topic: the effect of recruitment practices...

MAKERERE UNIVERSITY

TOPIC: THE EFFECT OF RECRUITMENT PRACTICES ON THE

PERFORMANCE OF FAMILY OWNED BUSINESSES IN KIKONI.

BY

NAKAGGWA DOREEN

207015304

07/U/11849/Ext

SUPERVISOR:

YOEL SHALOM

A DESERTATION SUBMITTED TO MAKERERE UNIVERSITY IN

PARTIAL FULFILMENT FOR THE REQUIREMENT OF A DEGREE OF

BACHELOR OF COMMERCE.

MAY 2011

DECLARATION.

This dissertation has not been presented to any institution before for the degree

award.

Candidate. Nakaggwa Doreen

Signature………………………………

Date……………………………………

Supervisor Yoel shalom

Signature………………………………..

Date…………………………………….

i

APPROVAL

This is to certify that this dissertation has been submitted for examination with my approval as

university supervisor.

Signed……………………………….

Yoel shalom

Lecturer

Makerere University

Date ………………………….

ii

DEDICATION.

I dedicate this work to my dear Father, Mr. Ssekiwunga Simon and my mother, Mrs. Nassanga

Sarah for the support offered, my brothers and sisters for all their prayers to see that I

successfully complete my course.

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AKNOWLEDGEMENTS.

I would like to thank my supervisor pastor Yoel shalom for sparing his precious time to give me

constrictive criticisms and guidance on the study.

I also thank the respondents especially business owners who spared their time to contribute to the

data gathering process in this study.

Am greatful to my friends Selina, Harriet, Joseph for their untiring support and encouragement

during the Programme.

Last but not least, special thanks to my family members for their great support without which I

would never have managed my Degree.

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TABLE OF CONTENTS.

DECLARATION.......................................................................................................................................... i

APPROVAL................................................................................................................................................ ii

DEDICATION............................................................................................................................................ iii

AKNOWLEDGEMENTS........................................................................................................................... iv

TABLE OF CONTENTS.............................................................................................................................v

LIST OF TABLES....................................................................................................................................viii

LIST OF FIGURES.................................................................................................................................... ix

ABSRACT..................................................................................................................................................xi

CHAPTER ONE..........................................................................................................................................1

1.0. INTRODUCTION................................................................................................................................1

1.1. BACKGROUND TO THE STUDY.....................................................................................................1

1.2. STATEMENT OF THE PROBLEM....................................................................................................2

1.3. PURPOSE OF THE STUDY................................................................................................................2

1.4. OBJECTIVES OF THE STUDY..........................................................................................................2

1.5. RESEARCH QUESTIONS..................................................................................................................3

1.6. SCOPE OF THE STUDY.....................................................................................................................3

1.6.1. The Geographical scope....................................................................................................................3

1.6.2. The time scope...................................................................................................................................3

1.6.3. The subject scope...............................................................................................................................3

1.7. SIGNIFICANCE OF THE STUDY......................................................................................................3

1.8. DEFINITIONS OF KEY TERMS........................................................................................................4

1.8.1. RECRUITMENT PRACTICES.........................................................................................................4

1.8.2. PERFORMANCE..............................................................................................................................4

1.8.3. FAMILY OWNED BUSINESSES....................................................................................................5

CHAPTER TWO.........................................................................................................................................6

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2.0. LITERATURE REVIEW.....................................................................................................................6

2.1. DEFINITION OF A FAMILY BUSINESS..........................................................................................7

2.2. THE FAMILY BUSINESS AS A SUB SYSTEM...............................................................................8

2.3. MANAGING HUMAN RESOURCE IN A FAMILY BUSINESS......................................................9

2.4. AQUISTION OF HUMAN RESOURCE...........................................................................................10

2.4.1. Recruitment of human resource.......................................................................................................10

2.4.2. Socialization of employees..............................................................................................................11

2.4.3. Selection of employees in a family firm..........................................................................................12

2.5 Development of human resource.........................................................................................................13

2.6. Motivation of human resource............................................................................................................13

2.7. Maintenance of human resource.........................................................................................................15

2.8. PERFORMANCE OF FAMILY BUSINESSES................................................................................16

2.9. RELATIONSHIP BETWEEN RECRUITMENT, SELECTION AND PERFORMANCE OF FAMILY OWNED BUSINESSES............................................................................................................17

CHAPTER THREE...................................................................................................................................19

3.0. METHODOLOGY.............................................................................................................................19

3.1. RESEARCH DESIGN........................................................................................................................19

3.2. STUDY POPULATION.....................................................................................................................19

3.3. RESEARCH VARIABLES MEASUREMENT.................................................................................19

3.3.1. The independent variable. Recruitment practices............................................................................19

3.3.2. The Dependent Variable. Performance of Family firms..................................................................20

3.4. SAMPLING DESIGN........................................................................................................................20

3.5. SAMPLE SIZE...................................................................................................................................20

3.6. SOURCES OF DATA........................................................................................................................20

3.6.1. Primary source.................................................................................................................................21

3.6.2. Secondary source.............................................................................................................................21

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3.7. INSTRUMENTS OF DATA COLLECTION.....................................................................................21

3.7.1. Questionnaire...................................................................................................................................21

3.7.2. Interviewing. This technique involves two parts, the researcher and the respondents. The............21

3.8. PROCEDURE....................................................................................................................................21

3.8.1. Primary data collection....................................................................................................................21

3.8.2. Secondary data collection................................................................................................................22

3.9. DATA PROCESSING AND ANALYSIS..........................................................................................22

3.9.1. Primary data analysis.......................................................................................................................22

3.9.2. Secondary data.................................................................................................................................22

3.10. LIMITATIONS OF THE STUDY....................................................................................................22

CHAPTER FOUR.....................................................................................................................................24

4.0. PRESENTATION AND DISCUSSION OF FINDINGS...................................................................24

4.1. ORGANISATION AND PRESENTATION OF THE DATA............................................................24

4.2. Characteristics of the sample..............................................................................................................25

4.2.2. Age structure of the sample.............................................................................................................26

4.2.3. Marital status of respondents...........................................................................................................27

4.2.4. Education status of the sample.........................................................................................................28

4.2.5. The period respondents have been in business.................................................................................29

4.3. RECRUITMENT PRACTICES OF SELECTED FAMILY OWNED BUSINESSES.......................30

4.3.1. Employee composition of family owned business...........................................................................31

4.3.2. Response on the relationship of employees with the family business..............................................32

4.3.3. Recruitment practices......................................................................................................................33

4.4. PERFORMANCE OF FAMILY OWNED BUSINESSES.................................................................34

4.4.1. Measures of performance in family owned businesses....................................................................35

4.4.2. Contribution of employees in terms of output to the business.........................................................37

vii

4.4.3. Contribution of employees to the profitability of the business.........................................................38

4.4.4. Losses incurred in the family businesses studied.............................................................................39

4.5.1. Category of employees in family owned businesses........................................................................40

4.5.2. Qualities for recruitment..................................................................................................................41

4.5.3. Training and development of employees in family owned businesses.............................................43

4.5.4. Profit making...................................................................................................................................44

4.5.5. Attributes to profits made................................................................................................................45

4.5.6. Business growth / expansion............................................................................................................47

CHAPTER FIVE.......................................................................................................................................49

5.0. SURVEY, CONCLUSIONS AND RECOMMENDATIONS............................................................49

5.1. Summary of the main findings of study..............................................................................................49

5.1.1. Recruitment Practices in selected Family Owned Businesses..........................................................49

5.1.2. Performance of selected family owned businesses..........................................................................50

5.1.3. Effect of Recruitment practices on the Performance of Family Owned Businesses.........................50

5.2. CONCLUSION..................................................................................................................................51

5.3. Recommendations for further Research..............................................................................................52

REFRENCES............................................................................................................................................54

viii

LIST OF TABLES.

