1

KANU, Mba

PG/M.Sc/06/46352

EFFECT OF HUMAN CAPITAL DEVELOPMENT

ON PERFORMANCE OF SELECTED MANUFACTURING

FIRMS IN ENUGU STATE, NIGERIA.

DEPARTMENT OF MANAGEMENT

FACULTY OF BUSINESS ADMINISTRATION

Godwin Valentine

Digitally Signed by: Content manager’s Name

DN : CN = Webmaster’s name

O= University of Nigeria, Nsukka

OU = Innovation Centre

2

EFFECT OF HUMAN CAPITAL DEVELOPMENT

ON PERFORMANCE OF SELECTED MANUFACTURING

FIRMS IN ENUGU STATE, NIGERIA.

KANU, Mba

PG/M.Sc/06/46352

DEPARTMENT OF MANAGEMENT

FACULTY OF BUSINESS ADMINISTRATION

UNIVERSITY OF NIGERIA

ENUGU CAMPUS

NOVEMBER, 2015.

3

EFFECT OF HUMAN CAPITAL DEVELOPMENT ON

PERFORMANCE OF SELECTED MANUFACTYRING FIRMS IN ENUGU

STATE, NIGERIA.

KANU, Mba

PG/M.Sc./06/46352

A DISSERTATION PRESENTED IN PARTIAL FULFILMENT OF THE

REQUIREMENTS FOR THE AWARD OF MASTER OF SCIENCE (M.Sc.)

IN THE DEPARTMENT OF MANAGEMENT FACULTY OF BUSINESS

ADMINISTRATION, UNIVERSITY OF NIGERIA ENUGU CAMPUS

SUPERVISOR: DR. E. K. AGBAEZE

NOVEMBER, 2015.

4

DECLARATION

I, KANU, Mba of the Department of Management, University of Nigeria, Enugu

campus hereby certify that this project work carried out by me is original and has not

been submitted in part or full for any degree or diploma of this university or any

higher institution of learning.

………………..…………………….

KANU, Mba

PG/M.Sc./06/46352

5

APPROVAL

This project work carried out by KANU, Mba PG/M.Sc./06/46352 has been approved

for the award of M.Sc. in management, Faculty of Business Administration,

University of Nigeria, Enugu Campus.

…………………………….. ……………………..

Dr E.K. AGBAEZE Date

Supervisor

……………………………… ……………………..

Dr. O.C. UGBAM Date

Head of Department

6

DEDICATION

This work is dedicated to God Almighty

The giver of wisdom, guidance and protection

And the grace to complete this programme. .

7

ACKNOWLEDGMENTS

I am grateful to the entire staff of Management Department, UNEC, both academic

and non-academic. My supervisor Dr. E.K. Agbaeze needs special mention: he is

accessible, friendly and does not keep anything back in terms of academics. Many

thanks go to the entire academic staff of Management Department: the Head of

Department, Dr. O.C. Ugbam, the Faculty representative, Dr. Ann Ogbo, Dr. C.A.

Ezenwakwelu, Prof. Johnny Eluka, Rev. Fr. Anthony Igwe, Prof. U.J.F. Ewurum and

Prof. Ogbuefi. Dr. V.A. Onodugo has assisted me in various ways and I am grateful.

I am greatly indebted to my lovely wife Jennifer Ifeyinwa Kanu for her perseverance

and understanding. My younger brother, Ibezimako Kanu, has assisted me in many

ways for which I am grateful. I thank the members of late Edward Kanu’s family for

their moral support. I thank Mr. Abel Anukwu, Mr. T.M. Efunelu, Mr. Chinedu

Ogbonna and the entire staff of Main Accounts Department, AG’s Office, Ministry of

Finance, and Enugu State for their support. My prayer is that God will give all of you

long life and excellent health and may you be alive to reap the dividends of your

endeavour.

KANU, Mba

PG/M.Sc./06/46352

8

TABLE OF CONTENTS

Title

i

Dclaration

ii

Approval

iii

Dedication

iv

Acknowledgments

v

List of tables

ix

Abstract

x

CHAPTER ONE

INTRODUCTION

1 .1 Background of Study 1

1.2 Statement of the Problem 3

1.3 Objectives of the Study 3

1.4 Research Questions 4

1.5 Research Hypotheses 4

1.6 Significance of the Study 4

1.7 Scope of the Study 4

1.8 Limitations of the Study 5

1.9 Definition of the Terms 5

References

CHAPTER TWO

REVIEW OF RELATED LITERATURE

2.1 Concept of Human Capital 7

2.2 Academic Perspectives of Human Capital 10

2.3 Characteristics of Human Capital 12

2.4 Impact of Human Capital 13

2.5 Division of Human Capital 13

9

2.6 Source of Human Capital 14

2.7 Human Capital and Complementary Capitals

15

2.8 Human Capital Development 16

2.8.1 Human Capital Developments Methods 17

2.9 Concept of Organisational Performance 17

2.9.1 Organisational Performance: A Definition 18

2.9.2 Factor Affecting Performance 19

2.9.3 Firm Performance Measures 19

2.10 Human Capital and Firm Performance 20

2.11 Theoretical Framework 23

2.12 Empirical Framework 26

2.13 Summary 29

References

CHAPTER THREE

METHODOLOGY

3.1 Research Design 38

3.2 Sources of Data

3.3 Instruments for Data Collection 38

3.4 Population of the Study 39

3.5 Sample Size Determination 39

3.6 Validity of Instrument - 41

3.7 Reliability of Instrument

41

3.8 Data Analysis Techniques

42

3.9 Decision Rule 43

CHAPTER FOUR

10

PRESENTATION AND ANALYSIS OF DATA

4.1 Questionnaire Distribution

46

4.2 Test of Hypotheses 54

4.3 Discussion of Findings 63

CHAPTER FIVE

SUMMARY OF MAJOR FINDINGS CONCLUSION AND

RECOMMENDATIONS

5.1 Summary of Major Findings 65

5.2 Conclusion

66

5.3 Recommendations 66

5.4 Suggested Areas for Future Research 67

5.5 Contribution to knowledge 68

Bibliography

Appendix I

Appendix I

11

LIST OF TABLES

Table 4.1: Questionnaire Distribution 46

Table 4.2 Customer patronage increases when I attend to them through

My experience 47

Table 4.3 My work experience encourages effective services

delivery to customers. 47

Table 4.4 Staying long in service makes me to serve customers better.48

Table 4.5 Acquisition of new skills increases my work speed 48

Table 4.6 Correcting my deficiencies reduces the mistakes I make on the

job 49

Table 4.7 My output increases through modification of my behaviour

Table 4.8 Training increases my output by reducing indusial accidents 50

Table 4.9 Being skillful promotes my service delivery to customers 50

Table 4.10 Effective service delivery is achieved through my talents 51

Table 4.11 My excellent health promotes quality service delivery 51

Table 4.12 Having the right competencies enables me achieve effective

service delivery 52

Table 4.13 My education creates a good path for creativity 52

Table 4.14 Application of innovation and creativity becomes possible

through my education. 53

Table 4.15 I can generate new ideas through formal education 53

Table 4.16 My education enhances the learning of better work habits 54

Table 4. 17 Descriptive Statistics work experience and customer satisfaction 55

Table 4.18 Correlations of work experience and customer satisfaction 55

Table 4. 19 Descriptive Statistics

56

Table 4.20 Correlations

56

Table 4.21 Model Summaryb

57

Table 4.22 ANOVAb

57

12

Table 4. 23 Coefficientsa

57

Table 4 .24 Descriptive Statistics

58

Table 4.25 Correlations

59

Table 4.26 Model Summaryb

59

Table 4.27 ANOVAb

59

Table 4.28 Coefficientsa

60

Table 4.29 Descriptive Statistics

61

Table 4.30 Correlations

61

Table 4. 31 Model Summaryb

61

Table 4.32 ANOVAb

62

Table 4: 33 Coefficientsa

62

13

ABSTRACT

The purpose of this research work was to highlight the effect of human capital

development on organisational performance in selected manufacturing firms in Enugu

State, Nigeria. Today’s business environment is in the state of flux, where competition is

the name of the game. Organisations that fail to innovate and brace up with the changing

times may be forced out of business. Organisations now leverage on the workforce as a

competitive weapon by developing and harnessing their human capital. The study

sought to: establish the nature of relationship between work experience and customer

satisfaction; examine the extent to which training affects productivity; ascertain the

effect of talent management on effective service delivery and evaluate the extent to

which education affects innovation and creativity. The study had a population size of

4,407, out of which a sample size of 528 was realised using Bill Godden formula at 4%

error tolerance and 95% level of confidence. Instrument used for data collection was the

questionnaire. Out of 528 copies of the questionnaire that were distributed, 479 copies

were returned while 49 were not returned. The descriptive survey research design was

adopted for the study. The hypotheses were tested using Pearson Product Moment

Correlation coefficient and simple linear regression. The findings indicated that: there is

a positive relationship between work experience and customer satisfaction (r = 0. 955, P

=0.000 < 0.05); Training has a significant effect on productivity (r = 0. 619; t = 9.744; p

= 0.000< 0.05); Talent management significantly affects service delivery ( r = 0.782; t =

12.149; p= 0.000 < 0.05) and Education has a significant effect on innovation and

creativity ( r = 0.932 ; t = 6.826; p = 0.000 < 0.05). The study concluded that human

capital development has become a part of an overall effort to achieve improved firm

performance. The study recommended that firms should verify and validate the job

information gathered to ensure that it accurately reflects mission requirements. Based on

the information, consider streamlining the organisation to generate synergy and should

take the development of their human capital seriously.

14

CHAPTER ONE

INTRODUCTION

1 .1 Background of Study

The business environment of today is in a state of flux, where competition is the name

of the game. Organisations that fail to change may be forced out of existence; hence,

survival is the panacea. To survive, companies must explore all available avenues that

can bring about competitive advantage. To develop a competitive advantage, it is

important that firms truly leverage on the workforce as a competitive weapon.

(Marimuthu, Arokiasamy, and Ismail, 2009).

Kwon (2009) in support asserts that current realities and issues in the global business

environment such as globalisation, knowledge - based economy, and technological

evolution have compelled many countries and organisations to seek new ways to

maintain competitive advantage. In response, the current understanding is that success

depends largely on the people with higher levels of individual competencies and

skills. To this end, the people are becoming valuable assets and can be recognised

within the framework of human capital.

In comparative terms, with regard to recorded history, income levels were low, lives

were short and there was little or no economic growth in the past. Presently, we now

have healthier, longer and by implication happier lives. This system shift involved

increased knowledge and its dissemination, greater levels of training and education,

improved health, more migration, fertility change, and demographic evolution. In

sum, the process involved improvements in human capital (Goldin, 2014).

In general terms, Boldizoni (2008) posits that the concept of human capital is

grammatically composed of two words: human and capital. In the economic

perspective, capital refers to factors of production used to create goods or services that

are not themselves significantly consumed in the production process. Combined with

the meaning of capital in the economic perspective, the human is the subject that takes

charge of all economic activities such as production, consumption and transaction.

These concepts having been firmly established, it can be seen that human capital

15

means one of production elements which can generate added-values through inputting

in it (Kwon, 2009). In the same vein, human capital is capital because it is an integral

part that is long lasting in the same way that machine, plant or factory lasts.

