Solving Problems of Human Capital Management in Small Scale Business in Nigeria (A Case Study of Some Selected Small Scale Businesses in Edo State)

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Product Category: Projects

Product Code: 00002703

No of Pages: 60

No of Chapters: 5

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The research examines the strategies for solving problems of human capital management in small scale business in Nigeria. Using some selected small scale businesses in Edo State as a case study. Deliberate shift emphasis to small-scale enterprise, which were seen to have large potential for domestic linkages for rapid sustainable industrial development, ensuring self-reliance industrialization with ability to rely largely on local raw materials. The objective, therefore is to investigate into the strategies for solving of human capital management in small-scale business. The instrument used for data collection is structured questionnaire which were administered to the employees, and owner of 10 small-scale businesses in Edo State. It was discovered that workers recruited are locally based and this may not make it possible to hire the best candidate. On the basis of these problems, it was recommended among others that a specialized personnel department should be established by the firm, for coordinating personnel policies in the organization.





Title Page                                                                         i

Certification                                                             ii

Dedication                                                               iii

Acknowledgements                                                  iv

Abstract                                                                   v

Table of Contents                                                     vi

Chapter One: Introduction                                    1

1.1   Background to the Study                                                 1

1.2   Statement of Problem                                              6

1.3   Research Questions                                                         7

1.4   Objective of the Study                                              7

1.5   Statement of Hypothesis (es)                                    8

1.6   Significance of the Study                                                 9

1.7   Scope of the Study                                                   10

1.8   Limitations of the Study                                          11

1.9   Definition of Terms                                                  12

Chapter Two: Review of Literature Review           14

2.1   Introduction                                                             14

2.1.1        Human Capital Management                           15

2.2   Human Capital or Personnel Policies                       18

2.3   Determination of Human Capital Function              19

2.4   Function of Human Capital Management                        22

2.5   Problems of Human Capital Management                        23

2.6   Strategies for Solving Problems                                29

Chapter Three: Research Method and Design       34

3.1   Introduction                                                             34

3.2   Research Design                                                      34

3.3   Description of Population of the Study                    34

3.4   Sample Size                                                             34

3.5   Sampling Techniques                                              35

3.6   Sources of Data Collection                                       35

3.7   Method of Data Presentation                                   35

3.8   Method of Data Analysis                                                  35

Chapter Four: Data Presentation, Analysis and Interpretation                                                 37

4.1   Introduction                                                             37

4.2   Presentation of Data                                                37

4.3   Data Analysis                                                           37

4.4   Hypothesis Testing                                                 43

Chapter Five: Summary of Findings, Conclusion and Recommendations                                         47

5.1   Introduction                                                             47

5.2   Summary of Findings                                              47

5.3   Conclusion                                                              48

5.4   Recommendations                                                           49

References                                                               51

Appendix A                                                              53

Appendix B                                                              54




1.1   Background to the Study

An individual in an establishment may lose his motivation if his effort is not properly rewarded. This necessarily calls for a qualified professional personnel manager in an establishment. Organizations can hardly progress without personnel manager to manage their activities. Thus human capital management has become very important in business; the human capital management function is one that is most other relegated. This comes from the fact that the small- scale business is often more interested in obtaining equipment for production turning out of good quality consumers for much desired income then how to manage its employees for greater productivity, because of the few number of employees on the rule, the personal nature of their employment relationship and the assumption that the owner manage is naturally endowed with the qualities to manage successfully few employees, the job of personnel is taken for granted.

On the other hand, a closer examination would reveal that an efficient and important as good quality product. To this end, the efficient management of the small number of employees at the disposal of small business is of paramount importance.

The employee of a small business constitutes an effective public relation medium for the organization. A satisfied, well treated work force will reflect loyalty and enthusiasm in their dealing with consumers and by so doing that offer them as a major asset to the business. In addition the materials, equipment machines and other things used in business are available to all small scale business at equal prices but the only distinctive characteristic among small business is the good employees relation which; cannot be copies equipped with specialized aids, the small business must rely more heavily on its personnel alone if it is to survive the competition of the market pace.

In Nigeria, the small-scale business experienced a lot of human capital management problems, ranging from the paternalistic relationship in the selection of the work force a reward system that is based on other criteria than productivity to the fact that employees can be fired without due regards to lay down disciplinary procedures. A poor staff selection process would lead to inefficiency in production and eventual failure.

Government intervention in the industrial system to transfer ownership and management to the state started from colonial times. Rail and air transport serviced; power generated and distribution and other public utilities have generally been developed and managed by the government. The government has thus, through this process provided basic infrastructure, which enable private enterprises to continue. It was natural that this pattern continued when the country got independence in 1960. The government made several efforts to industrialize the country by the establishment of capital — intensive largely urban-based thereby encouraging rural urban drift. Efforts were made in the 80’s to reverse this situation in 1986 was the government deliberate shift of emphasis to small-scale enterprises.

The policy of indigenization is essentially aimed at transferring the control of economic power from foreign hands to indigenous hands. Although indigenization transfer could be the state as the cooperation body representing the citizens to individual citizens or to both in joint ownership and control emphasis has really been on indigenous private enterprise which are generally seen to have large potentials for domestic linkages for rapid sustainable industrial development ensuring a self-reliant industrialization with ability to rely largely on local raw materials, harnessed to boost employment mainly in the rural areas (Aiyderbuse, 2010).

But small scale businesses in Nigeria have compelling reason especially human capital management problem etc that has made accomplishing great height success inclusive (Anao, 2009).

There is therefore, a greater need in the 90’s for the issue to be strategically and logistically discussed and tackled, training both the old and new entrepreneur becomes a suggested attempt to tackle the problem of human capital management from the root no business can exist without human resources and for these human resource to be efficient to maximize their productivity they must be well selected, trained, motivated and disciplined (Imiavan, 1996).