Table 1showing number of respondents according to their categories in family firms..............................20

Table 2. Number of respondents sampled by sex.......................................................................................30

Table 3. Age composition of respondents..................................................................................................31

Table 4. Marital status of Respondents......................................................................................................32

Table 5. Level of education attained by respondents.................................................................................33

Table 6. Period respondents have been in business....................................................................................34

Table 7. Employee composition.................................................................................................................35

Table 8. Relationship with the business.....................................................................................................36

Table 9. Recruitment practices...................................................................................................................38

Table 10. Measurers of performance.........................................................................................................40

Table 11. Contribution of employees in terms of output............................................................................41

Table 12. Contribution of employees in profitability levels.......................................................................42

Table 13.Loses incurred.............................................................................................................................43

Table 14. Category of Employees..............................................................................................................45

Table 15. Important qualities for recruiting employees..............................................................................46

Table 16. Training and development of employees in family owned businesses.......................................47

Table 17. Profits made in last year.............................................................................................................49

Table 18. Attributes to profits....................................................................................................................50

Table 19. Business expansion by profits made..........................................................................................51

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LIST OF FIGURES

Figure 1.Showing number of respondents..................................................................................................29

Figure 2. Showing Age of respondents......................................................................................................30

Figure 3. Showing Marital status of respondents.......................................................................................31

Figure 4. Showing Number of respondents (%).........................................................................................32

Figure 5. Showing the period respondents have been in business..............................................................33

Figure 6. Showing Employee composition (%)..........................................................................................35

Figure 7. Showing Employee Relationship with the business....................................................................36

Figure 8. Showing Recruitment practices used by Family Business..........................................................37

Figure 9. Showing measurers of performance............................................................................................39

Figure 10. Showing the contribution of Employees in terms of output......................................................41

Figure 11. Showing contribution of Employees in profitability levels.......................................................42

Figure 12. Showing losses incurred...........................................................................................................43

Figure 13. Showing category of Employees...............................................................................................44

Figure 14. Showing important qualities for recruitment............................................................................46

Figure 15. Showing the number businesses that train their employees......................................................47

Figure 16. Showing percentage of profits made on every 100shs invested in biusiness.............................48

Figure 17. Showing the attributes to profits made......................................................................................50

Figure 18. Showing business expansion using profits made......................................................................51

x

ABSRACT.

Family businesses contribute greatly to the economy of every nation. The need to study their

performance is therefore justified.

The study sought to find out the recruitment practices of family owned businesses and how these

practices affect their performance.

28 family business units were studied and they had to have the following characteristics.

(i) be formerly registered and operating in Kikoni.

(ii) Engaged in any kind of business but with a minimum capitalization of Ug shs 20,000,000

(twenty million).

(iii) Had been in existence and operated for a continuous minimum of 3 years.

Since there were specific characteristics required about the sample, the businesses to be studied

were purposively selected; data was collected through interview schedules using a designed

questionnaire. Data was analyzed using descriptive statistics to determine the effect and

relationship between recruitment practices and performance of family owned businesses.

It was found out that employing relatives in family businesses was because business owners

could comfortably trust relatives even if they were not qualified for the job in question. Relatives

were also employed because they lacked employment elsewhere.

In cases where relatives were not qualified for the job and especially key positions, it negatively

affected the profit margin. In family businesses, relatives performed even better when in key

positions than qualified non relatives. The businesses studied generally performed well in terms

of profit making. For example more than 39.3% of the businesses made at least 10% profit on

every UG shs 100 invested in previous year.

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CHAPTER ONE

1.0. INTRODUCTION

1.1. BACKGROUND TO THE STUDY

The goal of every business is to make profits for the owners. This looks to be an extremely

difficult task unless firms discover the different ways to improve on efficiency and effectiveness

of their operations.

In the early 1980’s, changes in the business environment brought it to the manager’s concern that

human resource hold the key to the survival of any family owned business. The major factor that

affected their performance during that period was the change in the rate of increase in

productivity. (Schuster 1985). This implies that workforce greatly affects the performance of a

firm.

Human resource being the most important resources to business, they supply creativity and drive

(Balunywa 1992). They can fail or succeed the business through the quality and quantity of

work they supply. This is measured in terms of how the specified resources are managed to

accomplish the intended objectives (Riggs 1983).

According to www.newvision.com.Ug published on 12th/8/2008,”the success of family

businesses should be put down to hard work, keeping an open mind, discussing freely with

people and empowering staff” Kakira Sugar Mayur.

In family owned businesses , there is a challenge of recruiting employees who understand what

they are supposed to do depending on positions they hold because of the unconditionally

acceptance granted to family members.

Despite the fact that it is not bad to employ relatives, it can have negative effects on the

performance of the business more so when people are put in positions they do not qualify for.

This brings it to the need for family owned businesses to have efficient and effective recruitment

practices for employees.

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http://www.newvision.com.Ug/

A family owned business therefore is one that grows out of family needs, built on family abilities

(LEA 1998), guided by its moral and spiritual values and is in control over the direction of the

business where by some or all of the family members are involved in the day today running of

the business and there is an intention of them to succeed the business.

Recruitment practices involve persuading potential employees to apply for jobs in an

organization and make sure proper selections are made.

The various changes in the economic policies in Uganda have created a favorable environment

for business which has also led to stiff competition among businesses. Therefore for any business

to be able to compete favorably, it must recruit people who are creative, innovative and

competent.

1.2. STATEMENT OF THE PROBLEM.

On several occasions, the researcher has visited family owned businesses and interacted with a

number of business owners in Kikoni and noted that family businesses employ family members,

in-laws and also extend employment opportunities to friends regardless of the question of

competence.

There is also an assumption that a family member must head the business. Despite the fact that

the family has full control in recruiting and selecting a member of the family to head a family

business, the practice can be achieved at the expense of the business performance in terms of

profit level yet it’s always every firm’s goal to make profits for the owners.

However, there is no clear extent to which performance of family owned businesses is affected

by recruitment practices.

1.3. PURPOSE OF THE STUDY.

The study sought to establish the recruitment practices in family owned businesses and how their

performance is being affected in terms of profit levels.

1.4. OBJECTIVES OF THE STUDY.

(1) To examine the recruitment practices of family owned businesses.

2

(11) To assess the performance of family owned businesses.

(111) To determine the effect of recruitment practices on the performance of family

Owned business.

1.5. RESEARCH QUESTIONS.

(1). what recruitment practices do family owned businesses use?

(11). what is the performance of family owned businesses?

(111).what is the effect of recruitment practices on the performance of family owned

businesses?

1.6. SCOPE OF THE STUDY.

1.6.1. The Geographical scope.

The study covered family owned businesses in Kikoni.

1.6.2. The time scope.

The study covered a period of three years from 2007 to 2010.

1.6.3. The subject scope.

The study focused on the recruitment practices with in the family owned business and how they

affect their performance.

1.7. SIGNIFICANCE OF THE STUDY.

(1).The objectives of this study will help family owned businesses to discover the effect of

recruitment practices on their business performance. This will help them come up with better

ways of recruiting competent employees to their businesses which will result into improved

performance.

3

(11). The study will benefit policy makers like Government and employers in making realistic

policies that promote merit other than the technical know who theory.

(111). The Research will also help or benefit other researchers who will carry out research in

areas of recruitment and selection practices in family firms and other organizations.

1.8. DEFINITIONS OF KEY TERMS.

1.8.1. RECRUITMENT PRACTICES.

Recruitment involves the utilization of organizational practices to influence the number and type

of individuals who are willing to apply for job vacancies (Rynes 1991, Rynes and cable, 2003).

Recruitment can focus on the internal labour market i.e. persuing staff already employed by the

organization or external labour market i.e. persuing applicants form outside the organization.

Internal candidates can be recruited through internal job postings, word of mouth or internship

programs. (Casper w, 2004).

Recruitment can still be defined as the process of identifying and hiring the best qualified

candidates for a job vacancy in a most timely and cost effective manner.

1.8.2. PERFORMANCE.

Performance can generally refer to accomplishment of a given task measured against preset

standards of accuracy, completeness, cost and speed. It can also refer to a successful execution of

a contract or fulfillment of an obligation in a manner that releases the performer from all

liabilities under the contract.

Nearly all businesses start as family enterprises. Many researchers argue that family members

with large concentrated ownership have more incentives to maximize a firm’s performance.

They also have more power to make it happen than diverse investors in a non family firm.

The justification for this is that there is a general agreement among organization scholars that

objective measures of performance are preferable to those based on manager’s perceptions (Dess

et Robinson 1984). However, objective data on performance of small firms is usually not

4

available because most small firms are privately owned and the owners are usually not willing to

reveal such information to outsiders (Dess et Robinson 1984).

Furthermore when financial statements are available, they may be inaccurate because they are

usually un audited. Therefore the study will rely on perpetual measures of organizational

performance, financial performance will be measured in terms of profit level as perceived by the

business owners. Other aspects like growth of sales and profits, management style and business

succession plans will be studied to further evaluate the performance of the business.

1.8.3. FAMILY OWNED BUSINESSES.

A family business can be classified as one in which the family broadly defined has either

significant ownership or management control. In the US, most family firms are small and the

majority faces a challenge of succession from one generation to the next. Less than 30% of

family businesses survive to the second generation. (Astrachen and Allen, 2003).

A family business is one in which one or more members of one or more families have significant

ownership interest and significant commitments towards the business’s overall well being. In

some countries, many of the largest publicly listed firms are family owned. A firm is said to be

family owned if a person is the controlling shareholder that is a person can garner enough shares

to ensure at least 20% of the voting rights.

