Impact of Human Resources Development on Organizational Performance

(A Case Study of Selected Banks in Ilorin)

FACULTY OF HUMANITIES, MANAGEMENT AND SOCIAL SCIENCE

DEPARTMENT OF BUSINESS AND ENTREPRENEURSHIP,

NAME: XXXXXXXXXXXXXX

MATRIC NUMBER: XXXXXXX

March, 2021
 CHAPTER ONE
INTRODUCTION
1.1 Background of the Study

The beginning of 21st century has been a dramatic surge among the businesses to attract
and retain talent. This is much due to globalization, technology exploitation and above all
increased competition. Business organizations this days, are characterized by turbulences of
organizational change, stiff competition, market globalization and rapid financial innovation
resulting from technological advancement. The changes that occur from all the facets of business
environment is now awakening business managers to keep in track and also to update their
resources. To survive in the competition and to meet the requirements, the management needs to
change their policies, rules and regulations. Organizational leaders have over the past years,
concentrated on the development of strategies and policies to outweigh their competitors,
measures to increase their financial returns and viability of their businesses, without taken a
critical look at the role human capital play to the success of the organization in totality.

Human Capital can be said to be specifically within an economic setting as a

manufacturing factor, and as an economic term used to describe the skills and knowledge that
individuals attracts upon to generate outputs of value, such as innovation and productivity in job
performance (Asel & Kam, 2009). It is no exaggeration in the assertion that the most significant
resource of any organization is often said to be its people. People, knowledge and skills are
known as human capital (HC), Human Capital is the central of intellectual capital that energies
business performance. Human Capital development, as pointed out by Okereke (2011), describes
the process of “job enrichment that has an intrinsic mechanism to motivate an employee to
accept and play challenging organizational tasks”. Others have generally referred to it as
involving activities that aids an employee in performing his/her tasks with ease and expediently.
On the other hand, performance tends to reflect “how well a group performs its required tasks to
satisfy its customers inside and outside the organization, which suggests effectiveness and
efficiency of the employees” (Sireal, 2009).

In response to the changes, most firms have embraced the notion of human capital 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 that would enhance employee satisfaction and improve
performance. Although there is abroad assumption that human capital has positive effects on
Firms performance, the notion of performance for human capital remains largely untested.
These, altogether make up the human capital of the organization, the inherent and acquired
qualities and characteristics in the people involved in the production of wants and services in line
with organization’s profit making objective for survival, growth and continuity. The quality
of human capital development programme determines the extent to which employees’
contribution will make for organizational cost effectiveness, profitability, growth and survival.
According to Nwachukwu 2008), an organization that puts great emphasis on employee training
and development is directly planning for its survival.

Furthermore, firms seek to optimize their workforce competences, abilities, skills and
knowledge through calculative and comprehensive human capital development programmes for
long term survival and sustainability. This research work captures the concepts of human capital
development and organizational performance. It explores the theories and relationship between
human capital development and organizational performance. Thus, this, however, will enable the
organizations to achieve and sustain greater operational effectiveness and efficiency that will
afford them greater leverage for success. As a result, banks are increasingly demanding superior
skills, increased productivity and work-related knowledge from their workers. These demands
however emphasize the need for human capital development in selected banks in Ilorin, Kwara
State.

1.2 Statement of Research Problem

The productivity of workers is falling resulting to low performance of the organization.

This is because most firms fail to send their employees on training due to lack of funds that is
involved in embarking on employees training. Also most firms believe that workers are dubious
in nature, after returning from training desert their firms to join other firms. For instance most
Nigerian organization do not give their employee effective and efficient training, considering the
cost implication of sending employees on quality training which result into low productivity.

Nevertheless, the issues of human capital development are not taken seriously by any
organizations, this is because of the failure to acknowledge the fact that business setting has
become very active and as such only those organizations with the right informational need in the
 business times can succeed with the right technological manpower to succeed in modern times.
Failure to take training and development especially in modern organization will lead to stifling
growth, lack of productivity, poor quality of service, inadequate operational effectiveness and
inability to compete favorably in the industry.

