Abstract

This study aims to examine the Impact of Human Resource Management Practices on Organizational performance of MFIs in Buea. Specifically, the study assess effects of human resource practices such as training and career development and compensation policy and management on organizational performance of MFIs in Buea. An exploratory research design was adopted as an appropriate study design.

A sample of 40 employees was selected using purposive sampling and simple random sampling. An interview and self-administered questionnaire composed of closed and open-ended, and likert scale questions were used to collect data.

Data obtained through a structured questionnaire were analyzed using descriptive and regression analysis. The hypothesis was tested through a correlation test, and it revealed that there is a strong positive relationship between the variables (r= 0.735) whereby 64.8% of MFIs performance could be attributed to human resource management practices.

The findings indicated that the human resource practices such as training and development, compensation policy, have a positive relationship with of MFIs performance in Buea. It is concluded that selected human resource practices work well if there is effective policies to assist managers when motivating staff to raise their working morale.

The study therefore recommends that the institutions Governing Boards, should be competent so that they can supervise managements and sign performance contracts with managers and later appraise.

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Today we are living in a dynamic world. Advancement of information technology has brought to center stage the importance of human resource, more than ever before. In a competitive scenario, effective utilization of human resource has become necessary and the primary task of organizations is to identify, recruit, and channel competent human resources into their business operations for improving productivity and functional efficiency (Jyothi & Venkatesh, 2006).

The responsibility of recruiting, selecting and retaining qualified, motivated, and experienced human resources for the organization is vested in the human resource department through their human resource management practices (HRMP). Human resource management practices can therefore be described as the formulation of procedures that constitute the development of employee’s capacity to maximise their potential in a manner that furthers the objectives of both the individual and the organization to gain competitive advantage (Khadka, 2009).

Organizations nowadays are looking forward to have a competitive advantage against the threats present in globalization. Due to the high competency requirements, most organization aim to generate the kind of performance that can bring more profit. In order to do that, the employees are required to perform well and improve their performance (Osman, 2013).

To comply with this, the organization needs to align organizational performance with human resource management practices, which would be shown by organizational output of financial variables (sales growth, goal achievement, good services, productivity) (Chand & Katou, 2015; ) and non-financial variables (management quality, long-term orientation, continuous improvement, workforce quality) (De Waal & Frijns, 2011; Dimba, 2010) and also other outcomes as commitment, quality and flexibility (Guest,2013). Once a business entity has analyzed its mission, identified all its stakeholders, and defined its goals, it needs a way to measure progress toward those goals (Kaplan & Norton, 2015).

Since the 1980s, human resource management practice (HRMP) strategy has become an important topic for the management area. HRMP strategy has achieved its prominence because it provides competitiveness and promotes managerial efficiency in the business area. The rise of human resource management in the 1980s brought managerial scholars to the link between the management of people and performance.

A number of attempts were made to put empirical facts with the theoretical bones of the knowledge based firms and the specific HRP views concerning how the systems on Human Resource practices, which can make an increment on the organizational performance. The approach that focuses on individual Human Resource practices and the link with the performance continued since early 1990s (Hendry & Pettigrew, 2012).

The key objective of HRM is to increase employee performance and improve organisational performance through investment in HR (Craft, 2000). This is achieved through several key functions of HRM including Planning for the quantities and qualities of required employees acquiring services of employees developing them motivating them and making sure that they continue to maintain high performance standards thus becomes a very essential component of human resource practice (Dienemann, 2005).

HRMP aims to ensure a suitable workforce is accessible to the organization to facilitate and improve organisational performance Mathias, 2003).Through HRP organisations are able to maintain a desirable human resource position whıle projecting future needs so as to have the correct quantities and qualıties of employees as needed.

HRMP is therefore a strategy for the organization to acquire utilıze development and retain its workforce by forecasting prospective workforce needs, reviewing current human resource needs and making plans to fill any anticipated manpower gaps (Green & Downes, 2005). Reilly (2003) argues that the HRP function enables an organization to approximate its need for labour, calculate the numbers and supply source that will satisfy the demand

Despite differences in terms of the strategies and practices, HRP is embraced in both the private and public sectors worldwide (Delaney. 2000). According to Seonghee (2005), since the mid-1990s there has been a rise in the use of HRP as a strategic function of HRM. HRP has been generally accepted as a critical funct1on because it enables organisations to attain their goals through the forecast of human resource needs Jacobson, 2010). Therefore, how to conduct HRP accurately and effectively has gained significant interest in the field of HRM over the years (Campbell, 2000).

Human resource management from its origin enables workforce planning, or personnel planning, that anticipates and makes the provision of the movement of people into, within and out of the work group. Its primary purpose is to enable the work group maximize the utilization of its human resources by making sure that the right number of people, of the right capabilities, is available to do the task in correspondingly right job positions at the right time. Human resource mananagement helps work groups to implement their short and long- term organization plans. Due to the vital role of human resource to the performance of the company, human resources planning are very important part of the strategic plan of any work group (Gupta, 2009).

In a global context, human resource practices are such as recruitment, selection, and appraisal; it directs partially constrain development of specific practices; and overarching philosophies, which specify the values that inform an organization’s policies and practices (Gilley et.al, 2012).