CHAPTER 1 REVIEW.

If I had to re-do this chapter again, I would also consider the following objectives.

To establish motivation practices undertaken in family owned businesses.

To find out other factors that affect performance of employees in family firms.

To find the relationship between motivation and employee performance in family owned

businesses.

Future researchers are encouraged to consider the above.

5

CHAPTER TWO.

2.0. LITERATURE REVIEW.

From the early beginning of capitalism, the family has constituted a primary vehicle of economic

production. Despite of all the technological changes that have taken place since the early times,

recent surveys show that the family remains a major force behind many modern work

organizations (Hansberg 1983).

In the 1990’s, family businesses received a lot of attention not only from law firms but also from

investment Banks, Insurance companies, Commercial banks, accounting firms and also family

business consultants (Fay 1994). Fay says that such attention is well shown in light of both the

size and demographic developments in the family business segments of the US economy. In

1990 Fortune magazine first estimated the value of capital invested in businesses in the United

States to be $2.4 trillion.

Family owned businesses in the United States, also produce almost half of the Gross National

Production and generate about 50% of the total wages in the country (Ward,1987).In Brazil,

family businesses represent 97% of all existing firms (Gus,1988).

There are at least 2million family businesses in the United States with sales over US $1million.

More than 90% of the corporations in the United States are family owned, more than 30% of the

Fortune 500 companies are family owned or controlled by families, and 42% of the largest US

companies are controlled by one person or family. Family businesses also account for more than

60%of the American labour force (Rock 1991).

In India, family businesses include big business organizations like Tata, Mahindra,Vespa etc.

Most of these produce a range of products from steel products to household items. In Uganda,

there is hardly any study on family owned businesses but since every country is dominated by

family businesses to a greater or lesser extent, it’s likely that most family owned businesses in

Uganda fall under small scale enterprises.

6

DEFINITION OF SMALL SCALE ENTERPRISES.

According to Wasswa Balunywa, small scale enterprises are defined differently in different

countries. Small scale enterprises in United States may be a large enterprise, in India and a very

large enterprise in Uganda. The absolute figurers involved in the definition of these enterprises

may also differ since the number varies from one country to country. In India, the figure is 30-

100, European Union; the figure is including what they call medium enterprises which employ

250 people (The Netherlands, 1997). Stoner et al (1996) reports that in the US, small scale

enterprises are those which employ less than 500 people.

In Uganda, however, family owned businesses cannot be restricted to only small scale enterprise

category. There are also big organizations which employ more than 10 people whose capital

assets are more than 100,000 US dollars. Among these include organizations like Madhvani

group of companies, Mulwana Industries, Spear motors and Mukwano industries.

Nevertheless, what category they fall in, the extent and range of their control and interest are

huge and mysterious and their contribution to the economy is immense (Rock, 1991). For

example, the Madhvani group has over the decades produced a variety of popular products for

Ugandan market and its products have been common in every home in Uganda for over 70years.

One of the Madhvani branches, the Kakira Sugar Works comprise over 1700 famers who own

11000 acres of sugarcane which contributes up to 25million US dollars per annum to the

country’s FOREX.

Successful family businesses are also vital for developing a country (Gus1998) for example in

Brazil they represent 97% of the existing firms.

2.1. DEFINITION OF A FAMILY BUSINESS

Several writers have attempted to define a family business. According to Rock 1991, a family

business can be one where one holds a majority of the voting shares or one where the family

exerts control over the destiny of the business or where the proportion of the senior management

posts are held by members of the family and children are expected to follow suit. a research

conducted in the early 1989 by corporate finance found out that almost 47% of those interviewed

7

who defined their companies as family owned planned to hand over their companies to the next

generation of the family. (Rock, 1991).

A family owned business is one that grows out of family needs, built on family abilities (LEA

1999), is guided by its moral and spiritual values and is in control over the direction of the

business where by some or all of the family members are involved in day today running of the

business.

Davis (1983) defined a family owned business as one where by one or more family units

influence the policies and directions of the business which is exercised through ownership and

participation of family members in management.

All the above definitions have the following in common in that family members are involved in

day today running of the business, participate in management of the business and there is an

intention of family members succeeding the business. Despite the fact that there is no widely

accepted definition of family firms, for purposes of this research, a family business will be

defined as one owned and operated by a family that employs some or all of the family members.

The definition implies both family ownership and active involvement in the firm.

Besides defining the business as family owned, for purposes of this research, its important to

define who are the members of the family and this includes members of both nuclear family i.e.

father, mother and children and also extended family which includes cousins, in-laws and closer

family friends. This is because in Ugandan situation as well as other African countries, there are

stronger cultural ties between the nuclear family and relatives in the extended families which

makes it difficult to define a family without thinking in terms of an extended family. This may

also include family friends and people of the same religious faith.

2.2. THE FAMILY BUSINESS AS A SUB SYSTEM.

Family businesses vary widely in form although they share common background characteristics

which define the environment in which their interactions occur. According to Davis 1993,

interactions between families and businesses establish the basic character and uniqueness of the

family business. This combination produces a joint system operating according to rules derived

from the needs of the separate parts but adopted to the needs of the whole.

8

Therefore Beckhard and Dyer (1983) put it out that the sub systems in a family business system

include:

(1). The family as an entity

(11). Business as an entity

(111). Founder as an entity and

(1v). Such linking organizations as the board of directors.

Each of the subsystems above has its own competing needs and values. Lansberg 1983 adds that

despite the diversity of family businesses, they all exist on the boundaries of two social

institutions that is the family and the business. In family owned businesses, the two systems

interact.

Due to the fact that the two subsystems are not necessarily compatible, the mission of each of

these systems is sufficiently different. The family dynamics thus intrude on the rational

functioning of the business (Kepner 1983). For example the purpose of the business is to make

money while that of the family is in the business of caring for and developing people and

membership in the business is by blood not through the criteria of competence.

According to Hollander (1983), the very nature of business seems to contradict the very nature

of the family in that where as families grant acceptance unconditionally to family members,

business grant it according to one’s contribution , families tend to be emotional where as

business are objective.

Therefore it is important to put into consideration the impact each subsystem can cause to the

other as Lyman puts it out that to ignore the reality that family and business affect each other is

to invite trouble. This calls for need to see that none of the systems especially the business is

negatively affected.

2.3. MANAGING HUMAN RESOURCE IN A FAMILY BUSINESS.

There is need to carefully plan and manage the human resource due to the fact that the norms and

principles that operate in the family and business interfere with the effective management of

9

human resource in a family owned business. Its common practice that family businesses employ

family members and in many cases extend employment opportunities to in-laws and distant

relatives who engage in the management of the business.

Human resource management is concerned with the “people” dimension in management. Since

every organization is made up of people , acquiring their services, developing their skills,

motivating them to high levels of performance and ensuring that they continue to maintain their

commitment to the organization are essential to achieving organizational goals. (David A

Decenzo Baltimore, Maryland, 2003). This is true regardless of the type of organization,

business or social action. Getting and keeping good people is critical to the success of every

organization.

Those business organizations that are able to acquire, develop, stimulate and keep outstanding

workers will be both effective (able to achieve their goals) and efficient (expending the least

amount of resources necessary), Stephen P. Robbins, 2003.

To look at human resource more specifically, we suggest that it is a process consisting of four (4)

functions, that is, Acquisition, Development, Motivation and Maintenance of human resources.

In less academic terms, we might describe these functions as getting people, preparing them,

activating them and keeping them (David A Decenzo, 2003).

2.4. AQUISTION OF HUMAN RESOURCE.

Human resource acquisition begins with planning. Relative to human resource requirements, its

here that management ensures that it has the right number and kinds of people at the right places

and at the right times. This includes estimating of demands and supplies of labour. Acquisition

also includes: Recruitment, Selection and socialization of employees. (Meg Isaac Stenberg,

Baltimore, 1984).

2.4.1. Recruitment of human resource.

This activity makes it possible for us to acquire the number and types of people necessary to

ensure the continued operation of the business.

10

Recruitment is the discovering of potential candidates or anticipated organizational vacancies.

The ideal recruitment effort will attract a large number of qualified applicants who will take the

job if it is offered. It should also provide information so that unqualified applicants can self-

select themselves out of the job candidacy. Therefore a good recruiting program should attract

the qualified and not attract the unqualified. This due objective will minimize the cost of

processing unqualified candidates. (Joseph G.P Paolillo and John A.Belt, April 1981).

Recruitment is more likely to achieve its objective if recruitment sources reflect the type of

position to be filled. The sources of recruitment can be classified into internal and external

sources.

