HUMAN RESOURCE FORECASTING AND VIABILITY OF SMALL BUSINESS ENTERPRISES IN ENUGU STATE, NIGERIA

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HUMAN RESOURCE FORECASTING AND VIABILITY OF SMALL BUSINESS ENTERPRISES IN ENUGU STATE, NIGERIA

ABSTRACT

Human resource management (HRM) is identified as the productive use of people in achieving the organization’s strategic objectives. Human resource is required for an organization to conduct different business activities and they need to be used very efficiently. The main objective of this study was to investigate human resource forecasting and viability of small business enterprises in Enugu state, Nigeria. The research used a structured questionnaire to collect the data. Target population of this study was the employees of small scale units of Chrunches Fast Food. Quantitative data analysis was analyzed by using simple percentage. The findings of the study showed that HRM practices have significant impact on the performance of the small scale industries in Enugu state. Findings of the study revealed that HR FORECASTING practices have significant impact on business performance at 1% level of significance. The study also revealed that while compensation and performance appraisal independently and significantly impacted on business performance, the effect of recruitment was not significant. Training however, had an inverse relationship with business performance. The findings also revealed that financial resources and firm size were major factors that had significant influence on adoption of HRM practices by small scale businesses in Nigeria. The study concluded that, for small businesses to grow, and build up the required capacity for promotion of sustainable national economic development, the adoption of human resource forecasting practices by SME operators should be encouraged.

CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Global competition, rapid technological advancement, and dramatically shifting demographics are challenges encouraging business organizations especially small scale business enterprises to consider people as their most valuable resource (Miracle, 2004). It has been argued by a number of studies that Nigeria’s competitive advantage lies in its private sector development (IMF, 2009; Debrah & Mmie, 2009; Fening, 2012) – a sector dominated by small- and medium-sized enterprises (SMEs). The government and private institutions have tried to support SME growth, but have not gained the expected results. Human Resource Management (HRM) recognises that competitive advantage in activities by employees with superior know-how, commitment, and motivation, among others, may lead to enterprise success (Stone, 2011). The human resource planning (HR FORECASTING) is a core process that ensures an organization prepares for its current and future needs by having the right people in the right place at the right time (Jacobson, 2010). HR FORECASTING allows the building of long-term capacity to meet workforce needs and overcome challenges (Choudhury, 2007). If an organization is effective in the development and implementation of its Human Resource Management (HRM) plan, it will be able to better utilise human capital in order to achieve its strategic objectives. The question of how organizations conduct HR FORECASTING in the public sector is at the heart of this research. However, small and medium scale businesses constitute a driving force for economic growth, job creation, and poverty reduction in developing countries. In Nigeria, the informal economy has grown to a stage where it contributes over 65% of Gross National Product, and accounts for more than 70% of all new jobs in the country (Osalor, 2010). Recent trends at different form in Nigeria have clearly revealed the amount of respect attached to SMEs by government, educational institutions, and corporate bodies; and the development of SMEs has been recognized as a veritable tool for promoting poverty eradication, job creation, rural development and sustainable livelihood for the populace (Iwere, 2013).

However, while the contributions of small scale businesses to economic development are generally acknowledged, entrepreneurs in this sector face many challenges that limit their long term survival and development. These challenges have been linked to some economic variables such as high level of unemployment, high incidence of poverty, lack of finance, inadequate infrastructure, low industrialization capacity, inconsistent government policies, among others. Some internal characteristics like low level of entrepreneurial skills, and poor management practices also interact with the economic variables to undermine the capacity of SMEs (Abiodun, 2014). It is pertinent to note that the solution to the economic challenges rest, mainly, at the feet of government, while the internal challenges have their solution with the entrepreneur himself. For any business to survive and prosper, the need for effective management of resources, particularly human resources, cannot be overemphasized. This is even more so for small businesses, which rely more heavily on individual employee’s contributions than their larger counterparts (Ojokuku, 2012). Macgregor (2004) also pointed out, the backbone of a small business is its core staff. It is therefore expedient to direct research attention to the application of human resource management practices to the creation and promotion of viable small scale businesses that will drive sustainable economic development. It must be recognized however, that the focus of HRM researchers on SMEs has been very limited, because SMEs have been considered for long, by HRM researchers as second class citizens (Tansky and Heneman, 2003; cited in Zakaria, 2013). However, since SMEs are not a scaled-down version of large firms, and they have their unique characteristics and also face different challenges, the findings of HRM research in large organizations cannot be generalized, in a wholesale manner, to SMEs (Nguyen and Bryant, 2004; Kwang, Songan, and Kian, 2008; and Barret and Mason, 2006). There is therefore the need for a shift of focus to HRM practices in SMEs, in view of the limited understanding of the significant roles of HRM in small and emerging firms (Cardon and Steven, 2004).

