THE EFFECT OF HUMAN RESOURCE DEVELOPMENT ON THE GROWTH OF ORGANIZATIONS.

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CHAPTER ONE

Introduction

  • Background Of The Study

 

Human resources development is very crucial issue in an organization. To an organization, it is regarded as a means to achieve effective human resources development objectives. The effectiveness of Human Resource Development depends on the degree of participation of employees’ and hence, reflects in the intended business outcome. The extent to which, human resource development affect organizational growth and performance has emerged as the central factor in the development of an organization. (Becker and Gerhart, 1996; Guest, 1997). Although human resources practices may have a positive effect on organizational development and performance, most scholars suggest that more conceptual and empirical work is required (Brewster, 2004; Cardon and Stevens, 2004; Givord and Maurin, 2004; Zhu, 2004). For the moment, Human resource development is considered as the most valuable asset in an organization and makes a difference for most organisations (Pfeffer, 1998; Wimbush, 2005).

The link between human resources development and firm growth is well documented in classic economic theory. Overwhelming evidence suggests that growth is driven by specialization and division of labour in the processes of generation and attraction/development of technological opportunities. However, at the firm level of analysis, only recently the link between human resource development and growth in an organization has attracted the interest among most researchers. Firm growth is often seen as an indication of market acceptance and firm success (Fesser and Willard, 1990). Growth is considered as a top strategic priority for most firms yet only few companies achieve growth (Baum and Wally, 2003; Zook and Allen, 2003).

The concept of human resource development in the growth of an organization is in the early stage of development in developing countries like Nigeria, Ghana, Cameroon and etc. Similarly, the total worth of an organization depends mainly on the skills of its employees and the services they render. Hence, the success of these organizations is contingent on the quality of their human resource ability of the organization. In knowledge driven economies therefore, it is imperative that the human resource development as an integral part of organizational elements be recognized as a total worth of an organization. However, in order to estimate and project the worth of the human resource, it is necessary that some method of quantifying the worth of the knowledge, motivation, skills, and contribution of the human elements be ascertained. Human Resource development (HRA) denotes just this process of quantification/measurement of the Human Resource (Prasad & Kumar, 2006).

1.2       Statement of The Problem

Despite so much recognition and debate on human development as the primary source of corporate performance in organizational productivity output and financial profitability in particular, there seem to be little emphasis of this cognisance amongst corporate managers in Nigeria toward the development of human resource(Brewster, 2004). One   problem is that there is lack of recognition about the significant contributions of human resource development towards the growth and performance of organization and this has become one of the factors which affect the development of human resources. Inadequate knowledge of the relationship between the costs of human resources development deprives corporate firms of the access to the economic basis and the growth of the organization.  Inadequate funding of human resource by organization as confirmed in the work of Central Bank of Nigeria (2000) is another problem which affects human resource development and the growth of organization(Itsede 2003). The tremendous increase in organizational output  at all levels have been affected because of poor human resource development and the  declining  quality of the trained manpower concerned without geometric increase in the public expenditure of most developing countries like Nigeria towards the actualization of  the aim of the organization has greatly reduce the rate of organizational growth in Nigeria. Based on these backdrops the study  examines the effect of human resource development on the growth of organization.

  • Objectives Of The Study

The main objective of the study is to determine the effect of human resource development on the growth of organizations. While other specific objectives are:

  1. To investigate the extent employee training cost affect  organisational growth.
  2. To ascertain the extent staff conference attendance cost affect organizational growth .
  • To examine the link of human resources training in organization in relation to the in-service training cost on growth of the organization.
  1. The effect of human resource development on company net assets in relation to organizational growth.

 

1.4       Research Questions

In order to give direction to this research and to gather arrived at relevant findings. The following questions were posed.

  1. To what extent do employee training cost  affect  organisational growth.
  2. To what extent do staff conference attendance cost affect organizational growth .
  3. What is the extent of the link between human resource training in relation to in-service training cost on growth of an organization?
  4. What is the effect of human resource development on company net assets in relation to organizational growth?

 

1.5       Research Hypotheses

The following five (5) hypotheses formulated to test each of the responses of the respondents to the research questions posed.

H01: Employee training cost  has no significant effect on organizational growth.

H02: Staff conference does not significantly affect the growth of organization.

H03: Human in-service training cost has no significant relationship on growth of an organization.

H04: There is no significant  effect  of human resource development on company net assets in relation to organizational growth.

 

1.6 Significance Of The Study

This study will add new knowledge to current theoretical work in Human Resource Development and will be of benefits to those interested on the effective of Human Resource Development. The study is also significant since it will evaluate the relationship which exist between the human resource development and the growth of organization and at the same time provide various reasons why it is necessary for an organization to invest on human resource. The study will also provide reasons why it is necessary for an organization to adequately focus in developing their human resource personnel. The research will also provide a new conceptual framework. The research will provide a sound model which will provide ground for future research and practice and provide conceptual framework for further empirical research. The findings of this research will also be of benefit to Human resource development practitioners who are often criticized by lacking of strategic linkages with business in practice thus curiously looking for strategic approaches in practical arena; a new model proposed by this study can help them refresh ideas beyond the current paradigms and link to their practices with two-stage strategic objectives: financial performance and sustainable competitive advantages. The research findings will also be of great important to different organizations who want to achieve a great level of organizational growth on the need to invest on their human resource development programme. The study will also serve as a source of reference to fellow researchers who will want to work on the effect of human resource development in  an organization.

  • Scope of the study

The research work is limited to “The effect of human resource development on the growth of organizations: using five different quoted companies. The financial statement of the companies to which this study will also be limited covers a period of ten (10) years. The study will used the   following firms as a selected case study: First Bank Nig Plc, located in Awka Anambra state, Dangote Sugar Nig Plc located in  Ikoyi Lagos state ,Dangote Cement Nig  Plc located in Gboko Benue state ,7 up bottling Company Plc located in Nine mill Enugu state and Gtb Bank Plc in Anambra state.

 

 

1.8. Limitation Of The Study

Some of the limitation  encountered during the course of the study was the difficulty in accessing data from the quoted companies used for the study. Other limitation is the difficulty in locating some of the firms used due to geographical location.

   

1.9 Definition Of Terms    

Capital Employed: This is the amount available for production. It represents the total less current liabilities employed in the business.

Human Capital (HC): Human capital is all the Expenses incurred on Compensation and development of employees. HCE = Value Added / Human Capital (VA/HC)

Human  Capital Efficiency (HCE): Human capital efficiency is the ratio of value added to human capital. This ratio shows the value added by every unit of money spend on the human resources of the banks in the form of compensation and development expenses.

Input: It is the sum of all the costs that is incurred by the organization towards purchase of inputs for operating and continuing the business.

Management:  The art of getting things done through people. Management is also the process of planning, organizing, leading and controlling the efforts of organization members and the use of all other organizational resources to achieve the stated organizational goal.

Output: It is the total of all income/revenue generated during the financial year by an organization by selling its goods or services.

Profit Optimization: Making the highest amount of profit given the available resources.

Value Added: Value added is the difference between the Output and Input. It is the value created by the organization during the particular financial year. Value Added= Value of Output – Value of Input

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