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Human resource management practices in a transition economy
Human resource management practices
Challenges and prospects John O. Okpara and Pamela Wynn
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Department of Management, College of Business, Bloomsburg University of Pennsylvania, Pennsylvania, USA Abstract Purpose – The purpose of this study is to examine the extent to which organizations in Nigeria use various human resource management (HRM) practices, and the perceived challenges and prospects of these practices. Design/methodology/approach – A combination of quantitative and qualitative research methods was employed to gather information. Specifically, data were collected from 253 managers in selected firms. Descriptive data analysis is presented with respect to the use and execution of HRM practices such as recruitment, selection, performance appraisal and training and development. In addition, information was collected and analyzed with regard to the challenges and prospects of HRM. Findings – This study provides significant current information on HRM knowledge and practices in Nigeria. The findings reveal that HRM practices, such as training, recruitment, compensation, performance appraisal and reward systems, are still in place. However, issues of tribalism, AIDS, training and development and corruption are some of the challenges identified that need to be addressed. Research limitations/implications – The study was limited to 12 companies in ten cities. A broader geographic sampling would better reflect the national profile. Another limitation could stem from the procedure used in data collection method (drop off and pick up). However, extreme measures were taken to protect the identity of the respondents. Practical implications – The study identified challenges and prospects of HRM in Nigeria. Organizations should employ requisite HRM practices to achieve excellent organizational performance. Furthermore, the government may create policies to promote the above practices, since, in the long term, achieving organizational excellence will reflect positively on the economy. All these may be facilitated through proactive organizational and national human resource development initiatives. Originality/value – The significance of the present study stems from the fact that very few studies have explored the impact of human resource challenges and prospects in Nigeria. The results provide additional insights into HRM practices in Nigeria, a sub-Saharan African country. A region that has been neglected by management researchers and has therefore been less researched. Also, the insights gained from this study contribute to the future development of this line of research, particularly in a nonWestern country like Nigeria. Keywords Africa, Nigeria, Human resource management, Privatization, Developing countries Paper type
Introduction In response to the disappointing economic performance in Nigeria in the last two decades, the government of president Obasanjo launched a liberalization policy to turn the nation’s economy toward a market-oriented system. This policy includes a comprehensive privatization program of state-owned enterprises (SOEs). In his opening address to the National Council on Privatization, the president stated that there was a time when publicly owned companies were better than private organizations for stimulating and accelerating national economic development, and that those days are over (Bureau of Public Enterprises, 2001). He argued that SOEs have failed to live up to their expectations and that something must be done to improve the quality and efficiency of goods and services. Following his speech, he issued an Executive Order directing the implementation of a privatization program for SOEs.
Management Research News Vol. 31 No. 1, 2008 pp. 57-76 # Emerald Group Publishing Limited 0140-9174 DOI 10.1108/01409170810845958
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The president’s order marked the end of a mixed economic system (socialist/capitalist) in Nigeria, and ushered in a new era – the era of a market-oriented system. There are pros and cons to privatization. One of the disadvantages of privatization is reduction in the labor force. Reduction in labor force occurs because public-sector companies are traditionally associated with over-staffing (Parker and Hartley, 1991; Parker, 1992; Haskel and Szymanski, 1994). Other changes have also been reported, such as in labor relations and employment contracts, as well as compensation practices, with the introduction of performance pay (United Research, 1990; Parker and Hartley, 1991; Bishop and Thompson, 1994). Human resource management (HRM) practices play a primary role in the privatization process. According to Sathe (1985), when seeking to create culture change such as privatization, human resource experts have to intervene through recruitment and socialization of members that fit the new culture, and the removal of members that deviate from the culture. Coherent human resource policies must be implemented in order to achieve the consistency in the process of cultural change. Seth (1985) asserts that human resource policies and activities are also significant management tools to promote commitment of the labor force to the new organizational culture or, at least, to help define acceptable corporate behavior in newly privatized organizations. According to Cunha and Cooper (1998), in the short term, the privatization of a public company is a process of change in the company’s objectives, competitive strategy, structure and HRM practices. They argued that this process is a necessary adaptation to the new competitive environment, reflected in a shift of organizational goals towards shareholder value maximization and profitability. There are very few studies demonstrating the effectiveness of HRM practices outside Western countries. Our literature search reveals that to date, very little research has been done on HRM practices in Nigeria in general, and none on this particular topic. Thus, gaps exist with respect to understanding human resource practices and how they are executed in Africa. Nigeria has opened its market to international trade and investment, and has become a credible player in the international market, thereby contributing to the need for more information on the management practices in Nigeria. There is current emphasis on privatization in developing and developed economies (Euromoney, 1988, 1990; Kapur et al., 1991; Morna, 1988), the influx of foreign direct investment to help accomplish this objective (Morna, 1988; Novicki, 1987; Steel, 1988), the potential of HRM to enhance the success of these efforts, and the prevailing absence of empirical data on HRM practices in Nigeria. Thus, the purpose of this study is to explore HRM practices, challenges and prospects facing organizations in Nigeria as the nation makes the transition from a mixed economic system to a market-oriented one. There are a number of reasons for this study, which can contribute to management research and literature. First, we argue that with the globalization of the world economy there is increasing recognition that the efficacy and generalization of HRM interventions in a non-Western context need to be investigated. Second, the economy of Nigeria is growing rapidly, and Nigeria has opened its borders to international business, making it imperative for scholars and practitioners to understand HRM practices and challenges in Nigeria. Third, it is essential to determine whether HRM practices and policies developed in the West also hold in a non-Western country. Fourth, from a practical perspective, the study draws management attention to the fact that there is a need to develop HRM practices that can enhance the effectiveness and sustainability of businesses in Nigeria. Finally, from an academic perspective, this study also provides additional insight into the HRM practices and challenges that will