According to Bulla and Scott (1994), human resource planning is the process of ensuring that human resource requirements of an organization are identified and plans are made for satisfying those requirements. This view suggests several specific, interrelated activities that together constitute Human Resources planning which includes personnel inventory, human resource process, action plan, control and evaluation. An organization needs to adopt specific HR policies and practices for different strategies. Thus, it can elicit employee behaviors that are consistent with an organization’s strategy (Rose & Kumar, 2014).

Human Resource management practices should be an important part of the strategy of any large corporation (Gilley et.al., 2012).Yet researchers basing their views on a behavioral psychology perspective have argued that human resource management practices could contribute to competitive advantage as long as they reinforce the skills, attitudes and behaviors that result in lowering costs and enhancing product differentiation.

Therefore, the important role of human resources practices in contributing to a firm’s competitive advantage overlaps with the concept of efficiency as a human resources strategy for effective performance (Ozcelik & Ferman, 2016).

Human resource management is surrounded by three basic level practices which can increase the organizational performance: To increase the knowledge, skills and abilities among employees, to enhance their empowerment like giving them employment security and organize some participation programs for employees and to give them motivation through both incentive means like giving them compensation and benefits, and also through internal promotion like promoting them with their job status. (Yongme et al., 2015).

Globally, human resources management (HRM) plays a vital role in achieving an innovative and high-quality product or service in an organization. The achievements of an organization widely depend on several significant factors that affect the organization performance. HRM practices such as training and development, compensation, career planning, employee involvement, and performance appraisal encourage the employees to work better thus, increase the performance of the organization (Nabi et al., 2016).

These human resource management practices could attract, motivate, propel and retain personnel to ensure the longevity of the organization and positively influence the level of employer and worker commitment. Several organizations invest enormously by placing higher priority on developing human resource to enhance organizational performance (Khan et al., 2011).

Organizational performance can be measured through financial stability and productivity, but when we have to relate human resource planning with the organizational performance, and then we consider some of other variables like efficiency and effectiveness, employee motivation, job satisfaction, trust on employees (Cho et al., 2015).

To comply with this, the organization needs to align organizational performance with human resource management practices, which would be shown by organizational output of financial variables (sales growth, goal achievement, good services, productivity) (Osman et al., 2013; Chand & Katou, 2015;) and nonfinancial variables (management quality, long-term orientation, continuous improvement, workforce quality) .

Such planning also includes specifying who is going to do what, when, where, how and with what resources for what population group or individuals, so that the knowledge and skills important for adequate performance can be made available according to predetermined policies and time schedules. This planning must be ongoing and not a sporadic process and it needs progressive monitoring and evaluation.

Therefore the problem or challenges that face the most present organization‘s performance are the results of human resources that are both inefficiently and ineffectively planned. Inefficient and ineffective human resource planning is associated with the lack of top management support, poor strategic planning poor budget, and absence of the of expertise to prepare good human resources planning for better performance of the organization, poor implementations of all human resources drafts, policies and poor human resources management information system (Gupta, 2009).

As an impact this results in general poor performance of particular organization (Gupta, 2009) therefore the major concern of this study is to find out the extent to which the human resources planning can help the organizational performance and then improve the applicability of its reports.

Human resources management in most today‘s groups works does not concentrate on what skills will be needed in future and may do more than providing information of the right numbers required in a long term, although in some conditions it might involve making inadequate short forecasts when it is possible to predict activity levels and skills needed with reasonable accuracy.

This being the fact, there is an abrupt decrease of HRM at a decreasing rate of the organization‘s performance. This problem is serious to organizations having more branches and missing human resource information system. When they are at their planning process they need to make sure their plans and budgeting fall and reach the demand and needs of human resources.

Such prediction will normally be based on the broad scenarios rather than on specific supply and demand forecasts. Thus performances tend to differ among organizations, as the problem is poor planning and compensation of human resources. To that juncture, it is the work of this study to assess the effect of Human Resource Management Practices on the performance of MFIs in Buea in order to come up with findings which will help for improvement of the head office, zonal offices and training Centers working performance.

To expand the modern knowledge on Human Resource (HR) practices in developing countries, this study is undertaken in microfinance institutions in Cameroon-Buea. Microfinance institutions (MFIs) are the rapid growing financial institutions in Cameroon with many products and services available to clients such as financial intermediation, social intermediation, and enterprise development services (Ngwa, 2019).

Most microfinance institutions over the world operate through a network of NGOs (ACCION in Latin America, CAMCCUL in Cameroon, etc.) providing funding to low income entrepreneurs in their localities as well as training them to overcome various challenges in their business activities. This microfinance industry of Cameroon has continued to record a steady growth in terms of members and account holders, with current market intelligence estimated at close to 1.4 million account holders (Fotabong, 2012).

An estimated 52% of MFIs in Cameroon are located in urban areas as opposed to just 48% in rural areas. The distribution of branches of MFIs member institutions is disproportionate with three of the ten regions of Cameroon-the North West, Littoral and Centre regions constituting about 60%, while the South West, the West and Extreme North constitute 28% of the number of MFIs (Fotabong, 2012). MFIs in Cameroon are creating more job opportunities and stabilizing the economy.

However, this project considers the microfinances having branches in Buea. Therefore, effective HRMP will thus enable proper alignment of structures, people and organisational development goals in MFIs.

This can only be realized if the Company has in place a strong HRM process. Surveys undertaken in both developing and developed countries have shown that HRMP has a major impact on organisational performance (Busienei, 2013). In view of the foregoing, this study will determine the effect of HRMP on the performance of MFIs in Buea.

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