Abstract

This study investigated on the effect of human capital development on employees performance, using a case study of Agro Techno Limited Company (AGROTECH) Buea. Specifically, It analysed the effect of education and training on employee’s performance in one hand and the effect of regular health condition on employee’s performance in the other hand.

The research employed exploratory and descriptive research designs. It also combined quantitative as well as qualitative research approaches. Data were collected through a survey over the total population of 51 employees in AGROTECH Buea who have been interviewed.

The findings   of the study show that improving employees education, training and health condition positively affect performance of employees in AGROTECH Buea. Precisely an increase in employees human capital developments at AGROTECH will lead to a significant increase in the performance of employees.

The study also disclosed that investing in human capital has long term and sustainable outcomes such as enhancing customers trust due to improvement of service delivery. The study recommends that there is a need of promoting in-service training, regular health facilities and further education related to career advancement particularly among employees working with  the company.

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

In today’s fast changing environment, where globalization is taking place everywhere, it is a challenge for organisations to remain competitive in market. Human capital is one the of biggest source of competitive advantage for organisations that cannot be easily imitated by other organisations while other capital like structural or financial capital can be copied easily. (Becker and Huselid ,2008).

Competition is a word most businesses are quite familiar with. Considering that several organisations provide similar products and services, and are targeting the same market, the chances of losing business to a competitor are high. From time to time, organisations evolve new strategies and approaches to ensure they emerge from multitude of choices as the preferred brand. Nevertheless, several organisations are still unable to cope with the dynamic taste of the modern day customers.

Porter (1990) describes productivity as the only meaningful concept of competitiveness. This means that irrespective of the high level of competition, an organisation must be productive if it will be considered as being competitive.

As a result of the competitive environment, Africa is experiencing profound shifts which all affect the building of human capital development in other to increase employee performance Lloyd, (2009).  With a young and rapidly growing population, Africa’ demographics are the most dynamic in the world. Economically, African countries have been growing by 5-8% on average, the private sector has a much larger presence in Africa than ever before, and Africa’s aid architecture is shifting, with new partners such as China and India emerging.

Technologically, Africa has been benefitting from a shift of the technological curve, leapfrogging access to information and communication. Politically, increased demand for voice and accountability has led to democratic reforms, and decreased conflicts and civil wars. Environmentally, urgent action is needed to address the consequences of environmental changes such as shortage of food, displaced populations, and increased poverty (Lori, 2010). Thus, An integrated Human Development Strategy is required because education, training, health and safety nets are inextricably linked with employees performance.

While discussing how small businesses can engage superior competitive advantage to master the art competition, Bressler (2014) advises that small businesses should not expect a warm and open arm welcome from the business community. Rather, they should be ready for resistance from businesses that would consider them a threat.

The author further states that for there to be successful market penetration, sound strategy must be devised by the new businesses. Globalization, in spite of its numerous opportunities, has also further complicated the issue of competition. This is because organizations no longer compete with local brands; rather, they compete with brands from across the globe. This means that every organization must be ready, not only to build its business to global standards, but also to seek to outperform global competition.

Dae-Bong (2009) also observes that with the advent of globalization comes challenges such as knowledge-based economy and technological evolutions, which have forced organisations to seek new strategies for maintaining competitive advantage. The author further asserts that the prevailing sense on how to achieve success is to focus on people who possess higher levels of individual competence.

Bressler (2014) observes that though research has considerably covered the significance of employees as relates to the competitiveness of a business, the employees are considered secondary to product, place, price and promotion. The author, however, argues that the employees play a pivotal role in synergizing the other elements.

Consequently, failure on the part of the employees will automatically result in the failure of the other elements. In response to these changes, most firms who have embraced the notion of human capital development has a good competitive advantage that will enhance higher performance. Human capital development becomes a part of an overall effort to achieve cost-effective and firm performance. Hence, firms need to understand human capital developments that would enhance employee satisfaction and improve performance.

In the view of Schultz (1993), the term human capital development means a key element in improving a firm assets and employees in order to increase productivity as well as sustain competitive advantage.

According to Schultz (1993), Human capital development refers to the processes that relate to training, education and other professional initiatives in order to increase the levels of knowledge, skills, abilities, values, and social assets of an employee which will lead to the employee’s satisfaction and performance, and eventually on an employees’ performance.

In recognition of the importance of human capital development, the United National Economic Commission for Africa (1991) has described human capital development as the knowledge, skills, attitudes, physical and managerial effort required to manipulate capital, technology, land and material to produce goods and services for human consumption.