Internal sources. Many family businesses will attempt to develop their own employees for

positions beyond the lowest level. This helps to bring morale, its good public relations; it

encourages good individuals who are ambitious and also improves the probability of good

selection since information is readily available. (Bureau of National affairs, January 1978).

External source. This is the lowest level of recruitment and it is done in case when a firm is

under expansion or when employees cannot meet job requirement. In this management attracts

candidates after reviewing and evaluating the alternative sources of applicants and advertising.

(Armstrong 1996).

2.4.2. Socialization of employees.

When we talk about socialization, we are talking about a process of adaption. In the context of

business organizations, the term refers to all passages undergone by employees. For example if

you get a new job or get promotion, you must adapt to anew environment, new boss and different

group of co-workers. While we recognize that this socialization will go on through out our

careers with in a business as well as between businesses, the most profound adjustment will

occur when we make the more from being an outsider to being an insider. (John Van Maanen

and Edgar 1979).

We will begin examining the socialization process by proposing that every business has a culture

that defines appropriate behaviors for the business members. This culture includes longstanding,

unwritten rules and regulations, a special language that facilitates communication among

11

members, standards for social etiquette and other traditions that clarify to business members

what is appropriate and smart behavior with in the organization and what is not . (Barry M.

Staw, Jai press 1979).

Socialization strongly influences employee performance and the business stability. Your work

performance depends to a considerable degree on knowing what you should do or should not.

Therefore understanding the right way to do a job indicates proper socialization.

2.4.3. Selection of employees in a family firm.

According to Ward, the family’s greatest resource is her family whose members provide the

company with employees and also gives the owner good reasons to work hard and achieve

success.

Family participation as managers strengthens the company because family members are often

loyal and dedicated to the family enterprise. However, participation as managers of the business

can present unique problems because the dynamics of the family system and the dynamics of a

business are often not in balance.

The interest of a family member may not be aligned with the interest of the business. For

example if a family member wants to be president but is not as competent as a non family

member, the interest of the family members and the well being of the business may be in

conflict. That is why Ward (1987) advises family heads to hire an employee only if he or she is

the right person for the job and for no other reasons.

Deegan (1986) further more says that when vacancies occur in key positions in the organization,

it is wise to promote from with in or hire outside the organization. Whether or not the individual

comes from with in or out, the only principle should be to find the person judged most qualified

for the vacancy and must be capable for handling responsibilities.

The cost of selecting people who are inadequate performers or who leave the organization before

contributing to profits is a major cost of doing business. The cost incurred in hiring and training

any new employee is expensive, sometimes in thousands of dollars. For example in 1983, the

average cost per hire for exempt employees was more than $4600. (Wellesley, mass 1984).

12

All selection activities from the initial screening interview to the physical examination if

required exist for the purpose of making effective selection decisions. Problems always occur

when we make errors by rejecting candidates who would perform successfully on the job or

accepting those who subsequently perform poorly on the job. (Thomas F. Cawsey and William

C.Wedley February 1979). It’s therefore very important to have the right people in the

organization in order to perform well.

2.5 Development of human resource.

The development can be viewed along three directions. The first is employee training

emphasizes skills development and the changing of attitudes among workers. The second is

management development which concerns itself primarily with knowledge acquisition and the

enhancement of the executive’s conceptual abilities.

The third is career development which is the continued effort to match long term individual and

organizational needs. America society for development and training, models for excellence,

(ASTD, 1983).

Competent employees will not remain competent forever. Some are minimally qualified upon

entering the organization but require additional training or education. Others enter the

organization capable of performing at an optimal level but their skills become obsolete over

time. Since organizations change over time, management must ensure that there is an appropriate

match of individual abilities with organizational needs for the future.

Employee training gives individuals specific skills that they will use on the job. Management

development looks at practices for ensuring a continual flow of managers when human resources

have been developed effectively, one can expect to have competent employees with up to date

skills and knowledge. Gary P. Lathom and Lise M.saari, 1979, PP239-46.

2.6. Motivation of human resource.

The motivation function begins with the recognition that individuals are unique and that

motivation techniques reflect the needs of each individual. Within the motivation function, job

satisfaction, performance appraisal, behavioral and structural techniques are essential for

13

stimulating worker performance, compensation and benefits administration and how to handle

problems employees are reviewed. Edwin A. Hocker, organizational behavior and human

performance, may 1968, pp 157-89.

High performance depends on both ability and motivation. Many employees with extra ordinary

talents do not perform satisfactorily because they will not exert the necessary effort. Therefore

we desire to have capable employees who are highly motivated. If a person is to perform

effectively, extrinsic factors such as job design, working conditions, job security and supervision

must be seen as satisfactorily.

But that alone is not enough; many people also look for intrinsic factors such as achievement,

recognition and responsibility from their work. For individuals who place high value on intrinsic

factors, the absence of these factors can reduce someone’s willingness to exert high degree of

effort. Meg Isaac Sternberg, organizational model for human resource planning, Baltimore,

1984.

Other forces can influence motivation. The performance appraisal process and its outcome will

affect an employee’s motivation. People expect their work to be objectively evaluated if they

think their efforts will decrease and therefore the rewards that follow the appraisal will influence

motivation.

Since motivation begins with the recognition that motivation techniques must reflect the needs of

each individual, Abraham Maslow hypothesized that with in every human being, there exists a

hierarchy of five needs which include:

(i). Physiological needs. This comprises of hunger, thirst, shelter, sex and other bodily needs.

(ii).Safety needs. Includes security, protection from physical and emotional harm.

(iii).Love. Includes affection, belongingness, acceptance and friendship.

(iv).Esteem include internal esteem factors such as, self respect, autonomy and achievement,

external esteem factors such as status, recognition and attention.

14

(v).Self actualization. The desire to become what one is capable of becoming. It includes,

growth, achieving one’s potential and self fulfillment. (Abraham Maslow. Motivation and

personality) New York, Harper and Row, 1954.

Maslow hierarchy of needs theory has received wide recognition, partially among participating

managers. This can be attributed largely to the theory’s intuitive logic and ease of understanding.

Unfortunately, research does not generally validate the theory; Maslow provided no empirical

substantiation and several studies that sought to validate the theory found no support. Douglas

Mc Gregory, the Human site of enterprise, New York, McGraw-Hill, 1960.

2.7. Maintenance of human resource.

The final function is maintenance. In contract to the motivation function which attempts to

stimulate performance, the maintenance function is concerned with providing those working

conditions that employees believe as necessary in order to maintain their commitment to the

organization.

Within the confines of the four functions, acquisition, development, motivation and maintenance,

many changes have occurred over the years. What once was merely an activity to find a warm

body to fill a vacancy has become a sophiscated process of finding, developing and retaining the

best qualified person for the Job. But this metamorphosis did not occur overnight, it’s the result

of many changes in management through society and the workers themselves. David A.

DeCenzo and Stephen p. Robbins 1988.

The objective of the last function is to retain people who are performing at high levels. This

requires that the organization provide safe and healthful working conditions and satisfactorily

labour relations. If those activities are performed effectively, we can expect to have competent

employees who are committed to the organization and satisfied with their jobs.

In order for an organization to provide safe, healthful working conditions ad satisfactorily labour

relations, it comes up with what is known as job evaluation. Job evaluation is a process whereby

an organization systematically establishes its compensation program. In this process, jobs are

ranked in order to arrive at each job’s appropriate worth. “Effective pay programs, an interview

with Edward E. Lawler III, 1976’’. Employees exchange work for rewards. Probably the most

15

important reward and certainly the most obvious is money. This brings us to a question, how

much should an employee be paid? The search for this answer throws us directly into the topic of

compensation administration. Edward E. Lawler III, 1976.

The goal of compensation administration are to design the lowest-cost pay structure that will

attract, motivate and retain competent employees and that also will be perceived as fair by these

employees.

Fairness is. a term that frequently arises in the administration of an organization’s compensation

program. Organizations generally seek to pay the least that they have to in order to minimize

costs. Fairness means a wage or salary that is adequate for the demands and requirements of the

job. David Belcher, 1994.

But of course fairness is a two Way Street, Employees also want fair compensation. if employees

perceive an imbalance in the relation of their input-output ratio to some comparative ratio, they

will act to correct the inequality, so the search for fairness is perceived by both employees and

employers. III, 1976. Edward E. Lawler

Keeping in mind that we are concerned with determining a fair compensation plan for an

organization, also recognize that while we pay employees, compensation systems are

predominantly designed around jobs. That is the responsibilities and the demands of the job

determine a pay range. The actual performance of incumbents determines where with in the pay

range they are placed. Wayne F.Cascio, 1978.

2.8. PERFORMANCE OF FAMILY BUSINESSES.

Most managers of businesses are doers by nature and this is one of the major reasons why they

are so successful. (Sullivan, 1994).

