent to the sound.

STEPS IN STAFFING PROCESS:-

Studying

Determining

Taking

Training

Development

Long objectives and plan

Overall human resources and requirement

Inventing of present human resources

Human resources required

Program recruiting and selection

Short-term goal, plans, programs and budget

Work force required by occupational categories of job skills and demographic characteristic

Inventory by occupational categories of job skill and demographic characteristic

Needed requirement or addition

Plan for developing and upgrading the needs

Source: Human capital management, Human resources approach by I.C Maggison, (p: 121)

        Manpower planning is an important practice in Human capital management and properly carried out by the organization, the benefits to be derived according to Finnegan (1973:89) include the following;

1)  Determination of recruitment needed.

2)  Anticipation of surplus to be collected by National Wastage rather than redound acnes or dismissal.

3)  Indication of further training needed.

4)  Provision of a basis for management development programs.

RECRUITMENT: Once human needs has been determined through manpower planning, recruitment settings is very necessary. Recruitment is part of the staff function which comprises of selection and placement.

        It is the process of filling in existing vacancies in the organization. According to Edwin Flip (1980:131), recruitment is a process of searching for prospective employees and stimulating them to apply for job in the organization. This suggests that recruitment seems to be Positive unlike selection, which is Negative because it rejects some people. Recruiting is usually based on the job need as developed by manpower planning. The view is upheld by Gluck (1980:693), when he pointed out that human resources planning action decision indicates recruiting. He gave his definition of recruitment as that set of activity which an enterprise uses to attract job candidates who has the ability and attitude need to help that enterprises achieve its goal. The method of recruitment by an organization may be generally classified as formal and informal methods.

        Under formal methods, we have internal and external sources of recruitment. The Internal source is the means of filling job openings by the organization of the existing staff through the form of upgrading, promotion, transfer and job posting. Internal recruitment tends to increase the morale of the employees, save cost, and time through reducing the hiring and training procedure. It enhances effectiveness because the organization is aware of the productivity, efficiency and attitude of its employees.

        According to Gluck’s, source of recruitment include internal job posting and biding friends of present employee and skill inventing. Examples are as follows;

    i.        External work in agencies of private and public employment and executive search firm.

  ii.        Education institution and high school.

iii.        Vocational technical college and universities.

 iv.        Other Union Professional association military service and former employee.

In general, each organization recruitment is based on the peculiar circumstance that its face such as the number of vacancies existing and general state of the economy. SELECTION: It is a process of costing individuals who are most likely to succeed on job among those already recruited. The source of selection process depends on the effectiveness of the manpower planning and recruitment process. The essence of selection process helps in making decision as whether an applicant has the personal qualification that matches the job requirements. It must take into account constraint of time, money and the depth of available human resources.

    Secondly, in selecting employees, there must be some criteria for measuring the successful candidate.

    Thirdly, there must be prediction that can be used to estimate whether an applicant can or will meet the performance expected.

        Fourthly, selection technique must be used to gather and evaluate the performance of the prospective candidate/employees.

        From the above statement, it could be rightly said that, it is a decision making under uncertainty where one cannot be perfectly sure of an individual performance until he gets in with the job. But, selection enables us to a reasonable extent, how the performance of Individual can turn out to be accurate or not. Therefore there must be need to other vital concerning selection making is based. The view of Maggison, especially the second issue he raised concerning selection in line with Gluck (1981:675), he emphasized that to make an effective selection, managers must establish criteria to use selection as a process undergoes various stages.

PLACEMENT: After the selection process the need to place the employee properly comes to hand. This is very important because if the right man is selected in the wrong position to do or carry out a test, there is the tendency that he will not perform effectively. Therefore if a worker is to be motivated on production, he must be placed in the right position in order to carry out his duty well. The view was upheld by Musclemen and Highed (1969:299), when they asserted that even a right person in the wrong position could have a disturbing effect on the operation of the business. This shows that a wrongful placement of employees can cause less productivity not only to the management but to its workers adversely. It was highlighted by Piggott’s and Myers, that placement is not the trail action to be taken, it is a decision step, which consists in matching what the supervisor has reason to think, and now employee can do with the job demand. It offers among other things, like opportunity for their work promotional possibilities and pay.