In the same vein, (Mahroum, 2007) suggested that at the macro-level, human capital developments is about three key capacities namely; the capacity to develop talents, the capacity to deploy talents, and the capacity to draw talents from elsewhere. Collectively, these three capacities formed the backbone of any country’s human capital competitiveness. In a collaborative view, (Simkovic, 2013) sees human capital as the most important element of success in business today.

According to him, developing human capital requires creating and cultivating environment in which human beings can rapidly learn and apply new ideas, competencies, skills, behaviours and attitudes. It could therefore, be deduced that human capital represents the stock of competencies, knowledge, habits, social and personality attributes, so as to produce economic value.

In the current global market, companies are composed by competitors, regardless of the industry. To develop a competitive advantage, it is important that firms truly leverage on the work force as a competitive weapon.

A strategy for improving workforce performance to derive higher value for the firms has become an important focus. Firms seek to optimize their workforce through comprehensive human capital development programmes not only to achieve business goals but most important is for a long term survival and sustainability, (Maran et al; 2009) opined.

To accomplish this undertaking, firms will need to invest resources to ensure that employees have the knowledge, skills and competencies they need to work effectively in rapid changing and complex environment. As such and in response to the changes, most firms have embraced the notion that human capital development has good competitive advantage that will embrace higher performance.

Therefore, human capital development becomes a part of an overall effort to achieve cost effective performance in a firm, (Maran et al; 2009) re-affirmed. Thus, firms need to understand human capital development that would enhance and improve employee performance.

Performance on the other hand encompasses the actual output or results of an organisation as measured against its intended outputs (goals and objectives). Mathias & Jackson (2009) maintain that a dynamic organisation is the one that has low rates of incapacity in her employees’ performances.

The employees should depict characteristics that are associated with high levels of performance. In simple words, employee performance means the ability of employees to achieve individual allocated task on daily bases, the achievement of department objective and improvement in individual productivity.

The understanding of individual employee performance is critical to the success of an organisation as it involves a systematic approach to the assignments of work, expectations and supporting employee efforts (Tende Sam, 2011). The above study further specified that employees’ performances depend largely on the knowledge and the skills which employees’ possess to carry out their individual task.

The performance is an especially critical result in the investigation of social capital and authoritative citizenship conduct. Analysts have made a refinement between undertaking execution and logical execution (Motowidlo et al., 1997). Employees performance is characterized as the financial results coming about because of the interchange among an organisation’s attributes, activities and environment.

Firm performance and other performance concepts like corporate environment or social performance are main focuses of organization effectiveness which are of main concern or practice and research. (Abston et al., 2006). Human capital development means stock of capabilities, competencies, knowledge, abilities and personality characteristics to do labor for producing economic value. Human capital  developments denotes the investment which is made by people in them or in their organisation. (Sullivan, 2003)..

Schultz(1961) said in his article that skills and knowledge are types of capital, and capital is deliberate investment’s product. Human capital’s development concept involves investing in people’s training as well as in their education. Schultz( 1961) compared achievement of abilities and knowledge to acquire production’s means. Schultz argued that investment in human capital leads to a rise productivity of human, as a result which leads to an increase in return rate. (Schultz, 1961).

Human capital situation in Pakistan in light of the literature mentioned in previous pages, one reason of the third world’s destitution for the most part and Pakistan particularly there is no more interest in human capital. Dissimilarity between monetary development and human advancement is more noteworthy in Pakistan than in the greater part of alternate nations of Asia.

According to Ali (2012). Human capital refers to “hours worked, work experience organisation tenure, job tenure, willingness to transfer, educational level, international work-experience, career planning, political knowledge and skills etc.”.

According to different scholars like Burt (2000), Adler and Kwon (2002) defined the social capital as “team spirit, harmony, confidence, and easiness that derive from social relationship involving family, friends, workmates and others and provide access to valuable resources such as information, influence and unity that facilitate action.

Human capital is connected with the creative performance of the organizations since when assorted gathering of individuals sit together share their data, information and innovativeness will result in latest creativity. Results recommended that top administration, firm’s cooperative attitude and different human capital assume huge part in entrepreneurial execution. Human capital can be divided into general human capital and specific human capital.

General human capital in the case of the entrepreneur is usually measured by the level of instruction and the total number of years of work experience. Specific human capital includes specific teaching of the company, specific skills related industry experience and management experience (Ganotakis, 2012), (Mahmood, 2014) Conducted research on the relationship between employees human capital and organisational performance.

Questionnaire has been used to collect the data from a sample of 237 employees working at executive positions in different organizations. For analysis purpose, different regression techniques were used. Researchers concluded that organisational human capital has positive impact on employee performance.