The success of a family business is directly linked to the commitment of the owners to the family

and to the business. According to Christensen, 1959, family loyalty has been responsible for the

continued operation of family businesses through periods of hardship when consideration of

profit and loss might well have dictated closing down.

16

Well managed businesses and healthy families share many positive and constructive traits that

contribute to better performance of the business.

According to Garlock (1995), for the family to succeed, there must be clear cut job

responsibilities and objective standards of performance for all employees including family

members. This helps to avoid conflicts in the business and creates a measure of evaluating

expectations of performance for each position in the business.

The purpose for evaluating expectations can be used as a basis for reward allocations, decisions

as to who gets salary increases, promotions and other rewards are determined by their

performance evaluations. It also helps in identifying areas in business where development

efforts are needed. (Richard I, Henderson, 1984)

We talk about performance a lot but what does the term actually mean. Employees are

performing well when they are productive yet productivity itself implies both concern for

effectiveness and efficiency. (H.Kent Baker, 1984). Effectiveness refers to goal accomplishments

while efficiency evaluates the ratio of inputs consumed to outputs achieved.

That’s why David A. Decenzo, 2003 says that it is most desirable to have objective measurers of

performance such as measurers of accidents and damages, and turn over absences. That is a

good employee is one who not only performs well in terms of productivity but also minimizes

problems for the organization by being to work on time, by not missing days and by minimizing

the number of work related accidents.

Therefore management can measurer actual performance through personal observation,

statistical reports, oral reports and written reports.

2.9. RELATIONSHIP BETWEEN RECRUITMENT, SELECTION AND

PERFORMANCE OF FAMILY OWNED BUSINESSES.

According to Koontz (1990) and stoner (1992), the term recruitment and performance in a

business are inseparable. Performance which is the ability of a firm to meet its objectives and

17

goals cannot survive as a going concern without effective recruitment and selection of human

personnel.

Good performance can be achieved through the department of human resource by sourcing

and offering jobs to the right and skilled human resource. (Balunywa, 2000). The policy in

human resource governing human resource sourcing and placement for the betterment of the

society and organization can lead to poor or good performance in business.

Recruitment/selection = f (performance).

R=F (P). That is to say performance depends on recruitment through the selection process.

CONCLUSION.

Recruitment and selection is a procedure that is supposed to be used by most private

businesses and public organizations if productivity is to be enhanced. Recruitment aims at

attracting a sufficient number of potential recruits to a business in a cost effective and timely

manner while selection is designed to identify those candidates who on the evidence available

appear to be the most suitable for the vacancies.

However, employee’s performance in family firms is likely to be achieved at the expense of the

business in case proper steps and recruitment procedures are not followed.

CHAPTER 2 REVIEW.

If I had to re-do chapter two again, I would consider the following.

I would also use Journals, internet, and pamphlets relating to recruitment practices for my

Literature review.


18

CHAPTER THREE.

3.0. METHODOLOGY.

This chapter describes the methodology used in the study. It intends to provide the reader with

the research designs, sampling design, procedures, data collection, management and analysis of

the study. It is meant to provide a background against which the findings of the study will be

assessed regarding their validity, reliability and conclusions made.

3.1. RESEARCH DESIGN.

The study was carried out using a method triangulation which contained both qualitative and

quantitative approaches where respondent’s opinions and attitudes were easily captured using

structured questionnaires.

The research was also based on purposive research design which used personal judgement to

select the sample.

3.2. STUDY POPULATION.

The researcher used a population that comprised of business owners and employees in family

firms.

3.3. RESEARCH VARIABLES MEASUREMENT.

3.3.1. The independent variable. Recruitment practices.

This variable was measured using question items that were designed to identify the number,

nature and quality of employees, the manner in which employees are recruited, training

opportunities given to employees and the relationship between key position holders and owners

of the businesses.

19

3.3.2. The Dependent Variable. Performance of Family firms.

Performance of family firms was measured as the amount of profits the business gets in a year,

measures of accidents and damages and turnover absences.

3.4. SAMPLING DESIGN.

The study used random sampling in order to get a cross section of views from respondents under

study. The population comprised of family businesses that:

(1). were registered and operated in Kikoni.

(11). Engaged in any kind of business but with a minimum capitalization of 15,000,000 (fifteen

million).

(111). were in existence and had been operating consistently for a minimum of 3 (three) years.

This population was chosen because it is such businesses that can recruit some employees.

3.5. SAMPLE SIZE.

A total of 28 respondents were randomly selected where by 16 were business owners selected

from family businesses and 12 from employees within family firms.

Table 1showing number of respondents according to their categories in family firms.

Category Number of respondents

Business owners 16

Employees 12

Total 28

Source: primary data.

3.6. SOURCES OF DATA.

There are mainly two sources of data that is to say Primary source and Secondary source.

20

3.6.1. Primary source.

This is the unprocessed information. Business units were used as sources of primary data.

Interview schedules were used. These involved both open and close ended questions which were

designed from the measurement constructs as seen above.

The open ended questions stimulated respondents and provided additional information and

helpful comments that were used in data analysis.

3.6.2. Secondary source.

This method involves sourcing for already processed information. Through this source, text

books, newspapers, journals, past research and other published materials about the research topic

were used as secondary sources.

3.7. INSTRUMENTS OF DATA COLLECTION.

The instruments which were used in the study included a questionnaire and interviewing.

3.7.1. Questionnaire.

The researcher prepared asset of questions which were used to administer the sampled

respondents. The questions were both open and closed ended.

3.7.2. Interviewing. This technique involves two parts, the researcher and the respondents.

The researcher asks questions and the respondent answers immediately. This was mainly

employed when the researcher was sourcing for primary data.

3.8. PROCEDURE.

Permission to conduct the research was obtained from relevant authorities.

3.8.1. Primary data collection.

The researcher fixed appointments prior to the interview. The researcher administered the

structured questionnaire to the randomly selected respondents. Questionnaires were sorted for the

21

unfilled and wrongly filled and thereafter were taken for data analysis. The researcher carried out

interviews with all the selected 28 respondents from the family firms.

3.8.2. Secondary data collection.

Documents relevant to the study, text books, newspapers, journals and internet were used as

sources of secondary data. Contact summaries were made outlining the documents used, kind of

information got, dates at which the information was got after which the gathered data was taken

for document analysis.

3.9. DATA PROCESSING AND ANALYSIS.

3.9.1. Primary data analysis.

Editing and coding of data was done when all questionnaires were collected. Quantitative data

analysis was carried out using computer software called Excel.

3.9.2. Secondary data.

A document analysis was done on summary sheets. Records from the registrar of companies

were used to establish the nature of businesses, documents from URA were used to draw up a list

of family businesses, licensed with a minimum capital of 15,000,000 (fifteen million) shs and

had also been in operation for the past three years.

Records showing taxes paid by these businesses were requested from URA and the family

businesses that passed the criteria were selected.

3.10. LIMITATIONS OF THE STUDY.

(1). One of the limitations was the attitude of the respondents towards the research study because

family businesses are by nature secretive. They may not want to reveal certain things about their

businesses because they feel it should only be known by family members.

(11). Hesitancy which was because of fear that we might be from URA and we were there to spy

on them.

22

(111). Some business owners were not willing to answer the questionnaire because the thought

we were from URA, others were not willing to tell us how much profit they make with fear of

being unfairly or highly taxed.

(1v). The duration to conduct the research was limited and I could not exhaust all what could be

expected from me

(V). Financial constraints in that being a privately sponsored student, funding of my research

study was a serious limitation which led to delays in the completion of the study.

However, inspite of the limitations, I believe that the findings from the study will be relevant and

useful.

CHAPTER 3 REVIEW.

If I had to do chapter three again, I would look at the following.

I would use interview guides to collect my data for the research topic.

I would also use observation as my instrument of data collection.

I would also use a document analysis guide to solicit information that would define the

population sample.


23

CHAPTER FOUR.

4.0. PRESENTATION AND DISCUSSION OF FINDINGS.

In this chapter the data presented and analyzed is based on the interviews conducted for data

collection. Some of the results especially those related with answering the research questions and

objectives will be compared to the information referred to in the literature review in chapter two

of this study.

4.1. ORGANISATION AND PRESENTATION OF THE DATA.

The data is presented in tables of percentages, Bar graphs and Pie charts.

Analysis is done using frequencies and percentages. The flow of data presentation and analysis

follows the ranking of the objectives of the study.

Objective (i)

In order to examine the recruitment and selection practices of selected family businesses, the

following data was analyzed.

The type of employees recruited

The various methods of recruitment

Employment of relatives or friends.

Objective (ii).