contribute to the future development of this line of research. Therefore, the present study is of significant value for practitioners and scholars alike. Background The Federal Republic of Nigeria is the most densely populated country in Africa. It is situated on the coast of West Africa; it has boundaries with the Republic of Benin in the west, Chad Republic and the Republic of Cameroon in the east, Niger Republic in the north and the Gulf of Guinea in the south (Okpara, 1996, 2006; Erondu et al., 2004). Nigeria is home to more than 130 million people with 250 ethnic and religious groups and more than 500 spoken languages (Erondu et al., 2004). The language of communication in Nigeria is English, which means that persons of different language backgrounds communicate in English. Hausa, Yoruba and Igbo are the most widely used languages (Okpara, 1996, 2006; Erondu et al., 2004). Nigeria runs a presidential system of government modeled closely after the US’ system. The president is the commander-in-chief of the armed forces and serves a fouryear term (CIA World Factbook, 2005). The country is endowed with rich natural resources, and is the fifth largest producer of crude oil in the world. Unfortunately, the economy has been plagued by political volatility, corruption and poor macroeconomic management. However, since its present transition to a civilian-elected government after May 1999, the development and potential for continuous development in many sectors of the economy has been outstanding. The government has instituted policies and practices geared towards embracing a market-oriented system. As a result, Nigeria is one of 54 developing countries considered to be emerging economies by the International Finance Corporation in 1999 (Hoskisson et al., 2000). In 2000, Nigeria received a debt-restructuring deal with the Paris Club and a $1 billion loan from the IMF. The World Bank Group (2000) indicated that an increase in foreign investment combined with high world oil prices should push economic growth to over 5 per cent. There are now over 200 international companies situated in Nigeria (Geo-Jaja and Mangum, 2000; Jason, 1997; Thompson, 1994). Conceptual foundation and literature review The conceptual framework for this paper is based on the pervious literature on HRM challenges and prospects in general and particularly in developing countries. A number of studies have identified several HRM practices and challenges managers face in executing their jobs, and have used these findings to provide theoretical and practical insights from a developing country context (Ghebregiorgis and Karsten, 2006; Ghebregiorgis, 2006; Stavrou-Costea, 2005; Jackson, 2004; Kamoche et al., 2004; Flood et al., 2003; Kamoche, 2002; Anakwe, 2002; Dowling and Schuler, 1990). Studies have identified several HRM practices, challenges and prospects faced by HR managers. For example, Ghebregiorgis and Karsten (2006) found that the concept and knowledge of HRM practices, such as training, recruitment, compensation, performance appraisal and reward systems, are practiced in Eritrea. Anakwe (2002) in a study of HRM practices in Nigeria found that traditional HRM functions, such as training and development, recruitment and selection, performance appraisal, among others, are very much practiced by HR professionals. In Mozambique firms have made use of informal workplace training, commonly known as ‘‘sitting with Nellie’’ or one-on-one. A significant minority of firms in their study also sponsored courses with outside training agencies. Few firms made no use of training at all and that very few firms made use of advertisements or employment agencies (Webster and Wood, 2005).
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In a rapidly changing environment, employers should be encouraged to experiment with innovative new recruitment schemes to ensure increased efficiency and innovation (Price, 2004, p. 382). It has also been encouraged that other methods of recruitment such as word of mouth and/or internal recruitment should also be utilized. However, the use of informal mechanisms for recruitment and selection results in a better fit between new recruits it is likely to exclude a large pool of competent candidates (Price, 2004, p. 385). There is a considerable mix in the ways in which HR practices are used by smalland medium-sized enterprises (SMEs and in their relative success (Cassell et al., 2002). Some HRM functions such as recruitment and selection were used more than any other practice. The key challenges for HRM include, among others, training and employee relations. These HRM practices are significantly related to organizational productivity (Stavrou-Costea, 2005). One may therefore surmise that an identification of HRM practices, challenges and prospects is essential to organizational productivity. HR functions and line management Line managers have traditionally been involved in HR issues as part of their job, although administrative employee matters were the responsibility of HR professionals. However, HRM roles are changing. With the transformation of job contents and the increase in change-driven HR initiatives, line managers today are required to conduct a series of people-centered tasks in their jobs that are not in their traditional roles but on the basis of strategic HR planning and in close collaboration with internal or external HR specialists (Papalexandris and Panayotopoulou, 2005; Storey, 1992; Guest, 1987). A key to organizational success lies in involving and inviting line management to actively participate in designing and implementing HR activities. Brewster and Larsen (2000) indicate various reasons why line involvement in HRM receives increasing attention. These reasons center around the need for a comprehensive approach to people management in cost-centered units where decisions have to be made fast and on the spot. As the operating cost of employees increases, in a cost or profit center based organization there is pressure to include human resource issues as part of line management responsibilities (Brewster and Mayne, 1994). Since line managers are responsible for creating value, they should integrate HR in their work, working in partnership and holding HR more accountable in delivering organizational dominance (Ulrich, 1998; Legge, 1995). An enhanced role for line managers hold them responsible for bottom-line results because of their frequent contact with the customers, which enables them to present themselves as the ‘‘voice of the customer’’. A partnership approach between HR, line and employees, called an ‘‘HR triad’’ stresses that it is everyone’s responsibility in managing HR issues (Jackson and Schuler, 2002, 2003). This background sets the stage for issues that will be evaluated in our study. Method This section includes a description of the research design, population, sample, data collection procedures and instruments validation. In order to generate data of appropriate range and depth, a mixed-method approach using both a questionnaire survey and in-depth face-to-face interviews was adopted. The mixed method has been used in a prior study of HRM practices (Cassell et al., 2002). Research design Data for this study were collected in the late summer of 2006, using a questionnaire survey and in-depth interview methods. These methods have been described by researchers as
methodological pluralism, and have been used in conducting research related to developing countries (Cassell et al., 2002; Ibeh and Young, 2001; Kamath et al., 1987; Bell and Young, 1998). Cross-cultural studies are deemed to have certain challenges due to cultural, linguistic, business practice and communication differences of research respondents. Mixed methods help to prevent some of these challenges and provide rich data.