Furthermore, given their financial constraints and other resource limitations, SMEs too, are directing increasing attention to how they can utilize other available resources more efficiently and effectively (Gallego et al, 2012). SMEs however, have fewer resource options than their larger counterparts to improve performance, but one resource that is common to all organizations, irrespective of size, is human resources, and this is becoming an increasing focus of theoretical, empirical, and practical attention in SMEs (Sheehan, 2013). HR FORECASTING is an outcome of a long period of evolution in management practice; it was historically known as manpower planning. The focus in manpower planning was on forecasting the needs for employees into the future, assessments of internal labour supply for meeting these needs, and identifying the gaps between what will be needed and what will be available (Santos, Zhang, Gonzalez, & Jain, 2009). Human resource management (HRM) is defined as the productive use of people in achieving the organization’s strategic objectives. HR practices enable the shaping of employee’s skills, abilities, values, attitudes, beliefs and behaviors through hiring and developing a firm’s pool of human. The performance of an organization depends upon the effective use of its human resources. An organization has to forecast its manpower requirements and need to alter its manpower planning accordingly for the development of the organization. Human resource is very important and needs to be utilized efficiently for the success of the organization. The importance of manpower in business management is rapidly increasing and is getting accepted universally. Human resource is the most delicate factor of production and need to be treated very carefully as their performance influences the performance of the organization. Even though there is very close relationship among the owners/managers and the employee in small scale industries human resource management has become a very sensitive issue here. Human resource management includes different practices such as Recruitment, Selection, Training & development, Compensation, Performance Appraisal and Employee Welfare. If good human resource practices are followed an organization can reduce the employee turnover, and the overall performance of the organization can be increased.

In order hand, human resource forecasting practices has gained importance in organization most especially on the performance of small scale businesses in Nigeria and Enugu state (Becker & Huselid, 1998; Huselid, 1995; ArunaGamage & Yuri Sadoi, 2008). The importance of Human Resource forecasting (HR FORECASTING), has found significant place in the survival Industrial organizations in that it enhances the competitiveness of the firms (Chandra Mohan Singh, Dr. Ashok Chandra and Dr. Sanjay Sharma, 2016; Gaafar Mohamed Abdalkrim, 2012; Mohinder Chand, Anastasia A. Katou, 2007).. The human resource forecasting increases the sales and reducing the employee absenteeism of the business organization. According to Huselid (1995), opined that HR FORECASTING practices improve the skills, abilities, knowledge motivation and raise the retention of skilled employees. Cheng Ling Tan, AizzatMohdNasurdin (2011) showed that Human Resource forecasting have positive effect on small scale enterprise innovation and demonstrated that training and performance appraisal are positively related to knowledge management effectiveness. Narware (2011) highlights that the use of strategic manpower planning, performance appraisal, welfare and reward system and industrial relations along with the recruitment and selection process enhances the industrial environment and long term success of the small scale industries. Hence, this research aims at investigating human resource forecasting and viability of small business enterprises in Enugu state, Nigeria.

1.2 STATEMENT OF THE PROBLEM

Human resource forecasting problems according to Geisler (1967) can be overcome through the following:

a. Information: One of the problems encountered by those who attempt to plan their manpower need and the availability of manpower lies in obtaining the right kind of information;

i. Insufficient developed personnel record system may prove to be another problem without the right information appropriately classified and store in a system from which it can re adily be retrieved the assessment of supply from within the organization will prove very difficult. This problem can best be overcome by making someone responsible for the regular collection and updating of the kind of information we have discussed (in larger organizations this tends to be a personnel department responsibilities). By anticipating as far as possible the kind of question that you will need to answer it would be possible to design a record upon the number of employees and the sophistication of your requirements. ii. You may also suffer from lack of knowledge of the labour market. This can be over to a large extent, by familiarizing yourself with the content of some published statistical sources, particularly census information and department of employment statistics, You will also find it helpful to make and maintain contact with the managers of your local Job centre/employment enough question the future aims of the organization and their implication for manpower. Office commercial recruitment agencies and the local authority planning office all of whom can provide up to data local information about the labour market or other employment, regular scanning of the local newspaper and an intelligent appraisal of current recruitment trends will help to complete the picture.

b. Expertise: Sophisticated human resource forecasting models requires expertise to build. If your organization is not big enough to warrant engaging the services of an expert, a general identification of future trends and possible problem areas can form a useful starting part until expertise is developed,

c. Time: The kind of planning we have discussing cannot be done overnight. It will take time to establish the right kind of information system and to interprets the data you can obtain there are no shortcuts here except a systematic process of data collection and interpretation and a continuing concentration on what you are trying to achieve.

d. Future uncertainties: Few would purport to predict with certainly just what the future holds. Economics changes may affect the demand for your goods or services, technological changes may alter your methods of working; social and political changes may influence peoples attitude to work and to the kind of work that they are prepare to undertaker we cannot pretend that this uncertainty does not exist, what we can do is to identify current trend consider any likely changes in the factors which underlies those accurate as possible in the circumstance. By constant monitoring of the actual situation as it unfolds to see how it compares with the plan, it should be possible to compares with the plan and the premises upon which it is based, and to improve our planning expertise in process. If there are time despair at the complexities and uncertainties of the planning process, the more we persevere, the more likely it is that we shall reap the benefits. Once we have identified our future manpower requirement we can take steps to deal with any shortfall.

