CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY        

Human capital is one of the most important factors that can contribute towards economic growth of a country. Organizations have traditionally based their competitive strategies on other factors, such as product and process technology, protected market niches, access to financial resources and economies of scale. However, in an entrepreneurial environment such as the present one, characterized by market globalization, the intensification of competition and the high rate of technological change, tangible assets no longer provide sustainable competitive advantages (Perez and Pablos, 2003). The contribution of an organization in its human capital can greatly benefit the firm and the individuals working in that firm. It helps in the development of employees to be more productive which helps the firm to perform better (Awan and Sarfraz, 2013).

Human capital presents the image of the background knowledge of individuals grouped in the organization’s composite ability to disclose the optimum solution from its distinct employees (Bontis, 1999). Competence and skills are very important for the future success and security of an organization. It is commonly accepted that the education and training that a person attains during a span of his professional career increase his abilities and potential to work, resolve problems and carry out innovation. The current market faces increasingly rapid amount of changes in technology, systems and products. Usually most of the organizations make investments in training of their employees because they believe that it will lead to higher performance and it will yield results (Alliger, 1997 and Kozlowski, 2000).

According to Muktar (2005), human resource is perhaps the most important component of an organisation. He reasoned that human resources are men and women who are working in an organization. They constitute the active agents that harness and combine other resources towards the accomplishment of organizations goals. Consequently, organizations must have competent employees who are able to carry out assigned tasks for the purpose of attaining organizational goals. It has long been recognized that employees’ competence on a job is acquired not only by formal education but also through experience gained in the work environment and through the acquisition of specific skills and knowledge on the job through training and development.

The need for dynamism in the business environment and growing competition among business firms have forced companies to constantly evolve new ideas in order to succeed. To ensure sustainable relevance, firms must constantly be innovative by evolving new procedures and products in a competitive banking environment. This is achievable through efficient human resource (Sanchez and Soriano, 2011). Intellectual assets of any organization can differentiate it from others and can provide strong basis for its competitive position among competitors. Muktar (2005) identified manpower training and develop-ment as the critical variables in the performance function of organizations. This happens to be the vehicle through which the knowledge, skill, and attitudes requisite for the running of organizations are passed on to the people who make the organizations to achieve their goals. The realization of this fact has made organizations, especially those interested in attaining and maintaining excellent performance, to pay close attention to training and development. Failure to do so can, and indeed does, spell doom for such organization. Bank customers are increasingly demanding for high quality, low priced and immediate service delivery. They want additional improvement of value from their chosen banks (Olaniyi, 2004). Hence, the need for human resource development in banking sector to meet ever increasing demand for improved services from customers as well as the returns on investment by investors.

The unpredictability of economic environment coupled with various programmes and reforms often introduced by government have made it mandatory for commercial banks to make regular training of their staff very imperative in order to ensure their continuous existence in business. Introduction of Structural Adjustment Programme (SAP) in Nigeria in 1986 was an eye opener to the stakeholders in banking industry that it is only banks with dynamic workforce equipped with modern techniques that can survive the aftermath of the programme. Between 1999 and 2005, there was another round of financial reforms on two different occasions which saw banks increasing their capital base while banks (commercial and merchant) capital base was raised to a minimum of N25 billion in 2005 from N1billion in 2001 (Soludo, 2007). The essence of these reforms was to control the volume of money in circulation, check inflation rate, make the financial sector more effective and relevant in meeting modern day demand for financial backup by investors and borrowers. It also aimed at increasing market competition and improves the asset quality. Banks that were unable to meet the stipulated N25billion were given merger or acquisition option.

The main objective of every business is to maximize profit. This major goal cannot be achieved without conscious investment on human capital to have the quality of employees that will enable the organization achieve it corporate objectives. According to Odhong et al., (2013), human capital was defined by Bontis et al., (1999) cited in Baron and Armstrong (2007) as the combined intelligence, skills and expertise that gives the organization its distinctive character. Carnegie (1919:3) as cited by Ismaila (2013) notes that, “the only irreplaceable capital an organization possesses is the knowledge and ability of its people. The productivity of that capital depends on how effectively people share their competence with those who use it”. The banks in Nigeria are well known for a common phrase which says “our employees are our greatest asset”. If this assertion is critically evaluated, the said greatest asset has not been given the required attention that could bring out the best in an employee. The highest recruiting industry in Nigeria is the banking sector. Basically, they now recruit the First class graduates from the universities and also professionals in IT and finance. One expects proper motivation and attractive welfare package for these quality of human capital who spend the useful part of their lives working and maximizing shareholders values. However the reverse has always been the case. The issue of human capital development in banking industry is all about investing in improving the skill, innovation and technical capability of the workforce to enhance productivity. Therefore, this study focuses on the Impact of investing in human capital on employees’ performance, a case study of GTBank PLC.

STATEMENT OF THE PROBLEM

The economic downturn and general reforms in Nigerian financial sector triggered the merger of banks which consequently brought about the down-sizing of their staff strength. To send staff on off-job training now becomes difficult due to tight working schedule. Most bank employees find it difficult to get release for further studies. Financial targets become the order of the day. Even where banks commit enormous financial resources to staff training and development, staff health care and other personnel benefits become an issue. Besides, one thing is to acquire additional knowledge and skill, another thing is to have the required motivation to use the human capital acquired to bring about improved productivity. Mling et al (2012) suggested that performance to big extent depend on training employees received, he further concluded that human capital investment programs really positively influence organizational performance. Another study was conducted by Saka (2014) on Dubai special economic zone, the study concluded suggest that human capital development is affected by the firms type, its financial performance, the level of clustering in the free economic zone and what level of technical know-how spillover has influenced human capital development. 

Despite the efforts made by firms in human capital investment through training with the intention of improving employees performance, the problem of employee poor performance still exist This may be due to various factors such as shortage of staffs to perform the required task within a given period of time and failure to utilize the knowledge obtained during the training. These problems necessitate the need to carry out a study on the Impact of investing in human capital on employees’ performance, a case study of GTBank PLC.

OBJECTIVES OF THE STUDY  

The general objective of this study is to examine the Impact of investing in human capital on employees’ performance, a case study of GTBank PLC. The specific objectives include the following:

1.     To investigate the prevalent practice of human capital investment in GTBank PLC.

2.     To determine the impact of academic level, work experience, and gender ratios on the performance of staffs in GTBank PLC.

3.     To find the relationship between human capital investments and employees performance in GTBank PLC.

4.     To ascertain the effect of human capital investments on the job satisfaction of staffs in GTBank PLC.

5.     To examine the influence of human capital investments on the customers’ retention in GTBank PLC.

RESEARCH QUESTIONS