1.3 Research Questions

This research is borne out of the effort to evaluate Impact of human capital development
Organizational Performance, therefore the research questions is based on the following question.
i. Does Human capital Training has any significant effect on the Service quality of the
organization?
ii. To what extent does Human capital Training has on the Operational effectiveness of the
organization?
iii. To what extent does Human Capital Coaching affects the Service Quality of the
Organization?
iv. Is there any Influence of Human Capital Coaching on the Operational effectiveness of the
organization?

1.4 Research Objectives

The aim of this research is to investigate the effect of this research is borne out of the effort to
evaluate human capital development Organizational Performance,, while other objectives are to;
i. Explore the Influence of Human capital Training on the Service quality of the
organization.
ii. Determines the extent in which Human capital Training affect the Operational
effectiveness of the organization.
iii. Examine the extent in which Human Capital Coaching affect the Service quality of the
Organization.
iv. Identify how Human Capital Coaching affect the Operational effectiveness of the
organization.

1.5 Research Hypotheses

An hypothesis is a tentative statement about the relationship that exists between a tow or among
many variables. It is a conjectural statement about a relationship and need to be tested
subsequently accepted or rejected. In view of the research question that this study seeks to
answer, the following hypothesis will be tested.
H1: There is no significant effect of Human capital Training on the Service quality of the
organization
H2: There is no significant effect of Human capital Training on the Operational effectiveness
of the organization.
H3: There is no significant effect of Human Capital Coaching on the Service quality of the
organization
H4: There is no significant effect of Human Capital Coaching on the operational effectiveness
of the organization

1.6 Significance of the study

The present study has great significance. First of all, the study findings will provide an
idea about the human capital development and organizational performance in order to provide
key information to further research work in such areas. In the same way, the study will provide
knowledge and guidelines to reveal if organizational productivity affects the overall goal of the
organization.

1.7 Limitations of the study

This study is limited to the issue of Human capital development on organizational
productivity. The study did not consider all the aspects Human capital development on
organizational productivity but instead was resisted to those elements of human capital
development that affects organizational productivity in one way or the other.

1.8 Scope of the Study

This research work, the effect of rewards on worker’s productivity, tends to know if
human capital development has been effective and efficient towards the productivity with a
major focus to some selected banks in Ilorin, this research work will be covering from the last
five years of this banks i.e. 2017-2020
1.9 Outline of Chapters
This study shall comprise of five chapters where Chapter 1 consists of the background of
study, statement of research problems, objectives of research, research questions, research
hypothesis, significance of study, sources of data, limitations of study, scope of study,
operationalization as well as the definition of terms that is needed to carry out the research.
Chapter two shall focus on the conceptual review, theoretical review, empirical review
and the gap analysis of the researcher.
Chapter three will talk about the methodology I intend to adopt in carrying out the
research which will include the research design, population of study, sampling techniques,
research instrument, validity of research instrument, and ethical issues that may arise in the
research.
Chapter four shall discuss the presentation of data, data analyses, empirical results and
interpretation of results, test of questionnaire, test of hypothesis, and discussion of result and
finally, chapter five shall discuss the summary, findings, conclusion and recommendations for
institutions, industry regulators, government and for future studies, references/bibliography and
appendices.

1.10 Operationalization
Topic: Impact of human capital development Organizational Performance (A Case Study of
Selected Banks in Ilorin. There for we have two constructs (X & Y)
Reward (X) Worker’s Productivity (Y)
X=f (Y)
Where X= (x1,x2,x3,x4......xn) Y=(y1,y2,y3,y4.......yn)
X= Independent Construct Y= Dependent Construct
Human Capital Development Organizational Performance
x1 = Human Capital Training y1 = Service Quality
x2 = Human Capital Coaching y2 = Operational Efficiency
x3 = Human Capital Mentoring y3 = Operational Effectiveness
x4 = human Capital Learning y4 = Business Growth
Selected Variables

X= Independent Construct Y= Dependent Construct

Human Capital Development Organizational Performance
x1 = Human Capital Training y1 = Service Quality
x2 = Human Capital Coaching y2 = Operational Effectiveness

1.11 Definition of Terms

Human Capital Development:
Human capital development is the process of improving an organization's employee
performance, capabilities and resources. 