From the historical point of new, the usefulness of human capital as a source of

progress and economic growth has long been recognised. It is not surprising that

Adam Smith (1776) cited in Golden (2014) was the First classical economist to

include human capital in his definition of capital. In his fourth definition of capital, he

says that human capital is the acquisition of talents (education, study, apprenticeship

e.t.c) and these talents (capital) increase the wealth of the individual and the society.

The works of Adam Smith on human capital were followed by those of other scholars

such as Bentham, Mill and Marshall who contributed immensely to the development

of human capital concept. Even though many other scholars W.Petty, R. Cantillon,

Von Thunder, A. Marshall, I. Fisher and J.M. Clark variously presented the term in

literature, it was never developed into a theoretical structure until mid 20th century.

Developing the theory of human capital was done by the pioneering works of Jacob

Mincer (1958), Theordore Schultz (1962) and Gary Becker (1964, 1975) aided by the

favourable research environment of Chicago University (Itascabili, 2008).

The contribution of the Chicago scholars was mainly based on the idea of years of

schooling and on - the -job experience as an explanatory variable of an individual’s

earning capacity. Before the developments brought by the Chicago school, most

economists limited themselves on highlighting the importance of acquired skill,

competence, and education as a motivation for salary differentials in line with Smith’s

theories. In the second half of the 20th century, the human capital study gained new

impetus. The main reason for this was the discovery that the increase in the physical

capital could only account for a relatively small portion of the increase in the income

of many countries. The effort to explain this gap sparked-off heated debate on

physical capital and the contribution of human capital to this increase. In the end

human capital and technological changes began to be introduced in the growth

models. Recently, other phenomena have helped to put human capital in the hot

burner and they include: large increases in education and health expenses increase in

the unemployment rate, breakthrough in technology in many sectors (Itacabili ibid).

16

Organization for Economic Cooperation and development (OECD) report (1996)

cited in Adelakun (2011) asserts that as the global economy shifts towards more

knowledge – based economy (e.g. the manufacture of ICT devices pharmaceuticals,

telecommunications and other ICT based services and R &D e.t.c), skills and human

capital development became a central issue for policy makers and others engaged in

economic development at different level. To achieve the desired purpose, human

capital has to be developed.

Akingbade (2008) explains that human capital development signifies building a,

critical mass of human resource base and providing an enabling environment for

everyone to participate fully in national development efforts. He further states that

developing the human capital involves providing opportunities for the citizens to

develop to their fullest potentials. It can be seen that human capital development is the

key to the development of any country. It is the process of ensuring that a country will

have adequate number of qualified persons available at the proper times to drive her

developmental efforts. Thus, countries and organisations are saddled with the task of

developing their human capital. It is evident that this task must be carried out

conscientiously and painstaking if they hope to survive in the current dynamic global

and competitive environment.

The history of human capital development in Nigeria can be traced back to the

1960’s. Olusegun and Adenugba (2013) write that it was discovered in that period that

most of the top government and business positions were occupied by expatriates. The

departure of the whites left a huge vacuum that needed to be filled by indigenous

workforce. The Federal Government then took urgent action by setting up a

manpower Board in 1962 following the recommendations of the Ashby Commission.

Further action was taken by the Government of that time in order to improve the

indigenous workforce. Complementary institutions of learning were established to

further retrain and polish graduates of formal academic institutions. They include: the

Centre for Management Development (CMD), Administrative staff College of Nigeria

(ASCON), Industrial Training fund (lTF), Federal Training Centre (FTC) amongst

others. Professional bodies equally established institutes to further enhance human

capital development and they include: Institute of Accountants of Nigeria (ICAN)

Chastered Institude of Bankers in Nigeria (CIBN).

17

There is a large and growing body of evidence (Agarwala, 2003, Guthrice et al., 2002;

Seleim et al., 2007; Marimuthu et. al. 2009) that demontrate the linkage between the

development of human capital and organisational performance. The emphasis on

human capital in organisations reflects the view that market value depends less on

tangible resources but rather on intangible ones particularly human resources.

Recruiting and retaining the best employees are definitely not enough. The present

study ‘effect of human capital development on the performance of selected

manufacturing firms in Enugu State’ finds motivation by adding to the empirical

database of the human capital development and organisational performance link as it

affects the organisations selected.

1.2 Statement of the Problem

Human capital is an individual’s cumulative abilities, knowledge and skills

developed through formal and informal education and experience. Human

capital is getting wider attention with increasing globalisation and the

saturation of the job market due to the recent downturn in the various

economies of the world. Developed and developing countries have put

emphasis on human capital development towards accelerating the

economic growth by devoting necessary time and efforts. Thus, human

capital development is one of the possible ways to enter the international

arena. Specifically, firms must invest necessary resources in developing

human capital in order to maintain their competitive advantage. Failure to

take human capital development seriously may lead to stifling growth,

diminished productivity and inability to compete favourably in the

industry. Nevertheless, the issue of human capital development is not taken

seriously by many organisations. Some of the reasons for this development

may be that many organisation have failed to acknowledge that the

contemporary business environment has become very dynamic and as such

only these organisations with the right information can succeed in modern

times; most firms have the challenge of cost control when they look at the

funds involved in human capital development; most firms believe that

workers are dubious in nature that after returning from a training program,

they may desert their firms to join other firms. Aside from the above, it is

18

more worrisome to note that most organisations are yet to see the link

between human capital development and organisational performance. In

view of this, Singh and Mohanty (2012) assert that organisations do not

understand how investments in training can provide value. Hanson et al.

(2004) state that there has been continuing debate in labour economics

literature on the subject of whether firms can benefit from training

investments. Simply put, organisations are reluctant to invest in human

capital development because they are not sure whether or not it will

improve performance. Pertinent to the above, the present study seeks to

investigate the effect of human capital development on organisation

performance.

1.4 Objectives of the Study

The general goal of the study is to investigate the effect of human capital development

on organisational performance. The specific objectives, however, include:

i. To establish the nature of relationship between work experience and

customer satisfaction.

ii. To examine the extent to which training affects productivity.

iii. To ascertain the effect of talent management on effective service delivery.

iv. To evaluate the extent to which education affects innovation and

creativity.

1.4 Research Questions

1. What is the nature of relationship between work experience and

customer satisfaction?

2. To what extent does training affect productivity?

3. What is the effect of talent management on effective service delivery?

4. To what extent does education affect innovation and creativity?

1.6 Research Hypotheses

The following hypotheses were formulated and tested in alternate

1. There is a positive relationship between work experience and customer

satisfaction.

2. Training has a significant effect on productivity.

3. Talent management significantly affects service delivery.

19

4. Education has a significant effect on innovation and creativity.

1.6 Significance of the Study

1. The study shows how organisations can maintain, and develop their workforce

in order to enhance organisational productivity.

2. The findings of this study will highlighted the need for managers and trainers

to design the content of their training and development programmes to reflect

the needs of the employees and the organisation.

3. It is significant in the sense that its findings will serve as a base and

framework for future researchers to carry out further studies.

1.7 Scope of the Study

Five manufacturing firms in Enugu State, Nigeria were chosen because they have

similar mode of operation and all are into production. The manufacturing firms were

Nigeria Bottling Company, Nigeria Breweries, Innoson Technical Plc, Juhel Nigeria

Plc, and ANAMCO Plc. The study covered a time lag from 2008 to 2015.

1.8 Limitations of the Study

As part of the research experience by researchers, this study was not exempted from

certain limitations that hindered effective collection of materials. They include:

1. Financial constraint: The finance needed to carry out this work was much.

The researcher, however, sourced fund from friends and relatives to ensure the

completion of the work.

2. Non-challant attitude of respondents: Another limitation in the course of

carrying this study was the non- challant attitude of some of the respondents in

supplying the necessary information. This was probably due to their ignorance

of the main purpose of the study. To overcome this challenge the researcher

used moral suasion to elicit information from the respondents.

20

1.9 Definition of the Terms

1. Talent: This is an unusual natural ability to do something well

2. Training: This focuses on teaching organisational members how to perform

their current jobs and helping them acquire the knowledge and skills they

need to be effective performers.

3. Competency: This means an ability to do something especially measured

against a standard.

4. Innovation: Finding a new invention or way of doing something.

5. Creativity: This describes ability to use imagination to develop new and

original ideas or things

21

REFERENCES

Adelakun, O.J. (2011). “Human Capital Development and Economic Growth in

Nigeria,” European Journal of Business and Management, Vol. 3, No. 9.

Agarwala, T. (2003). “Innovative human resource practices and organizational

commitment: An empirical investigation,”International Journal of Human

Resource Management, 14(2), 175–197.

Akingbade, B. (2008). “Meeting the Challenges of Human Capital Development in

Nigeria: The Case for Reforms in Our Education Policies and System,”

Journal of Educational Research and Evaluation, Vol.10, No. 2.

Boldizzoni, (2008). “Means and Ends: The Idea of Capital in the West; 1500-1970,”

Claudia, G. (2014). “Human Capital,” Handbook of Cliometrics.

Hanson, B.O., Johanson, U., and Leitner, K.H. (2004) The Impact of Human Capital

and Human Capital Investments on Company Preformance: Evidence from

Literature and European Survey Results, Third Report on Voctional Training

Research in Europe, Cedefop Reference Series, 54.

Itascabili (2008). “Human Capital, A Resource for Development: The Experience in

the World of Three Italian NGOs:AVSI, ICU and Monserrate.” AVSI Pocket

Books, 8.

Kwon, Dae-Bong, (2009). “Human Capital and Its Measurement,” The 3rd OECD

World Forum on Statistics, Knowledge and Policy, October.

Marimuthis, M., Arokiasamy L. and Ismail, M. (2009). “Human Capital Development

and the impact on Firm Performance. Evidence from Development

Economic. The Journal of International Research, (2) 265.

New York: Palgrave Macmillan.

Ogunjimi, M, O., Sheu, A. L. and Owolabi, H.O. (2011). “Emerging Human Capital

Development Needs and Modification of Training Programmes by Nigerian

Tetiary Institutions,” Journal of Educational Research and Evaluation, Vol.

10, No. 2.

Olusegun, O.T. and Adenugba, A.A. (2013). “Human Capital Development in First

Bank of Nigeria,” Mediterranean Journal of Social Sciences,” Vol. 4, No. 2.

22

Seleim, A., Ashour, A., & Bontis, N. (2007). “Human capital and organizational

performance: A Study of Egyptian Software companies. Management

Decision, 45(4), 789-801.

Singh, R. & Mohanty, M. (2012). “Impact of training practices on employee

productivity: A comparative study,” Interscience Management Review

(IMR), 2(2): 87-92.

WWW.AVSI.ORG.

23

CHAPTER TWO

REVIEW OF RELATED LITERATURE

2.1 Concept of Human Capital

Baptiste (2001) defines human capital as the employee knowledge and skills that

produce economic potential for organization while Bontis and Fit-enz (2002) see it as

employee knowledge competence and experience. Davis and Noland (2002) see

human capital as improvement /accumulation of employee competence through

education.

For Dzinkowski (2000) human capital is employee know- how, competence, skills,

and professional knowledge. Leliaert et al. (2003) define human capital as the skills,

competence, reputation and potential of an individual while Luthans et al. (2004) see

human capital as personal experience, level of education, professional skills,

knowledge and creative ideas.