(Allen et.al., 2008). Proposed that university staff who is engaged in entrepreneurial activities is directly associated with patenting needs of that industry, this study was conducted on the educational sector of U.S In order to understand the association of entrepreneurship and human capital. It was observed that patenting endures an unmistakable part of staff business, particularly, basic activity that consequence in united authorized advancement and this association was tested by demographics like job tenure of respondents and age, and those employees whose tenure were long are more associated with these activities, the employees which ere alder in age demonstrate more interest in patenting actions.

These findings recommended that personnel skill and expertise are very imperative for the business because it is for the mutual benefit of both the parties. Human capital development is the process of helping people to acquire expertise.

 

In an organisational context, it is the process by which organisations help their employees in a continuous and planned way in order to: acquire or sharpen the abilities required to perform various functions associated with their present or expected future roles; develop their general skills as individuals, discover and utilize their inner potential for their own and/or organisational development purposes; develop an organisational culture in which supervisor subordinate relationships, teamwork and collaboration among sub-units are strong and contribute to the professional well-being, motivation, and pride of employees.

While analyzing the issue of what contributes to competitive advantages ,more emphasis has been laid on the internal resources which are seen as crucial to sustain effectiveness rather than on external positioning in the industry and the relative balance of competitive forces Penrose” work shows the beginning of the resource based view of the firm which was later polished.

The significance for an organisation to build a valuable set of resources and binding them in different and unique ways to develop firm success has been established by  Resource Base View (RBV) . Unlike traditional assumption competitive advantage does not depend on natural resources, technology or economies of scale because they are easily copies. According to the resource base view RBV competitive advantages depend on the valuable, rare hard to imitate resource that sets within organisation.

Many business personnel directors assess the performance of each staff member on annual or quarterly basis in order to help them identify areas for improvement. Employee performance may also be understood as the standard criteria of employee behaviour at work place. These criteria mean more than how an employee does the work. On the other hand, employees are rated on how well they do their jobs compared with a set of standards determined by the employer.

Now our days, we are witnessing an overwhelming number of research studies from both descriptive and prescriptive traditions, focusing on several characteristics of human capital development programs as well as their costs and benefits for business organisations (Becker and Gerhart, 2012).

At the same time, employees have come to better understand the significance of human capital for their survival in knowledge ¬intensive and volatile markets of this era, and thus have increasingly acknowledged the profitability of developing their human resources through various forms of human capital development (Berge, 2001; Salas and Cannon-Bowers, 2001).

The constantly changing business environment in Cameroon requires firms to strive for superior competitive advantages via dynamic business plans which incorporate creativity and innovativeness. This is essentially important for their long term sustainability. Undoubtedly, human resource input plays a significant role in enhancing firms’ competitiveness (Barney, 1995).

At a glance, substantial studies have been carried out on human capital and their implications on employees performance; results show that, human capital enhancement will result in greater competitiveness and performance (Agarwala, 2003). Guthrie et al., 2002). In relation to this, the definition of employees performance could vary.

Nonetheless, some clear definitions of employees performance in the context of human capital enhancement could be put forward. Human resource capital of any organization plays an important role, thus training and education helps in fortifying employees (Khan, Khan and Khan, 2011).

Despite the obvious significance of human capital, the enormous expansion in the content of employees human capital development programs overtime has largely been taken for granted. Some Human Resources Departments rarely question the necessity and appropriateness of human capital developments on a particular employee at a particular time.

Often times, there are other motives why employees are given human capital development incentives. Mourdoukoutas (2012) found out that some of those organizations that neglect employee human capital developments do so because of the huge cost and the fear of losing those employees after impacting them with essential skills and competences.

1.2 Statement of the Problem

In today’s society, Several businesses are established daily, joining the pool of already existing ones. In the same vein, several businesses are closed down for failure to keep up with market requirements. According to Oduyoye, Adebola and Binuyo (2013), “Worldwide, there are about 300 million people trying to start about 150 million businesses; about one-third will be launched, so one can assume 50 million new firms births per year or about 137,000 per day”.

The authors, however, note that about 120,000 of that figure probably terminate business everyday worldwide. The survival of any business is determined, to a large extent, by its ability to satisfy its target market through constant innovation and elevation of service quality.

It is, however, unfortunate that some organisations tend to drive productivity and customer satisfaction at the expense of their employees. They demand greater speed, initiative, efficiency and customer satisfaction without developing the capacity of the employees to Lanre Amodu, Philip Alege, Stephen Oluwatobi and Thelma Ekanem (2017),

The Journal of Organisational Management Studies, meet up with the ever growing trends in the industry. The implication of this is that the employees tend to believe that the organisation does not care about their individual development and is not committed to equipping them with the skill or knowledge to deliver the expected result.

If this happens, the employees may develop a poor attitude towards their work and transfer their aggression to the customers. Consequently, the organisation will fail to achieve its strategic objectives.