Human Capital Training

Training is the use of systematic and planned instruction activities to promote learning.

Service Quality
Service quality generally refers to a customer's comparison of service expectations as it relates to
a company's performance. A business with a high level of service quality is likely capable of
meeting customer needs while also remaining economically competitive in their respective
industry.

Human Capital Coaching

This is an “the art of facilitating the enhanced performance, learning and development of others.’
It takes the form of a personal (usually one-to-one) on-the-job approach to helping people
develop their skills and levels of competence

Operational Efficiency
Operational efficiency is a measure of how much costs are incurred during a given economic or
financial activity, where lower costs equals greater efficiency

Operational Effectiveness
Operational effectiveness is a core objective of enterprise and IT governance where
organizations seek to maximize the efficient use of resources in their business operations and to
improve quality, productivity, or competitive positioning in markets in which they participate.
Business Growth
Business Growth is a stage where the business reaches the point for expansion and seeks
additional options to generate more profit. Business growth is a function of
the business lifecycle, industry growth trends, and the owners desire for equity value creation.
 CHPAPTER TWO

LITERATURE REVIEW

2.0 Preamble
This chapter examines previous literature related to the impact of human capital
development organizational productivity in manufacturing industry. It reviews the past studies
that help the researcher to understand and identify the problem being studied more appropriately.
This chapter also explains empirical review i.e past research on non-financial rewards, theories
and gaps in literature.
2.1 Conceptual Review
2.1.1 Human Capital Development
Human capital development refers to processes that relate to training, education,
coaching, mentoring, modelling and other professional and social enhancement programmes
meant to create and/or increase the employees’ levels of professional skills, abilities, knowledge,
values, socialization which lead to employees’ capabilities and competences for organizational
survival and sustainability. The knowledge, skills, competences, attributes, values, abilities and
other positive factors embodied in employees which create professional personal, social and
economic wellbeing (OECD, 2001.18). These must be developed for renewal, retention and
readiness for use as the work demands. The organization also has to leverage the skills and
capabilities of its employees by encouraging individuals and organizational learning; and
creating a supportive environment where knowledge can be created, shared and applied. For an
organization to survive in this competitive business world, it must train, develop and educate its
workforce.

Schutlz, (1992) posits that education increases the productivity and efficiency of workers
by increasing the level of their cognitive skills. Meier (1995) stated that people invest in
education to increase their stock of human capital. Human Capital Development is therefore
seen as the stock of economically productive human capabilities that can be formed by
combining innate ability with that of investment in human beings; such as expenditure on
education, on-the-job training, health and nutrition, which increases future productive capacity at
the expense of current expenditure. The provision made for education is a productive investment
in human capital which is an investment considered to be equal or more equally worthwhile than
the investment in physical capital. Therefore, basic literacy enhances the productivity of low-
skilled workers.