Rastogi (2000) states that human capital are highly skilled, creative, motivated

collaborative and knowledgeable people who understand the dynamic business

environmental context and the competitive logic of their enterprises and the critical

requirements thereof. Gratton and Ghoshal (2003) see human capital as the composite

of an individual’s intellectual, social and emotional capital by which it is suggested

that “ volunteer” employees need to align their personal values with work to reflect

the most satisfying passion on a human aspiration thereby continuously improving on

ones own knowledge, relationship and sense of self- efficacy. For Weatherly (2003),

it is the collective sum of the attributes, experience, knowledge, inventiveness, energy

and enthusiasm that its people choose to invest in their work.

Literature search reveals that there is a proliferation of definitions of human capital.

Some of the definitions are narrow while others are wide and more encompassing.

Yound et al. (2004) observe that through these definitions there is clear emphasis on

24

human capital as the knowledge, skills and abilities of individuals. This study,

however, adopts the following as its working definition: human capital is a

individual’s cmulative abilities, knowledge and skills developed through formal and

informal education and experience.

Literature search also reveal that some factors may be responsible for the differences

in the definition of human capital. The major reason identified is the perspective from

which scholars viewed the subject matter of human capital.

2.2. Academic Perspectives of Human capital

Individual Perspective

Schults (1961) cited in Kwon (2009) sees human capital as a kind of property against

the concept of labour force in the classical perspective and conceptualised the

productive capacity of human beings is now vastly large than all form of wealth taken

together. Beach (2009) states that in line with this thought some researchers view the

capacity of human beings as knowledge and skills embedded in an individual. Based

on this observation by Beach, some researchers have given their definition (Garavan

et al, 2001; Youndt et al., 2004; Rastogi, 2002).

Accumulation Process Perspective

This perspective emphasises knowledge and skills obtained through educational

activities such as compulsory education, post-primary education and vocational. This

viewpoint neglects knowledge and skills gained through experience (De- Ia fuente

and Ciccone,2002; in Alan et al, 2008).

Production - Oriented Perspective

This perspective sees human capital as a fundermental source of economic

productivity as initiated by Romer (1998). In line with this perspective, many scholars

have defined human capital in various forms, for instance, Rosen (1999) states that

human capital is an investment that people make in themselves to increase their

productivity. Frank and Bemanke (2007) define it as an amalgam of factors such as

education, experience training, intelligence, energy, workhabits and initiative that

25

affect the value of a worker’s marginal product. Sheffin (2003) defines human capital

as the stock of skills and knowledge

embodied in the ability to perform labour so as to produce economic value. To

Rodrigues and Loomis (2007) human capital is the knowledge, skills, competence

and attributes in individuals that facilitate the creation of personal, social and

economic well -being.

2.3. Characteristics of Human Capital

Crawford (1991) cited in Kwon (2009) identifies some characteristics of human

capital which Kwon (lbid) termed ‘indigenous characteristics and they include:

expandable, self generating, transportable and shareable.

Expandable and Self - Generating

These characteristics emphasise the possibility that the stock of knowledge increases

individuals’ human capital. Besides, the increase of human capital can be expanded

by either endogenous or exogenous factors, that is, from within and without. The

import of this is that human capital can be expanded by an interpIay of factors and

there is every possibility that the portion of that capital as an economic agent is

extended.

Transportable and Shareable

The transportable and shareable attributes mean that the original holder of knowledge

can transfer the knowledge to others though these may be governed by certain

conditions, the former two characteristics extend the ‘volume’ of human capital and

the latter expand the ‘range’ of human capital (Kwon, Ibid). Considering the

characteristics (attributes) of human capital from the standpoint of two main

components which are individuals and organizations, Garavan et al, (2007) describe

four attributes: flexibility and adaptability, enhancement of individual competencies

and individual employability. These attributes in turn generate and add values to

individual and organizational outcomes.

2.4. Impact of Human Capital

Kwon (2009) identifies three spheres where the impact of human capital can be felt:

26

Individual, organisation and society.

Individual Impact

In the internal labour market, there is the possibility of increasing individual income

resulting from individual productivity (Sidorkin, 2007). For this reason, most

employers will prefer to employ such individuals as they are likely to contribute in

maximizing organisational profits. Such individual also has the potential to move to a

higher level in the internal market (Sicherman, 1991; Galor, 1990). In the external

market, an unemployed individual’s human capital affects his/her job- seeking and

employable opportunities (Vinokur et al. 2000). In the international scene, an

individual with high level of human capital is more positioned to access job- related

information with high chances of getting it.

Organisational Impact

Lepak and Snell (1999) suggest that there is a close link between the potential of

human capital and the core competencies and competitiveness of organisations.

Edvison and Malone (1997) in support submit that individual human capital can affect

organisational human capital such as collective competencies, organisational routines,

company culture and relational capital.

Societal Impact

Kwon (2009) submits that social perspectives of human capital is a mixture of both

the individual and organizational perspectives of human capital. Mcmahon (1999)

suggests the manifestation of human capital of citizens for social issues such as

democracy, human rights, and politics. Hence, Beach (2009) suggests that human

capital can raise the social consciousness is based on a close inter-relationship

resulting in socio-political development (Grubb and Lazerson 2004).

2.5 Division f Human Capital

Becker (1964) cited in Kwon (2009), presents two kinds of human capital as general

and specific. Some researchers, however, present three kinds: general, firm-specific,

and task - specific (Gibbons and Waldman, 200 4; Hatch and Dyer, 2004).

27

The different kinds of human capital have different characteristics such as mode of

accumulation and transferability. Becker says general human capital is to be defined

by generic knowledge and skill, not specific to a task or company and usually

accumulated through working experience and education (Atan et al. 2008). The

general human capital is or industry transferable across jobs, firms and industry. In

contrast to the general human capital, firm/task specific human capital is usually

accumulated through education, training, working experience on knowledge specific

to a firm/task (Alan, Ibid). Specific human capital increases a worker’s productivity

only at a firm, embedded in an individual and is rarely transferable to other jobs, firm.

2.6 Sources of Human Capital

Expenses in education, healthcare and training are investments in human capital,

with educational and training expenditure the most important of these (Becker,

1964). Various authors agree that human capital can be built through training and/or

education (Bontis, 2002; Dakhli and De Clercq, 2004; Ram et al., 2007).

Neergaard (2006) describes the nature, level and the total number of years in

education and the extent of experience of an entrepreneur as part of an individual’s

human capital. Education is one of the most cited indicators of general human capital

(Bruderl et al., 1992; Parker and Van Praag, 2006). In fact many researchers use

education, skills and human capital as interchangeable concepts (Harris and Helfat,

1997; Teixeira, 2002), and some have used education as a substitute for human capital

and skills (Bates, 1990; Teixeira, 1999) is just one way to develop skills, and others

still who argue that education is simply a way to measure a worker’s ability to learn

on the job (Thurow, 1975) or to identify favourable social personalities (Bowles and

Gintis, 1976; Bowles and Gintis, 2002).

Empirical evidence shows that education and training complement each other

(Goedhuys and Sleuwaegen, 2000; Honig, 1998; Levinthal, 1997). Education is also

considered to help accelerate the processes of idea generation and innovation (Becker,

1964; Hayton, 2005) two important factors that positively influence the start-up and

performance of enterprises (Burns, 2007). Skills can be developed through formal

training and workplace experience (Teixeira, 2002), and by performing job-related

activities over a period of time (Rosen, 1986).

28

The significance of relevant experience to human capital is found in the study

conducted by Lam et al. (2007). On-the-job training, discussed by Bosworth et al.

(1996), is another major form of investment considered under human capital theory.

Formal education helps people quickly learn the skills taught through on-the-job

training (Foster, 1987; McMahon, 1998). The level of formal education thus

correlates positively with the degree of skills acquired and, therefore, the amount of

human capital (general and specific).

However not all sources of human capital involve cost. Ben-Porath (1967) identifies

human capital itself as the main raw material for producing of new human capital.

Korman and Kraut (1999) maintain that there are areas of human capital, such as

innate capabilities, that are acquired free of cost to the individual and hence society.

2.7. Human Capital and Complementary Capitals

Armstrong (2003) makes a distinction between human capital and human resource.

He states that human capital shows the quality side of human resources. This quality

side human capital) comprise the knowledge skills and abilities of employees in the

organisation. He further states that human capital is a component of intellectual

capital. He defines intellectual capital as the accumulation and flow of knowledge

available to an organization. Intellectual capital has three components ( Armstrong,

2003; Wright et al. 2001) and these are : human capital- knowledge, skills, and

abilities of employees in the organisation; social capital - accumulation and

knowledge flows arising from networks of relationships inside and outside the

organization; organisational capital (Structural capital)- institutional knowledge held

by an organisation stored in the database, manuals e.t.c. Gratton and Ghoshal (2003)

hold the view that human capital comprises intellectual capital, social capital and

emotional capital. This view, however, appear to be less popular among scholars.

Another variant in the definition of intellectual capital is held by OECD (1999) which

defines intellectual capital as the economic value of two categories of intangible

assets of a company - organizational and human capital. Further discussions on the

content importance and intricacies of social capital to the individual and organisation

levels were done by (Garavan et al, 2001; Gratton and Ghoshal, 2003).

29

Further on organisational capital, Dess and Pickens (1999) write that its principal role

is to link the resource of the organisation together into process that create value for

customers and sustainable competitive advantage for the firms this includes:

+ Organizational and reporting structures;

+ Operating systems, processes, procedures and task designs

+ Information and communication infrastructure;

•• Resource acquisition, development and allocation systems

+ Decision processes and information flows;

+ Incentives, controls and performance measurement systems;

• Organizational culture, values and leadership;

The interactions between these dimensions are important if employees are to have the

motivation to develop and use their skills and knowledge.

2.8 Human Capital Development

Adelakun (2011) defines human capital development as the process of acquiring and

increasing the number of persons who have skills, education and experience which are

critical for growth of a country. Erhuruna (2007) says any effort to increase human

knowledge, enhance skills, productivity and stimulate resourcefulness of individuals

is an effort in human capital development.

Duru (2013) cited in Ojonemi et al. (2013) defines human capital development as the

process that relates to training education and other professional initiatives/

interventions in order to increase the level of knowledge, skills abilities, values, and

social assets of an employee which will lead to employees satisfaction and better

performance and eventually improved organisation performance.

Commenting on the usefulness of human capital development, Lyakurwa (2007)

writes that it has the capacity to enlarge peoples’ choices and opportunities, improve

healthy living through acquired skills and knowledge and eventually enhance growth

in the nations’ gross domestic product through increased productivity .It is important

30

to state that human capital recognises that not all labour is equal and that the quality

of employees can be improved by investing in them. Investing in them means making

budgetary allocations (fund) for education training and other interventions which will

increase the experience and abilities of employees. The education, experience and

abilities of an employee have an economic value and for the organisation a whole.

Consequently, it is fully in keeping with the capital concept as traditionally defined to

say that expenditures on education, training and medical care etc. are investment in

capital; these are not simply costs but investment with valuable return that can be

calculated.

2.8.1 Human Capital Development Methods

Aigbokan et al. (2007) cited in Ogunjimi et al. (2011) identifies five activities that

contribute to the development of the human capital. They are:

� Health facilities and service broadly conceived to include all expenditures that

affect the life expectancy, stamina, strength, vigour and vitality of people;

� On-the-job training: including old apprentice organised by firms;

� Formally organised educational program at elementary, secondary and higher

levels;

� Study programs for adults that are not organised by firms, including extension

programs notably in agriculture;

� Migration of individuals and families to adjust to changing job opportunities.

