THE CHALLENGES OF HUMAN RESOURCES MANAGEMENT IN THE OIL INDUSTRY (A STUDY OF SELECTED OIL COMPANIES IN RIVERS STATE)
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THE CHALLENGES OF HUMAN RESOURCES MANAGEMENT IN THE OIL INDUSTRY (A STUDY OF SELECTED OIL COMPANIES IN RIVERS STATE)
This study examined the challenges of human resource management in the oil industry. Data were obtained from 96 managers in selected oil companies in Rivers State, and the statistical tools used in analyzing the data were the percentage tables, spearman rank order correlation coefficient and the Kendall coefficient of concordance. The result revealed that there is significant relationship between demographic constraints (job experience) and employee recruitment and selection. A significant relationship was also found between technology and employee training and development. Also, significant relationship exists between globalization and wages/salary administration. More so, it was established that there is significant relationship between organizational change and employee performance. Our data therefore, support the hypotheses of relationship between the various challenges of HRM and the functions of human resource managers. It is therefore concluded that the challenges of human resource management in the oil industry are demographic constraints, technology, globalization and organizational change.
TABLE OF CONTENT
Title Page i
Table of Content vi
CHAPTER ONE: INTRODUCTION
1.1 background of the study 1
1.2 statement of the problem 7
1.3 purpose of the study 8
1.4 research questions 9
1.5 research hypothesis 10
1.6 significance of the study 11
1.7 scope of the study 12
1.8 limitations of the study 12
1.9 definition of terms 13
1.10 organization of the study 16
CHAPTER TWO: LITERATURE REVIEW
2.1 Introduction 19
2.2 The Nigerian oil industry an overview 20
2.3 Oil companies in Nigeria 25
2.4 Human resource 27
2.5 Strategic importance of human resource in the
Oil industry 30
2.6 Human resource management 33
2.7 Human resources planning 35
2.8 Recruitment and selection 38
2.9 Human resources training and development 42
2.10 Wages and salaries administration 48
2.11 performance appraisal 53
2.12 challenges of human resource management
In the industry 57
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Introduction 71
3.2 research design 71
3.3 population sample size and sampling procedure 72
3.4 data collection method 75
3.5 questionnaire design 76
3.6 operational measures of variables 76
3.7 data analysis techniques 78
CHAPTER FOUR: PRESENTATION AND ANALYSIS OF DATA
4.1 Introduction 83
4.2 questionnaire distribution and collection 83
4.3 Analysis of data 84
4.4 testing of hypotheses 93
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION
5.1 Introduction 116
5.2 Summary 116
5.3 Conclusion 119
5.4 Recommendation 120
1.1 BACKGROUND OF THE STUDY
The oil industry if perhaps one of the most important industries in the Nigerian economy the industry generates the highest level of revenue for the government. It is because of this that much emphasis has been paid to this industry. Companies in this industry, engage in oil exploration and exploitation, drilling, production, marketing and other related oil activities in order to achieve certain objectives. Some of the most notable multinational oil companies in Nigeria include; Shell Petroleum Development Company (SPDC), Nigeria Agip Oil Company (NAOC), Elf Nigeria Limited, Nigeria National Petroleum Corporation (NNPC), Chevron Nigeria Limited, to mention but a few. However, for these oil companies to achieve their predetermined goal, they need to bring together different kinds of people to carrying out their oil operations. This is the essence of human resource management (HRM). While people have always been central focus to these companies today; they have taken on an even more central role in building their company’s competitive advantage. As Prehald and Hamel (1990) observed, success of any company increasingly depends on “People embodies know-how”. Bratton and Gold (1999) described this as competencies.
To work with people effectively and achieve competitive advantage, human resource managers in the oil industry must effectively perform certain functions that represent the components of human resource management. These functions as identified by Nwachukwu (2000) include; human resource planning, recruitment, selection, training, compensation (wages and salaries) and performance appraisal. However, certain factors have continued to pose challenge in which these human resource functions are performed in the oil industry.
One of such factors which constitute a great challenge to human resource management (recruitment and selection) in the oil industry is demographic constraints (job experience). Ryder (2007) noted that the oil industry in its recruitment and selection policy often requires people with at least 10 years or more of job experience. Consequently, there are simply too few opportunities with 10 years or more experience, whether they are geologists, petroleum engineers, chemical engineers, or technical sales or service people. The lack of experienced workers is expected to intensify. Panelists at a recent topical discussion at the offshore technology conference conclude that oil and gas companies in Nigeria are likely to lose more than 60% of their employees by 2010, along with their experience and knowledge, due to retirement; therefore, finding a replacement of this category of workers with the required experience, is a though challenge to these companies (Rodrik, 2001).
