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HUMAN RESOURCES MANAGING STRATEGIES AND CORPORATE ORGANIZATIONS PERFORMANCE: A STUDY OF FIRST BANK PLC, AKWA IBOM STATE
1.1 Background of the Study
Organizations are seeking to create much competition between them, taking more market, more customers, more sales, etc. Rapid changes stemming from globalization, advancement of information systems and other factors have caused higher competition among corporate organizations. Many organizations are driven by the market to set their goals in their performance. Some of the goals are: cost reduction, achieving sales levels, increasing the number of customers, increasing the market percentage, improving productivity and quality, innovative products (Gerhart, 2007).
The realization of these goals will be achieved through the human resources management. This is because human capital is considered to be one of the most important resources of contemporary firms due to the fact that people possess tacit knowledge which the organization can use to leverage its competitive advantages. This attribute of human capital fulfils the valuable, rare, inimitable, and non-substitutable (VRIN) criteria of a competitive resource as advocated by Barney (1991) thus making strategic management of human resources a central feature of contemporary competitive organizations (Boxall and Purcell, 2003).
Strategic management of employees requires managers to dedicate time, money and attention to staff training and development. This increases workers value and enhances their capacity for continuous improvement. Human Resource Management Strategies (HRMS) implies a managerial orientation that ensures that human resources are utilized in such a way that its add value to the organization by giving it competitive advantages thus leading to the attainment of organizational goals, vision, and mission (Guest, 2011).
The notion of Human Resource Management Strategies (HRMS) evolved in the 1990s with an amplified prominence on a proactive, integrative and value-driven approach to human resource management that focuses on issues such as the fit between human resource management practices and organizational strategic goals, the incorporation of human resource management in the organizational strategic management, the participation of human resource role in senior management teams, the devolvement of human resource practices to line managers and taking of strategic approach to employee compensation, selection, performance appraisal and the value that is added to the organizational performance by human resource management (Boxall etal. 2007).
The environments in which organizations operate today are divergent. Achieving competitive advantage and improving organizational performance relative to competitors are the main goals that business firms should always strive to attain. The banking sector globally has been facing unprecedented challenges with the wave of privatization and globalization. To survive and thrive in a globally competitive marketplace, organizations must adopt a broad strategy that gives them a sustainable competitive advantage (Inyang, 2010).
The increasing significance of people to organizational success has been observed to have corresponded with the rise of Human Resource Management strategy as a field of study on a global scale (Iwaugwu, 2004). Since its emergence, Human Resource Management Strategy (HRMS) has been the focus of debate over whether it exists in reality or it is merely rhetoric. Previous studies have shown that human resource management practices have the ability to create firms that are more productive, flexible, and competent than their rivals through the application of policies and practices that concentrate on recruiting, selecting, training skilled employees and directing their best efforts to cooperate within the resource bundle of the organization (Inyang, 2010).
The implementation of corporate and functional strategies depend on the companies’ resources, particularly on people. The strategic management of human resources is one of the ways banks are using to increase their competitiveness in the new organizational landscapes. Banks globally are under intense pressure to perform in today’s volatile market place. Steep competition, globalization, growing customer demand and exposure to higher credit risks are forcing banks to find new ways of providing better customer service so as to improve profitability and guarantee their survival. In the last two decades, several scholars have shown that strategic human resource management is one of the most important determinants of organizational performance (Kham, 2010).
Previous studies have shown that human resources management practices are important to enhanced corporate performance in the modern competitive society. Globally, the transformation of systems, structures, and processes in public services has been well acknowledged over the past 20 years (Kiiru, 2015). The key rationale of these changes has been to improve the cost-effectiveness, efficiency and performance of corporate organizations. Government-owned entities have therefore been under immense pressure to follow private sector managerial practices such as performance management, customer orientation, and a heightened strategic focus (Duke and Udono, 2012).
Efforts have been made by human resources management theorists to establish a causal link between human resource management and performance. However, little has been reported on the effect of Human Resources Management and corporate performance in the banking industry. Crook (2008:12) in his opinion argues that there is a symbiotic relationship between human resources strategy and organizational performance.
Armstrong (2006) in his studies spelled out those areas which human resources management practices help in improving organizational productivity. Some of these areas according to him include: (1) increasing employee skills and abilities (2) promoting positive attitudes and increasing motivation and 3 providing employees with expanded responsibilities so that they can make full use of their skills and abilities.
According to Milkovish and Budreau (2004), most of the works on Human Resource Management and performance have been undertaken in the manufacturing sector mainly in the US and recently in the last decade in UK and as such may not be suitable to explain the relationship in a developing economy, thus, it is very difficult to generalize findings from one sector to other sectors. Furthermore, there is a great need for additional evidence to support the HRM-performance relationship and show exactly how the different strategies affect one another (Sunil, 2003).
Despite these findings most studies have been characterized by lack of a solid theoretical foundation explaining the mechanisms causing the observed enhanced performance. Available studies do not adequately investigate exactly how a good alignment between HRM and firm strategy leads to improved performance. Researchers have termed the link between Human Resource Management strategies and organizational performance to be a ‘black box’, that is, lack of clarity regarding ‘what exactly leads to what’ (Purcell, 200).
While investigations have been initiated in emerging markets and in transitional countries, available literature shows that most studies examining the relationship between Human Resource Management (HRM) and performance have been conducted in the manufacturing sector mostly in the United States without a clearly delineated theoretical model of HPMS and their effects on performance. Scholars cannot adequately validate the efficacy of such strategies and provide useful suggestions to practitioners. There is, therefore, a great need for additional evidence to support the HRM-performance relationship from different sectors and contexts (Lee and, Bruvold 2003).
There is need for a theoretical link on exactly how human resources management and organizational performance are related. Hence, the focus of this study will be to establish the HRMS practices and their effect on perceived performance of corporate organizations with specific reference to First Bank Nigeria PLC.
1.2 Statement of the Problem
The recent trend of globalized competitive business era focuses on formulation and execution of human resources management strategies practices and its significant effect on the financial performance of the organization. The aim of human resource strategy is to devise ways of managing people in order to assist in the achievement of organizational objectives. All organizations have predetermined objectives and goals, these objectives and goals are the end towards which the activities of the organization are directed. Every organization strives to achieve its respective goals and objectives since this is the parameter for assessing its success or failure, and those objectives cannot be accomplished without human effort.
One of the difficult challenges confronting management of most organization today is how to make their workers become efficient and competence. This issue has led most organization to employ strategies by which to motivate their work force. The rapid technological growth and increased competition have forced commercial banks in Nigeria to aggressively compete for employees in order to remain competitive. This trend has created a lot of interest on the effect of Human Relation Management strategies on performance through training, and development, motivation which are a continuous effort designed to improve employees’ competence and performance.
In spite of some outstanding efforts by the management of corporate organizations through various interventions and programmes towards effective human resource management, the sector’s score-card (especially Banking), has remained poor and inefficient due to inadequate fund, lack of commitment on the part of the management, shortage of skilled manpower, poor remuneration system and facilities needed for effective staff training and development. These in turn affect proper human resource management process leading to staff inefficiency in service delivery. Poor staffs motivation package also pose a great challenge over workers’ productivity in First Bank. The effect of the above problems leads to ineffectiveness and inefficiency as well as poor quality and quantity of service delivery in First Bank