2.9 Concept of Organisational Performance

The first problem in defining performance is that the definition of performance will

depend on the stakeholder involved. Organisations inevitably have an array of

stakeholders, and any particular measure of performance often tends to compete

against another (Denison, 1990). Shareholders prefer performance in dividends, while

managers regard performance in operational processes as important. From a

traditional perspective, organisational performance is commonly referred to as

financial performance where considerations of budgets and assets are crucial in

determining the overall bottom-line of an organisation (Yeo, 2003). According to

Langton (2000) performance implies the action of doing things, using things, and

attending to conditions, processing, communicating, and achieving results. It is not a

31

static concept, but an active concept. Langdon (2000) describes performance as

consisting of four dimensions:

a. Behaviour

b. Standards;

c. Support

d. Human relations.

An organisation cannot perform unless all four layers are present. A high performance

organisation is one in which the culture provides employees with the accountability

and responsibility necessary to meet customers’ needs in a timely manner to ensure

business success (Allerton, 1998). He defines characteristics of a high performance

organisation as follows:

• Well-understood vision and values help guide decision-making;

• Decision making occurs at the lowest level;

• Risk taking is encouraged;

• Performance feedback comes from peers, customers and direct reports.

From Allerton’s definition it is clear that he is of the opinion that a specific type of

culture is important to create the environment in which an organisation can perform.

Not all corporate cultures will allow decision making at the lowest level or encourage

risk taking. As Jacobs (2005:1) states in his article: “How a company decides who is

authorised to make what types of decisions can have a profound effect on its business,

both in terms of everyday effectiveness and the bottom line.”

2.9.1 Organisation Performance: A Definition

Gunu et al. (2013) submit that organisation performance involves the actual output or

results of an organisation as measured against its intended outputs (goals and

objectives). Gunu et al. citing Richard in Wikipedia (2008) says organisation

performance comprises three specific areas of firm outcomes:

(1) Financial Performance (profits, return on assets, return on investment e.t.c.)

(2) Product and market performance (sales, markete share e.t.c.)

(3) Shareholders return (total Shsreholers return, economi value added e.t.c). Richard

further writes that many organisations in recent years have attempted to manage

32

organisational using balanced score cards methodology where performance is

tracked and measured in multiple dimensions:

� Financial performance

� Customer service

� Social responsibility (e.g. corporate citizenship, community outreach

� Employee stewardship

2.9.2 Factors Affecting Performance

Cummings and Worley (2005) advocate that six factors other than culture can affect

the performance of organisations. The key components of the six elements are as

follow:

a. Context: Context refers to the environment in which the organisation operates

and includes both external and internal environments. Organisational

characteristics such as business strategy, strategy and structure as well as

organisational culture form part of the context.

b. Purpose: This will represent the goals and objectives of the organisation. in

this study it will focus on the objective of achieving a five-day service level

agreement.

c. Composition & Diversity: The demographics of the group will be identified in

this variable.

d. Structure: Size of the group will be taken into account.

e. Processes: The formation and socialisation processes play a critical role in the

performance of an organisation. This tie back to Schein’s (1984) where he

stated that a group must be together for a long enough time to resolve

problems. It can therefore be concluded that performance can be determined

by the length of time that a group has been working together.

f. Leadership: The type of leadership behaviour will have an influence on

performance. Research has shown that a transformational leadership style does

result in increased performance (Lok and Crawford, 2004).

2.9.3 Firm Performance Measures

Financial performance measures such as percentage of sales resulting from new

products, profitability, capital employed and return on assets (ROA) can be used

(Selvarajan et al. 2007;Hsu et al. 2007). Grossman (2000) states that measure in use

33

include: return on investment (ROI), earning per share (EPS) and net income after tax

(NAT). Wright et al. (2005) state that benchmark managerial accounting indicators

against financial measures in six dimension: workers compensation (workers’

compensation expense divided by sales), quality (no of errors in production), shortage

(e.g. inventory loss, defects, sales return), productivity (payroll expenses divided by

output), operating expenses (total operating expenses divided by sales), perceived

performance approach ( also referred to as subjective performance measure) where

likert-like scaling is used to measure firm performance from the top management

perspective.

2.10 Human Capital and Firm Performance

From the strategic human resource management view, assuming that not all existing

knowledge and skills are strategic, the first step is determining what forms of human

capital exist in the firm and how they can be a source of competitive advantage.

Resource-based view of the firm indicates that resources are valuable when they allow

improving effectiveness, capitalising on opportunities and neutralising threats. In the

context of strategic management, value creation focuses on increasing the ratio of

customer profits in comparison with the associated costs. In this sense, firm’s human

capital can add value if it contributes to lower costs, provide increased service or

product features to customers (Perez and Pablos, 2003). The authors further note that

perhaps the organisational resources most difficult to control of all are people.

Therefore, executives have traditionally based their competitive strategies on other

factors, such as product and process technology, protected market niches, access to

financial resources and economies of scale. However, in an entrepreneurial

environment such as the present one, characterized by market globalisation, the

intensification of competition and the high rate of technological change, tangible

assets no longer provide sustainable competitive advantages.

As firms are focusing on their intangible assets, intellectual capital can be viewed as

the future basis of sustained competitive advantage. This is particularly true in

industries based on knowledge, such as information and software services.

Competitive advantage depends more and more on “people-embodied know-how”

(Prahalad, 1983).

34

Accordingly, it is human capital, rather than physical or financial capital, that

distinguishes the leaders in the market. For these reasons, and given the fact that

employee knowledge, skills and abilities constitute one of the most significant and

renewable resources which a company can take advantage of, the strategic

management of this capital now has greater importance than ever (Ulrich, 1991).

Knowledge is the most important resource that organizations can rely on to generate

innovation (Nonaka and Takeuchi, 1995). Knowledge can add value to organisations

through intangible assets such as customer relationships, goodwill, brand recognition

and competences of employees. Those intangible assets are defined as intellectual

capital.

Edvisson and Sullivan (1996) have defined it as knowledge that can be converted into

value. There are many evidences that intellectual capital has a positive impact not

only on corporate value but also on its present and future performance (Chen, Cheng

and Hwang (2005); Youndt and Snell, 2004). The rise of the knowledge-based

economy is attributed to the increasing importance of intellectual capital as an

intangible and important resource for companies’ sustainable competitive advantage

(Roos and Roos, 1997).

There is no doubt that part of an organisation's knowledge resides in the people who

form it. The employee's knowledge value depends on their potential to contribute to

the achievement of an organisational competitive advantage. Recent research suggests

that human capital attributes (including training, experience and skills) and in

particular the executives' human capital, have a clear impact on organisational results

(Huselid, 1995; Pennings et al., 1998; Wright et al., 1995). Although the use of this

knowledge is an important factor in the actual competitive environment, it is not

enough to use the actual employees’ knowledge basis. Thus, Wright et al. (1995)

consider that “despite the firm's resources and capacities have added some value in

the past, changes in customers' demands, in the industry's structure or in technology

may turn them into less valuable in the future” . Therefore it is important to manage

employees, their knowledge and competences in such a way that the organisation can

build a long-term competitive advantage.

35

In order to be a source of competitive advantage, human resources must create

organisational value. Resources are valuable if they allow the organization to develop

strategies that improve efficiency and efficacy (Barney, 1991). When human capital is

highly valuable and unique it provides strategic benefits that exceed the bureaucratic

costs associated with their development and deployment. Organisations have

incentives to internally develop and invest in human capital to maximize its value

creating potential and differentiating characteristics. To do this, organisations may

implement commitment based human resource systems that focus on internal

development of skills and long-term relationships (Rousseau, 1995; Tsui et al., 1995).

Investment in human capital improves employability and therefore labor flexibility

(Groot and Van Den Brink, 2000). Workers with higher levels of education and

training are more employable, i.e. they can be employed in more jobs and perform

multiple tasks within the firm. According to Lepak et al. (2003) one advantage of this

“resource flexibility” is that it enhances the ability of the organization to deploy its

workforce effectively, and thus, improve organizational performance.

Barney and Wright (1998) concluded that only human capital with valuable and

unique knowledge is a strategic asset. Hence, as recommended by Boxall (1996),

companies should select and retain employees of this type, as they generate human

capital advantage. However, knowledge, skills and expertise tend to suffer a certain

degree of obsolescence. Companies can act to prevent this by using certain types of

HRM practices, as also stated by Boxall (1996) and Snell et al. (1996). If the

company adopts appropriate procedures of personnel management, human capital can

be orientated to the achievement of sustainable competitive advantages through the

preservation and enlargement of the value and the specificity of the knowledge

possessed by employees. This will promote the updating, improvement and transfer of

this knowledge in the organisation. More recently, research into intellectual capital

and its components confirmed this reasoning; it has been demonstrated empirically

that the human capital of an organisation becomes a strategic asset of the company

when that knowledge is valuable and unique, thus generating greater competitiveness

and ultimately more profit (Subramaniam and Youndt, 2005).

On the other hand, Collis and Montgomery (1995) state that the importance of human

capital depends on the degree to which it contributes to the creation of a competitive

36

differentiation. From an economic view, transaction-costs theory indicates that firms

gain a competitive advantage when they own firm-specific resources that cannot be

copied by rivals (Williamson, 1975). Thus, as the uniqueness nature of human capital

increases, firms have incentives to invest resources into its management with the aim

of reducing risks and capitalize on its productive potential.

Idiosyncratic human capital (low value, high uniqueness) is a potential source of

differentiation because it is a firm-specific resource. Ancillary human capital (low

value, low uniqueness) is simply generated as a result of firm’s activity. As ancillary

human capital is formed basically by unskilled or semi-skilled employees that offer no

source of competitive advantage, firms tend to automate this knowledge, that is to say,

they substitute technology for employees (Snell et al., 1995). Core human capital

(high value, high uniqueness) provides strategic benefits that exceed the bureaucratic

costs associated with their development and deployment. Organisations have

incentives to internally develop and invest in this human capital to maximize its value

creating potential and differentiating characteristics. To do this, organisations may

implement commitment based human resource systems that focus on internal

development of skills and long-term relationships (Tsui et al., 1995).

Compulsory human capital (high value, low uniqueness) is not specific to any

particular organization and employees are free, within certain limits, to sell their

talents wherever they can achieve the greatest return (Rousseau, 1995). Due to this

transferability, human capital theory suggests that organisations would not be likely to

invest in this kind of human capital (Becker, 1964). Instead, organisations may rely on

selective staffing processes to identify potential employees with the appropriate skills

to generate immediate productivity. The hiring firm simply pays the market rate (or

above) for these employees and takes advantage of their valuable talents immediately.

These practices characterize a market-based human resource system (Lepak and Snell,

1999).

2.11 Theoretical Framework

Baptiste (2001) writes that the term human capital came from human capital theory

which refers to the knowledge, attitudes and skills that are developed and valued

primarily for their economically productive potential. Based on the views of Adelakun

37

(2011) theories of human capital are often tied to those of economic growth and they

include:

Human Capital Theory

This theory shows how education leads to increase in productivity and efficiency of

workers by increasing the level of their cognitive skills. Schultz, Becker and Mincer

introduced the notion that people invest in education in order to increase their stock of

human capabilities which can be found by combining innate abilities with investment

in human beings (Babalola, 2000). Examples of such investments include expenditure

on education, on - the - job training, health and nutrition. However, the stock of

human capital increases in a period only when gross investment exceeds depreciation

with the passage of time with intense use or lack of use. The provision of education is

seen as a productive investment in human capital, an investment which the

proponents of human capital theory consider to be equally or even more equally

worthwhile than that in physical capital. Human capital theorists have established that

basic literacy enhances the productivity of workers low skill occupations. They

further state instruction that demands logical and analytical reasoning that provides

technical and specialised knowledge increases the marginal productivity of workers in

high skill or profession and positions. Moreover, the greater the provision of

schooling society and consequently the greater the increase in national productive and

economic growth.

