1.1 Introduction
Human Resource Management can be described as a strategic, integrated and coherent approach to the employment, development and well-being of the people working in organizations. It has a strong conceptual basis drawn from the behavioral sciences and from strategic management, human capital and industrial relations theories. This foundation has been built with the help of a multitude of research projects (Armstrong, 2010). A human resource practice is considered the most critical for organizational performance. However, Human Resource Management is described as a strategic, integrated and coherent approach to the employment, development and well-being of the people working in organizations.
As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitations of the Study and Definition of technical terms.
1.2 Background of Study
Human resource management (HRM) is the policies, practices, and systems that influence employees’ behavior, attitudes, and performance. Many companies refer to HRM as involving people practices. There are several important HRM practices that should support the organization’s business strategy: analyzing work and designing jobs, determining how many employees with specific knowledge and skills are needed (human resource planning), attracting potential employees (recruiting), choosing employees (selection), teaching employees how to perform their jobs and preparing them for the future (training and development), evaluating their performance (performance management), rewarding employees (compensation), and creating a positive work environment (employee relations). An organization performs best when all of these practices are managed well. At companies with effective HRM, employees and customers tend to be more satisfied, and the companies tend to be more innovative, have greater productivity, and develop a more favorable reputation in the community (Raymond, 2011).
According to Noe (2011) human resource management is critical to the success of organizations because human capital has certain qualities that make it valuable. In terms of business strategy, an organization can succeed if it has a sustainable competitive advantage (is better than competitors at something and can hold that advantage over a sustained period of time). Therefore, we can conclude that organizations need the kind of resources that will give them such an advantage.
Employees are one of the most important assets of an organization as they contribute to its growth and success (Danish and Usman, 2010). Malik, Nawab, Naeem, and Danish (2010) concluded that in the era characterized by rapid and continuous change, knowledge capital must be retained in order for organizations to be productive and responsive to the needs of their stakeholders. Likewise, banks as fianacial institutions need to attract, retain and develop their employees. Banks need employees who are well trained and motivated so that they are committed to their work of conducting research and training for the development of the nations (Lew, 2009). Research literature has shown that effective application of some human resources management (HRM) practices enables organization employees to be committed to their work for good performance of the bank (Shahzad, Bashir, & Ramay 2008).
Implementation of appropriate HRM practices for banks employees will promote university performance as Lew (2009) noted that employees play a strategic role in improving ratings in key areas like proper customer financial management. Realizing the importance of promoting banks’ performance, many banks are embarking into strategizing its HRM (Sirat, 2005). For this to materialize, it is significant that the country’s financial institution improve their world class bank ranking by attracting and retaining excellent and experience staff.
One of the sectors which will play an important role is banking sector especially the commercial bank. The nation needs more human resources capable of performing different activities both in public and private sectors. Subsequently, the commercial bank are expected to properly management customers’ money. Malik et al. (2010) training and development of well-qualified human resources will depend on the performance of the bank subjected to effective implementation of different bundles of HRM practices such as selection, compensation, information sharing, participative decision making, job definition, training, career planning and performance management among others.
Little empirical research has been conducted to examine the effects of HRM practices on commercial bank performance in Nigeria. In order to effectively investigate whether human resources are capable of contributing to competitive advantage, it is pragmatic to examine HRM practices in as many settings as possible. Therefore, in Ecobank, Nigeria where the research was carried out, the activities that was conducted is to know the Impact of Human Resources Management (HRM) Practices on Organizational Performance.
1.3 Statement of Problem
The impact of Human Resource Management (HRM) practices on organizational performance has been a widely researched area. Result of studies, from developed countries to developing countries; have been time and again showing that HR practices have significant effect on organizational performance. But unluckily, very insufficient numbers of studies have been conducted to check the effectiveness of existing and currently implemented HRM practices in Nigerian banks. The main aim of this study is to fill this existing gap by exploring the effect of HRM practices on organizational performance of Eco bank (Nigeria) Plc. as well as examining whether there is a positive or negative effect of HRM practices on organizational performance.
Performance appraisal has attracted a great deal of attention, due to the under-performance of several banks which led to the winding down of some banks. Annual performance appraisals enable management to monitor the standards, to agree on the expectations and objectives, and to delegate the responsibilities and tasks. The effect of the economic recession on the Nigerian economy has pushed banks to find ways to increase its level of employee productivity and maintain competitive advantage in the industry. The performance of a bank is largely dependent on the performance of its employees and the only way to continually have the best hands on the job is through the implementation of effective performance appraisal systems.