Another important factor which posed a great challenge to human resource management in the oil industry is technology. According to Anakwe (2002), technology advancement has changed the way in which tasks are performed in the oil industry (i.e. from manual/physical to digital). Technology is shifting the basis of competition from physical to knowledge based assets. Physical or manual skills that were applicable become obsolescence. Most employees in the oil industry often see technology application as a threat to their job. Nwachukwu (2000) explained this saying that technology application could lead to workers frustration and a frustrated worker is a threat to the entire organization. Training, retraining and development seem to be the only option available to curb the problem of shifts in skill requirements.
Also, globalization is not left out as one of the crucial challenge to human resource management (wages and salaries administration) in the oil industry. According to the World Bank (2002), globalization refers to the growing economic interdependence of countries worldwide through the increasing volume and variety of cross border transactions in goods and services; and of international capital flows and also through the mere rapid and wide spread diffusion of technology. Over the years, foreign and cross-border movement of technology, laobur and capital have been massive and irresistible. Recently, the demand for more skilled workers has increased in the oil industry at the expense of less skilled (experience) workers, and the income gap between the two groups has grown. Mathew & Philip (2000) noted that the movement of labour from one country to another directly affects wages .
An important issue in the advanced economics is whether immigration of less-skilled workers from developing countries depress the earnings of less skilled natives. Often times, employees with international assignments receive special allowance for relocation, children’s education, housing, travel, or other business related expenses. This challenge can also be viewed in terms of higher wages/salaries offered to expatriates. Thus integrating a fair wages/salaries structure for an expatriate or employee with and international assignment is a key global human resources challenge facing oil companies around the world.
Apart from the above factors discussed above, change is another factor affecting human resource management (performance appraisal). Change is inevitable in any organization. Management in oil companies often introduce change in order to respond to the dynamic nature of business environment. Thornhill (2001) stated that the consequence of any change process is that employee will need to think and/or behave differently. This will apply whether the change is operational, for example, adjustments to working practices or the introduction of new policies and procedures such as performance appraisal or strategic, where change will be more dramatic and pervasive, as with the culture change programme. From these examples, we can see that different behaviours will be required either at the level of individual employees, work groups or units or even, potentially, the whole workforce. Irrespective of the degree or scope of change some type of human resource development process will be inevitable to move staff from where they are now to where the organization wants them to be.
Therefore, effective human resource management in contemporary times requires a good knowledge of the requisite tools and techniques to respond to the dynamic nature of environment. More and more practioners have realized the need for some theorizing, conceptualization, modeling policies, plans programmes and other essential strategies that would assist organization to address these human resource challenges and achieve their objectives within the described dynamic and highly competitive global economy.
1.2 STATEMENT OF THE PROBLEM
Human resource management is a very important issue to any organization. It plays a significant role in the success of an organization. The oil industry is one of the crucial industries where effective human resource management is required because the achievement of the goals and objectives of companies in this industry depends on how effective the human resource functions such as recruitment, selection, training and development, wages/salaries administration and performance appraisal, are performed.
In recent times, several factors have continued to pose serious challenge to these human resource functions in the oil industry. Fajana (2006) noted that human resource managers in oil companies are today faced with numerous challenges in the course of performing the human resource functions effectively. But what are the challenges of human resource management in the Nigerian oil industry? Studies carried out in the advanced nations (United States of America) showed that demographic constraints, technology, it is still not clear whether the above identified factors constituting challenges to human resource management in the oil industry of advanced nations, equally affect oil companies in Nigeria. This therefore, calls for investigation.
1.3 PURPOSE OF THE STUDY
The purpose of this study is to examine the challenges of human resource management in the oil industry using selected oil companies in Rivers State as a survey study. In order to achieve this, the study intends to attain the following objectives
1. To identify the challenges confronting human resource functions in the oil industry.
2. To find out whether demographic constraints (job experience) constitute a great challenge to employee recruitment and selection in oil companies.
3. To determine whether technology pose a challenge to employee training and development in oil companies.
4. To find out whether globalization constitute a great challenge to wages and salary administration in oil companies.
5. To ascertain whether organizational change pose a challenge to performance appraisal in oil companies.
6. To provide the necessary recommendations for the study based on the findings.
1.4 RESEARCH QUESTIONS
In order to adequately address the problem and objectives of this study, the following questions were put forward:
1. What are the challenges of human resource management in the oil industry?
2. Does demographic constraint (job experience) constitutes a great challenge to employee recruitment and selection practices in oil companies?
3. To what extent does technology pose a challenge to employee training and development in oil companies?
4. Does globalization constitutes a great challenges to wages and salary administration in oil companies?
5. To what extent does organizational change constitutes a challenge to performance appraisal in oil companies?
6. How can oil companies address the above challenges of HRM so as to enhance effective human resource management in their organization?
