The Impact Of Effective Human Capital Management Practice On Organizational Growth

Project and Seminar Material for Business Administration and Management BAM

The Impact Of Effective Human Capital Management Practice On Organizational Growth


The main purpose of this study is to know the impact of effective human capital management on organizational Growth. Every organization, no matter the nature and activities being undertaken by it, will not exist. This time, the other factors of production like materials, capital and machines will be meaningless if there are no human beings to harness them. The availability of manpower is not just the issue but its effective and efficient manpower on the organization enhance the need for human capital management. Therefore, this study has tried to unfold the basic functions of human capital management and its impact and effectiveness of organization growth. With references to impact effective human capital management of organizational growth, the impact of effectiveness, extent had quality of human capital management has been carried out at Star Paper Mill Limited Aba, Abia State as a case study. In view of this, the researcher conducted a detailed survey on this subject such as questionnaire, oral interviews and closely looked at the views of other Authors was also an immense help in this project. The result of this study was presented and analyzed using table of the study, recommendations and conclusion were made.

Chapter One


1.1 Background of the Study

Human capital management is that aspect of management that is concerned with all aspect of managing the human resources of an organization. Human Capital management involves the management of human capital at work irrespective of the type of organization in question, its products, size or structure, philosophy of its management must procure human resources of it to achieve its stated objectives. Human capital management practices spreads all the aspect of co-operate and organization activities. It therefore becomes the responsibility of all those who manage people in the organization as well as being a description of work of those who are employed as a human capital specialist. More especially, human capital management involves determining the organization and the use of human resources, recruiting and selecting the best available employees acting as liaison between the union and the government organization and handling other matters relating to employees will being.

However, many organizations have paid little or no interest in the effective human capital management which has resulted to how productivity high rate of employee interest and other ugly social menace, thereby hindering the organization growth. The growth of any organization lies solely on the growth and development of his employee. In a case where human capital management is not well practiced in any organization the growth of the employees will not be achieved and the result is that a stunted growth or declining profit will be recorded.

A satisfied work force is the cove strength of an organization and to maintain a satisfied work force the organization must be organized. For human resources that have been acclaimed, it must be vital and must be a useful resource among the organization resources. Any organization that must achieve its objectives must first develop its human factors or resources. But, it is ironical that many organizations have no plan for growing their human resources. But budget of millions of naira and even Dollars have been spent in the growth of many organization. Billions is been spent on infrastructural capacity building, information communication, technology, but little or none is budgeted on the human resources that will control the infrastructural and the information communication technology. This remains the core reason why the infrastructure and the technologies acquired is not performing the purpose for which they were designed to do.Human Capital refers to the knowledge, expertise, and skill one accumulates through education and training (Severine and Lila, 2009; Marimuthu et al.,(2009),Dae-bong (2009); Malose and Boris (2012; Afiouni (2013); Armstrong (2014), Odhong et al., 2014; Joshi et al., 2015). The concept of Human Capital (HC) was initially formulated by Theodore Schultz in the early 1990, as a way of explaining the advantages of investing in education on a national scale (Afiouni, 2013) cited in Odhong and were (2013). The emphasis on human capital in organizations reflects the view that market value depends less on tangible resources, but rather on intangible ones, particularly human resources (Kulvisaechana, 2006) cited in Odhong et al., (2014).

1.2 Statement of the Problem

It is true that many business organizations have succeeded without acquiring the formal knowledge of human capital management. But it is true that many of these organizations could have record more successes if scientific human capital management was applied in them.

The efficient of such organization would have trained or at least doubled in the presence of human capital management. Problem remains that we need to ascertain the extent roles human capital management plays to help these organizations achieve their objectives. There is the need to determine the most important; it can contribute towards the organizational efficiency.

Therefore, the problems of this study are posed as a question, they are:

  1. Does human capital Management contribute anything to the achievement of organizational goals?
  2. What are the ways of making these contributions?
  3. Does good human capital management improve productivity?
  4. Can efficient human capital Management change workers attitude to work?

1.3 Purpose of the Study

The major purpose of this study is to assess at the impact of effective human capital management practice onorganizational growth.

Specific objectives that guided the study are:

  1. To explore literatures and describe human capital management practices in organization
  2. To examine the extent to which human capital management influence organizational performance
  3. To examine whether management disposition to human capital management has any relationship with career development of employees and organizational performance.
  4. To identify if human capital management improve productivity
  5. To examine if Human capital management training affect the attitude of staff in the organization

1.4 Significance of the Study

This study examines the effectiveness of human capital management in the achievement of organizational goals.

The findings and suggestions from this research work will help different sectors of business organizations lacking in human capital management to see the need of capital management to be implemented in their organization.

Finally, this research work is of strategic important to students and other researchers in the same area of study and it will also serve as a spring board or reference materials for other scholars in their own research work.

