Effect Of Human Capital Development On Organizational Performance

Project and Seminar Material for Business Administration and Management BAM

Effect Of Human Capital Development On Organizational Performance

Chapter One


1.1 Background To The Study

Increasing productivity in the public sector to match the levels of the private sector has been the call of the Civil Services Commission in Nigeria. According to Michie & Oughton (2003), research suggests that closing the productivity gap between the private and public sectors will require increased investment in research and development, capital and people, improved education and training, and a modernised productive infrastructure. In a bid to improving productivity, Michie & Oughton (2003) further suggest that there should be a continuous improvement in management practice, corporate governance and organisational design. Michie, Conway & Sheenan (2003) also point out that a major challenge for modern organisations is the urge for increasing productivity and achieving a competitive advantage

Due to the high pace of change and economic instabilities in some markets, the organization of the workforce level possesses a crucial role in many businesses today. This especially true in the manufacturing sector since the “human component of production” is the most important and costly part of the supply chain The volatility of demand that is prevailing in some sectors increases the importance of having a good human capital planning strategy.

Organizations are under increasing pressure to find ways to implement their strategies in a rapidly changing business environment in which planning lifecycles tend shrink to reduce the time ‘to market’ intervals. At the same time, organizations are putting more and more emphasis on aligning the organization and people in their attempt to achieve business goals. Human capital development is usually seen as an essential feature of an ideal type model of human resource management, even if it does not always appear to be a given high priority in practice

The issue of effective planning for people was brought up long before the advent of human resources management. However, there has been little research evidence of its increased use or of its success. Hassan (2007), who argues that the developing business environment forces organizations to plan effectively for their human resources, the rapid changes in the business environment, also makes it increasingly difficult for organization.

1.2 Statement Of The Problem

Human capital development in Nigeria has been hindered with different problems that prevent employee development and growth and thus prevent overall growth to the productivity of an organization. Lack of careful human capital planning over the years by management has been identified by several researchers as the bane of most organizational failure for low productivity. Therefore this research thesis is to ensure that management have proper personnel in place to help ensure that the organization attain maximum productivity possible and thereby reducing wastage of resources. Recently, proper human capital development and employee career growth through adequate training, motivation and management structure has been identified as a panacea to the low productivity witness by the most organization. So this research work aim to carefully analyzed the effect of human capital development on the productivity of the manufacturing industry especially the Nigeria Flour Mills and also to measure the effect/correlation between training, motivation and career development on an organizational productivity cum level of contribution of employee.

1.3 Objectives Of The Study

The broad objective of this research is to examine the effects of human capital development on employee productivity in the manufacturing industry, a study of Nigeria Flour Mills Plc. The specific objectives for the study are;

  1. To examine the relationship between employee training & development and employee career growth.
  2. To evaluate the effect of employee orientation on employee satisfaction.

1.4 Research Questions

  1. Is there a significant relationship between employee training & development and employee career growth?
  2. Does employee orientation have any significant effect on employee satisfaction?

1.5 Research Hypotheses

Hypothesis I
  • Ho: There is no significant relationship between employee training & development and employee career growth
  • Hi: There is a significant relationship between training & development and employee career growth
Hypothesis II
  • Ho: Employee orientation does not have any significant effect on employee satisfaction
  • H1: Employee orientation has a significant effect on employee satisfaction

1.6 Limitation Of The Study

To limit the scope of our research was of major concern for us in the beginning of our work in order to arrive at some kind of starting point, on which we were able to build a realistic and feasible study. We have limited our study to include long-term HRP, career development and planning, motivation and productivity. Our study will relies heavily on empirical data, due to the specified timeframe and economic factors; it was not realistic to design our research to include visits to other or Organizations except Nigerian Flour Mills. However, most empirical data will be collected from staff of Nigerian Flour Mills who are career motivated and works in factory.

1.7 Scope Of The Study

The study is aimed at studying the Effect of human capital development on productivity a case study of Nigerian Flour Mills However, due to proximity and size of the case study, specifically, some department, in Nigerian Flour Mills specifically Human Resource Department, production Department and some Management Staff member’s responses were carefully analyzed through a well structured questionnaire. However, the research study is delimited with time, geographical implications, finance and other phenomenon that affect scope of research report.

1.8 Significance Of The Study

This study could be relevant to the performance and importance of human capital development in the manufacturing industry. The study could also be relevant to other industry as it is an aid to enhance economic growth, planning and development on manpower issues. There is the need now than ever to re-discover the weaknesses and the strengths of employee in determining the level of motivating the employee may desire. The study will throw more light into the practice, managerial procedure and control of the human capital development, It would assist management to create a situation where the employee can grow likewise the organization can be satisfied with each other as both cannot exist without the other.