One thing that is common to every organisation is the desire for high performance through her employees. This is necessary for the survival and sustainability of business organisations and for them to optimize their objectives which ranges from maximization of benefits/profits to cost minimization. Therefore, it has been academically debated that for this objective be achieved, organizations must consider vital human capital development elements such as motivation, training, education level and experience level among others Mlingi, (2012).

That is to say that, organisations could not achieve high performance without paying adequate attention to these elements of human capital. No doubt, many organizations in Cameroon and across the globe consider such elements to be very important to gain competitive advantage. Also, in the recent times, some scholars debates that not only motivation in terms of salary and allowances enables workers to perform more but training (on- the-job and off- the-job) to ensure workers have the skills and ability to work.

However, none of the prior studies have evaluated training along other elements of human capital development stated herein on employee performance especially in the Oil Service Firms particularly Halliburton and Schlumberger in the Post Local Content Development Act regime.

The perception of employees on human capital developments has a greater impact on the success of any organisation. If the employees are satisfied with the training criteria, good education offers and good health conditions of the organisation, this will have a positive impact on the employees performance.

The perception or attitude of employees is transformed into positive or negative behaviour. How the employees do sees human capital policies of the organisation, how seriously does the management takes the human capital developments of its employees. Some see human capital and development as a waste of time and resources that would have been employed in the production of goods and services that will yield profit to the organisation.

Sometimes, the fear that an employee could leave the organisation after their achievements in human capital affects the organisation and sometimes makes it unplanned and unsystematic, Walliman (2011).The procedure and process usually adopted by some Human Resource Departments in the identification of those employees that require human capital are worrisome, Bryman & Bell  (2007).

Employees sometimes go for human capital incentives for personal reasons which include enriching themselves; preparing themselves for other positions in other organisations; power play/politics; because he/she knows the person in-charge of training or offering health facilities and not necessarily because there is an identified skill gap which needs to be filled through training or regular health conditions, Kevin , Joan and Adrian (2004).

At times, the HR Department does not conduct human capital needs assessment. Organisations’ development in human capital criteria ought to be systematic and free from bias, Kreitner & Knick (2000). It must follow a lay down procedure to ensure that the right candidates are sent for training, the right candidates are given good working conditions, to improve on their performances.

Past studies have indicated that the concept of human capital focuses on individual and employees performance. A number of researchers have shown that there is a strong linkage between the human capital development and performance of employees, thereby leading to sustainable competitive advantage.

These researchers include Bai et al (2015) who found that human capital development has strong significant positive relation with satisfaction level of employees and customers, which eventually lead to increase in employee performance. Seleim, Ashour and Bontis (2007) concluded that human capital indicators had a positive association on employees’ performance; the study further concluded that indicators such as Training, Experience, employee regular health lead to team work practices which result in superstar performance where more productivity could be translated to employees performance.

Iqbal et al  (2013) suggested that there is association between investment in the development of human capital and the benefit of an organisation, he further concluded that organisation that invest in human capital development programs have high employees productivity which ultimately contributes toward high organisational performance.

Mling et al (2012) suggested that employee’s performance to bigger extent depend on training employees received and the health facilities given to employees. He further concluded that human capital investment programs really positively influence employee’s performance.

From the individual level, Collis and Montgomery (1995) point out that the importance of human capital depends on the degree to which it contributes to the creation of a competitive advantage. From the economic point need to enhance their competency skills in order to be competitive in their organizations.

In fact nowadays, companies in Cameroon precisely Agro Techno Limited company (AGROTECH) Buea faces  issues  with their human capital development incentives  in other to increase employees performance. Thus, the Lack of training, education and regular health conditions in AGROTECH may result to the stressing   of their workers, thus reducing their job performance and productivity as well as affecting the growth of the company.

With the above mentioned challenge face by AGROTECH Buea, AGROTECH have put in place concrete measures by adopting different types of human capital developments incentives to address such issues. Like compressed training, education and a healthy condition for the employees.

Despites the efforts made by firms in human capital investments through training, education and regular health with the intentions  of improving employees performance, the problem of employees poor performance still exit (Mahmood  and Sahu 2014).  This may be due to various factors such as shortage of staffs to performed  the required task within a given period of time and failure to utilize the knowledge obtained during training and education.

1.3 Research Questions

This thesis thus seeks to answer the following questions.

1.3.1Main Research Question

The main research question is; what is the effect of human capital development on employee performance in a given Cameroonian company?

1.3.2 Specific Research Question

The specific research questions were as follows;

1. What is the effect of employee training and education on employee performance in AGROTECH Buea?
2. What is the effects of employee health condition on employee’s performance in AGROTECH Buea?