TRAINING AND DEVELOPMENT: After the staffing function and employees are placed on the job. Their performance may not be satisfactory because they could not have being perfect at the time of being trained. Therefore, in order to develop them so as to fit adequately into both the job and the organization they need to be trained. Gluck defined training as a means/system process of training the behavioural goals. This implies that employees have to acquire certain knowledge, skills and abilities that will enable them perform effectively in the organization which operates in a dynamically changing environment.

        On the other hand, development involves preparing employees; development could be looked at as a process concerned with the improvement and growth of their capabilities within the organization programs and continues throughout the employees working years. The ambiguity of a training and development were classified by Stoner and Freeman (1992:388), when they differentiated training and development program in their words. Training programs are directed towards maintaining and improving current job performance. While Development programs seeks to develop skills for future job.

        At this juncture, one may wish to ask how training of individuals can be established. Stoner and Freeman gave a possible answer on how managers can use these procedures to determine the training needs in individuals in the organization. They include;

a)   Performance Appraisals: Each employees work is measured against the performance standard or objectives established for his or her job.

b)   Organization Analysis: The effectiveness of the organization and its success in meeting its goals lies on its ability to analyze and determine where differences exist.

c)   Analysis of Job Requirement: The skill and knowledge specified in the appropriate job description examined and those employees without necessary skill or knowledge become candidate for a training program.

d)  Survey of Human Resources: Managers as well as non-managers are assessed to describe what problem they experience in their work and what action that is believed to be necessary for solving them. After these needs are identified, it becomes imperative and the various methods are open for training purpose. Generally, the methods could be on the job or off the job training. They include the following;

1)  On The Job Training: Here the employees are shown how the job is done and they are accounted to do it under skill trade. Under the supervision of an expert, the trainee spends relatively a longer period in order to become perfect on the job.

2)  Vestibule Training: These are procedures machines that are set up in his working areas called Vestibule. The trainee under the intricacies of the job at his or her own rate of understanding.

3)          Sandwich Training: It becomes practical on the job experience with normal lecture. An example of this is the long vacation on the improvement program in higher institution.

1.2 STATEMENT OF THE PROBLEM:-

Nigeria is one of the most popular country in Africa, with labour force and abounded natural resources. Paradoxically, the nation has witnessed slow economic growth despite presence of these resources. Noting this phenomenon, Udabah (1999:69) stated that although as abundance of natural resources might appear to give a country a head start on development nor does their absence guarantee backwardness as there exist many developing nations with abundant natural resources that comma potential value in the world market but still remains largely undraped. It is clear from this statement that human capital development is highly required for a meaningful economic growth.

1.3 PURPOSE OF THE STUDY

The main purpose or aims of this research study are stated below;

a.   To evaluate the extent of practices of human capital development in the organization.

b.  To examine how effective human capital development practices will affect workers attitudes towards work.

c.   To evaluate the impact of organizational training problem on the workers productivity.

1.4 SIGNIFICANCE OF THE STUDY

Both small and large business enterprises in some area have been abandoned due to their styles of human capital management practices. It is with this background that the study of the history of human capital management practices in Star Paper Mill Limited Aba, Abia State was based. This study will be essential to businessmen and women, lecturers, students, human capital management etc, because, its reference on this topic is a way forward. It will equally help to increase the increase the level of awareness and importance of understanding of human behavior as it relates to increase in the organizations growth.

1.5 RESEARCH QUESTIONS

In the cause of the research, I wish to provide answer to the following question:-

1. Does your organization really have problem human capital management effectively?

1.  How does effective human capital management practice affect workers attitude to work?

2.  Does your organization have a training programme that can improve the skill and knowledge of the workers?

3.  Does the management practice adopted by your organization increase productivity?

1.6 SCOPE/DELIMITATION OF THE STUDY

This project is based on the impacts of human capital management practices to the growth of organisation. It is only on how a good development of human capital and human resources of the organization good as it relates to the growth and development of such firms in quote.