In order to assess the performance of selected family owned businesses, the following data was

analyzed.

The different measurers of performance in business

Contribution of employees in terms of output.

24

Profit making and the factors that might have influenced it.

Objective (iii).

In order to determine the effect of recruitment practices on the performance of family business,

the following data was analyzed.

-The qualities of employees that were considered when recruiting.

The category of employees that were being recruited.

Training of employees.

The relationship between profit and the quality of employees who were relatives.

4.2. Characteristics of the sample.

2.1. General characteristics of the sample.

Figure 1.Showing number of respondents

25

The table below shows the number of people and the sex of those interviewed.

Table 2. Number of respondents sampled by sex.

Sex Number of respondents Percentage (%)

Female 12 43

Male 16 57

Total respondents 28 100

Source. Study survey.

There were more males than females.

The sample consisted of 28 respondents who were owners of family businesses and employees in

family businesses. The findings show that males engage more in family owned businesses than

females.

4.2.2. Age structure of the sample.

Figure 2. Showing Age of respondents

26

The table below shows the age composition of the sample interviewed.

Table 3. Age composition of respondents.

Age range Number of respondents Percentage (%)

18-22 1 3.4

23-28 18 64.2

29-34 3 11

35-40 2 7.2

40 and above 4 14.2

Total respondents 28 100

Source. Study source

The majority of the people interviewed were between 23 and 28 years of age with a percentage

of 64.2%. This entails both youth and middle aged.

4.2.3. Marital status of respondents.

Figure 3. Showing marital status of respondents

27

The table below shows the marital status of the respondents.

Table 4. Marital status of Respondents.

Marital status Females Males Total Percentage (%)

Single 4 13 17 61

Married 6 3 9 32

Divorced 1 1 2 7

Widowed - - - -

Total 11 17 28 100


The above table shows that the majority (61%) of the respondents were single, 32% were

married. This finding further supports the nature of this study as emphasizing family businesses

owned and managed by family members, and only 7% were divorced.

4.2.4. Education status of the sample.

Figure 4. Showing Number of respondents (%)

32%

39%

21%7%

Number of respondents(%)

UniversityDiplomaSecondaryPrimary

28

The table below shows the level of education attained by respondents.

Table 5. Level of education attained by respondents.

Education level Number of respondents Percentage (%)

University 9 32.2

Diploma 11 39.2

Secondary 6 21.3

Primary 2 7.2

Total 28 100


The table above shows that 39.2% of the respondents were diploma holders, 32.2% were degree

holders, 21.3% had attained secondary education and only 7.2% of the respondents stopped at

primary levels of education.

4.2.5. The period respondents have been in business.

Figure 5. Showing the period respondents have been in business

29

The table below shows the period respondents have been in business.

Table 6. Period respondents have been in business.

Years Number of respondents Percentage (%)

Less than a year 3 11

One year 2 7.2

Two years 10 36

Above two years 13 46.4

Total 28 100


The above table shows that majority of the respondents (46.4%) have been in business for more

than two years.

4.3. RECRUITMENT PRACTICES OF SELECTED FAMILY OWNED BUSINESSES.

Objective (I)

In order to examine the recruitment practices of family owned businesses, the data below was

analyzed.

Planning and managing the human resource aspects in family businesses has been observed

earlier in the literature review to pose difficulties. For example in the process of selection, the

tendency to employ family members who are incompetent may affect the performance of the

business hence leading to discontentment among non family members.

30

4.3.1. Employee composition of family owned business.

Figure 6. Showing Employee composition (%)

The table below shows employee composition.

Table 7. Employee composition.

Employee

composition

Number of

businesses

Percentage (%)

Family members 17 60.7

Non family members 11 39.3

Total 28 100


The above table shows that majority of the family owned businesses interviewed (60.7%)

employ more of family members in addition to employing some 39.3% members.

31

4.3.2. Response on the relationship of employees with the family business.

Figure 7. Showing Employee Relationship with the business

The table below shows the relationship employees have with the family owned business.

Table 8. Relationship with the business.

Employee relationship Frequency Percentage (%)

Father 6 21.4

Mother 4 14.3

Uncle 3 10.7

Aunt 3 10.7

None of the above 11 39.3

Others(son) 1 3.6

Total 28 100


32

The table above shows that 39.3% were employees in family owned business, 24.1% were

business owners, 14.3% were wives to the owners, 10.7% were Uncles, 10.7% were Aunts and

3.6% belonged to others say, sons in the family owned business.

4.3.3. Recruitment practices.

Employee Recruitment methods. These included: Advertisement of job vacancies, selection of

suitable applicants, training of successful applicants, informed through a friend, through

relatives, through working experience, technical know who, through academic qualification, on

merit, use of employment tests, through acceptable salary, un conditional acceptance, through

referees, showing interest in working, considering age of the applicant, use of interviews,

through orientation, emergency replacement and promotion due to hard work.

Some of the above practices were common in many family owned businesses as seen below.

Figure 8. Showing Recruitment practices used by Family Business

33

The table below shows recruitment practices used by family owned businesses.

Table 9. Recruitment practices.

Recruitment practices Number of businesses

Advertisement 7

Through friends 13

Through academic qualification 10

General acceptance of family members 10

Through interviews 7

Age of applicant 3

Acceptable salary 4


From the table above, 7 businesses used advertisement to select suitable employees, 13 give out

employment opportunities through friendship, 10 through academic qualification, 10 generally

accepted family members, 7 businesses use interviewing after getting applications, 3 recruited

basing on age of applicants and 4 recruited basing on acceptable salary.

Most family businesses employed family members because they believed them to be trustworthy

and also most considered applicants with academic qualification because they believed them to

be knowing what they are supposed to do.

4.4. PERFORMANCE OF FAMILY OWNED BUSINESSES.

Objective (ii)

In order to assess the performance of selected family businesses, the following data was

analyzed.

Performance of businesses as earlier stated in the definition of concepts is the manner in which

business is conducted to realize the objectives of family businesses sampled. In assessing the

34

performance of businesses studied, we looked at the measurers of performance, that is

profitability levels, output per employee and capacity to avoid accidents.

However the study relied on perceptual measurer of organization performance. Total output of

profit is a key indicator since many small businesses owners who derive the majority of their

income from their businesses use it to assess their financial performance.

4.4.1. Measures of performance in family owned businesses.

Figure 9. Showing measurers of performance

35

The table below shows the different measurers of performance in family owned businesses.

Table 10. Measurers of performance.

Measurers of performance Number of respondents Percentage (%)

By output per employee 6 21.4

By capacity to avoid accidents 3 10.7

Profitability levels 16 57.2

No standard measurers 3 10.7

Total 28 100


The table above shows that 57.2% of the family owned firms measurer performance using

profitability levels, 21.4% use output per employee, 10.7% consider capacity of employees to

avoid accidents while 10.7% did not have any standard measure of performance in their

businesses.

36

4.4.2. Contribution of employees in terms of output to the business.

Figure 10. Showing the contribution of Employees in terms of output

The table below shows the contribution of output to the business.

Table 11. Contribution of employees in terms of output.

Contribution in output Number of respondents Percentage (%)

High 10 35.7

Moderate 15 53.6

Low 3 10.7

Outstanding - -

Total 100


Findings from table 2.9 show that majority of the respondents, 53.6% admitted that the

contribution of employees in terms of output is moderate, 35.7%, said that contribution was high,

and 10.7%, and ranked the contribution of employees to output to be low.

37

4.4.3. Contribution of employees to the profitability of the business.

Figure 11. Showing contribution of Employees in profitability levels

The table below shows the contribution of employees to the profitability of the business.

Table 12. Contribution of employees in profitability levels.

Contribution to profitability Number of respondents Percentage (%)

High 10 35.7

Moderate 15 53.6

Low 2 7.1

Outstanding 1 3.6

Total 28 100


The table above shows that 53.6% said the contribution of employees in profitability levels is

moderate, 35.7% said its high, 7.1% said its low and 3.6%said its outstanding. This all is

38

attributed to the recruitment of people with academic qualifications since they know what to do

and also employment of family members who are trustworthy in that it’s not so common for

them to steal profits made from the business.

4.4.4. Losses incurred in the family businesses studied.

Figure 12. Showing losses incurred

The table below the extent to which businesses incur losses.

Table 13.Loses incurred.

Extent of loss Frequency Percentage (%)

Rarely 18 64.3

Often 4 14.3

Quite often 6 21.4

Total 28 100


39

According to the table above, 64.3% respondents said their businesses rarely incur loses. 14.3%,

often incur loses where as 21.4% incurred loses quite often.

4.5. The effect of recruitment on performance of family owned businesses.

Objective (iii)

In order to determine the effect of recruitment practices on the performance of family businesses,

the following data was analyzed.

