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MBA
THESIS PROPOSAL ON
THE
EFFECT OF HUMAN CAPITAL DEVELOPMENT (HCD) ON CORPORATE PERFORMANCE
TABLE
OF CONTENTS
CHAPTER
ONE: INTRODUCTION
1.1 Background
to the study 1
1.2 Statement
of the problem 1
1.3 purpose
of the study 5
1.4 research
questions 7
1.5 research
hypothesis 8
1.6 significance
of the study 10
1.7 delimitation
of the study 12
CHAPTER
TWO: LITERATURE REVIEW
2.0 Introduction 16
2.1 understanding
the basis for HCD 16
2.2 The
historical perspective of human capital 18
2.3 definition
of human capital 18
2.4 human
capital development (HCD) 19
2.5 HC
Challenges and Development Needs in the
Construction Industry 22
2.6 methods
of HCD 26
2.6.1 Training 29
2.6.2 Mentoring 40
2.6.3 Internship 56
2.8 Importance
of HCD in the Construction Industry 57
2.9 Advance
and Disadvantage of HCD in the
Construction Industry 59
2.10 variables
for corporate performance 61
2.11 variable for measuring of Corporate
performance 62
2.11.1 components of corporate performance
valuation 71
2.12 moderating variables 71
2.12.1 Organization culture 72
2.12.2 Technology 73
2.13 limitation of corporate performance
measurement 75
CHAPTER
THREE: METHODOLOGY
3.1 Introduction 84
3.2 Research
Design 84
3.3 Sampling
procedure 84
3.31. Sample Size 85
3.3.2 Method of sampling 85
3.4 Validation
of the instrument 86
3.5 Reliability of the instrument 87
3.6 Questionnaire
Design 87
3.7 operational
measures of the variable 88
3.8 technique
of data analysis 88
3.8.1 Statistical test 89
Summary 90
CHAPTER ONE
INTRODUCTION
1.1
CONTEXT
OF THE PROBLEM
Over
the years, capital has unarguably formed the basis for the generation of
revenue for both organizations and individuals. Kremer (1995) defined fixed
capital as that characterized by its ability to afford a revenue or profit
without circulating or changing masters. He identified four types to include:
Ø Useful
machines ie instruments of trade
Ø Buildings
as the means of procuring revenue
Ø Improvements
of land
Ø Human
capital
Of
these, human capital (HC) which includes the acquired and useful abilities of
all the inhabitants or members of the society, seems to be the most important
resource. To this extent, Bratton and Gold (1999) emphasizes that employees
(humans resource and the capital they possess) are critical to achieving
sustainable competitive advantage; that human resources (HR) practice need to
be integrated with the corporate strategy, and that HR specialists help
organizational controllers to meet both efficiency and equity objectives.
Bratton and Gold (1995) argues further that human capital is a very important resource
that can influence the achievement or attainment of the goals and objectives of
an organization. To this end, the corporate performance (corporate success or
failure) of any organization may be traced to its human capital and the
development thereof. Research has shown that people decisively development to
corporate success (Pfeffer, 1994; Hitt et al, 2001). More so, there is a
growing number of empirical evidence on these contributions (Huselid, 1995;
Wimalasir, 1995; Delaney, & Huselid, 1996; Becker & Huselid, 1998;
Barrette & Ouellette, 2000). These findings became the foundation of Human
Capital Management (HCM) in which human resources are perceived as a specific
sort of intellectual capital (Edvisson, & Malone, 1997) and Human Resource
Development (HRD) as an investment into this capital (Schultz, 1961; Becker,
1962). Given that analogy to financial capita, two research lines developed:
the first specifies the driving HR forces to corporate success. It results in a
number of key performance indicators and performance drivers like annual
training hours or the degree of variable payment (Becker, Huselid, &
Hlrich, 2001) which are able to leverage HRM efforts. “Human Capital
Development and Management” in this view is seen as the description, combination
and regulation of key performance indicators.
The
second trend connects HRM performance with the company value. If excellent HRM
increases corporate performance, it should be possible to identify the directly
induced influences on the corporate value (Fitz-enz, 2000). Human Capital
Development and Management in this view, is seen as monetary assessment of
investment decisions in human capital, based on a clear measurement of the
human capital.
If
this is true, it follows then that no organization can actually exist or
survive without the input of human capital. This places human capital at a very
prime position. One may argue that with technological advancement, corporate
performance may not have much to do with human capital. Nevertheless, when we consider
the fact that it takes human resource with requisite human capital to form and
manage organizations, operate computers and machine, encode and decode robots,
then we realize that human resource and the capital they possess, is sine-qua
non to the survive of organizations.
In
the light of these, it can be inferred that corporate performance which is
measured by productivity, turnover, market share, profitability, earnings per
share, return on investment and liquidity can be linked to the intensity of the
available human capital of any organization and its development. A visit to a
construction site quickly shows the level of intensity of human resource
involved. The skills and knowledge possessed by them defines their human
capital. With ever changing technology, increases in reported cases of building
collapse, failure of bridges and spoilage of roads, the need for the continuous
development of human capital in the construction industry becomes highly
understood.
