CHAPTER 1 INTRODUCTION 1.1  Background of the Study

The strategic value of an activity determines its capability as a source of competitive   advantage.   Barney (1991)   states   that   sustainable   competitive advantage is a result of possessing immobile resources that permit clear product or service differentiation. However, not all resources have the potential to be a source of sustainable competitive advantage for the firm. Barney (1991) also affirms that for a resource to have that potential, it must satisfy four conditions: be valuable, rare, imperfectly imitable and non-substitutable. The resources that satisfy the conditions for being sources of competitive advantage are superior assets and capabilities and distinctive core competences (Day & Wensley, 1988; Prahalad & Hamel, 1990). Distinctive core capabilities are those processes that involve a combination of physical and human resources and which are later responsible for the organization’s tacit and explicit knowledge. (Espino- Rodriguez, Pardon-Robaina, 2005).

The debate on personnel outsourcing is polarized. Personnel outsourcing is seen as an opportunity for the human resources function by some and as a human resource threat by others. the first view suggests that personnel outsourcing is an instrument creating time for human resources to become a strategic partner. The second view considers personnel outsourcing as a cost- cutting instrument gradually reducing human resources staff. (Delmotte, Sels, 2008).

Outsourcing has been defined as work done for a company by people other than the company’s full-time employees. in the modern setting, outsourcing turns out to be highly complex and organizations use outsourcing vendors for a variety of reasons. According to analysts, companies usually cite cost reduction as the most crucial reason for human resources outsourcing. as companies were discussing how to cut costs in the face of an economic downturn, many look at outsourcing for some of  their  human resources  processes.  as the managing director of capita human resources solutions, Wayne story, rightly puts it, “human resources outsourcing is on every human resources director’s list of things to do. It has to be driven by the business case though the right partner at the right time, for the right reasons.” However, some analysts argue that by outsourcing major human resources activities, the number of human resources jobs is decreasing, others feel that on the contrary by outsourcing these kinds of repetitive and administrative jobs, higher-level human resources professionals get the time they need to tackle strategic workforce challenges. With more and more companies looking to rationalize employees on their payroll, manpower outsourcing is slowly becoming the new buzz in India. And the trend seems to have hit not just big multinational companies but the public sector and government undertakings as well, though on a very low key yet in the latter.

Human resources services are among the key elements in the enlarging outsourcing game. Recognizing the fact that senior management needs to get out of mundane day-to-day processing work and focus instead on strategic planning, core competencies, customer satisfaction and decision making, a number of large companies, across globe have begun opting for outsourcing of their human resources services. Some of the functions most commonly handed over to outside providers include payroll, benefits administration, background checks, drug testing, recruiting and training. Even small companies that might not get noticed much in big studies of outsourcing trends, turn to outside services to help with such chores. From the foregoing, therefore the study is intended to examine the relationship between personnel outsourcing and performance.

1.2 Statement of Problems

The debate on human resource outsourcing is polarized. Human resources outsourcing is seen as an opportunity for the human resources function by some and as a threat by others. The first view suggests that human resources outsourcing is an instrument creating time for human resources to become a strategic partner. The second view considers human resources outsourcing as a cost- cutting instrument gradually reducing human resources staff. (Delmotte, Sels, 2008).

Problems identified are as follows:

1. Poor Training and Development.
2. Weak Recruiting Process.

iii. Poor Compensation/Salary system.

1. Inadequate reward strategies.

1.3 Objectives/Purpose of the Study

The main objective of the study is to examine the relationship between personnel outsourcing and performance. The specific objectives are as follows:

1. To examine the relationship between Training/Development and performance in selected multinational firms in Rivers State.
2. To examine the relationship between Recruiting Process Outsourcing and performance in selected multinational firms in Rivers State.

iii. To examine the relationship between Compensation/Salary and performance in selected multinational firms in Rivers State.