2.1.2 Forms of Human Capital Development

It takes human capital to organize and rationalize the contributions of other factors of production
before results oriented productive goal can be achieved in any industrial setting, therefore human
capital development is about supporting and investing in employees in terms of learning,
coaching, training, job rotation, job enlargement and any other development planning policies.
2.1.2.1 Learning
Learning is a change in behavior or performance that occurs as a result of experience
which takes the form of observing others, reading materials, listening to sources of information
or experiencing the consequences of one’s own behavior (Daft, 2004 pp532) op. cit. Mullins
(2010), learning is a permanent change in behavior or potential behavior that results from
experience. Learning is therefore, by imitating others and role models. Learning can also be
termed as self-managed process through which individuals within the organization acquire new
knowledge and skills with the aim of increasing performance.
Continues learning which is one of the learning theories suggests that to thrive in today’s
business climate, individuals and organizations must be continuous learners. For individuals,
continuous learning involves creating opportunity to learn from class, reading and talking to
others. This approach of learning enhances employees’ skill, knowledge and capability. It is
therefore, important for managers to give attention to subordinates by allocating resources to
support their learning programs.
2.1.2.2 Coaching
Coaching can be looked at from sports and business perspective but the emphasis at this
juncture is on business perspective. From the business point of view, coaching is how individuals
are helped to perform better to achieve the goals and objectives of the organization (Mullins,
2010). Douglad and Morley (2000), coaching is the act of equipping people with the necessary
tools, skills, knowledge and opportunities needed to develop themselves in order to become more
competitive. Coaching is a process aimed at giving others insight into ways to develop
themselveswhich are consistent with the goals of the organization, (Kraus, 2007)
According to Parsloe (1999), coaching is a process that enables learning and development to
occur and that improves performance. For coaching to become successful, the coach requires a
knowledge and understanding of the process as well as the variety of styles, skills and techniques
that are appropriate to the context in which the coaching takes place. It further suggests that
coaching is facilitating and challenging activity that creates supporting relationship aimed at
developing understanding, direction and action. Coaching is about developing the full potential
of employees, helping to identify and grow the personality and performance strengths that will
make them better employees. For effective and efficient coaching the coach must be able to
extract the ideas, opinions and problems of the coachees and tries to assist the coachees on how
the problems are solved. Coaching is more formal education and participatory on the part of the
coach. The coach must have a deep knowledge in the area of coaching. Most organizations think
about their employees in terms of the results they deliver with little regard to how the results will
be delivered, (MBA Lecture Notes 2014).

2.1.2.3 Job Enlargement

Daft (2010) describes job enlargement as component of human capital development and
it is a process of giving employee more tasks, responsibilities or assignments within a giving
period. Employees instead of taking up only one job may be responsible for more than one
responsibility. Taking large responsibilities is a great challenge for employee which warrants
him/her develops new skills and acquiring new knowledge.

2.1.2.4 Job Rotation

Human capital development can take the form of job rotation. Daft (2010) op. cit.
contents that job rotation is moving employee from one job to another within the same
organization thereby introducing the employee into performing different tasks at different times.
Job rotation gives the individual employee the opportunity to develop new skills and takes on
more challenges making the organization gaining competitive edge.

2.1.3 Human Capital Development Impact on Organizational Performance

The impact of human capital on organizational performance is discussed from the individual and
organizational perspectives as these two forms the essential components of human capital
(Marimuthu et al., 2009). According to Garavan et al., (2001), there are four attributes of human
capital – flexibility and adaptability; enhancement of individual competencies; development of
organizational competencies; and individual employability- that create value and enhances
individual and organizational outcomes. Fatoki (2011) posits that organizations with higher
general and specific human capital qualities regardingthe relevance of knowledge, skill,and
abilities to the industry of an organization can be expected to show higher levels of performance
than those with lower levels of such general and specific human capital qualities. Michael and
Zaid (2014) investigated the influence of human capital development on organizational
performance in the Nigerian banking sector in the state of Osun. The study established thatthe
Nigerian financial sector employees are knowledgeable, skilled, competence.The research
resulted that there is a significant relationship between human capital development and
organizational performance. Awan & Sarfraz (2013) studied the impact of human capital on the
performance of firms with the intervening effect of employee’s job satisfaction. It considered a
sample of 3 firms. The study revealed that there exists a strong positive relationship between
human capital and firm performance. The paper found that human capital is the most valuable,
inimitable, rare and non-substitutional assetofany organization. It helps the firm to grow and
achieve its objectives more effectively and efficiently. It also shows that education, training, and
skills influence the company
performance in any way. Also, Seleim, Ashour,and Bontis (2007) studied the relationship
between human capital and organizational performance in the software industry in Egypt. The
study revealed that training and teamwork practices turned employees into superstar performers
and their increased productivity enhanced organizational performances. They concluded that
human capital indicators had a positive relationship with organizational performance. Marimuthu
et al. (2009) conducted a study on human capital development and its impact on firm
performance with evidence from developmental economics. The study concluded that the
infusion of human capital enhancement elements in organizations promotes innovativeness and
higher performance. There is no doubt that human capital development is a critical element
required for the growth of an organization such that it is traceable to the financial and financial
performance of an organization.
2.2 Theoretical review
2.2.1 Human Capital Theory
The intangible assets an individual possess that is knowledge and skills, are used to raise
individual values economically for themselves, employer plus the society at large. Investment in
Education pays off in terms of human capital higher productivity. The human capital theory
emanated from the theory of macroeconomic development (Schultz 1993) education is given
important preference. According to Becker we have different kinds of capitals which includes
medical care expenditures, computer training, and schooling. He teaches on time management,
being honest are also investments. Human capital considers labour as an item that can be bought
and sold. This theory concentrates much on exploiting labour. Education and training makes
employees acquire skills, expertise and knowledge needed to perform, which is more valuable so
a lot of consideration has to be given it in terms of investment in people. To distinguish firms
specific and general human capital, general is gained is through education while specific is done
through areas of expertise like, Accounts, engineers. Therefore training is considered a special
investment in employees (human capital).