Human resource management practices
Population and sample The population consisted of HRM professionals and line managers employed in the banks, construction, manufacturing, transportation and oil industries represented in the ‘‘A to Z’’ Trade directory of Nigeria. They were selected because they represent businesses that employ 140 or more people (Okpara, 1996; Aboyade, 1981). These industries combined accounted for over 95 per cent of the country’s revenue and over 90 per cent of the gross domestic product. The companies include subsidiaries of multinational and privately owned corporations. They were also chosen because they were convenient to reach by telephone, fax, private, or public transportation. Moreover, these organizations were in a better position to provide the researchers with the necessary information regarding HRM policies and practices.
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Survey method A random sample of 12 firms from the ‘‘A to Z’’ directory was successfully contacted via telephone, letter, or fax requesting their participation. The firms that agreed to take part in the study formed the research sample. Stratified sampling was used to select the people surveyed. Stratified sampling allows the researcher to obtain a greater degree of representativeness thus reducing the probable sampling error and to ensure that different groups in a population are adequately represented in the sample (Babbie, 1990, p. 94; Nachmias and Nachmias, 1992, p. 179). To avoid loss and delay due to the weaknesses in the communication and postal system in Nigeria, a drop-off and pick-up method was adopted (Ibeh et al., 2004; 2001; Okpara, 1996; Yavas, 1987). This method ensured distribution and collection procedures, which were systematic and controlled by the researcher. Eight trained research assistants were hired and charged with the responsibility of distribution and collection of the questionnaire. Interview method In addition to collecting data through the questionnaire survey, a qualitative data collection technique involving one-on-one interviews with selected respondents was conducted. This stage of research involved the selection of a quota sub-sample of 12 firms for in-depth interviews. These firms are part of the original firms selected for this study. The actual number of people interviewed was thirty. The 12 firms included five plastic firms; six banks, six firms in the food and beverage industry, eight from the oil industry and five transportation firms. Twenty personnel/HRM professionals and ten line managers participated in the in-depth interviews. Line managers were interviewed because they too are now involved in human resource activities (Papalexandris and Panayotopoulou, 2005; Storey, 1992; Guest, 1987). Instruments Survey measures The survey questionnaire was developed based on previous empirical international HRM research. Cronbach’s alpha was used to test the reliability of the measurement scales (Hair et al., 1989).
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Responsibilities of HR professionals Responsibility was measured using sixteen items adopted and modified based on previous research (Delery and Huselid, 1996; Arthur et al., 1995; Cassell et al., 2002; Webster and Wood, 2005; Anakwe, 2002). The sixteen items related to the activities performed by HR professionals on a typical day, and the type of services they provided to other managers or departments, respondents were asked to rate the items using a Likert scale ranging from ‘‘Strongly Agree’’ (1) to ‘‘Strongly disagree’’ (5). HRM policy and current practices This category was measured using ten items adopted and modified from Arthur et al. (1995). The items sought information on specific HRM practices, namely recruitment and selection, performance appraisal and training and development. Information was also requested on the types of employee support programs provided or managed by the organization (e.g. health care, child care, quality of work issues), and how salary increases and promotions were determined. This was carried out on a five-point Likert scale ranging from 1 ‘‘No importance’’ to 5 ‘‘All important’’. Recruitment and selection Recruitment and selection items were adapted from (Delery and Huselid, 1996; Arthur et al., 1995; Cassell et al., 2002; Anakwe, 2002; Webster and Wood, 2005). This was measured using a five-point Likert scale ranging from ‘‘Strongly Agree’’ (1) to ‘‘Strongly disagree’’ (5). For example, (1) HRM professionals play an active role in determining the qualifications and skills required for a position, (2) HRM professionals play an active role in initial screening of candidates for a position, (3) HRM professionals are actively involved in the hiring process, (4) Line managers are actively involved in the hiring process, (5) HRM professionals are required to advise line managers on employment-related issues, and so forth. Challenges of HRM professionals Seventeen challenges were generated from the literature (Delery and Huselid, 1996; Arthur et al., 1995; Cassell et al., 2002; Webster and Wood, 2005; Anakwe, 2002). These challenges include health, HIV/AIDS, managing talent, employee rewards, retention, training and development, technology, tribalism, nepotism and corruption. Respondents were asked to indicate the extent to which they face each of these challenges in carrying out their work. The answers ranged from ‘‘Strongly Agree’’ (1) to ‘‘Strongly disagree’’ (5). Respondents were then asked to indicate any other challenges they faced if none of those listed applied to their situation. They were also asked to state what they considered to be the main challenges they faced in accomplishing their work. Prospects Twelve major prospects were generated from prior studies (Webster and Wood, 2005; Anakwe, 2002; Ghebregiorgis and Karsten, 2006; Ghebregiorgis, 2006). Examples of these prospects include technology, employee assistance programs, health care issues, flextime, telecommuting, child care and stock options. Respondents were asked to indicate the extent to which they see each of these potential prospects in the future for their organization. The answers ranged from ‘‘Strongly Agree’’ (1) to ‘‘Strongly disagree’’ (5). Respondents were then asked to indicate any other prospects they see for the future that will enhance their work if none of those listed applied to their situation.