1.4 Aim and Objectives of Study
The aim of the study is to examine the Impact of Human Resources Management (HRM) Practices on Organizational Performance. In achieving this aim, the following specific objectives were laid out as follows to:
- Determine how Recruitment and selection practices affect employee effectiveness in Eco bank (Nigeria) Plc.
- Assess the effect of performance appraisal on employee performance in Eco bank (Nigeria) plc.
- Evaluate the influence of compensation plan on Employee Motivation in Eco bank Nigeria Plc.
- Investigate how training and development programs affect organizational commitment in Eco bank (Nigeria) plc.
1.5 Research Questions
The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:
- How does recruitment and selection practices affects employee effectiveness in Eco bank (Nigeria) Plc?
- What are the effects of performance appraisal on employee performance in Eco bank (Nigeria) plc?
- How does compensation plan influence employee motivation in Eco bank Nigeria Plc?
- How do training and development programs affect organizational commitment in Eco bank (Nigeria) plc?
1.6 Research Hypothesis
In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.
- H01: Recruitment and Selection practices do not affect employee effectiveness in Eco bank (Nigeria) Plc.
- H02: Performance appraisal has no significant effect on employee performance in Eco bank (Nigeria) Plc.
- H03: Compensation plan by management has no significant influence on employee motivation in Eco bank (Nigeria) Plc.
- H04: Training and development programs do not affect organizational commitment in Eco bank (Nigeria) Plc.
1.7 Significance of Study
This study will contributes to the literature by critically examining the effectiveness of existing Human Resource Management (HRM) practices that are currently in place at Eco bank (Nigeria) Plc. such as recruitment and selection, performance appraisal, compensation plan and training and development, and what effects they have on the employee, as this will ultimately determine the bank’s performance.
The management of financial institutions especially the banking sector will definitely find the recommendations and findings of this work relevant and useful in charting a new course for improved organizational performance, through the utilization of HR tools for human resources management and development.
The study will be relevant to the government in terms of formulating and implementation of policies concerning the banking sectors of Nigeria. The study will be useful to those who will carry out studies in related areas in future. It will serve as a reference material to them. Even, the findings can provide the bases for further studies.
1.8 Scope of Study
The study focuses on the Impact of Human Resources Management (HRM) Practices on Organizational Performance in Nigeria using Eco bank (Nigeria) Plc as a case study.
1.9 Limitations of the Study
During the course of this study, many things militated against its completion, some of which are:
- Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
- Research material: availability of research material is a major setback to the scope of the study.
- Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
- Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
1.10 Operational Definitions of Terms
Performance appraisal (PA): also referred to as a performance review, performance evaluation, (career) development discussion, or employee appraisal is the method by which the job performance of an employee is documented and evaluated.
Employee compensation plan: collectively refers to all the components in addition to the manner in which the compensation is paid and for what purpose employees receive case bonuses, salary increases and incentives.
Recruitment: this is the process of identifying that the organization needs to employ someone up to the point at which application forms for the post have arrived at the organization.
Selection: this consists of the processes involved in choosing from applicants a suitable candidate to fill a position.
Training and development: this is a function concerned with organizational activity aimed at bettering the job performance of individuals and groups in organizational settings.
Job Security: this is an assurance that an individual will keep his or her job without the risk of becoming unemployed. He/she will have continuity in employment and it may be from the terms of a contract of employment, collective bargaining agreement, or labor legislation that prevents arbitrary termination.
Effectiveness: The degrees to which objectives are achieved and the extent to which targeted problems are solved. In contrast to efficiency, effectiveness is determined without reference to costs.
Efficiency: this is the (often measurable) ability to avoid wasting materials, energy, efforts, money, and time in doing something or in producing a desired result. In a more general sense, it is the ability to do things well, successfully, and without waste.
Performance: the accomplishment of a given task measured against preset known standards of accuracy, completeness, cost, and speed.
Human Resource: this is a single person or employee within your organization. Human Resources is also the organizational function that deals with the people and issues related to people such as compensation, hiring, performance management, and training.
Personnel management: this is an administrative function of an organization that exists to provide the personnel needed for organizational activities and to manage the general employee-employer relationship.