Modernisation Theory

This theory focuses on how education transforms an individual’s values, belief and

behaviours. Exposure to modernisation institutions such as schools, factories and

mass media inculcate modern values and attitudes. The attitudes include openess to

new idea, independence from traditional authorities, willingness to inculcate further

exigencies and growing sense of personal and social efficacy. According to the

modernisation theorists, these normative and attitudinal changes continue throughout

the life cycle, permanently altering the individual’s relationship with the social

structure. The greater the number of people exposed to modernisation institutions, the

greater the level of individual modernity attained by the society. Once a critical

segment of a population changes in this way the pace of society’s modernisation and

38

economic development quickens. Thus, education expansion through its effects on

individual values and benefits sets in motion the necessary building blocks for a more

productive workforce and a more sustained economic growth.

Dependence Theory

This theory arose from Marxist conceptualisation based on the dynamic world system

that structures conditions for economic transformation in both the core and periphery

of the world economy. Certain features of the world polity such as state fiscal

strength, degrees and regime centralisation and external political integration may

contribute to economic growth in the developing world.

Resource-based theory

Resource-based theory emphasises the critical importance of internal resources for

sustainable competitive advantage. This perspective argues that firm performance is a

function of how well managers build their organisations around resources that are

valuable, rare, inimitable, and lack substitutes (Barney, 1991). Intangible resources

like human capital are more likely to produce a competitive advantage because they

are rare and socially complex, and therefore difficult to imitate (Hatch and Dyer,

2004; Hitt et al., 2001). In particular, specific human capital represents an inimitable

asset in terms of knowledge and skills that are only of use to an individual company

(Lepak and Snell, 2002; Rauch et al., 2005). Networks are fundamental in social

capital because networks can provide resources, which may facilitate investment, can

provide access to information, and reduce transactional cost. Trust is one of the

resources that may be the result of networks (Zhang and Fung, 2006) and this is a

resource that is socially complex and difficult to imitate. Firms obtain sustainable

competitive advantages by implementing strategies that exploit their internal

strengths, while neutralizing external threats and avoiding internal weaknesses.

Strategic resources are heterogeneous and immobile across firms, and that these

resources are stable over time. The theory identifies the firm’s potential key resources

and evaluates whether these resources fulfill the following criteria: Valuable – A

resource must enable a firm to employ a value-creating strategy, by either

outperforming its competitors or reduce its own weaknesses; Rare – To be of value, a

resource must be rare by definition. In a perfectly competitive strategic factor market

for a resource, the price of the resource will be a reflection of the expected discounted

39

future above-average returns; In-imitable – If a valuable resource is controlled by only

one firm it could be a source of a competitive advantage. This advantage could be

sustainable if competitors are not able to duplicate this strategic asset perfectly. An

important underlying factor of inimitability is causal ambiguity, which occurs if the

source from which a firm’s competitive advantage stems is unknown (Peteraf, 1993).

If the resource in question is knowledge-based or socially complex, causal ambiguity

is more likely to occur as these types of resources are more likely to be idiosyncratic

to the firm in which it resides (Mahoney and Pandian, 1992). Non-substitutable –

Even if a resource is rare, potentially value-creating and imperfectly imitable, an

equally important aspect is lack of substitutability. If competitors are able to counter

the firm’s value creating strategy with a substitute, prices are driven down to the point

that the price equals the discounted future rents, resulting in zero economic profits.

A critical look at the four theories discussed above shows that the present study has

links with the human capital theory, modernisation theory and the resource - based

theory.

2.12 Empirical Framework

A study carried out by Okotoni and Erero (2005) on the topic titled “Manpower

Training and Development in the Nigerian Public Service” aimed at identifying the

experience of Nigerian public services on manpower training and development with a

view to understanding the problems being faced. Qualitative content analysis was

employed in analyzing the data. The researchers found out that training and

development helps to ensure that organisational members possess the knowledge and

skills they needed to perform their jobs effectively, take on new responsibilities, and

adapt to changing conditions. They also found that the experience of manpower

training and development in the Nigerian public service has been more of ruse and

waste. They recommended that the government should avoid the use of quack

consultants in training the public servants.

In another study carried out by Iwuoha (2009) on the topic titled “Impact of Training

and Development Programmes on Secretaries Productivity in selected Business

Organisations in Owerri” aimed at identifying the adequacy of development

programmes provided to the secretaries in the selected business organisations in

40

Owerri. The researcher employed a survey research design. The population of the

study was 50 respondents using simple random sampling technique, while

questionnaire was used for data collection and mean scores for data analysis. It was

found that development programmes were adequately provided for the secretaries by

the management of these organisations in such areas as seminar, conferences,

workshops, etc. The researcher recommended that the secretaries should be given

periodic leave with full pay to fully acquaint them with the latest skills.

Also, Igwegbe (2009) carried out a study titled “The Role of Management

(Employers) in Human Capital Development” focused on the role of management as

employers of labor in the development of human capital. Igwegbe found that human

capital development is inevitable and the need for the entire work force to be at home

with modern information and technology (ICT) in line with global trends if

organisations must remain relevant in the world today.

Babaita (2010) in a study titled “Productivity as a driving force for investment in

training and management development in the banking industry” sought to determine if

productivity is a driving force for investment in training and management

development in the banking industry in Nigeria. The population was made up of 320

old and new generation banks. Simple random sampling techniques were used. The

study relied on both qualitative and quantitative analysis of data. Babaita found that

productivity is really one of the driving forces for investment in training and

management development. He recommended that it is vital that managers, senior

executive, as well as all employees receive training.

Roca-Puig, Beltrán-Martín and Cipres (2011) did a study on the combined effect of

human capital, temporary employment and organisational size on firm performance.

The study considered the moderating role of temporary employment and

organisational size on the relationship between human capital and firm performance.

The study found that the positive effect of human capital on firm performance is

greater in large firms with low temporary employment than in small firms with high

temporary employment. These findings only applied where return on Sales was

examined, but not where labor productivity was selected as the dependent variable.

The study therefore yielded mixed results depending on the measure of the dependent

41

variable used. The study further showed a weak positive correlation (r=0.221)

between human capital and organisational size, which may be an indicator of

organizational size being a less significant moderating variable.

Seleim, Ashour and Bontis (2007) analysed on the relationship between human capital

development and organisational performance of software companies. They found that

human capital indicators had a positive association on organisational performance.

These indicators such as training attended and team- work practices, tended to result

in superior performers where more productivity could be translated to organisational

performances. This was also supported by Dooley (2000) who found a significant

positive correlation between the quality of developers and volume of market shares.

Based on the above arguments we can conclude that human capital indicators

enhanced the firm performers directly in directly.

A Causal Model using a set of cross- sectional data developed by Slevarajan et al.

(2007) indicates that human capital enhancement paves a way for greater

innovativeness and this in firm offers positive implications on firm performance. In

the meantime firm performance and human capital could also be viewed in the

context of high performance work systems (HSu et-al. 2007). It is argued that the

formation and emphasis on human capital enhancement will result in high

performance or rather high performance work systems.

Abeeka and Barha (2012) in their study carried out in Pakistan, observed a positive

correlation between employees training and organisational competitive advantage.

Gunu , Oni and Ajaji (2013) carried out a study on training and development as a

tool for organisational performance of selected banks in Nigeria. The findings

revealed that training and development has a positive relationship with the

performance of banks in Nigeria. Based on the findings of this study, it is concluded

that for training and development to have significant impact on organisational

performance, employees need to be need to be motivated during training programs.

Obi-Anike H.0. and Ekwe M.C. (2014) did a study on the impact of training and

development on organisational effectiveness with evidence from selected public

42

sector organisations in Nigeria. Their findings indicated a positive significant effect of

training/development on organisational performance. They, however, added that mere

investment is not enough; organisations need to manage training programs more

effectively.

Salim et al (2004) conducted a study in Egyptian software companies to assess the

relationship between human capital and organisational performance. A sample of 38

software companies, out of 107, was selected, but only 16 companies responded. The

study concluded from analysis that performance of software firms was influenced by

the intelligence, creative ideas, ambition and immutability of the employees.

Marimuthu et al. (2009) conducted a research to examine the relationship between

human capital and firm performances. Through content analysis it was shown that all

the countries (developing economies) are more concerned about human capital

development and they also allocate necessary time and efforts. It was concluded that

human capital increases not only financial performance of the firms but also non-

financial of the firms.

Oforegbunam and Okoroafor (2010) carried out research on effects of human capital

development on the performance of small and medium scale enterprises in the

Southeastern region of Nigeria. The results show that with the increase of human

capital development performance of SME’s improved and human capital in SME can

be enhanced with on the job training program

2.13 Summary

The study covered the following concepts: definition human capital, academic

perspectives of human capital, characteristics of human capital, impact of human

capital, division of human capital, sources of human capital, human capital and

complementary capitals, definition of human capital development, methods of

developing human capital e.t.c. The theoretical framework reviewed the following

theories; human capital theory, modernisation theory, dependence theory and resource

– based theory. The empirical framework reviewed other scholars’ contributions in

the various studies they conducted. Several works ( Seleim, Ashour and Bontis, 2007;

Sleravajan et al., 2007; Gunu, Oni and Ajaji, 2013; Salim et al., Marimuthu et al.,

43

2009; Oforegbunam and Okoroafor, 2010) have studied the relationship between

human capital development and organisational performance, however, this

relationship as it affects the manufacturing firms selected in Enugu has not been

studied. This is where the present study intends to fill a gap.

44

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51

CHAPTER THREE

METHODOLOGY

3.1 Research Design

In the view of Agbaeze (2004) research design is a map or plan of action showing

what and how the researcher will carry out the step-by-step procedure for

accomplishing the research task. For the purpose of this study, descriptive survey

design was used. The method is considered adequate and most appropriate because it

helped the researcher to describe, examine, record, analyse and interpret the variables

that exist in this study. It is also worthwhile in view of the relatively large population

from which the information was collected. More so, it is very economical for

independent researchers.

3.2 Sources of Data

The data used for this research work were obtained specifically from two sources

namely: primary and secondary sources.

(a) Primary Sources

Questionnaire was used to collect primary data for this study.

(b) Secondary Sources

The secondary sources were derived from existing but related data which were

produced by earlier researchers for the purpose of contributing their quota to

the problem under study. Specifically the materials used for extracting

secondary data for this study include: journals, magazines, text-books and the

internet.

3.3 Instruments for Data Collection

The instruments for data collection issued in this research include the structured

questionnaire.

Questionnaire: structured questionnaire was administered to respondents and the

contents of the questionnaire were clear enough to elicit accurate responses from the

selected companies from Enugu State. The instrument was structured in Likert scale

52

form, it contained sixteen questions and four hundred and seventy-nine copies were

administered to the respondents.