They were also asked to state what they considered to be the major prospects they faced in accomplishing their work. In-depth face-to-face interviews We developed semi-structured questions based on the literature (Delery and Huselid, 1996; Arthur et al., 1995; Cassell et al., 2002; Webster and Wood, 2005). One of the researchers conducted the interview. The following questions were asked:
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(1) What are the responsibilities of HR professionals in your firm? (2) What type of training do you offer to new employees? (3) Do you have employee development programs? (4) What type of feedback do you get from your training programs? (5) What methods do you use in recruitment and selection? (6) What are your current HR policies and practices? (7) What are the most important challenges you face in doing your job? (8) What do you consider to be the future prospects for HRM? Selected interviewees had to be one or more of the following: an HRM professional, a functional manager, a managing director or a president of a company. The interviews lasted on average about 45 min and were tape recorded where permitted[1] and later transcribed. The transcripts were then analyzed using template analysis (Crabtree and Miller, 1992; King, 1998). The purpose of the template is to generate a list of codes representing themes identified in the text. Survey data collection The survey was administered to 365 HR professionals and line managers in 12 organizations located in ten cities: Aba, Abuja, Awka, Enugu, Umuahia, Onitsha, Owerri, Lagos, Jos and Port Harcourt. The decision to limit the study to firms in ten cities since these cities are the major industrial areas spread across the main geopolitical regions, namely Lagos (South-West), Abuja, Jos, (North), and Aba, Awka, Enugu, Umuahia, Onitsha, Owerri and Port Harcourt, (South-East). The cities were also selected because it was easy to manage the logistics problems associated with conducting a nation-wide research in Nigeria. Of the 365 questionnaires distributed, 253 (69 per cent) usable questionnaires were returned. Table I shows the number of firms, number of questionnaires sent, and usable
Sector Banks Construction Manufacturing Oil Transportation Total
Number sent
Usable returns
75 78 71 72 69 365
58 51 49 50 45 253
Note: aThe usable response rate is 69 per cent
Percent of usable returns 23 20 19 20 18 100a
Table I. Selected businesses in the questionnaire survey (n ¼ 365)
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returns. The majority of the respondents are in the age group 25-45 years old (82 per cent), while 52 per cent were male and 48 per cent female. Most of the respondents are in lower management or supervisory positions (40 per cent), and middle-level managerial positions (60 per cent). With regard to experience, 216 (59 per cent) have at least five years of working experience. A large percentage of the respondents (66 per cent) come from organizations that employ at least 120 workers. Finally, there are 190 (52 per cent) privately owned companies and 175 (48 per cent) subsidiaries or multi-national companies. Respondents were employed in various industries, including 50 in the oil industry, 51 in construction, 45 in the transportation sector, 49 in manufacturing and 58 in banking/insurance. Validation of the research instruments The instruments were submitted to a panel of experts for validation. The panel was asked to review the content of the items in each of the instruments and eliminate items they found to be irrelevant to the study. After some modifications were made, the instruments were resubmitted to the panel, which then unanimously recommended the use of the modified instruments for this study. Cronbach’s alpha was used to test the reliability of the measurement scales (Hair et al., 1989). Pilot test of the instruments A pilot test was performed in order to establish the highest degree of reliability. The jury-validated instruments were pre-tested on a small sample (n ¼ 45) of randomly selected managers who are part of the study. The correlation of random split-halves for internal consistency ranged from 0.85 to 0.90. Also, the step-up formula ranged from 0.85 to 0.98 and the Cronbach’s alpha ranged from 0.86 to 0.96. Hair et al. (1989) suggested the use of Cronbach alpha to test the reliability of the measurement scales. Criteria for selection of panel members The following criteria were used to select the nine-member panel that evaluated the instruments, with each member of the panel satisfying at least three of the following conditions: (a) must hold a doctoral degree; (b) must have at least ten years of experience as personnel/HRM director; (c) must have at least ten years of experience in teaching and research with appropriate publications in personnel/HRM; (d) must serve on a panel that had previously evaluated an instrument; and (e) is familiar with the Nigerian management environment . Data analysis To explore HRM practices and prospects in Nigeria, the data collected was analyzed through various statistical procedures including the frequencies, means, mean differences and standard deviations. In addition, the contents of the responses of the interview questions were analyzed using template analysis (Crabtree and Miller, 1992; King, 1998). We also used direct interpretation. According to Stake (1995) direct interpretation is considered as one of the approaches for qualitative data analysis. This method involves an evaluation of respondents’ answers and making meaning from it. Findings: questionnaire survey Responsibilities of HR professionals The means and standard deviations scores and percentages of the respondents’ professional responsibilities are shown in Table II. These results suggest that the
Function Recruitment and selection Training and development Formal performance appraisal Monitor/evaluate HR practices Administer compensation and benefits Termination/layoff Staff welfare services Union/labor relations Health and safety issues Written job description Formal job analysis Job sharing Job rotation Employee selection tests Incentive/merit policy Sexual harassment
n
Mean
SD
Percent
253 253 253 253 253 253 253 253 253 253 253 253 253 253 253 253
3.79 3.76 3.74 3.69 3.65 3.85 3.75 3.60 3.72 3.77 3.58 3.72 3.69 3.76 3.68 3.73
0.120 0.184 0.178 0.319 0.276 0.318 0.236 0.335 0.321 0.168 0.222 0.123 0.210 0.317 0.251 0.231
81 78 70 41 60 45 30 20 20 80 75 70 45 78 68 10
Note: *Categories range from ‘‘Strongly Agree’’ (1) to ‘‘Strongly disagree’’ (5)
managers surveyed in this research, while their scores fall into the moderate area, are at the extreme end of this category toward the high mean scores of the HR professional responsibilities scale. Based on the data for this study, it can be suggested that overall, a modest level of HR functions are practiced by HR professionals surveyed in this study. It should be noted that recruitment and selection (81 per cent), written job description (80 per cent), training and development (78 per cent) and employee selection tests (78 per cent) were reported to be the functions most performed by HR professionals. HRM policy and current practices Table III shows the means and standard deviations of HRM current practices as answered by the respondents. The results depicted in Table III show a modest level of overall HRM current practices in the firms surveyed for this study. Recruitment and selection, written job description, employee selection tests and training and development with overall means of almost 90 per cent are considered to be the five most important HRM current practices. Recruitment and selection practices The data in Table IV show that the majority of the respondents indicated that all recruitment and selection processes are still practiced and are the primary responsibility of the HR professionals. As shown in Table IV, 80-90 per cent of the respondents strongly agree and agree with the items indicated in the recruitment and selection dimension of the instrument. Challenges of HRM professionals The results of the descriptive statistics presented in Table V show that the most important challenges facing HR/personnel professionals are benefit costs of health care and AIDS and ethics, nepotism, tribalism, bribery and corruption, followed by the implementation of work/family programs, technology selection and implementation, change management, staffing and availability of skilled local labor and training and development.