1.5 RESEARCH HYPOTHESES
The following hypotheses are postulated to guide this study
H01: There is no significant relationship between demographic constraint (job experience) and employee recruitment and selection practices in oil companies.
H02: There is no significant relationship between technology and employee training and development in oil companies.
H03: There is no significant relationship between globalization and wages/salaries administration in oil companies.
H04: There is no significant relationship between organization change and employee performance appraisal in oil companies.
1.6 SIGNIFICANCE OF THE STUDY
This study would be of value to the general public, if published as it would enable them know the challenges of human resource management in the oil industry. More, importantly, the result of this study would be relevant to human resource managers in oil companies. Their knowledge of human resource challenges to their profession will be broadened.
The Nigeria oil industry and other organizations would equally benefit from this study, as the recommendations for the study would make way on how to address the problems associated with human resource management in their organization.
The government would also benefits from this study as a result of the macro-economic effect. Finally, the findings of this study would to the existing stock of knowledge in this issue, which scholars, writers’ researcher and students would find useful for the purpose of future research on it.
1.7 SCOPE OF THE STUDY
The scope of this study has been limited to selected oil companies in Rivers State. The sample (respondents) constituted top, middle and lower level managers of the selected oil companies in Rivers State. It is hoped that the findings from this area covered will be used for generalization to all the oil companies in Nigeria.
1.8 LIMITATIONS OF THE STUDY
The following factors were the limitations to this study.
Inadequate Finance: The researcher was highly constrained by lack of adequate fund to finance the huge expenses associated with this study. As a result of this, the research was not able to visit all the oil companies in Nigeria.
Inadequate Time: Time inadequate is another limiting factor to this study. The time available to the researcher was too insufficient to extensively conduct this study.
Scarcity of Current Secondary Materials: There was a problem of dearth of current materials such as textbooks, journals, magazine, newspaper, etc which adequately dealt specifically on the challenges of human resource management in the oil industry in Rivers State and Nigeria at large.
Non-Challant Attitude of Respondent: Some of the respondents were reluctant in filling the administered questionnaire let alone attending the oral interview. This constituted a great limitation to this study.
1.9 DEFINITIONS OF TERMS
The following are the contextual meaning of key terms used:
Human Resources: The energies, skills and knowledge of people which are or which potentially can or should be applied to the production of goods and services.
Human Resource Manager: An officer charge with the responsibility of sourcing for and making proper utilization of manpower needs of the organization.
Human Resources Management: all activities involved in the effective utilization of people to achieve both the objectives of the organization and the satisfaction and development of the employees.
Human Resource Information System (HRTS): A computerized system that provides current data for the purpose of control and decision making.
Employee: A person who enters into a contract with another (the employer) to perform some work. The term employee is also used the same as worker, staff or personnel.
Recruitment: The person of discovering the potential of applicants for actual or anticipated organizational vacancies. It can also be looked at as a linking activity, bringing together those with jobs and those seeking jobs.
Selection: Choosing from a pool of (potential employees) applicants the most suitable/qualified candidate for employment.
Recruitment/Selection Practices: The ways in which recruitment and selection (pooling together applicants and choosing from them) are carried out. These include the methods used and policies/guidelines that influence them.
Training: The purpose of applying appropriate educational methodology to those situations in which improved performance can result from effective learning. It can also be defined as a systematic development of knowledge, skills and attitudes required by individuals to perform adequately a given task of job. It involves learning of various kinds and in various situations.
Employee Development: This refers to those processes directed towards equipping employees with the skills, knowledge and attitude necessary to achieve corporate objectives both now and in the future.
Motivation: Ability to influence to the behaviour of employees through the provision of desired work outcome.
Globalizations: This is an economic phenomenon, involving the increasing interaction, or integration of national economic systems through the growth international trade, investment and capital flows.
Technology: A development of plans and equipment for solving human problems. It includes innovations, technique and organizational knowledge of how to do things electronically. Technology includes computers, internet facilities, telegram facilities and information electronic devices.
Proactive Change: Change initiated to take advantage or targeted opportunities. Reactive change: change but occurs after external forces have already affected performance.
1.10 ORGANIZATION OF THE STUDY
This study is organized into five (5) chapters.
Chapter one is the introductory chapter which comprised of the background of the study, statement of the problem, purpose of the study, research questions, research hypotheses, significance of the study, scope of the study, limitation of the study, definition of terms and organization of the study.
Chapter two is tilted literature review. This chapter was devoted to review of some literature/work of previous scholars and writer related to this study.
Chapter three dealt with the research methodology and it was discussed under the sections like the research design, population, sample size and sampling procedure, data collection method, and questionnaire design, operational measures of variables and data analysis techniques.
Chapter four is concerned with presentation and analysis of data, and
Chapter five dealt with the summary, conclusion and recommendations.