1.5 Research Questions

For the purpose of this research study, the researcher has adopted the following research questions:

  1. Does human capital management in any way contribute to the achievement of organization’s growth?
  2. Does effective management contributed to the achievement of organizational goals?
  3. Does management disposition to human capital management have any relationship with career development and organizational performance of employees?
  4. Does human capital management positively change workers attitude to work?
  5. Does quality human capital management generally improve the efficiency of organizations?

1.6 Scope / Delimitation of the Study

The research limited to Star Paper Mill Limited Aba, Abia State as the case study. The research will be conducted in the corporation. The conferment of the researcher at Star Paper Mill Limited Aba, Abia State was informed by the fact that it would be possible to carry out the research in all the Business organization in the country.

Therefore, the affairs of a given company or corporation needs to be studied and used as reference to obtain what implies to other firms in the country.

However the research has some constraints which are;


The time at the disposal of the researcher which is allocated for the study was a major limitation as the researcher has to combine other academic work with the study.


The finance at the disposal of the researcher in the course of the study does not allow for wider coverage as resources are very limited as the researcher has other academic bills to cover.

1.7 Definition of Terms

Human Capital Management:

This is concern with the formal system for management of people within the organization with greater emphasis is place on planning, controlling, organizing, coordinating and others.


This is the complementation of all the component of the organization control in one place in order to bring about efficiency and effectiveness in the organizational aims and objectives and does the process of determining the appropriate organizational structure.


This is a group of people that work together with aims and objectives to achieve organizational goals.


This is the ratio of actual outputs to actual inputs.


The process of increasing in size. The process of increasing in amount, value, or importance. ‘The rates of population growth are lowest in the north’

1.8 Organization of the Study

This research work is organized in five chapters, for easy understanding, as follows Chapter one is concern with the introduction, which consist of the (overview, of the study), statement of problem, objectives of the study, research question, significance or the study, research methodology, definition of terms and historical background of the study. Chapter two highlight the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding. Chapter five gives summary, conclusion, and recommendations made of the study.

Chapter Five

Summary, Conclusion and Recommendation

5.1 Introduction

It is pertinent to note that this research was aimed at examining the effect of human capital management practice on organizational performance, thus the topic “the impact of effective human capital management practice on organizational growth”.

In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges associated with human capital management practice on organizational growth in Nigeria.

5.2 Summary

Based on the findings from the research question 1, it has been established that human capital management contributes to the achievement of organization’s growth. This corroborates the earlier studies of Huselid, Jackson & Schuler (1997) who concluded that one percent increase in human resource practices effectiveness was resulted in increase of 5.2% in sale per employee and 16.5% increase in organizational cash flows. Huselid (1997) study showed that one standard deviation change in human resource system was associated with 21 percent change in shareholder value.

The result of study also shows that management disposition to human capital management is positively correlated with career development and organizational performance of the employees. This result generally confirms what previous studies have found that when examining the positive relationship between human capital and firm performance. Bhattacharya, Gibson & Doty (2005) reported similar results that organization human resource flexibility was positively associated with return on sales, operating profit per employee and sales per employee. The result of the studies shows a significantly positive correlation of human resource practices and organizational performance. It is also in line with Rahim et. al. (2011) who indicated that human capital efficiency has significant and positive relationships with firm’s performance. The findings of this study is also consistent with that of Jamal and Saif (2011) who opined that firm’s human capital has a significant positive impact on organizational performance. Also Hasanloo (2011) proved that there is a significant relation between human capital value and market values of companies. Huang and Lin (2011) suggested in their study that team work will enhance specific research and development human capital and in turn, increase higher creative performance of teams. Fan and Lee (2011) observed that research and development firm gained their innovation performance through human capital. Iqbalet. al. (2011) again revealed in their study that human capital practice is positively correlated with employees’ knowledge sharing and organizational capability. This view also supported the present study. Dodaro (2012) stated that integrating human capital planning with broader organizational strategic planning is essential for ensuring that organizations have the talent and skill mix needed to cost-effectively execute their mission and program goals. Al-Ghazawi (2012) revealed that there is a significant impact of staffing, training and development, incentives and retention policy on the effectiveness of human capital, human capital return on investment and human capital value added.

5.3 Conclusion

The need for human capital development for sustainability and growth arises essentially from the fact that there are constant changes in the business environment. The challengers of these changes makes it imperative for human capital to be constantly trained and retrained in order to meet such challenges. This is the only way banks can ensure sustainability and growth in their competitive marketing environment. Effective human capital development ensures sustainability and growth through enhanced productivity, efficient provision of banking services, improved competitiveness, effective customer relations management and acquiring skills in ICTS. Thus, effective human capital development improves productivity to a large extent and impacts significantly on sustainability and growth of banking institutions.

5.4 Recommendations

As a result of the various finding emanating from the study, the following recommendations which the research work is hereby suggested:

  1. Organizations should hire the right people to do the right jobs by motivating, appraising and developing them.
  2. More human capital development practices should be adopted often to keep the employees up-to-date in their jobs.
  3. Training and development programmes should be prioritized in the banking industries and workers should be made to develop their careers by ensuring their job security and not just being used for the organizational growth; but later abandoned being useless and unproductive.

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