2.2.2 Resource Based view Theory:

For a competitive advantage to be attained a company has to strategically place itself to counter
the external forces in the environment so as to position itself in the market. There the internal
resource which includes Human Capital has to be acknowledged as a crucial resource to be
sustained effectively (Wright et al 2001).Resource Based View (RBV) was started by the works
of Penrose (1959), the many researcher articulated to it like Barney (1995). The RBV articulates
the needs for an organization developing valuables resources and put them together so as to
succeed in a unique way, other resources in the organization can be imitated examples use of
Technology, availability of natural resources but Human Capital’s knowledge cannot be imitated
because each person has special uniqueness (tacit knowledge) hence rare and difficult to copy or
imitate so they are valuable resources within the organization though its an asset that can’t be
seen (Itami 1987). If all employees with different talents are put together and managed well
through Human Resource process (Training and development, reward management, employee
relations etc.) then the organization positions itself strategically in a rare manner. That is unique
compared to its competitors, most organizations creates barrier’s for imitation (guarding that rare
resource they have) and cannot be acquired in the market easily they strive to keep resource they
by retaining and continuously improving them through Training and Development.
2.2.3 Social Capital Theory:
Nahapiet & Ghoshal (1998), described social capital theory as what puts together the resources
are valuable how they relate in social affairs and networks, knowing each other mutually, this
brings efficiency on they act since they cooperate and behave in a similar manner, hence the
relationships they socially can have appositive influence on the development of human capital
intellectually, both at an individual level ‘networks with people with similar characters,
professions’ ( For example Doctors meeting at their joints or social clubs during their leisure
time to network and share ideas ,new acquaintances to current and changing trends). This
develops human capital (Garavan et al 2001). At an organizational level social capital is very
important since intellectuals exchange ideas that are useful in the running of the organization. So
networking is key since you learn from other new knowledge and information that is needful and
creates identity, i.e. you identify yourself with a particular social class this connections cannot be
imitated they are rare and they last based on trust, building a pool of knowledge and creating
value

2.2.4 Evolutionary Growth theory:

Nelson and Winter (1985) Viewed Evolutionary growth theory as a biological emerging in
economics, that’s something that is coming up in upcoming firms would want maximize profits
subject to the level of knowledge they have, so they have to improvise ways of doing business in
order to make them capture and retain the market, so when it fails it becomes difficult to
rejuvenate it given the competition surrounding them. So will look for something closer, to what
they had initially and if it succeed then it will survive and if not then it’s eliminated. The essence
of this theory is like an experimental exercise in the new product economic growth so human
capital needs to learn do more research hence becomes an important asset in the organization
2.3 Empirical Review

In view of Oforegbunam & Okorafor(2010) in their study which finds out that Human
capital is the most critical agent of small and medium enterprise (SME) performance. To this
extent, a survey approach was adopted in investing the effect of human capital development on
the performance of SMEs. Fifty (50) entrepreneurs operating around the Aba SME cluster,
located in the South-Eastern region of Nigeria were interviewed as it relates to their quantity of
output, quality of output, revenue generated, and profits as indices of performance, while formal
education from educational institutions, on-the-job training, and participation in seminars and
trade fairs by SME employees were used as indices of human capacity development. The Likert
5-point scale was used in the quantification of responses. The multiple regression tool was used
in analyzing the effect of human capacity development indices on the performance index. The
result of the analysis shows that increased human capital development by sampled SMEs leads to
significant improvements in their performances. However, on-the-job training was identified as
the most significant option for developing the human capital of SMEs for enhanced performance.