Again, the study is underpinned by the Resource-Based View (RBV) and New Management (NM) theories. There is a lack of information regarding the application of these theories in the field of human resources management in developing countries like Nigeria. These two theories are used together to provide a framework to understand HR FORECASTING practices in small scale business enterprises.

1.3 OBJECTIVE OF THE STUDY

1. To examine the objectives of manpower planning in small scale enterprises in Enugu state.

2. To examine the need for manpower planning in small scale enterprises in Enugu state .

3. To identify the steps in manpower forecasting.

4. To examine the quantitative and qualitative approaches to human resource forecasting demand in small scale business enterprises.

5. To examine the factors influencing the adoption of human resource forecasting practices in small scale businesses in small scale enterprises in Enugu state.

1.4 RESEARCH QUESTION

1. What are the objectives of manpower planning in small scale enterprises in Enugu state?

2. Is there need for manpower planning in small scale enterprises in Enugu state?

3. What are the steps in manpower forecasting.

4. Are there quantitative and qualitative approaches to human resource forecasting demand in small scale business enterprises?

5. What are the factors influencing the adoption of human resource forecasting practices in small scale businesses in small scale enterprises in Enugu state?

1.5 RESEARCH HYPOTHESES

H0: There is no need for manpower planning in small scale enterprises in Enugu state.

H1: There is high need for manpower planning in small scale enterprises in Enugu state.

H0: There area no factors influencing the adoption of human resource forecasting practices in small scale businesses in small scale enterprises in Enugu state.

H1: There area lot of factors influencing the adoption of human resource forecasting practices in small scale businesses in small scale enterprises in Enugu state.

1.6 SIGNIFICANCE OF THE STUDY

Contributions of this study are made in two ways: first, the study adds to the growing body of knowledge on HR forecasting practices small business enterprise; and secondly it provides evidence to add to the aggregated knowledge of HRM practices in Chrunches Fast Food, particularly HR forecasting small business enterprise, as there is a need for in-depth analysis of how HR forecasting is practiced in the public sector in different contexts. The HR FORECASTING literature includes limited empirical studies conducted in the public sector (Curson et al., 2010; Freyens, 2010; Goodman et al., 2013; Johnson & Brown, 2004). Based on evidence in the literature that HR forecasting is not commonly practised small business enterprise, this study will contribute to awareness of the importance of HR forecasting and will assist public organisations to work towards achieving their objectives. Empirical studies on HR forecasting can add to the creation of scholarly knowledge by probing deeper into the nature of HR forecasting small business enterprise. Further research is also needed to suggest ways in which private organizations can align their HR forecasting practices to their strategic planning. This study contributes to identification of important HR forecasting variables and characteristics which enable the public sector to be more effective. The location of this study in Chrunches Fast Food will contribute to a small but growing body of knowledge of HR practices in that country, and will provide a significant study of HR forecasting in the Chrunches Fast Food’s small scale business enterprises. As most HRM theories and practices originated in Western cultural contexts, research and studies need to take place in other nations and cultural contexts to form a full picture of the issues of significance, especially in developing countries (Zhiwei, 2012). Conducting such studies in developing countries is necessary both to provide perspective on the possibility of applying Western theory or practices in non-Western settings and to identify alternative policies or practices suited to the different contexts.

1.7 THE SCOPE OF THE STUDY

The research study limited to human resource forecasting and viability of small business enterprises in Enugu state, Nigeria.

1.9 DEFINITION OF TERMS

HRM: human resource management (HRM) as the strategic and coherent approach to the management of an organization’s most valued assets – the people working there, who individually and collectively contribute to the achievement of the objectives of the business.

HR forecasting: This is defined as a methodical process of analyzing the current workforce, determining future workforceneeds, identifying the gap between the present and future, and implementing solutions so the organisation can accomplish its mission, goals, and objectives’. (Helton & Soubik, 2004)

Small Business: Small Business is defined as companies with capital base between twenty thousand naira and thirty million naira (equivalent of $125 to $193,500). According to Hatten (2012: 4), a company is considered small if it is independently owned, operated, and financed; has fewer than 100 employees; and has relatively little impact on its industry. The Central Bank of Nigeria (CBN, 2011) defines small-scale enterprises as an enterprise whose annual turnover ranges between N25, 000-N50, 000.

Human Resource Planning: Human resources planning is defined as the process of assessing an organisation’s human resources needs in the light of organisational goals and changing conditions and making plans to ensure that a competent, stable workforce is employed.

Human Resource Forecasting: This is defined as a process that helps an organization determine how many employees it will need in the future to meet its strategic goals.

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