3.4 Population of the Study

The population for this work includes all staff of the five selected manufacturing

companies in Enugu state.

Table 3.1

Nigeria bottling company 1128

Nigeria breweries 1309

Innoson technical 810

Julel Nigeria 680

ANAMCO 480

Total 4,407

3.5 Determination of Sample Size

Sample size for the study was calculated based on Golden (2004) formula which is

appropriate when dealing with descriptive statistics. The procedure was taken in two

stages. First, the sample size was calculated using the infinite population. Then use

the sample size derived from that calculation to determine the sample size for a finite

population. In the both cases this formula applies where the population is less than

50,000. The formula is given below:

SS = Z2 * (P) (1-P)

C2

Where:

SS = Sample size

Z = Value (e.g. 1.96for a 95% confidence level)

P = Percentage of population picking a choice (expressed as a decimal)

C = Confidence internal expressed as a decimal

Therefore, to determine the sample size (infinite population)

SS= 3.8416 * 0.5*0.5

0.0016

53

SS = 600

Where

Z = 1.96

P = 0.5

C = 4% (0.04)

New Sample size = SS (For a finite population of 4407)

1+ (SS – 1))

Pop.

= 600

1+ (600 – 1)

4407

= 528

To ensure that the sample is representative of each of the firms in Nigeria

manufacturing sector, proportionate stratified random sampling was employed. This

makes the proportion of the sample from each of the firm conform to the pattern of

the population and also increase accuracy of the study. A stratified sampling method

was adopted so as to give a fair representation to the designated organisations. The

Bowley’s proportional allocation formula is given as:

nh = n Nh

N

Where:

nh= Number of units allocated to each firm/staff category.

Nh = Number of employees in each firm/staff stratum in the population

n = Total sample size

N = The total population size under study

Nigeria Bottling Company = 1128 x 528 = 135 124

4407

54

Nigeria breweries = 1309 x 528 = 158 136

4407

Innoson technical = 810 x 528 = 97 89

4407

Julel Nigeria = 680 x 528 = 81 75

4407

ANAMCO = 480 x 528 = 57 55

4407

3.6 Validity of Instrument

To ascertain the validity of the instrument, content validity was adopted, in which the

researcher subjected the instrument to face to face validity by giving it to a panel of

judges comprising management experts who examined the items and made sure they

were in line with the objectives of the study. The structure and language of the

questionnaire was modified in the light of their corrections. The instrument was

structured in such a way as to minimise the effect of errors like inconsistency and

ambiguity.

3.7 Reliability of Instrument

The reliability of the instrument was determined by a reliability test through the use of

pilot study. To ensure the reliability of the instrument, a test-retest-method was

applied through the use of pilot study twenty copies of the questionnaire were sent out

to the management staff (respondents) of selected organisations two to each

organisation. The copies of the questionnaire were collected ten days after the

administration. Later, the same respondents were served with the copies of the

questionnaire, the second time. The first and second scores were measured using

Spearman Rank Order Correlation co-efficient as the statistical tool. The result gave a

coefficient value of (0.73) indicating a high degree of item consistency.

55

3.7.1 Reliability test-using test-retest method

Questionnaire items Rank 1 Rank 2 D D2

1 4 2 2 4

2 6 2 4 16

3 7 5 2 4

4 3 1 2 4

5 5 3 2 4

6 4 2 2 4

7 5 2 4 9

8 6 3 3 9

9 4 1 3 9

10 5 3 2 4

11 3 1 2 4

12 6 4 2 4

Σd2 = 75

N = 12

N3 = 1728

N3-n=1716

r = 1 - 6 Σd2 r = 1 -6 x 75 r = 1 – 450

n3 – n 1728-12 1716

r = 1-6 x 75 r = 1-6 x 75 r = 1-0.2622237762

1728-12 1716 r = 0.73

3.8 Data Analysis Techniques

In this study, the descriptive statistics such frequency counts with simple percentage

were used to analyse the four research questions. At the inferential level of analyses,

Linear regression was used to test hypotheses 2, 3 and 4 while Hypothesis 1 was

tested using Pearson Product Moment Correlation coefficient to determine the extent

of correlation between x and y variables (Independent and Dependent). All analyses

were done through the application of Statistical Package for Social Science (SPSS

20.00 windows).

56

The formulae are:

Regression Equation(y) = a + bx

Slope (b) = (NΣXY - (ΣX)(ΣY)) / (NΣX2 - (ΣX)2)

Intercept (a) = (ΣY - b(ΣX)) / N

Where,

x and y are the variables.

b = The slope of the regression line

a = The intercept point of the regression line and the y axis.

N = Number of values or elements

X = First Score

Y = Second Score

ΣXY = Sum of the product of first and Second Scores

ΣX = Sum of First Scores

ΣY = Sum of Second Scores

ΣX2 = Sum of square First Scores

Pearson product moment correlation coefficient for sample data is denoted by

"r". The formula for Pearson correlation coefficient r is given by

Where,

r = Pearson correlation coefficient

x = Values in first set of data

y = Values in second set of data

n = Total number of value

3.10 Decision Rule

In testing hypotheses, the calculated value of the test statistic was compared with

critical or table value of the statistic. The critical or table value serves as a benchmark

for rejecting or not rejecting the null hypotheses. Therefore, the decision rule applied

in this research was to reject the null hypotheses if the calculated value at 5%

57

significance level with respective degrees of freedom is greater than the table value,

otherwise do not reject.

58

REFERENCES

Godden, B. (2004). “Sample size and Confidence Interval Tutorial”.

Http://share.pdf.net/find/bill-godden-january-2004. Retrieved on 28th April, 2016.

59

.CHAPTER FOUR

Presentation and Analysis of Data

The focus of the chapter was on the presentation and analysis of data generated

through questionnaire administered to the respondents. Tables and other common

statistical aids were used in presenting and analysing the data generated.

4.1: Questionnaire Distribution

Company Names Number

Distributed

% Number

Returned

% Not

returned

%

Nigeria Bottling

Company

135 26 124 23 11 2

Nigeria Breweries

Plc

158 29 136 26 22 4

Innoson technical 97 18 89 17 8 2

Juhel Nigeria PLC 81 17 75 14 6 1

ANAMCO 57 10 55 11 2 0

Total 528 100 479 91 49 9

Source: Fieldwork 2015

Table 4.1 shows that a total of 528 copies of the questionnaire were distributed to the

five manufacturing companies. A total of 479 representing 91% copies were returned

and used; 49 representing 9% were unreturned.

60

Table 4.2 Customer patronage increases when I attend to them through my

experience

Organisations SA A U D SD Total

Nigeria Bottling

Company

70 44 3 5 2 124

Nigeria breweries 101 25 2 4 4 136

Innoson technical 66 20 1 1 1 89

Julel Nigeria 47 31 - - - 75

ANAMCO 24 25 1 3 2 55

Total 305 145 7 13 9 479

Percentage 64 30 1 3 2 100

Source: Fieldwork, 2015.

Table 4.2 indicates that out of 479 respondents, 305 (64%) strongly agree that

customer patronage increases when experience employees attend to them, 145(30%)

of the respondent agree to the statement, 7(1%) of the respondents were undecided

about the statement, 13(3%) disagree that customer patronage increases when

experience employee attend to them while 9(2%) strongly disagree.

Table 4.3 My work experience encourages effective services delivery to

customers.

Organisations SA A U D SD Total

Nigeria Bottling

Company

84 35 3 1 1 124

Nigeria breweries 107 24 1 2 2 136

Innoson technical 32 48 2 5 2 89

Julel Nigeria 45 20 1 4 5 75

ANAMCO 44 7 1 3 - 55

Total 312 134 8 15 10 479

Percentage 65 28 2 3 2 100

Source: Fieldwork, 2015.

Table 4.3 reveals that out of 479 respondents, 312 (65%) strongly agree that work

experience encourages effective services delivery to customer, 134(28%) of the

61

respondent agree to the statement, 8(2%) of the respondents were undecided, 15(3%)

disagree with the statement, 10(2%) of the respondents strongly disagree to the

statement.

Table 4.4 Staying long in service makes me to serve customers better.

Organisations SA A U D SD Total

Nigeria Bottling

Company

80 39 1 2 2 124

Nigeria breweries 97 33 2 2 1 136

Innoson technical 41 39 2 4 3 89

Julel Nigeria 48 17 2 4 4 75

ANAMCO 31 19 - 3 2 55

Total 297 147 7 15 13 479

Percentage 62 31 1 3 3 100

Source: Fieldwork, 2015.

Table 4.4 reveals that out of 479 respondents, 297(62%) strongly agree that staying

long in service makes employee to serve customer better, 147(31%) of the respondent

agree with the statement, 7(1%) of the respondents were undecided, 15(3%) disagree

with the statement, 13(3%) of the respondents strongly disagree to the statement.

Table 4.5 Acquisition of new skills increases my work speed.

Organisations SA A U D SD Total

Nigeria Bottling

Company

92 26 2 1 3 124

Nigeria breweries 101 30 1 2 2 136

Innoson technical 48 35 2 3 1 89

Julel Nigeria 33 38 1 1 2 75

ANAMCO 37 11 2 1 4 55

Total 311 140 8 8 12 479

Percentage 65 29 2 2 3 100

Source: Fieldwork, 2015.

62

Table 4.5 reveals that out of 479 respondents, 311(65%) strongly agree that

acquisition of new skills increases employee work speed, 140(29%) of the respondent

agree to the statement, 8(2%) were undecided while 8(2%) and 12 (3%) disagree and

strongly disagree respectively.

Table 4.6 Correcting my deficiencies reduces the mistakes I make on the job.

Organisations SA A U D SD Total

Nigeria Bottling

Company

95 23 1 3 2 124

Nigeria breweries 103 24 2 5 2 136

Innoson technical 31 52 1 3 2 89

Julel Nigeria 41 27 3 2 2 75

ANAMCO 38 11 2 1 3 55

Total 308 137 9 14 11 479

Percentage 64 29 2 3 2 100

Source: Fieldwork, 2015.

Table 4.6 reveals that out of 479 respondents, 308(64%) strongly agree that

correcting employee deficiencies reduces the mistakes he makes on the job, 137(29%)

of the respondent agree to the statement, 9(2%) were undecided, 14(3%) disagree to

the statement while 11 (2%) strongly disagree.

Table 4.7 My output increases through modification of my behaviour

Organisations SA A U D SD Total

Nigeria Bottling

Company

92 21 5 5 1 124

Nigeria breweries 104 23 3 3 3 136

Innoson technical 72 12 2 3 - 89

Julel Nigeria 45 22 2 4 2 75

ANAMCO 34 13 1 3 4 55

Total 347 91 13 18 10 479

Percentage 74 19 3 4 2 100

Source: Fieldwork, 2015.

63

Table 4.7 reveals that out of 479 respondents, 374(74%) strongly agree that increase

of output increases through modification of employee behaviour, 91(19%) of the

respondent agree to the statement, 13(3%) were undecided, 18(4%) disagree to the

statement while 10 (2%) strongly disagree to the statement.

Table 4.8 Training increases my output by reducing industrial accidents

Organisations SA A U D SD Total

Nigeria Bottling

Company

81 35 3 5 - 124

Nigeria breweries 99 27 4 4 2 136

Innoson technical 68 12 3 3 3 89

Julel Nigeria 40 29 2 2 2 75

ANAMCO 13 36 1 3 2 55

Total 01 139 13 17 9 479

Percentage 63` 29 3 3 2 100

Source: Fieldwork, 2015.