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Table II. Means and standard deviations of functions of HR professionals (n ¼ 253)
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Recruitment and selection Training and development Performance appraisal Compensation and benefits Staff welfare services Union/labor relations Health and safety policies Written job description Employee selection tests Incentive/merit policy Job analysis
Table III. Means and standard deviations of HRM current practices (n ¼ 253)
n
Mean
SD
Percent
253 253 253 253 253 253 253 253 253 253 253
2.88 2.75 2.44 2.55 2.15 2.11 2.62 2.78 2.76 2.58 2.10
0.93 0.90 0.75 0.67 0.71 0.74 0.80 0.82 0.78 0.68 0.77
90 84 65 70 58 55 57 88 86 66 59
Note: *Categories range from 1 for ‘‘No importance’’ to 5 for ‘‘All important’’
Current practices
Table IV. Means and standard deviations of HRM recruitment/selection practices (n ¼ 253)
Play active role in determining qualifications skills Play active role in initial screening of candidates HR managers are actively involved in the hiring process Managers are actively involved in the hiring process Advise functional managers on employment issues Involved in setting HRM strategies Involved the final decision of new employee selection Administer employment test for new candidates Have employment discrimination policy HRM directors involved in the final selection decision of new selection
n
Mean
SD
Percent
253 253 253 253 253 253 253 253 253 253
3.80 3.71 3.45 3.56 3.35 3.46 3.51 3.74 3.46 3.13
0.63 0.61 0.52 0.66 0.76 0.80 0.71 0.58 0.73 0.651
95 90 92 87 80 86 88 90 85 81
Note: *Categories range from ‘‘Strongly Agree’’ (1) to ‘‘Strongly disagree’’ (5)
The respondents were also asked to include other challenges that they face that were not included in the listed items. Among these were lack of infrastructure (transportation, road and communication facilities), motivation, poor work attitude and lack of recognition. In identifying the main challenges faced, recurring themes were tribalism, bribery and corruption, government regulations and resistance to change. Some of the main challenges identified seem to be job or company specific and range from inadequate resources with respect to funds and equipment to the need for autonomy in executing HR policies, and a lack of connection between HR goals and organizational goals. Prospects The findings in Table VI indicate that the mean scores on the HR prospects range from (mean ¼ 2.66 to mean ¼ 2.90). These mean scores tend to technically fall into the moderate area and are at the extreme end of this category toward the high mean scores of prospect dimension. Implement work/family programs, employee rewards, child care, health care issues and flextime (2.87) are indicated as the five most important areas of HR prospects.