Agha, (2014) conducted a study of human capital development and organizational

performance of selected Chief Executives of firms in the South-east, Nigeria. The study was
designed to determine the effect of human capital development on organizational performance.
The study administered fifty (50) copies of structured questionnaire to the Chief Executives of
the selected firms out of which forty seven (47) questionnaires were successfully returned, hence
used for the analysis. The study was a survey type of which correlational design was employed
in an attempt to ascertain the extent to which human capital development relates to
organizational performance. It was found that the organizational performance is relatively
associated to her promotion of on-the-job training, formal education and employee participation
in seminars as strategies of human capital development for her employee and concludes that
firms in South East, Nigeria can attain significant improvement in their performance levels if
effort is made to develop human capital through the strategies of on-the-job training, formal
education, and participation in seminars and workshops. Thus, recommended that concerted
efforts need to be made by the relevant bodies in the education sector in Nigeria to enhance the
vocational and entrepreneurship content of academic programmes, offered by tertiary institutions
in the country.
In view of Goddy & James (2014), In this article Human capital is generally understood
to consist of the individual’s capabilities, knowledge, skills and experience of the organizations
employees and managers as they are relevant to the task at hand, as well as the capacity to add to
this reservoir of knowledge, skills and experience through individual learning. The concept and
perspective of human capital stem from the fact that there is no substitute for knowledge and
learning, creativity and innovation, competencies and capabilities and they need to be
relentlessly pursued and focused on the firm’s environmental context and competitive logic. The
issue of what contributes to competitive advantage has been within the strategy of literature, a
shift in emphasis away from external positioning in the industry and the relative balance of
competitive forces, towards an acknowledgement.
In another study by Vyacheslav, Elena & Elena(2016) which study was able to show the
purpose of the article is to disclose the content of evolution of the human capital as a scientific
concept and phenomenon of the economic life. The leading approach to the studying of the
problem of changes in ideas about the human capital is the evolutionary approach that allows us
to identify the cause-and-effect relations between definitions of this concept and actual
necessities of economic development. The author's hypothesis about the necessity of priority of
the human capital and its intellectual component in the study of economic content was proved in
the article. It is necessary for the subsequent quantitative analysis of interconnection between the
human capital development and structural changes in the economy. In this research the original
definition of the concept was formulated. The materials of the article can be useful for
development and implementation of the policy of the innovative economic growth in regard to
accumulation of the human capital.
In a study conducted in Kenya by Emily & Jacob(2015), which sought to establish the
effect of Human Capital Investment on Organizational Performance of Pharmaceutical
Companies in Kenya. The independent variables include: training, education, knowledge
management and skills development. The main underpinning theories in this study include:
Human Capital, Skill Acquisition and Sustainable Resource Theory. 200 observations were used
in the study. Study used questionnaires in data collection, descriptive and inferential statistics
used in the analysis. The found a positive significant relationship between human capital
investment and organizational performance. The study recommends provision of quality
education, relevant training linked to industry requirement, the study suggest adoption of
German Dual Vocational Education and Training system to facilitate and strengthen linkage
between education sector and the industry. Promotion of knowledge management through
teamwork, social networks and knowledge management systems; training on employability and
transferability skills to enhance Skills Development. The enterprises to go beyond traditional
apprenticeship, Soft skills assessment in schools, embrace technology and promote
intrapreneurship. The study also suggest introduction of Skill Development Fund to equip the
communities and businesses with relevant skills required in the dynamic global market place.
In another study by Maran, Lawrence & Maimunah (2015), in which they were able to
find out that Human capital is getting wider attention with increasing globalization and also the
saturation of the job market due to the recent downturn in the various economies of the world.
Developed and developing countries put emphases on a more human capital development
towards accelerating the economic growth by devoting necessary time and efforts. Thus human
capital development is one of the fundamental solutions to enter the international arena.
Specifically, firms must invest necessary resources in developing human capital which tend to
have a great impact on performance. This paper examines the extent to which human capitals
have direct impacts on firm performance from various critical perspectives. Firm performance is
viewed in terms of financial and non-financial performance. Finally, this paper develops a model
that explains the relationship between human capital and firm performance.