Table 4.8 reveals that out of 479 respondents, 313(65%) strongly agree that training

increases employee output by reducing industrial accidents, 127(27%) of the

respondent agree to the statement, 12(3%) were undecided, 16(3%) disagree to the

statement while 11 (2%) strongly disagree to the statement.

Table 4.9 Being skillful promotes my service delivery to customers.

Organisations SA A U D SD Total

Nigeria Bottling

Company

85 27 4 6 2 124

Nigeria breweries 108 17 5 2 3 136

Innoson technical 36 47 1 4 1 89

Julel Nigeria 44 24 2 3 2 75

ANAMCO 40 12 - 1 2 55

Total 313 127 12 16 11 479

Percentage 65 27 3 3 2 100

Source: Fieldwork, 2015.

64

Table 4.9 reveals that out of 479 respondents, 301(63%) strongly agree that being

skillful promotes employees’ service delivery to customers, 139(29%) of the

respondent agree to the statement, 13(3%) were undecided, 17(3%) disagree to the

statement while 9 (2%) strongly disagree to the statement.

Table 4.10 Effective service delivery is achieved through my talents

Organisations SA A U D SD Total

Nigeria Bottling

Company

90 25 6 1 2 124

Nigeria breweries 110 22 2 - 2 136

Innoson technical 70 12 2 4 1 89

Julel Nigeria 21 46 3 3 2 75

ANAMCO 32 16 2 2 3 55

Total 332 115 15 8 9 479

Percentage 69 24 3 2 2 100

Source: Fieldwork, 2015.

Table 4.10 reveals that out of 479 respondents, 332(69%) strongly agree that effective

service delivery achieved through employee talents, 115(24%) of the respondent

agree to the statement, 15(3%) were undecided, 8(2%) disagree to the statement while

9 (2%) strongly disagree to the statement.

Table 4.11 My excellent health promotes quality service delivery.

Organisations SA A U D SD Total

Nigeria Bottling

Company

92 27 2 - 3 124

Nigeria breweries 103 25 4 3 1 136

Innoson technical 72 8 1 5 3 89

Julel Nigeria 45 25 - 3 2 75

ANAMCO 29 21 1 3 1 55

Total 341 106 8 14 10 479

Percentage 71 22 2 3 2 100

Source: Fieldwork, 2015.

65

Table 4.11 reveals that out of 479 respondents, 341(71%) strongly agree that

excellent health of employees promotes quality service delivery, 106(22%) of the

respondent agree to the statement, 8(2%) were undecided, 14(3%) disagree to the

statement while 10 (2%) strongly disagree to the statement.

Table 4.12 Having the right competencies enables me to achieve effective service

delivery

Organisations SA A U D SD Total

Nigeria Bottling

Company

82 36 3 1 2 124

Nigeria breweries 89 41 1 2 3 136

Innoson technical 44 38 2 4 1 89

Julel Nigeria 28 38 1 4 4 75

ANAMCO 37 13 1 4 1 55

Total 280 166 8 3 11 479

Percentage 58 35 2 14 2 100

Source: Fieldwork, 2015.

Table 4.12 reveals that out of 479 respondents, 280(58%) strongly agree that

employees with the right competencies can achieve effective service delivery,

166(35%) of the respondent agree to the statement, 8(2%) were undecided, 14(3%)

disagree to the statement while 11 (2%) strongly disagree to the statement.

Table 4.13 My education creates a good path for creativity

Organisations SA A U D SD Total

Nigeria Bottling

Company

85 34 - 4 1 124

Nigeria breweries 105 21 3 3 4 136

Innoson technical 62 21 5 - 1 89

Julel Nigeria 30 37 2 2 4 75

ANAMCO 18 27 5 5 - 55

Total 300 140 15 14 10 479

Percentage 63 29 3 3 2 100

Source: Fieldwork, 2015.

66

Table 4.13 reveals that out of 479 respondents, 300(63%) strongly agree that

education creates a good path for employees’ creativity, 140(29%) of the respondent

agree to the statement, 15(3%) were undecided, 14(3%) disagree to the statement

while 10 (2%) strongly disagree to the statement.

Table 4.14 Application of innovation and creativity becomes possible through my

education.

Organisations SA A U D SD Total

Nigeria Bottling

Company

85 29 1 6 3 124

Nigeria breweries 99 28 2 3 4 136

Innoson technical 57 25 1 4 2 89

Julel Nigeria 50 21 - 2 2 75

ANAMCO 33 16 4 1 1 55

Total 324 119 8 16 12 479

Percentage 68 25 2 3 2 100

Source: Fieldwork, 2015.

Table 4.14 reveals that out of 479 respondents, 324(68%) strongly agree that

application of innovation and creativity becomes possible through employees’

education, 119(25%) of the respondent agree to the statement, 8(2%) were undecided,

16(3%) disagree to the statement while 12 (2%) strongly disagree to the statement.

Table 4.15 I can generate new ideas through formal education

Organisations SA A U D SD Total

Nigeria Bottling

Company

91 26 2 3 2 124

Nigeria breweries 102 31 2 - 1 136

Innoson technical 43 38 1 5 2 89

Julel Nigeria 53 16 1 2 3 75

ANAMCO 28 21 1 3 2 55

Total 317 132 7 13 10 479

Percentage 66 28 1 3 2 100

Source: Fieldwork, 2015.

67

Table 4.15 reveals that out of 479 respondents, 317(66%) strongly agree that new

ideas can be generated through formal education, 132(28%) of the respondent agree to

the statement, 7(1%) were undecided, 13(3%) disagree to the statement while 10 (2%)

strongly disagree to the statement.

Table 4.16 Education enhances my learning of better work habits

Organisations SA A U D SD Total

Nigeria Bottling

Company

82 37 1 3 1 124

Nigeria breweries 108 22 2 1 3 136

Innoson technical 34 46 2 2 5 89

Julel Nigeria 46 19 4 1 5 75

ANAMCO 42 8 1 3 1 55

Total 312 132 10 10 15 479

Percentage 65 28 2 2 3 100

Source: Fieldwork, 2015.

Table 4.16 reveals that out of 479 respondents, 312(65%) strongly agree that

education enhances the learning of better work habits, 132(28%) of the respondent

agree to the statement, 10(2%) were undecided, 10(2%) disagree to the statement

while 15 (3%) strongly disagree to the statement.

4.2 Test of Hypotheses

To test the hypotheses listed in chapter one, the following statistical tools: Pearson’s

product moment correlation coefficient and simple linear regression aided by

computer Microsoft Special Package for Social Science (SPSS) were used to test the

four hypotheses earlier stated in chapter one.

Hypothesis One

Ho: There is no positive relationship between work experience and customer

satisfaction

H1: There is a positive relationship between work experience and customer

satisfaction

68

Table 4. 17 Descriptive Statistics work experience and customer satisfaction

Mean

Std.

Deviation N

work

experience 1.8261 1.16043 958

customer

satisfaction 1.9065 1.26713 958

Table 4.18 Correlations of work experience and customer satisfaction

work

experience

customer

satisfaction

work

experience

Pearson

Correlation 1 .955**

Sig. (2-tailed) .000

N 958 958

customer

satisfaction

Pearson

Correlation .955** 1

Sig. (2-tailed) .000

N 958 958

Source: SPSS Version 20.00.

Table 4.17 shows the descriptive statistics of the work experience via, customer

satisfaction with a mean response of 1.8261 and std. deviation of 1.16043 for work

experience and a mean response of 1.9065 and std. deviation of 1.26713 for customer

satisfaction and number of respondents (958). By careful observation of standard

deviation values, there is not much difference in terms of the standard deviation

scores. This implies that there is about the same variability of data points between the

dependent and independent variables.

Table 4.18 is the Pearson correlation coefficient for work experience and customer

satisfaction. The correlation coefficient shows 0.955. This value indicates that

correlation is significant at 0.05 level (2 tailed) and implies that there is a significant

69

positive relationship between work experience and, customer satisfaction (r = .955).

The computed correlations coefficient is greater than the table value of r = .195 with

956 degrees of freedom (df. = n-2) at alpha level for a two-tailed test (r = .955, p<

.05). However, since the computed r = .955, is greater than the table value of .195 we

reject the null hypothesis and conclude that there is a positive relationship between

work experience and customer satisfaction (r =. 955, P<.05).

Hypothesis Two

Ho: Training has no significant effect on productivity

H1: Training has a significant effect on productivity

Table 4. 19 Descriptive Statistics

Mean

Std.

Deviation N

productivity 1.8182 1.09298 958

Training 1.6621 1.01787 958

Table 4.20 Correlations

Organisational

growth Training

Pearson

Correlation

Organisational

growth 1.000 .619

Training .619 1.000

Sig. (1-tailed) Organisational

growth . .000

Training .000 .

N Organisational

growth 958 958

Training 958 958

70

Table 4.21 Model Summaryb

Model R R Square

Adjusted R

Square

Std. Error of

the Estimate

Durbin-

Watson

1 .619a .383 .382 .85904 .054

a. Predictors: (Constant), Training

b. Dependent Variable: productivity

Table 4.22 ANOVAb

Model

Sum of

Squares df Mean Square F Sig.

1 Regression 231.342 1 231.342 313.489 .000a

Residual 371.931 956 .738

Total 603.273 957

a. Predictors: (Constant), Training

b. Dependent Variable: productivity

Table 4. 23 Coefficientsa

Model

Unstandardized

Coefficients

Standardized

Coefficients

t Sig. B Std. Error Beta

1 (Constant) .713 .073 9.744 .000

Training .665 .038 .619 17.706 .000

a. Dependent Variable: productivity

R = 0.619

R2 = 0. 383

F = 313. 489

T = 9.744

DW = 0. 054

71

Interpretation:

The regression sum of squares (231.342) is less than the residual sum of squares

(371.931), which indicates that more of the variation in the dependent variable is not

explained by the model. The significance value of the F statistics (0.000) is less than

0.05, which means that the variation explained by the model is not due to chance.

R, the correlation coefficient which has a value of 0.619, indicates that there is

positive relationship between training and productivity. R square, the coefficient of

determination, shows that 38.3% of the variation in the productivity is explained by

the model.

With the linear regression model, the error of estimate is low, with a value of about

.85904. The Durbin Watson statistics of 0.054, which is not more than 2, indicates

there is no auto correlation.

Training coefficient of 0. 619, indicates a positive significance between Training and

productivity, which is statistically significant (with t = 9.744). Therefore, the null

hypothesis should be rejected and the alternative hypothesis accordingly accepted.

Thus training has a significant effect on productivity

Hypothesis Three

Ho: Talent management does not significantly affect service delivery

H1: Talent management significantly affects service delivery

Table 4 .24 Descriptive Statistics

Mean

Std.

Deviation N

service delivery 3.3192 1.62412 958

Talent management 2.7173 1.54910 958

72

Table 4.25 Correlations

service

delivery

organizational

culture

Pearson

Correlation

service delivery 1.000 .906

Talent management .906 1.000

Sig. (1-tailed) service delivery . .000

Talent management .000 .

N service delivery 958 958

Talent management 958 958

Table 4.26 Model Summaryb

Model R R Square

Adjusted R

Square

Std. Error of

the Estimate

Durbin-

Watson

1 .906a .821 .820 .68838 .031

a. Predictors: (Constant), Talent management

b. Dependent Variable: service delivery.