4.5.1. Category of employees in family owned businesses

Figure 13. Showing category of Employees

40

The table below shows category of employees in family owned businesses.

Table 14. Category of Employees.

Category Number of respondents Percentage (%)

Nuclear family 3 10.7

Extended family 10 35.7

Friends’ family 8 28.6

Religious family 3 10.7

Others 4 14.3

Total 28 100


The table above shows that performance of family owned businesses is mostly affected by

recruitment of employees from extended families with 35.7% and 28.6% from friend’s families

who at times do not have academic qualifications to take the business to another level, 10.7% are

from Nuclear family and 10.7% from religious families who are mostly generally accepted for

the job because they are seen as being trustworthy while 14.3% belong to other factors that affect

performance of family owned business like academic qualifications, and employee’s competence

for the job.

4.5.2. Qualities for recruitment.

Different qualities are considered when recruiting employees in family owned businesses say;

Qualification and skills, relationship between the employer and employees, age, acceptable

salary and other qualities.

41

Figure 14. Showing important qualities for recruitment

The table below shows the important qualities considered when recruiting employees.

Table 15. Important qualities for recruiting employees.

Quality Frequency Percentage(%)

Qualification / skills 9 32.1

Acceptable salary 6 21.4

Age 5 17.9

Relationship 7 25

Others 1 3.6

Total 28 100


42

Performance of family owned businesses is also affected by recruitment practices through

considering the qualities of employees when recruiting, where by 32.5% is considered thru

qualifications / skills, 25% through relationship of employees and employers, 21.4% is through

acceptable salary and 3.6% respondents considered other factors.

4.5.3. Training and development of employees in family owned businesses.

Figure 15. Showing the number businesses that train their employees

The table below shows the number of businesses that train their employees.

Table 16. Training and development of employees in family owned businesses.

Training Number of businesses Percentage (%)

Yes 24 85.7

No 4 14.4

Total 28 100


43

As can be seen above from table 3.4, 85.7% businesses know about the training programs and

they extended them to their employees where as 14.3%, do not know that they are supposed to

extend training opportunities to their employees. Hence explaining lack of coordination between

the functions of their business which in the end affect the business performance.

4.5.4. Profit making.

Profit making in family owned businesses studied was achieved through the amount of profit in

percentage realized on every 100shs invested in the business in the previous year.

Figure 16. Showing percentage of profits made on every 100shs invested in biusiness

44

The table below shows the percentage of profit made on every 100shs invested in business.

Table 17. Profits made in last year.

Profit range Number of businesses Percentage (%)

0-9 1 3.6

10-25 9 32.1

26-40 5 17.9

41 and above 11 39.3

Hard to tell 2 7.1

Total 28 100

Source. Study survey

From the table above, its seen that 39.3% of the family firms made profits above 41%, 32.1%

between 10-25%, 17.9% respondents made profits between 26-40%, 3.6% respondents realized

profits on every 100shs invested last year between 0-9% while 7.1% could not tell how much

profits they made due to the fact that there were no proper records kept for the business.

4.5.5. Attributes to profits made.

These are factors that were mentioned as influencing profits in the business interviewed. The

factors included; workforce, competition in the market, although these factors were mentioned in

combination with others like, political environment and economic policies, their repetition was

higher.

45

Figure 17. Showing the attributes to profits made

The table below shows attributes to the profits made in the businesses

Table 18. Attributes to profits.

Attributes to profits Number of businesses Percentage (%)

Recruitment standards 15 53.6

Supervision 8 28.6

Competitive advantage 4 14.3

Others specify 1 3.5

Total 28 100


53.6% of the respondents attributed their profits to Recruitment standards, 28.6% attributed it to

Supervision, 14.3% to Competitive advantage of the firm along with other factors like, political

environment at a percentage of 3.5%.

46

4.5.6. Business growth / expansion.

The aspect observed was the ability to expand business using the profits made from the same

business.

Figure 18. Showing business expansion using profits made

The table below shows the number of businesses that expanded.

Table 19. Business expansion by profits made.

Expansion Number of businesses Percentage (%)

Yes 27 96.5

No 1 3.5

Total 28 100


The above table shows that 96.5% of the businesses expanded using the profits made in the

business. This further proves that recruitment practices are significantly affecting performance of

family owned businesses. This finding is in line with what Lansenberg (1983) and others said as

reviewed in chapter 2.

They said that family businesses contribute a great deal to the economy of their Nation.

47

CHAPTER 4 REVIEW.

If I had to do chapter 4 again, I would consider the following.

I would use chi- square analysis to determine the certainty of relationships between the study

variables.

Future researchers should consider the above.

48

CHAPTER FIVE

5.0. SURVEY, CONCLUSIONS AND RECOMMENDATIONS

In chapter four of this, we dealt with the effect of Recruitment Practices on Performance of

selected Family Owned Businesses.

In this chapter, we are going to summarize the main findings of the study, make some

conclusions and recommendations for further research.

First, we shall reflect on the objectives of the study before we summarize the findings as stated in

1.3 above, the study had three objectives namely;

1. To examine the recruitment practices of selected family owned businesses.

2. To assess the performance of selected family businesses.

3. To determine the effect of recruitment practices on the performance of family businesses.

28 Family Owned Businesses in Kikoni formed the main source of data, we used

Questionnaires to collect most of the data which we then coded and analyzed using

Frequencies, Percentages, Bar graphs and Pie charts. Most of the analysis was done using

Excel computer package.

5.1. Summary of the main findings of study.

5.1.1. Recruitment Practices in selected Family Owned Businesses.

We found that many Family Owned Businesses employ more family members in addition to

employing some non family members. (See table 2.5)

Most of the people employed were between 23-28 years of age.

The highly ranked quality that was observed when recruiting employees generally was

possession of Qualification or Skills. Other common qualities considered were Relationship,

Acceptable salary and Age.

49

However when Recruiting and Selecting relatives, possession of Qualifications/ Skills was a

strong influencing factor. Relatives were recruited mainly because they were believed to be

trustworthy.

When recruiting, the most common method or practice used was Single handled through

friends or relatives.

We also found out that these businesses train their Employees, where over 85.7% were

providing Training and Development facilities to their Employees.

5.1.2. Performance of selected family owned businesses.

Businesses studied were run by Managers/ Owners who combined a number of management

styles like hard working, having a Vision for the business and getting involved in the day

today running of the businesses.

However there were some Business Owners who said they were hard working and attributed

their success to hard work, Recruitment standards by 53.6%, Supervision (28.6%),

Competitive advantage of the firm (14.3%, plus a good political environment (3.5%).

Majority of the businesses had performed well 39.3% made profits of atleast41% on every

100 shs invested in the previous year and 96.5% of the businesses had expanded using profits

made from the Business.

5.1.3. Effect of Recruitment practices on the Performance of Family Owned Businesses.

We found out that businesses that were performing well mainly recruited their employees

through the method of a friend / relative. Businesses that had often experienced losses had a

very small percentage of 14.3%.

50

5.2. CONCLUSION.

From the above summary of findings, we conclude that Family Businesses may not

necessarily have a written and outlined policy on Recruitment but they have certain Practices

in their business system.

Family businesses mostly recruit their Employees through a friend, relative recommendation.

They also employ relatives because they can trust them especially with Managing and

Succeeding businesses. The other reason for employing relatives is because they lack

Employment in that business owners could not just let their own blood be seated home doing

nothing yet giving employment opportunities to non Family members, so they sought it was

wise to employ their own people. This is all brought about by the emotional attachment that

people have towards their relatives and families.

However they consider Qualification / Skills when recruiting and relatives who have the

skills are the best option for recruitment in family owned businesses and where these people

were Qualified, their Profit margins were high. Un skilled Employees affect the performance

of the business that is why they are mainly given training on jobs such that their lack of skills

is not achieved at the expense of the business performance in terms of profits.

Profits were attributed to Recruitment standards of workforce who comprised of family

literate people with at least diplomas. This could partly explain why most of the businesses

were performing well and being that the age was between 23-28, people are always expected

to be creative, innovative, hardworking, always seeking for new challenges in that they

contributed highly to business Performance.

Presence and absence of relatives in the business affects its performance. Since relatives are

assumed to be trustworthy, it’s always or sometimes true that performance of a business is

built on trust. Employers can always be sure about their relatives being trustworthy that’s

why they want to give them key positions in their businesses though it’s not a guarantee that

they are trusted 100%.

Despite not trusting their relatives 100%, they have this saying that, ‘’The Devil you know is

better than the devil you do not know’’ meaning that even if a relative turns otherwise, it’s

easy to trace out for him / her than someone you just employed when you do not know all

51

about their families and their backgrounds. This does not mean that non family members are

not trustworthy concerning business; they can turn out to be better than all family members.

