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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
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.