Chrales (2016), in his study which was directed to analyze the main objective of this
study is to determine effect of human capital development on the financial performance of banks
in Nigeria. The specific objectives were to find out if there exist a significant relationship
between human capital development and earnings per share, net profit margin, return on asset
and return on equity of banks in Nigeria. To achieve the aim of this study, the Ex-post facto
research design and secondary data were used. Data on EPS, PAT, and Personnel cost, Total
asset, Equity and were extracted from 2005-2015 annual financial statement of selected quoted
commercial banks. Data on human capital (HCROI was the proxy used for measuring human
capital) which was the independent variable, and financial performance indicators (EPS, NPM,
ROA, ROE) which were the dependent variables were subjected to simple regression technique
in order to analyze and establish the relationship between the variable and to test the hypotheses.
The test showed that there no significant relationship between human capital development and
EPS of banks in Nigeria, since p= sig= 0.350 > 0.05. However human capital was seen to have a
strong positive relationship with net profit margin, return on asset , and return on equity which
was 0.904, 0 .866 and 0.340 respectively as indicated by the R, which was the correlation
coefficient of the two variables , also R2 which were 0.818, 0.750 and 0.115 , further revealed
that human capital development accounts for 81.8%, 75% and 11.5% , contribution in Net Profit
Margin , Return on asset and Return on equity of banks in Nigeria respectively, also their test
showed that there was a significant relationship between human capital development and these
variables since p= sig= .000 0.05 . The study shows that the importance of human resource
development cannot be overemphasized in the banking industry, and that proper and adequate
investments in human capital development in the banking sector will indeed bring about positive
improvement in their organizational performance . Based on the findings, it was recommended
that efforts should be intensified by the banking institution and the government to increase
investment on Human capital, which in the long run will lead to an increase in the performance
of these institution and the country at large.

Udu & Ewans (2016), in their study, Human Capital Development and Employee Job
Performance was an attempt to explore the implications of human capital development on
employee job performance of Double Diamond Plastic Manufacturing Company, Aba, and Abia
State, Nigeria. The complexities of the ever changing business environment predisposes
organizations to place emphasis on human capital development, for the requisite skills needed to
achieve and sustain greater operational effectiveness and efficiency that will afford them greater
leverage for improved performance. The study employed a correlational design in an attempt to
determine the direction and magnitude of the relationship between the studied variables.
Structured questionnaire drawn on 5 point scale rating was administered to a sample of one
hundred and sixty five (165) respondents drawn from the population of the study. The data
collected from the respondents were analyzed with Pearson’s product moment correlation and p-
value. The results show a positive relationship between on-thejob training and quality of
employee job performance. This was shown by a positive correlation coefficient (r) of (0.97) and
the result on the second objective shows a positive relationship between off-the-job training and
worker efficiency. This also was shown by a positive correlation coefficient (r) of (0.84). The
implication is that increased in human capital development enhances employee job performance,
which in turn, leads to increased organizational performance. In the light of the findings, the
study recommends that organizations should allocate considerable efforts, time, and resources to
invest on human capital development for the acquisition of practical skills, and learning
experience deep-rooted on the work for operational excellence.
In a study by Mba , Celestina & Onyia (2018), which was to evaluate the effect of human
capital development in organizational performance in manufacturing industries in South-East
Nigeria. The specific objective includes to; ascertain the effect of knowledge on product quality
and ascertain the relationship between skills and promoting of innovation. The study was to
evaluate the effect of human capital development in organizational performance in
manufacturing industries in South-East Nigeria. The population consists of 6230 staff of selected
manufacturing firms from South-East, Nigeria. The study used the survey approach. The primary
sources used were the administration of questionnaire to staff and distributors. The sample size
of 358 was determined using Ferund and Williams formula. 306 copies of the questionnaire were
returned and accurately filled. The validity of the instrument was tested using content analysis
and the result was good. The reliability was tested using the Pearson correlation coefficient (r). It
gave a reliability co-efficient of 0.88 which was also good. The hypotheses were analyzed using
f-statistics (ANOVA) tool. The findings indicated that Knowledge has positive significant effect
on product quality F(95,n=358)= 2181,P<0.05; Skills have positive significant relationship on
promoting of innovations F(95,n=358)= 381.631,P<0.05; The study concluded that any
organization that does not learn continuously and is not able to continuously list, develop, share,
distribute, mobilize, cultivate, put to practice review and spread knowledge will not be able to
compete effectively in the global market. The study recommended that to it is important that
organizations should training their staff to enable them acquire Knowledge to enhance
productivity and the market share of the firms and Provision of new technological equipment and
training of workers on the machines should be advised and encouraged for more profitability of
the manufacturing companies.