Work Experience is also contributing positively to profit making in family businesses. This is

one of the reasons why business owners employ their relatives, put them in key positions and

show them all that concerns business such that by the time they die, they are convinced that

there is someone who can at least take the business to another level in terms of Performance.

Most of the Business Owners want their relatives/ children to succeed them or take over their

businesses as they feel that the business is an extension of the family and it would only be

rational that the family member takes it over.

This really shows that business owners have a hard time of separating family from business.

That’s why Hollander (1993) says that one has a deep investment (not money investment)

selling out to someone else when the owner has died or retired is not common and also an

option for very few.

5.3. Recommendations for further Research.

We suggest further Research on the following so that the Findings and Conclusions in the

proceeding sections of this report become cleaver than they are now.

i. Why is it that there is little trust in non Family members?

ii. Do Family Owned businesses carry proper books of Accounts?

iii. Selection Procedures and Quality of Services delivered.

We would like to make a few Recommendations to Family Business Owners.

1. There is stiff competition in the business sector in Uganda today. We suggest that when

recruiting they should not focus on relatives only because they do not have jobs, I hear what

will my cousin say if I do not give him / her a job, wont they hate me, they are trustworthy

but rather consider people from all sides Family members and non Family members putting

in mind that they are Qualified, know what to do in order to be a valuable tool to the

Organization and also place the Organization in a better competing position.

52

If at all there is no any other way they can do without relatives, they should always

provide Training facilities to them before being placed in vacancies they do not qualify

for.

2. Every business should come up with different depart ments within the organization, identify

the key positions, kinds of skills and qualities that people to take up such positions must have

such that in the end of it all their impact is reflected on the performance of the business.

3. Advertising for Jobs should not be left out because it gives an Organization greater chance of

Recruiting the right people with different skills and competences, people who have been exposed

to different fields.

3. Business Owners should also put much more emphasis on the record keeping systems. This is

so because some businesses interviewed (10%) did not know the profits they had made in the

previous year just because there were no proper books of accounts kept. They should put more

emphasis on it because its effects can be achieved at the expense of the business performance.

RECOMMENDATIONS TO SOCIETY.

4.Members of the society should not fear to seek for employment in family firms because since

they are established to continue for longer periods of time, there can be job security in those

businesses and also tend to provide good quality products, provide supportive work to

environment and also create employee and employer loyalty.

RECOMMENDATIONS TO GOVERNMENT.

5. Governments should be supportive to family owned businesses since they contribute

significantly to the National Economy, they can support them in terms of Research, Consultancy,

providing facilitation like good roads to ease transportation of goods from one place to another.

53

REFRENCES.

1. Balunywa, Wasswa (1994), the development of entrepreneurship capacity in Uganda. Un

published seminar paper sep 8th-20th.

2. Balunywa Wasswa (1992), business administration, Kampala, business publishing group

p.106.

3. Christenshen, Roland (1959), management succession in small and growing enterprises,

Endeavour, Massachusetts, the Andover press ltd.

4. Cole, GA (1997) Personnel management 4th edition, Adinie place, Ashford Colour press,

Gospot.

5. Hollander, B.S (1993), family owned business as a system. A case study of the interaction of

family task and market place components unpublished doctoral dissertation, school of

education, university of Pittsburg.

6. GUS, J.Ida (1988) ‘’behavioral aspects of the family business PSICO, Jan- June Vol 15.

7. Hollander. B.S (1993). Family owned business as a sub system. A case study of the

interaction of family task and market place components unpublished doctorial dissertation,

school of education, University of Pitsburg.

8. Lansberg, Ivans (1983), ‘’managing human resources in the family. The problem of

institutional overlap’’. Organizational dynamics volume 12 no 1 summer (39-46) periodicals.

Division of America management association.

9. Lea W. James 91996), non family employees need to feel part of the team. American city

business journals consults un limited, image July.

10. Riggs James, L, AND Glenn, H. Felix (1983), productivity by objectives, results oriented

solutions to the productivity puzzle, Engle weed cliffs, prentice- Hall, Inc.

11. Rock, Stuart 91991), family firms, Director Books, Cambridge.

54

12. Schuster, E, Fredrick (1985), human resource management concepts, cases and readings. 2nd

E.d Reston Virginia, Reston publishing company Inc.

13. Baltimore, (19840. Organizational model for human resource planning.

14. David Decenzo, personnel / human resource management, associate professor of

management Towson state University and Stephen P. Robbins, professor of management San

Diego state university.

15. Survey no 120. Washington D.C bureau of national affairs Jan (1978) p.2, employee

promotion and transfer policies, personnel policies forum.

16. Thomas F.Cawsey and William C. Wedley labpur turn over costs, measurement and control.

Personnel journal, February 1979, pp 90-95.

17. Edgar H Schein, ‘’organizational socialization and the profession of management’’ industrial

management Review, winter 1968, pp 9-10.

18. Richard I, Hinderson, performance appraisal, 2nd E.d. Reston Va, Reston publishing co, 1984.

P.175.

19. An interview with Edward E. Lawler 111, effective pay programs, compensation review,

third Quarter, 1976, p.27.

20. David W. Belcher, compensation Administration (Engleweed Cliffs, N.J Prentice Hall, 1979,

p.90.

21. Wayne F. Cascio, Applied Psychology in personnel management (Reston Va, Reston).

22. Richard, I Henderson, Compensation management (Reston publishing co. 1982), pp 262-301.

55

MAKERERE UNIVERSITY

RESEARCH QUESTIONNAIRE ON RECRUITMENT AND PERFORMANCE OF

FAMILY OWNED BUSINESSES.

A CASE STUDY OF KIKONI.

(TO BE FILLED BY BUSINESS OWNERS AND EMPLOYEES IN FAMILY

BUSINESSES)

Dear respondent,

This study is focusing on recruitment and performance of family businesses.

This research will not be used for any other purpose other than partial fulfillment of the

requirements for the award or Bachelor of commerce Degree. It’s only through your response

that the work can be completed well.

Please spare a few minutes to answer the following questions. Your answers will be treated with

utmost confidentiality.

(Tick and fill in where appropriate)

SECTION A. BACKGROUND INFORMATION.

1. What is your name?

…………………………………………………………………………………………………..

2. What is your sex?

Male Female

3. What is your age group?

1) 18-22 years 2)23-28 years 3)29-34 years

1

4) 35-40 years 5) 40 and above

4. What is your marital status?

1) Single 2) Married 3) Divorced 4) Widowed

5. What is your level of education?

1) Primary 2) Secondary 3) Diploma 4) University

6. How long have you been in this business?

1) Less than a year 2) one year 3) two years 4) above two years

7. How are you related to the business?

1) Father 2) Mother 3) Uncle 4) Aunt

5) None of the above 6) others specify.

SECTION B. RECRUITMENT PRACTICES.

(Business owners)

8. How do employees get employed in your business?

1)…………………………………………………………………………………………..

2)……………………………………………………………………………………………

3)…………………………………………………………………………………………....

4)…………………………………………………………………………………………….

5)…………………………………………………………………………………………….

2

(Employees)

9. How did you get employed in this business?

1)……………………………………………………………………………………………

2)……………………………………………………………………………………………

3)……………………………………………………………………………………………

4) ……………………………………………………………………………………………

5)…………………………………………………………………………………………….

SECTION C.PERFORMANCE.

10. How do you measure performance in the business?

1) By output per employee 2) By capacity to avoid accidents

3) By profitability levels 4) No standard measure

11. What is the contribution of employees in terms of output to the business?

1) High 2) Moderate 3) low 4) Outstanding.

12. How often do you incur loses?

1) Rarely 2) Often 3) Quite often

14. What is the contribution of employees to the profitability of the business?

1) High 2) Moderate 3) Low 4) Outstanding.

SECTION D. EFFECT OF RECRUITMENT ON PERFORMANCE OF FAMILY

BUSINESSES.

15. What category of employees do you have?

a) Nuclear family b) Extended family c) Friend’s family

3

d) Religious family e) others (specify)

16. What do you consider the most important aspect when recruiting employees?

a) Relationship b) Age c) Qualification

d) Acceptable e) Others (specify)

17. Do you train your employees?

a) Yes b) No

18. In the last one year, how much profits did you get on every shs 100 invested?

………………………………………………………………………………………………

………………………………………………………………………………………………

19. What do you mostly attribute your profits to?

a) Recruitment standards b) Supervision

c) Competition advantage d) others specify

20. Have you expanded your business using profits from the business since you started?

a) Yes b) No

THANKS SO MUCH FOR YOUR TIME.

4