1. To examine the relationship between reward strategies and performance .

1.4 Research Questions

This study is guided by the following research questions;

1. What is the relationship between Training/Development and performance.
2. What is the relationship between Recruiting Process Outsourcing and performance in selected multinational firms in Rivers State.

iii. What is the relationship between Compensation/Salary performance in selected multinational firms in Rivers State.

1. What is the relationship between reward strategies and performance in selected multinational firms in Rivers State.

1.5 Research Hypothesis

HO: There is no significant relationship between personnel outsourcing and organizational performance in selected multinational firms in Port Harcourt.

HA: There is a significant relationship between personnel outsourcing and organizational performance in selected multinational firms in Port Harcourt.

1.6 Significance of the Study

This study is significant in the following ways;

Firstly, it will assist the organization to continually plan for the good of their employee’s and make use of skilled manpower for the good of the organization.

Others who will benefit from this study include, managers, business organizations, higher institutions and the society in general.

1.7 Scope/Delimitation of the Study

The scope of this study is delimited into the following;

Content Scope: The specific areas of organizational performance the study investigated include; profitability, efficiency, effectiveness and market share. Whereas the areas of personnel outsourcing includes training/development, recruitment /selection, compensation/salary and reward strategies.

Geographical scope: This study covers an examination of personnel outsourcing and organizational performance.

Unit of analysis:- This is a macro study because it is interested in ascertaining the performance in this direction.

The study covers personnel outsourcing and organizational growth. The study limits scope to some selected to some selected multinational firms in Port Harcourt Metropolis, Rivers State which include Agip Oil Company, Mobile and Total.

1.8 Limitation of the study

The major limitation of the study is the short time frame the research lasted, coupled with the tight academic time table, which prevented a very comprehensive study. The fund available to the researcher was also limited and therefore the study was limited to a small portion of the survey population.

Another limitation is the difficulties, encountered by the researcher in obtaining all needed information and materials from the right source and compilation of data for the project.

1.9 Definition of Terms

COMPENSATION AND SALARY

One advantage of outsourcing the salary survey process that is unique to this human resources management activity is the issue of being charged with conspiring to set prices with other organizations.

EFFECTIVENESS

organizational effectiveness is defined in many ways depending on the organizations goals and objectives in today’s market and also is dependent on the industry. In today’s market, organizational effectiveness is dependent on seven to ten attributes/characteristics.

EFFICIENCY It is the ability to avoid wasting materials, energy, efforts, money, and time in doing something or in producing a desired result. In a more general sense, it is the ability to do things well, successfully, and without waste.

MARKET SHARE

Market share represents the percentage of an industry or market’s total sales that is earned by a particular company over a specified time period. Market share is calculated by taking the company’s sales over the period and dividing it by the total sales of the industry over the same period.

ORGANIZATIONAL PERFORMANCE

Organizational performance is most often defined as (1) a strong desire to remain a member of a particular organization. Organizational performance is associated with lower turnover and absence, but there is no clear link to performance.

Outsourcing is the transfer of both people and physical assets to the supplier.

PERSONNEL OUTSOURCING

Outsourcing allows firms to focus on their own core competences by relocating limited resources to strengthen their core product or service.

PROFITABILITY

Profitability is the state of yielding financial profit or gain. It is often measured by price to earnings ratio.

RECRUITMENT AND SELECTION

Recruitment is the process of identifying the pool of applicants and stimulate them to apply for jobs. Selection starts from where recruitment ends. Managers must probe into the factors and be sure that applicant has all as specified in the advertisement.

REWARD STRATEGIES

This means that investment in people adds to the value of the firm and of the workforce. Individuals expect to return on their own investment, and          firms have to recognize that the increased value of their employees should be rewarded i.e.

TRAINING AND DEVELOPMENT

Training is a short-term educational process utilizing a systematic and organized procedure by which non-managerial personnel learn technical knowledge and skills for a definite purpose. Training is made for supervisors, managers, executives and also develop new talent and to upgrade new ones.