In
spite of this, it is worrisome to observe that some organizations pay only lip
services to the issue of HCD. Some others treat it as unavoidable cost, and in
some extreme cases, employees are subtly surcharged for training and
development costs. Recently, the researcher was privileged to listen to the
complaint of an employee who was refused certain benefits accruing to him
simply because he was on a training program sponsored by his company. Similar
other reports are common features in the media. The researcher wonders why this
should be so. HCD costs should rather be
seen as investments since it may contribute to the company’s corporate
performance in the long-run. Becker (1964) supported this view when he pointed
out that there is such a thing as investment in human capital as well as that in
material capital.
It
is based on this that the researcher is embarking on this work which is aimed
at finding out if there is any relationship between the development of human
capital and corporate performance in the construction industry.
1.2
STATEMENT
OF THE PROBLEM
Despite
the importance of HCD in enhancing overall organizational performance, it seems
its place is not highly appreciated as investment on HCD is not encouraging.
This study therefore seeks to determine the extent to which HCD can contribute to
organizational performance. The researcher believes that knowledge is not
static. In other words, what is right or correct today may be wrong or
incorrect tomorrow. Skills that are sufficient and relevant for today’s work
may not suffice for tomorrow’s technology. For this reason, the researcher is
of the opinion that organizations ought to train and continue to develop its
members so as to keep them abreast with changing technology, knowledge and
skill. If this is done, there may be no room for cases of collapse buildings,
failed bridges, spoilt roads, delay in the completion of project etc that are
making rounds in the news today, especially in our country Nigeria. These
problem situations eventually affect the market share, profitability and
general corporate performance of the concerned organizations either in the long
or short run. As long as these problems continue to confront our construction
industry, a problem scenario which represents some situation that is in need of
solution, improvement, modification or change is created (Abdellah and Levine
in Baridam 1995:33).
It
is the opinion of the researcher that these problem situations in the
construction industry are remotely caused by poorly developed human capital.
This opinion stems from the fact that highly developed and skillful workers
according to standard specifications and not according to available resources
or political inducement.
It
should however be noted that in spite of recent theoretical developments in
measuring human capital values, it is still an open question whether they
really indicate the impact of human resource management practices on firm
performance.
1.3
PURPOSE
OF THE STUDY
The
purpose of embarking on this study is to find out if there is any relationship
between.
1) To determine
the relationship between HCD and the corporate performance of organizations,
especially those of them in the construction industry.
2) To
make my own contribution to the existing stock of knowledge in the areas of HCD
and their impact or effect in the corporate performance of the construction
company.
1.4 RESEARCH
QUESTIONS
In
order to carry out this study successfully, the following research questions
shall be formulated.
v Does
training lead to increased turnover in the construction industry?
v Does
training lead to greater productivity of organizations in the construction
industry?
v Does
training lead to increased profitability of firms in the construction industry?
v Does
mentoring lead to increased turnover of construction companies ?
v Does
mentoring lead to increased productivity of construction companies?
v Does
mentoring lead to increased profitability construction companies?
v Does
internship lead to increased turnover of construction companies?
v Does
internship lead to increased profitability of construction companies?
v Should
construction companies continue to embark on HCD programs inspite of the cost?
v What
ate the benefits or demerit of HCD programmes to companies/organizations that
embark upon them?
v What
are the advantages and disadvantages of not embarking upon HCD programmes
v Can
the success of a construction company be attributed to its HCD?
1.4
RESEARCH
HYPOTHESIS
In
order to carry out this research successfully, these hypotheses shall be
formulated.
H0:1.
There is no significance relationship between training and the turnover of
construction companies.
H0:2.
There is no significant relationship between training and the productivity of
construction companies.
H0:3. There is no significant
relationship between training and the profitability of companies in the
construction industry.
H0:4. There is no significant
relationship between mentoring and the turnover of organizations in the
construction industry.
H0:5. There is no significant
relationship between mentoring and productivity of construction companies.
H0:6. There is no significant
relationship between mentoring and profitability of construction companies.
H0:7. There is no positive and
significant relationship between education and the turnover of construction
companies.
H0:8. There is no positive relationship
between education and the productivity of construction companies.
H0:9. There is no positive and
significant relationship between education and the profitability of
construction companies.
H0:10. There is no significant
relationship between culture and corporate performance of construction
companies.
H0:11. There is no significant
relationship between technology and the corporate performance of construction
companies.
1.5
SIGNIFICANCE
OF THE STUDY
The
findings of this study will be of immense use to many organizations especially
the construction industry.
Firstly,
it will serve as a pointer to the development needs of available manpower and
workforce of the industry. Secondly, the findings will pinpoint what
organizations that practice HCD stand to gain or lose and vice versa. Thirdly,
managers of organizations will find it as a veritable too for policy making and
strategic planning, in that it will help chart a course for proper and
effective measurement of human capital in organizations. Fourthly, the society
will benefit from the ripple effect of improved delivery from the construction
industry, which this study may trigger off. Lastly, this study will definitely
lead to an increase in the existing stock of knowledge on the subject matter.
Consequently, educational institutions, students, professionals and interested
parties will benefit thereof.
1.6
DELIMITATION
OF THE STUDY
Ordinarily,
the scope of this study should cover all the companies in the construction
industry. However, for ease of accessibility possible unwillingness of some
companies to cooperate with the researcher due to security reasons and company
policies (some of which might be necessitated by hostage taking of construction
company workers), the researcher intends to survey only some selected
construction companies in Rivers State. In selecting these companies, effort
shall be made at covering all the Local Government Areas where majority of
these construction companies are located.
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