THE RELEVANCE OF HUMAN CAPITAL MANAGEMENT TO PROFIT MAXIMIZATION IN THE HOSPITALITY INDUSTRY (A CASE STUDY OF NOSTALGIA HOTELS, LOKOJA)
Despite the success of Human Capital Management (HCM) in research, it is not reflected in many Human Resource divisions of companies. Employees are the human capitals who contribute to the success and development of a company to a great extent. Thus, these days, companies do not see them only as factors of production from the classical perspective, but have started to value them as stakeholders and partners with whom long-term goals are achieved together. This study, therefore, sought to explore and understand the relationship between a selected bundle of Human Resource practices in the Hospitality industry (Nostalgia Hotels) that make up Human Capital and its usefulness on the profit maximization of the Company. The type of research design for this study is exploratory and it relied on secondary information such as reviewing available literature and primary data. The researcher applied qualitative approach and used semi-structured interview which was personally conducted “face-toface”. Elicited responses from both the questionnaires and the interviews point to the fact that HR practices such as employment security, selective hiring, self-managed teams, high compensation contingent on performance, training and information sharing when correctly managed would generate the desired results in terms of profit maximization. After conducting research, acquiring empirical findings, and making analysis of data, the researcher suggests that there is a link between HCM and job performance. The study is of a great importance because being aware of the influence of certain HR practices, managers can better realize how these practices contribute to the performance of their employees, and find ways to improve them in order to increase workers’ job performance and productivity.
1.0 Background of the study
Institutional reports and public out-cries had shown that most public institutions tend to persistently fail to deliver as expected. Therefore it has become more important than ever for such organizations to come up with multi-faceted strategies such as Human Capital Management (HCM) that seeks to strengthen employee engagement and create a commitment that goes further than the contractual employer/employee relation to enhance performance.
Human capital management, for the purpose of this study, is a bundle of Human Resource practices that provide HR professionals with the resources they need to shift from a reactive, task-oriented role to being a proactive strategic partner. A holistic HCM approach requires organizations to view talent acquisition, development, retention and employee engagement in a radically new way as a single entity rather than distinct parts. HCM is not about automating processes through the use of software. That is just clever marketing by software companies and HR professionals should know
During this new era in HCM, HR professionals will become catalysts for strategic change only when they understand the relationship and interconnectedness of the different components of HCM. As highlighted by Springer (2002) and cited by Marrewijk and Timmers (2003), HCM translates into organizational performance. The HCM practice in an organization will therefore significantly contribute towards the performance of that organization.
For the past 20years, electricity supply in The Nigeria, have come under serious criticism as being ineffective and inefficient despite all the investments in the sector. The Hospitality industry, (Nostalgia Hotels) responsible for the
generation, transmission and distribution of electricity in the Nigeria, is a member of the West African Power Pool (WAPP) – a body created by Decision A/DEC.5/12/99 during the 22nd Summit of the Authority of ECOWAS Heads of State and Government in order to address the issue of power supply deficiency within West Africa. The
Hospitality industry (Nostalgia Hotels) has not been able to participate in
WAPP’s projects due to lack of relevant technical and institutional capability.
In October 2008, an organizational assessment was carried out by a German Consultant, to support the Human Resource and Administration Division of Nostalgia Hotels. In this report the consultant noted the existing lack of both qualified staff and sense of responsibility among Nostalgia Hotels staff met during the meetings and interviews held. The general observation during the assessment revealed an urgent need for a cultural adjustment with regard to staff development in order to enable them perform to expected standards. There was need also for adjustment in the institution and development of other people issues such as usage of working time, self confidence, responsibility and own initiative. This, the Consultant believed will greatly reduce and eventually eliminate negative work attitudes and practices that destroy the Company’s assets, such as vehicles, transformers, tools and any other hardware necessary in running the business.
Analyzing the issues highlighted on this report, the main finding was the need for a more strategic Human Resource Division that can align its activities with the corporate strategic objectives of the Company. It is in this light, and as a follow up study to the findings of the report, that this research investigated and ascertained the extent to which the Human Capital of this Company can transform the current dwindling trend of performance if properly managed. This meant identifying the relevant Human Resource Practices that translated into employee total commitment which in turn impacted positively on organizational performance.
Nostalgia Hotels had depended on ad-hoc measures in planning for Human Resource requirements. The 2008 assessment report narrowed the Human Resource division as mainly focused on traditional practices of personnel administration and not as strategic business partner necessary for the organizational performance improvement. The study will therefore help Nostalgia Hotels develop a more strategic and modern approach to the management of people and their attributes that translate to the sustainable improvement of the Company’s overall performance in terms of higher profits, lower operating costs, and lower turnover.