The small scale entrepreneur has to be a good manager since he cannot afford specialists to look after the multiple business decision of small scales finance purchasing. This calls a jack of all trades and master of none syndrome. However, though a well rounded managerial experience is essential for better performance, the new (trainee) entrepreneur emerging from the rank of employees and a fresh graduate usually as familiarities or experienced in only area.

Either sales finance, purchasing, over all managerial understanding is therefore developed true training programs. The goal is to enable participant to look at any enterprises in totality and introduces them to element of management process of planning, organizing, staffing, motivating, coordinating and controlling (Imiavan, 1996).


1.2   Statement of Problem

Researching on problems in small scale businesses have faced much divergent approaches principally because, since the publication of industrial policy of Nigeria in 1988 by the federal Ministries of Industries, a lot of interest have been shown on the small scale business enterprises by various organization ranging from Bank Manager, Development Associations, Institute of Higher learning and lately the organized product sector spear headed by the Niger Association of Small Industrialist (NASSI). These various interests have led to a conflict of opinions even on basic as the definition of what a small scale business.

This is also a feeling in some quarters that study on small scale business does really have in much; relevance to the economy and like the name implies “small scale” it means no big time foreign exchange could be earned from it. But it must be noted that most industrialized nations of the world started by encouraging small scale business. However, having seen all these, this study will attempt to clarify most of these issues while not leasing its focus of identifying the strategies for solving the small scale business human capital problem.

1.3   Research Questions

In relation to the objective of the study, the following research questions are addressed:

i.      Is the absence of personnel department in small scale business a major problem of human capital management?

ii.     Is the use of friends and relatives in small scale business a major handicap for effective staff recruitment in human capital department?

iii.    Does the inability of small sale to perform the perceived function of the human capital management a major cause for future problems?           

1.4   Objective of the study

The broad objective of this study is to examine how the problems of human capital management in small scale business in Nigeria can be solved. However, the specific objective of this study re to:

i.      Determine if the absence of personnel department in small scale business a major problem of human capital management.

ii.     Ascertain if the use of friends and relatives in small scale business a major handicap for effective staff recruitment in human capital department.

iii.    Determine if the inability of small sale to perform the perceived function of the human capital management a major cause for future problems.

1.5   Statement of Hypothesis

The following hypotheses are hereby formulated in null and alternative forms;

Hypothesis One

HO: Absence of personnel department in small scale business is not the major problem of human capital management.

HI:    Absence of personnel department in small scale business is the major problem of human capital management.



Hypothesis Two

HO:   The use of friends and relatives in small scale business is not a major handicap for effective staff recruitment in human capital department.

HI:    The use of friends and relatives in small scale business is a major handicap for effective staff recruitment in human capital department.

Hypothesis Three

HO:   The inability of the small scale to perform the perceived function of the human capital management in their areas is not a major cause of human capital management problem.

HI:     The inability of the small scale to perform the perceived function of the human capital management in their areas is a major cause of human capital management problem.

1.6   Significance of the study

The impact of this study on individual, government and entrepreneur cannot be over emphasized in the economy, taking in to consideration, the rate of human capital management in small scale business over the years.

Organization: It will serve as a guide to organizations who provide or interned to provide training and retraining programmes for the employee and how to carry out such schemes which will be geared towards organization effectiveness.

The economy: This study will be of great relevance to the overall economy, as it will help provide solutions to the problem of human capital management in small scale business thus building confidence in the business environment.

Government and policy makers: The result of this study will therefore be of immense help to the policy makers, government, individuals and investors.

1.7   Scope of the Study

This research work deals specifically with the strategies for solving human capital management problems in selected small scale business organization in Edo State. The research work will focus on the sample group and attempt to investigate the causes of human capital problems. A time frame of 5 years was used which covers 2010 to 2014. A sample size of 45 was used for effective result.

1.8   Limitations of the Study

The researcher in the course of the research work encountered a number of problems, which militated against the study. The problems were:

a.     Attitude of the respondents: In the course of carrying out this research one problem encountered by the researcher was the altitude of the respondents, some of the respondents was suspicious of the researcher’s intention therefore were reluctant and sometimes unwilling to supply information.

b.     Financial Constraints: Finance has been a major constraint in carrying out research project. Information gathering entails a lot of movement from one place to the other and the cost of transportation is quite high, cost of stationeries sky rocketed in Nigeria market and this posed major problems to the research effort.

c.     The problem of non return of questionnaires by the respondents: Some of the respondent refused to return the questionnaires that were distributed to them by the researcher, in fact 11.11% of the respondents did not return the questionnaires distributed to them by the researcher. This refused the sample of workers finally included in the study.

1.9   Definition of Terms

Strategy: Strategy Is the various scheme methods and maneuvers which management hopes to move the organization from its present position to arrive at its target goal by the end of a specific period

Management: Management is a social process entailing responsibility for the effective and economic planning and regulation of the operation of an enterprise in fulfillment of a given purpose or tasks. A manager is someone who is responsible for the work of other. This simply means that he has responsibility for ensuring that the conformity with the concerned. An owner of a small-scale business may also be the manager or may employ a professional manager

Human Capital Management: Involves the effective utilization, development and motivation of people at work to achieve objectives of the organization, the satisfaction and development of the individual employee.
Vertical Communication: This communication line is otherwise called line management. The line runs from top to bottom that is from management or top officer’s information flows down the rungs of the ladder to the officer the system also gives room for feedback. Horizontal Communication: This occurs when information diffuses across the breath of an organization among people of comparable status.



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