1.9 Operationalization Of Variables

This involves expressing the relationship between of human capital development and employee productivity in mathematical form.

In specifying the models, the independent variable is human capital development while the dependent variable is employee productivity.

EP = f (HCD)

Employee Productivity = f (Human Capital Development)… … … …. (1)

HCD = (Training & Development, Employee orientation)

EP = (Employee Satisfaction, Employee Career Growth)

EP = a + bi HCD… …. (2)

Model 1:

ECG = a + bi TD

Model 2:

ES = a + bi EO


  • EP = Employee Productivity
  • HCD = Human Capital Development
  • ES = Employee Satisfaction
  • TD = Training & Development
  • EO = Employee orientation
  • ECG = Employee Career Growth

Effect Of Human Capital Development On Organizational Performance

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Effect Of Human Capital Development On Organizational Performance


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Frequently Asked Questions

What is the impact of human capital on firm performance?

The development of human capital is positively influenced by the educational level of employees and their overall satisfaction. Therefore, development human capital has a direct impact on ROI of firms. implications on firm performance. In the meantime, firm performance and human capital could also be

What is developed human capital and why is it important?

Developed human capital creates value and generates revenue, able to spot opportunities and take advantage of them, able to develop and implement strategies that make the organization a market leader, and ultimately optimizes organizational performance. Human capital consists of knowledge, skill, and experience.

Does human capital development impact on organizational performance?

Human Capital Development Impact on Organizational Performance perspectives as these two forms the essential components of human capital (Marimuthuetal., 2009). Ac cording to individual and organization al outcomes. performance than those with lower levels of such general and specific human capital qualities.

Does firm’s human capital add value?

Sense, firm’s human capital can add value if it contributes to lower costs, provide increased performances. capital and organizational performance of software companies. They found that the human capital indicators

Does human capital development matter for firm performance?

Specifically, firms must invest necessary resources in developing human capital which tend to have a great impact

How does human capital affect the ROI of a firm?

Human capital has a direct impact on the intellectual capital assets that will yield higher financial results per employee. The development of human capital is positively influenced by the educational level of employees and their overall satisfaction. Therefore, development human capital has a direct impact on ROI of firms.

What is the link between human capital and productivity?

The literature also ignores the fact that human capital and productivity are mostly connected to dualistic hypothetical components. The linkage of human assets and performance is grounded on two hypothetical strands. The foremost strand is the asset-based view of the firm.

Does firm’s Human Capital Management affect organizational performance?

Results of the study show that firm’s HCM has a significant positive impact on organizational performance. Study results provide support to strategy of investment in human capital and its management for competitive advantage at organizational and national level. … … Content may be subject to copyright.

What is the impact of human capital on organizational KPIs?

The effective utilization and engagement of an organization’s human capital have also been proven to have a direct impact on a wide range of organizational KPIs (Key Performance Indicators), including productivity, employee turnover, product quality, work safety, and customer satisfaction.

How does human capital affect the achievement of an organization’s goals?

The results of this research also show that the better the human capital of an organization will be able to have a positive impact on the achievement of an organization’s goals, especially in realizing the targets that have been set. …

What is the impact of human capital planning on business growth?

Strother, Koven, Howerth and P an growth and found a significant positive impact. Zula & Chermack (2007) concluded that proper human capital planning effect t he organization profits.

What is human capital value added HCVA?

Human Capital Value Added (HCVA) is an indicator, or measurement, of the financial value (profit) an average employee brings to an organization. In other words, it shows the average profit per employee or to what extent does the average employee contributes to the bottom line. HCVA is commonly calculated on a quarterly basis,…

Is human capital the most important asset of any organization?

Assessing the value of human capital (HC), the most important asset of any organization, has long been easier said than done. Because it is such an intangible asset, assigning a value on a balance sheet is a perennial challenge.

What is the impact of human capital on business performance?

According to a CFO Research Services report, nearly all CFOs recognize the critical impact of human capital in key business areas such as driving customer satisfaction, product/service innovation, growth and overall profitability.

Why are standard human capital valuation metrics lacking?

Standard Human Capital Valuation Metrics Remain Lacking. As human capital management has come to the forefront of today’s innovation-driven, talent-driven and knowledge-based economy, and as smart organizations make huge investments in developing their people, CFOs struggle with measuring the return on their human capital investments. 

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