HR challenges Benefits costs (Health and AIDS) Change management Staffing: availability of skilled local labor Ethics: nepotism, tribalism, and corruption HR technology selection and implementation Downsizing Employee rewards Labor relations Self-managed work teams Legal/regulatory compliance Training and development Retention Implementing work/family programs Leadership development Globalization
n
Min
Max
Mean
SD
Range
253 253 253 253 253 252 253 250 253 253 253 251 253 253 253
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
5 5 5 5 5 5 5 5 5 5 5 5 5 5 5
3.60 3.48 3.45 3.55 3.50 2.99 3.25 2.63 2.17 3.23 3.16 2.66 3.51 2.67 2.52
0.69 0.72 0.66 0.58 0.64 0.57 0.68 0.59 0.66 0.67 0.56 0.59 0.71 0.67 0.64
4 4 4 4 4 4 4 3 3 4 4 3 4 3 3
Note: *Categories range from ‘‘Strongly Agree’’ (1) to ‘‘Strongly disagree’’ (5)
Prospects Health care issues Flextime Child care Sexual harassment issues HR technology selection and implementation Employee rewards Self-managed work teams Increase training and development Increase retention Implementing work/family programs Leadership development Globalization
n
Min
Max
Mean
SD
Range
253 253 253 253 253 253 253 253 251 253 253 253
1 1 1 1 1 1 1 1 1 1 1 1
5 5 5 5 5 5 5 5 5 5 5 5
2.88 2.87 2.89 2.77 2.80 2.89 2.70 2.76 2.66 2.90 2.87 2.85
0.61 0.75 0.64 0.67 0.65 0.62 0.64 0.68 0.70 0.68 0.69 0.63
4 4 4 4 4 4 3 4 3 4 3 3
Note: *Categories range from ‘‘Strongly Agree’’ (1) to ‘‘Strongly disagree’’ (5)
Face-to-face interviews Responsibilities of HR professionals With regard to the responsibilities of HR professionals, the results were similar to the questionnaire survey. The most practiced HR responsibilities were recruitment and selection, written job description, training and development and employee selection tests. The interview data revealed a variety of HR responsibilities practiced in their firms, with half of the interviewees suggesting that they are responsible for recruitment and selection, training and development, written job description among others. However, some of the interviewees reported that they are assigned to do only one task (for example, training or written job description). Training and development When asked about wide-ranging employee training and development within a firm, eight out of the 12 interviewees suggested that they had employee training and
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Table V. Means and standard deviations of challenges facing HR managers (n ¼ 253)
Table VI. Means and standard deviations of HR prospects (n ¼ 253)
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development in their organization. There was a diverse set of responses ranging from just sending employees on courses to taking a company-wide view of training, development and learning. In every company, training was seen as an important investment. A wide range of different types of training were provided, ranging from formal apprentice schemes to sending staff on short courses. A typical comment is below: We have a good training program in this company. We conduct a needs analysis every year, to identify our training needs, whatever they are, we address them. We want to invest in our employees.
Comments about training were often linked to discussions about the general availability of skills within the firm and the importance of retaining skilled staff. A number of cautionary tales were provided as to the problems of investing in staff training, to then see the benefits transferred to another company. It is frustrating – you spend all your money training people and they think they are bright but relatively they are a liability. As soon as they think that other people recognize they are brilliant or offer them more money or better position, they will leave.
Recruitment and selection When considering recruitment and selection procedures, ten out of the 12 interviewees said they had formal systems for recruiting and selecting new members of staff. They stated that when selecting new employees they rely on word of mouth or a variety of other ways, for example, through the local and national job centers and chambers of commerce. What influenced the decision about how to recruit was the nature of the job. It was recognized that it was better to advertise for jobs at the managerial level, where word of mouth was unlikely to produce a suitable candidate. Here are some of the comments made by in interviewees: I have been involved in the recruitment efforts in this firm for fifteen years, the most frequent and effective methods we use in our recruitment efforts here are newspaper announcements and word of mouth. I have been the personnel director for this company for eighteen years; we frequently used newspaper advisements for recruiting new staff. However, in the last five years, methods such as internal advertising, employment agencies, announcements in professional/trade publications and visits to university and college campuses have been used, but were less frequently used.
HRM policy and current practices When asked about the current policies and practices of HRM in their organizations, ninety percent of the interviewees indicated that their current most important practices and policies include: recruitment/selection, written job description, performance appraisal, training, monitor/evaluate HR practices and administration of compensation and benefits. These results were similar to the findings of the questionnaire survey. Another 80 per cent of those interviewed stated that current practices and policies do not address the issue of AIDS/HIV, and that there should be a policy on how to deal with employees who have AIDS/HIV. One of the respondents stated that: We do not have a policy on how to deal with people with AIDS/HIV in this company. In most cases we do not know what to do when one of our staff is diagnosed with HIV infection. I think a policy should be put in place to protect the privacy of the staff and his family.
Yet another respondent put this way: People with HIV are discriminated against. We need to have a policy on how to protect these people from being abused and harassed by follow workers. People are ignorant on how the disease is transmitted; we need to have training sessions on how the disease is transmitted or not transmitted.
Performance appraisal The interview data revealed a variety of informal systems that were used for appraisal, with half of the interviewees suggesting that a form of appraisal existed in their firm. In most cases appraisal was of a fairly ad hoc nature. For example: They are all having appraisals all the time because I am sitting there and talking with them or they are sitting there and talking with their colleagues. The appraisal system has caused us a lot of problems – it differs from one department to another and not a lot of achievement results from it. I believe in the appraisal system. The appraisal system here is very informal. It is not linked to anything, such as promotion, salary increases, etc. Five of the interviewees (out of the 12 who practiced appraisal) expressed a caution about appraisals and the difficulties they had encountered in implementing them.
Prospects of HRM When asked about the future prospects of HRM in Nigeria, the majority of the interviewees indicated that the merit system of recruitment, promotion and salary increases connotes that the best candidates are selected from among the pool of qualified candidates rather than recruiting candidates on the basis of nepotism, favoritism, or other considerations. This is not the case in most of the companies selected for this study. For example: Our promotion should be based on merit, which may help us to verify overall performance of the worker. Promotion and merit increases here are based on favoritism, nepotism, and in most instances tribalism.
In terms of productivity improvement programs, respondents indicated that instituting an employee incentive system helped to boost morale, productivity and dramatically reduced employee turnover: Here we started pay-for-performance programs four years ago. Our sales have increased by 12 per cent; performance and productivity have also increased considerably, and our rationale for the programs is that most people believe that employees should be rewarded for good performance.
With respect to the trends in information technology, respondents stated that in recent years, training in the use of computers had intensified: We want to be a leader in our industry on the use of information technology. All the orientation programs designed for our HR professionals and line supervisors had information technology as part of the course module. The intent is to proliferate the use of computer information storage and retrieval, modeling and simulations, etc., in decision-making and accessing information on the internet and most payroll departments in our regional offices have been computerized, and records in our headquarters are undergoing computerization.