1.1 Problem statement
The relationship between Human Capital Management and performance in the Hospitality industry has never been denied, but empirical evidence for this link is inadequate as far as Nostalgia Hotels is concerned. The growing consistency of the Company’s inefficiency, marked by high operational costs, low productivity, generated power losses and inadequate and unaffordable power supply, is contrary to the Company’s mission statement which states “To ensure the safe, effective and efficient provision of affordable nationwide electricity, water and sewerage services to satisfy customer requirements, generate reasonable rates of return on investment and contribute to the socio-economic development of The Nigeria.”
Therefore, in order that the mission statement is realized, there is an urgent need to identify the factors responsible for this undesirable business performance and a solution to the problem.
1.2 Objectives of the study
The objectives of the study are grouped into two. These are general objective and specific objectives.
1.2.1 General objective
The general objective is to explore and understand the relationship between a selected bundle of Human Resource practices that make up Human Capital Management (HCM) and its impact on the profit maximization of the Company.
1.2.2 Specific objectives
- To identify the relevant bundle of HR practices that make up HCM in
- To examine the mediating and moderating roles of felt obligation and employee commitment in Nostalgia Hotels.
- To ascertain how positive work attitudes and employee behaviour translate to individual and organizational performance in Nostalgia Hotels.
- To explore the benefits of employee involvement in decision making in Nostalgia Hotels.
- To recommend to Nostalgia Hotels Management, the HR bundle that constitutes HCM for improved productivity in Nostalgia Hotels.
1.3 Research questions
- What bundle of HR practices make up Human Capital Management in Nostalgia Hotels?
- What mediating and moderating roles does felt obligation and employee commitment play in Nostalgia Hotels?
- How does positive work attitudes and employee behaviour translate into individual and organizational performance in Nostalgia Hotels?
- To what extent can employees be involved in decision making in Nostalgia Hotels?
- What HR bundle, that constitutes HCM, can be recommended to Nostalgia Hotels Management for improved productivity in Nostalgia Hotels?
1.4 Significance of the study
The purpose of this research is to examine the impact of human capital management on organizational performance in Nostalgia Hotels. The significance of this study which will help build Nostalgia Hotels’s capability and capacity to deliver on its strategic and operational mandate cannot be overemphasized. It is expected that the study will inform the Management of Nostalgia Hotels that to reduce operational losses and increase productivity, there is the need to effectively manage its human capital. It is also to help develop and maintain a quality work life, which will provide an opportunity for employees’ self-actualization and commitment. Finally, the recommendations from this study will aid Nostalgia Hotels Management to significantly improve their operations and become a more efficient public enterprise through a more strategic management of the human capital.
1.5 Scope of the study
The study is limited to Nostalgia Hotels’s performance in terms of operational losses which is a major current bottleneck and how human capital management can significantly improve this situation. Secondly, as a follow up study to the fore mentioned report on Nostalgia Hotels’s HR division, this study was limited to identifying the components of HCM that impacted employee behaviours and work attitudes, which in turn translated into organizational performance. Indeed human capital management embodies all HR practices but this study did not treat those components distinctly. In fact only those HR activities that constitute high performance such as turnover intention, selective hiring, extensive training, learning and development, employee involvement and information sharing, team working, high compensation contingent on performance and reduced status distinctions between managers and workers, was used to measure employee commitment and felt obligation towards the company. The study will cover all divisions, sections, units and staff of the Company.
1.6 Limitations of the study
Data collection was somehow impeded by some ethical issues that could not be stated for security reasons. Also due to some fear of reprimand, there was a lot of indifference and apprehension on the part of interviewees and respondents as most of the employees felt very uncomfortable to speak out on the subject matter of the study. The absence or inaccessibility of reliable records and reports on Nostalgia Hotels activities within the past five years also limited the research investigation.
1.7 Organization of the study
The study is organized into five chapters. Chapter one gives a general background and an introduction on the research problem, objectives, research questions, scope, limitations and the plan of the study.
Chapter Two dealt with the review of relevant literature pertaining to the research problems and concepts particularly as they apply to The Hospitality industry, (Nostalgia Hotels). The benefits and moderating effects of human capital management was also looked into.
Chapter Three explains the research methodology used for collecting, coding and analyzing the primary data. It also explains why and how the data is analyzed to achieve the objectives of the study.
Chapter Four is a discussion of the results of the questionnaires distributed and the interviews held and how these responses have answered the research questions and achieved the research objectives to effectively address the research problem.
Chapter Five focuses on the research findings, conclusions drawn and recommendations to the Management of Nostalgia Hotels to reduce operational losses and improve efficiency through an effective Human Capital Management.