Table 4.27 ANOVAb

Model

Sum of

Squares Df Mean Square F Sig.

1 Regression 1123.548 1 1123.548 2.371E3 .000a

Residual 245.460 956 .474

Total 1369.008 957

a. Predictors: (Constant), Talent management

b. Dependent Variable: service delivery

73

Table 4.28 Coefficientsa

Model

Unstandardized

Coefficients

Standardized

Coefficients

T Sig. B Std. Error Beta

1 (Constant) .738 .061 12.104 .000

Talent management .950 .020 .906 48.693 .000

a. Dependent Variable: service delivery

R = 0.906

R2 = 0. 821

F = 2.371E3

T =12.149

DW = 0. 031

Interpretation:

The regression sum of squares (1123.548) is greater than the residual sum of squares

(245.460), which indicates that more of the variation in the dependent variable is not

explained by the model. The significance value of the F statistics (0.000) is less than

0.05, which means that the variation explained by the model is not due to chance.

R, the correlation coefficient which has a value of 0.906, indicates that there is

positive relationship between talent management and service delivery. R square, the

coefficient of determination, shows that 61.1% of the variation in the innovation is

explained by the model.

With the linear regression model, the error of estimate is low, with a value of about

.68838. The Durbin Watson statistics of 0.031, which is not more than 2, indicates

there is no autocorrelation.

Talent management coefficient of 0. 782 indicates a positive significance between

talent management and service delivery, which is statistically significant (with t =

12.149). Therefore, the null hypothesis should be rejected and the alternative

hypothesis accordingly accepted. Thus talent management significantly affects service

delivery

74

Hypothesis four

Ho: Education has no significant effect on innovation and creativity.

H1: Education has a significant effect on innovation and creativity.

Table 4.29 Descriptive Statistics

Mean

Std.

Deviation N

Innovation and

creativity 2.3327 1.47127 958

motivation 2.61 1.558 958

Table 4.30 Correlations

innovation

and creativity Education

Pearson

Correlation

innovation and

creativity 1.000 .932

Education .932 1.000

Sig. (1-tailed) innovation and

creativity . .000

Education .000 .

N innovation and

creativity 958 958

Education 958 958

Table 4. 31 Model Summaryb

Model R R Square

Adjusted R

Square

Std. Error of

the Estimate Durbin-Watson

1 .932a .869 .868 .53372 .050

a. Predictors: (Constant), Education

b. Dependent Variable: innovation and creativity

75

Table 4.32 ANOVAb

Model

Sum of

Squares df Mean Square F Sig.

1 Regression 975.890 1 975.890 3.426E3 .000a

Residual 147.555 956 .285

Total 1123.444 957

a. Predictors: (Constant) Education

b. Dependent Variable: innovation and creativity.

Table 4: 33 Coefficientsa

Model

Unstandardized

Coefficients

Standardized

Coefficients

t Sig. B Std. Error Beta

1 (Constant) .038 .046 6.826 .000

Education .880 .015 .932 58.531 .000

a. Dependent Variable: innovation and creativity

R = 0.932

R2 = 0. 869

F = 3. 426E3

T = 6.825

DW = 0. 050

Interpretation:

The regression sum of squares (975.890) is greater than the residual sum of squares

(147.555), which indicates that more of the variation in the dependent variable is not

explained by the model. The significance value of the F statistics (0.000) is less than

0.05, which means that the variation explained by the model is not due to chance.

R, the correlation coefficient which has a value of 0.932, indicates that there is

positive relationship between education and innovation and creativity. R square, the

76

coefficient of determination, shows that 86.9% of the variation in innovation and

creativity is explained by the model.

With the linear regression model, the error of estimate is low, with a value of about

.67998. The Durbin Watson statistics of 0.050, which is not more than 2, indicates

there is no autocorrelation.

Education coefficient of 0. 932 indicates a positive significance between education and

innovation and creativity, which is statistically significant (with t = 6.825). Therefore,

the null hypothesis should be rejected and the alternative hypothesis accordingly

accepted. Thus education has a significant effect on innovation and creativity.

4.3 Discussion of Findings

Objective 1: To establish the nature of relationship between work experience and

customer satisfaction. Finding: The study found that a positive relationship exist

between work experience and customer satisfaction.

This finding that work experience is positively related to customer satisfaction agrees

with Becker (1964), and Frank and Bemanke (2007) which hold that experience is

among the proxies of human capital. It also agrees with a study by Lam et al. (2007)

which shows the significance of work experience to human capital. The finding is

equally supported by Gunu et al. (2013) which uses customer satisfaction to track and

measure organisation performance. All these reinforce the fact that work experience is

favourably related to customer satisfaction,

Objective 2: To examine the extent to which training affects productivity.

Finding: The study found that training has a significant effect on productivity.

This finding is strongly underpinned by the human capital theory which was proposed

by Schultz (1961) and developed by Becker (1964). Human capital theory suggests

that training raises the productivity of workers by imparting useful knowledge and

skills, hence raising workers future income by increasing their lifetime earnings.

Empirical studies by (Iwuoha, 2009; Babaita, 2010; Seleim et al., 2007) fully

reinforce that training has significant effect on productivity.

77

Objective 3: To ascertain the effect of talent management on effective service

delivery.

Finding: The study found that talent management significantly affects service

delivery. Empirical studies by (Babaita, 2010; Iwuoha, 2009; Seleim et al. 2007;

Gunu et al. 2013; Salim et al. 2004) all indicate that human capital development has

significant effect on organisational performance. Talent is a proxy of human capital

while service delivery is a proxy of performance.

Objective 4: To evaluate the extent to which education affects innovation and

creativity.

Finding: The study found that education has a significant effect on innovation and

creativity. The finding states that application of innovation and creativity become

possible through education. Innovation and creativity is a proxy of human capital

while education is a proxy of performance (Becker, 1964; Hayton, 2005). Empirical

studies by (Babaita, 2010; Iwuoha, 2009; Seleim et al. 2007; Gunu et al. 2013; Salim

et al. 2004) all reinforce the fact that education has significant effect on innovation

and creativity.

78

CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS

5.1 Summary of Findings

The result based on the descriptive statistics reveals the following:

1. There is positive relationship between work experience and customer

satisfaction (r = 0. 955, P =0.000 < 0.05). The data in Tables 4.2, 4.3,

and 4.4 shows that work experience of employees increases customer

satisfaction. This is because 92% of the respondents either agreed or

strongly agreed, while 7% agreed or disagreed.

2. Training has a significant effect on productivity (r = 0. 619; t = 9.744;

p = 0.000< 0.05). The result in Tables 4.5, 4.6, 4.7, and 4.8 clearly

indicate that respondents believe that the training received by

employees substantially affect their productivity. Data shows that 93%

either agreed or disagreed, while 6% disagreed or strongly disagreed

3. Talent management significantly affects service delivery (r = 0.782; t =

12.149; p= 0.000 < 0.05). The result shows that respondents believe to

effective management of employees’ talents significantly affect the

service delivery to customers. The data in Tables 4.9, 4.10, 4.11, and

4.12 show that 93% of the respondents either agreed or strongly

agreed, while 5% disagreed or strongly disagreed.

4. Education has a significant effect on innovation and creativity (r =

0.932; t = 6.826; p = 0.000 < 0.05). The results in Tables 4.13, 4.14,

4.15, and 4.16 believe that education acquired by employees

substantially affect their innovative and creative ability. This is

because 93% of the respondents either agreed or strongly agreed, while

5% disagreed or strongly disagreed.

79

5.2 Conclusion

The following conclusions could be drawn from the findings of the study:

1. Customers tend to be more satisfied when well experienced employees attend to

them. Experience helps employees determine the best way to serve customers

having learnt from mistakes over time.

2. Training equips employees on modern best practices to do their jobs and this

definitely has profound effect on their productive ability.

3. Effective and efficient management of employees’ talents help to harness such

talents which when put to good use substantially affect the quality of service

delivered to customers.

4. Acquisition of quality education has a profound effect on the innovative and

creative ability of employees. Education tend to ignite the reasoning and

imaginative ability of people

5.3 Recommendations

Based on the findings, the following recommendations were made.

1. Firms should verify and validate the job information gathered to ensure

that it accurately reflects mission requirements. Based on the information,

consider streamlining the organisation to generate synergies.

2. Firms should conduct a workforce assessment to determine the current

human capital capacity based on the verified job requirements.

3. Firms should develop, verify and validate the proficiency scale so that the

points on the scale are criterion-referenced, i.e. able to accurately reflect

the level of proficiency required. The proficiency scale should account for

gains in human capital from on-the job experience.

4. Firms should keep abreast with state of the art methods of developing their

human capital and use them.

5. Human capital development programmes should be well planned and

evaluated so as to achieve best results.

6. Employees need to be adequately motivated for human development

programmes.

80

5.4 Suggested Areas for Future Research

Future research should look at impact of human capital development on

organisational commitment.

Future research should look at the implication of human capital development on

organisational culture.

Future research should look at the relationship between human capital development

and employment patterns; relationship between human capital development and

unemployment rates; human capital development and urban/rural settings.

.

81

5.5 Contribution to knowledge

Model of human capital development and firm performance.

Organisations should develop their human capital through training, talent

management and education. This will lead to organisation performance through

customer satisfaction, improved service delivery, innovation and creativity, and

employee growth.

Human Capital

Training Talent management

Education

Organisation performance

Customer satisfaction

Productivity

Innovation and creativity

Growth

Employee

82

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APPENDIX I

Department of Management,

University of Nigeria,

Enugu Campus.

June ,2015

Dear Sir/Madam,

RESEARCH QUESTIONNAIRE ON THE EFFECT OF HUMAN CAPITAL

DEVELOPMENT ON ORGANISATIONAL PERFORMANCE.

I am a postgraduate student of the above named department and institution, presently

carrying out a research work on the effect of human capital development on

organisational performance. This questionnaire is drawn to extract the necessary

information to enable me write a dissertation on the above topic in partial fulfilment

for the award of Masters of Science (Management), University of Nigeria Enugu

Campus. I assure you that the information given will be treated with utmost

confidentiality and will be used strictly for academic purposes.

I will be very grateful if you could assist me in this direction. I hereby attach the

questionnaire for your completion. Thanks for your co-operation.

Yours faithfully,

Kanu Mba.

91

Appendix 11

Questionnaire

Please read each of the following statements or questions carefully and tick (√) the

response that best represent your reaction to the statements according to the following

scale.

i. Strongly agree (SA)

ii. Agree (A)

iii. Undecided (UD)

iv. Disagree (D)

v. Strongly Disagree (SD)

1. My wealth of experience provides quality service to customers.

2. Customer patronage increases when I attend to them through my experience.

3. My work experience encourages effective service delivery to customers.

4. Staying long in service makes me to serve customers better.

1. Acquisition of new skills acquisition increases my work speed.

2. Correcting my deficiencies reduces the mistakes I make on the job.

3. My output increases through modification of my behavior.

4. Training increases my output by reducing indusial accidents

1. Being skillful promotes my service delivery to customers.

2. Effective service delivery is achieved through my talents

3. My excellent health promotes quality service delivery

4. Having the right competencies enables me achieve effective service delivery.

1. My education creates a good path for creativity

2. Application of innovation and creativity becomes possible through my education.

3. I can generate new ideas through formal education.

4. Education enhances my learning of better work habits.