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In terms of bureaucracy, one respondent characterized it as: A problem, but with the advances in information technology and empowerment of workers, we have devised a means of doing things differently to eliminate bottlenecks and red tape.
Another manager summed it up this way:
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The empowerment of our employees is a number-one priority issue for us. We have restructured our company, eliminating a number of administrative layers to encourage employees to play a more active role in the decision-making process as it relates to their work.
Overall, respondents indicated that the challenges facing HRM in Nigeria are enormous. However, they were optimistic about future prospects as the country makes the transition to a market-oriented capitalist system. The key to the future prospects of HRM is working with line managers, top management, government agencies and all stakeholders, to root out corruption, nepotism and favoritism, invest in technology, engage in ongoing training and development and above all instigate realistic and meaningful productivity improvement programs that will boost employee morale, confidence and gain the trust of management. Discussion The purpose of this exploratory study was to investigate HRM practices, challenges and prospects facing organizations in Nigeria as the country makes the transition from a mixed economic system to a market-oriented system. The findings of this study reveal that the following HRM practices are in place in the organizations surveyed: recruitment and selection, training and development, performance appraisal, monitoring/evaluation of HR practices, compensation and benefits and termination/layoff. Additional human resource activities performed by the respondents or their departments include staff welfare services, union/labor relations and health and safety issues. These findings are consistent with previous studies on HRM practices in Africa (Ghebregiorgis and Karsten, 2006; Webster and Wood, 2005; Anakwe, 2002; Arthur et al., 1995; Fitsum and Luchien, 2006). Training and development activities were found to be one of the most dominant functions of HR professionals. However, the findings also reveal that most of the people trained do not stay with the company; once they get the requisite skills, they leave and join another organization. This high turnover has negative impact on the perceived organizational performance. In the case of a developing country like Nigeria, stability of the workforce is critical to sustaining competitive advantage. Some of the respondents indicated that employees leave for high paying jobs after training, resulting in excessive turnover. Excessive turnover may lead to low performance and productivity. Higher turnover may also be an indication, however, that training activities received by employees are a form of ‘‘best practices’’ according to the suggestions made by Pfeffer (1994) and the empirical findings of Delaney and Huselid (1996). As two interviewees put it, ‘‘Training and development activities have a positive impact on organizational performance, over and above all other HR functions’’. This finding also suggests that training activities can be considered an element in the first stage of attaining a competitive advantage as proposed by Barney (1986, 1991, 1995) in his resource base theory. Our findings are similar to the Western practices, especially those of the USA and Europe. The reason for this similarity may be the result of management practices in organizations becoming similar due to the influence of globalization and Western management theories and practices that dominate Nigerian management practices.
Another reason for the similarity could be because the respondents work in organizations where Western management practices, including HRM practices, are primarily used. With regard to the challenges HRM professionals face, issues of tribalism, corruption, government regulations and resistance to change are some of the challenges identified by the respondents as issues which must be addressed. These issues have inhibited management and economic development in Nigeria and stained the country’s image. Unethical business practices have also tarnished the country’s image, and in 2002, Nigeria was rated as one of the most corrupt countries in the world (Transparency International Report, 2002). As a result, the government of President Obasanjo is seriously addressing the issues by creating agencies to investigate and prosecute corrupt officials, including elected officials. Other challenges identified are organizationally specific, and range from inadequate resources with respect to funds and equipment to the need for autonomy in executing HR policies, and a lack of connection between HR goals and organizational goals. With respect to linking HRM practices to organizational goals, human resource planning is the thread that ties together all other human resource activities, integrating them with the rest of the organization (Kleiman, 2007, p. 56). It is encouraging to hear from the respondents that the majority of HRM personnel are using computers and other HRM technology. Respondents indicated that they are using information technology because they want to improve services, increase productivity and be more effective in managing human resource activities. This use of technology is encouraging because human resources information systems and other technologies have streamlined the processing of data, making employee information more readily available (Bohlander and Snell, 2004, p. 7). Although the challenges facing HRM in Nigeria are enormous, we are optimistic about the future prospects as the country makes the transition to a market-oriented capitalist system. The key to the future of HRM is working with line managers, top management, government agencies and all stakeholders, to root out corruption, nepotism and favoritism, to invest in technology, engage in ongoing training and development and above all formulate realistic and meaningful productivity improvement programs that will boost employee morale, confidence and gain the trust of management. Conclusions The purpose of this paper is to examine the extent to which organizations in Nigeria use various HRM practices, and the perceived challenges and prospects of these practices. This study provides significant current information on HRM knowledge and practices in Nigeria. Results reveal that HRM practices including training, recruitment, compensation, performance appraisal and reward systems, are in place. However, issues of tribalism, AIDS, bribery and corruption, and resistance to change are some of the challenges identified by the respondents that need to be addressed. Our sample included organizations from different industries and different sectors of the economy. As a result, we believe that we were able to identify HRM ‘‘universal best practices’’ as suggested by Pfeffer (1994). It is entirely possible that previous studies, which used samples that represent part of the economy’s different organizations, reported results that are different from ours due to the nature of their sample. Our sample transcends industrial and sectorial analysis and thus provides a truly ‘‘global’’ picture of the HRM practices, challenges and prospects in Nigeria. It makes a unique contribution, in our opinion, to the emerging empirical literature exploring the combined impact of HRM practices and future prospects in a sub-Saharan African country, a sub-continent that has been under-researched and neglected by management researchers.
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Implications Our findings have several implications. First, results reveal that recruitment and selection, and training and development are the most common HR functions. We suggest that managers should give attention to other HR activities such as compensation and benefits, staff welfare services, health and safety issues, incentive and merit policies. With the AIDS/HIV epidemic in Africa, HRM professionals and decision makers should be cognizant of this disease and make employees’ health and welfare issues a top priority. With regard to recruitment and selection, the majority of respondents indicated that they rely on word of mouth when selecting new employees. Other methods advertising jobs should be used because word of mouth may be unlikely to produce an appropriate candidate. HR professionals should properly identify those candidates who fit the needs of the job, the work-team and the organization; this method would enhance performance. Where appropriate, personnel recruiters should solicit the help of experts such as executive recruiters, employment agencies and colleges and universities to identify the right people for the right jobs. Respondents identified health care, AIDS/HIV, and corruption and nepotism as major challenges that face HRM in Nigeria. AIDS/HIV is having a destructive impact on Africa. Organizations should partner with pharmaceutical companies, NGOs, and governments to provide generic AIDS drugs to get the life-saving medicines to the people who need them. With corruption and other ethical issues, organizations should maintain a corrupt-free environment. If a company is known as a corrupt-free organization, it will enjoy a good reputation, instilling confidence and trust, causing other firms to wish to do business with that company. Behaving ethically is the right thing to do because it increases a company’s profits in the long run. The appraisal system should be linked to productivity improvement programs such as performance, promotion and salary increases. It should also be used to identify employees’ strengths and weaknesses. Where there is a weakness, a corrective action in the form of training should be given to remedy the weakness. Findings indicate that promotions and merit-based increases are based on favoritism, nepotism and tribalism. Promotions and merit increases based on favoritism and similar factors lead to incompetence and poor performance within the company. Managers should develop a system where promotions and merit-based increases are granted because of good performance and job-related factors and not on favoritism or other non-work-related factors. Our research uncovered that the challenges facing HRM in Nigeria are enormous. However, the key to the future prospects of HRM is working with line managers, top management, government agencies and all stakeholders to root out corruption, nepotism and favoritism, invest in technology, engage in ongoing training and development, and above all instigate realistic and meaningful productivity improvement programs that will boost employee morale, confidence and gain the trust of management. Overall, in order to achieve improved and sustained organizational performance, HRM activities should be implemented in an environment of employee involvement. For example, Baird and Meshoulam (1988) proposed that HRM practices ‘‘must fit with and support each other’’ (p. 122). Thus, organizations simultaneously use many HRM practices that may enhance ‘‘operational effectiveness’’ but in order to achieve ‘‘strategic positioning’’ as Porter (1996) suggested, they have to combine HRM practices in a way that produces a synergistic effect.
Limitations and directions future research This is an exploratory study to identify HRM practices and challenges in Nigeria. Like all research, the present study has several limitations. The sample is not a representation of all businesses in Nigeria because it was limited to 12 firms; therefore, the results cannot be generalized to businesses that were not part of this study. The research was limited to ten cities. A broader geographic sampling would better able to reflect the national profile. Future research may be strengthened by using a more diverse set of businesses including government agencies. Another approach could be to conduct a longitudinal nation-wide study to identify HRM practices, challenges and prospects. Future research should collect data on a longitudinal basis to help draw causal inferences and validate the findings of this study. Future research would also benefit from a large-scale quantitative study survey that would add statistical generalizations and strengthen the validity of the results. As with much research, other important research questions have been identified during the course of the review process. For example, is Nigeria a presidential democracy? Should globalization lead to convergence or divergence? Or whether the firms surveyed history of personnel management? All these are important questions and are areas of future research; however, they are beyond the scope of this study. Despite the above-mentioned limitations, this paper makes considerable contributions. Firstly, it is one of the few approaches to the study of HRM policies and practices in Nigeria. Secondly, this study provides a reasonable picture of HRM practices and challenges in Nigeria. Generally, the paper identifies the nature and use of HRM practices and challenges, which are descriptively and quantitatively rich in detail. It sheds light on the extant of HRM practices from a developing country’s perspective. Note 1. In one case, where recording was not permitted, detailed notes were made both during and directly following the interview. References Aboyade, O. (1981), Nigeria Economy, Africa South of Sahara, 11th ed., Europa, London. Anakwe, U.P. (2002), ‘‘Human resource management practices in Nigeria: challenges and insights’’, The International Journal of Human Resource Management, Vol. 3 No. 7, pp. 1042-59. Arthur, W., Woehr, A. and Strong, M.H. (1995), ‘‘Human resource management in West Africa: practices and perceptions’’, The International Journal of Human Resource Management, Vol. 6 No. 2, pp. 349-67. Babbie, E.R. (1990), Survey Research Methods, Wadsworth Publishing Company, Belmont, CA. Barney, J.B. (1986), ‘‘Organizational culture: can it be a source of sustained competitive advantage?’’, Academy of Management Review, Vol. 11, pp. 802-35. Barney, J.B. (1991), ‘‘Firm resources and sustained competitive advantage’’, Journal of Management, Vol. 17, pp. 99-120. Barney, J.B. (1995), ‘‘Looking inside for competitive advantage’’, Academy of Management Executive, Vol. 9, pp. 49-61. Bell, J. and Young, S. (1998), ‘‘Towards an integrative framework of the internationalization of the firm’’, in Hooley, G., Loveridge, R. and Wilson, D. (Eds), Internationalization: Process, Context and Markets, Macmillan, London, pp. 5-28. Bishop, M. and Thompson, D. (1994), ‘‘Privatisation in the UK: internal organization and productive efficiency’’, in Bishop, M., Kay, J. and Mayer, C. (Eds), Privatisation and Economic Performance, Oxford University Press, Oxford.
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