In a study by Pereral & Weeraakkody (2018), The human capital and Social Capital are
most focus areas for the further research study. Previous literature was identified the importance
of these human capital and social capital, even though there is less sufficient evidence regarding
these areas. It is hard to find research which is done in Sri Lankan context that investigate on the
relationship between human capital and social capital on employee performance in small scale
industrial enterprises in Sri Lanka. Therefore the main objective of the study was to identify the
whether there are significant effect from human capital and social capital to employee
performance. The research framework contains of two Independent variable (Human Capital,
Social Capital) dependent variable (employee performance).Therefore the purpose of the study
was hypotheses testing. The study was cross sectional. It means collected only at a single point in
time due to time horizon. Measures of this study retained adequate validity and reliability.
Sample for this study was employees in small scale industrial enterprises in western province, Sri
Lanka. The structured questionnaire, which consists of 65 statement with five point Likert scale
used to gather data and sample consists of 316 employees in small scale enterprises in western
province. Therefore unit of analysis was individual level. The data analysis contained within
univariate and multivariate analysis. The research discovered that there were positive strong
impact of human capital on employee performance. And also there were positive moderate
impact of social capital on employee performance in small scale industrial enterprises in Sri
Lanka.

In a study by Rafiya & Chandran (2019), which primary aimed is to explore the impact of
human capital management practices on job performance of employees working in the selected
private sector banks in India. This empirical research was carried through survey method and
structured questionnaire was used to gather the perception of private bank employees. The
statistical tools such as, percentage analysis, factor analysis, t-test and analysis of variance has
been applied to draw the meaningful findings to the research objectives. The empirical evidence
proves that five dominant underlying dimensions were found and labeled as Recruitment and
Selection, Performance Appraisal, Training and Development, Carrier advancement, and
Commitment in their order of dominance. This research concludes that proper recruitment and
selection of bank employees and rationalized performance evaluation are able to give maximum
benefit to their customer in the form of best service quality and satisfaction.

In a study by Mohanad (2019), which main purpose of this study is to investigate the
relationships between the practices of human resource development and organizational
effectiveness in the Iraqi public universities context. This study adopted the survey method to
collect primary data. The survey was created by the google-forms tool, which is commonly used
by researchers for collecting data. The web-based questionnaires were distributed through E-mail
designed to collect the relevant data from the public universities of Iraq including a number of
deans, heads of departments, faculty members and principals of the execution units which seems
to provide a corresponding sample for conducting data collecting and analyzing. An online
questionnaire was distributed to around 342 employees, out of which 215 complete
questionnaires were obtained. For analyzing the data, confirmatory factor analysis (CFA),
structural equation modeling (SEM) were used. This study finds that HRD practices such as
talent development, training and development, organizational development and career
development have a positive and significant impact on organizational effectiveness. This study
has confirmed the significance of HRD practices and how they are positively related to
organizational effectiveness. The results of this study have the potential to help the decision
makers of universities to develop effective HRD practices which will enable them to improve
employees’ competencies in enhancing organizational effectiveness. Also, this study
recommends universities’ managers to use effective HRD practices which are aimed at building
excellent employees’ competencies and increase the integration between human resource
development and organizational effectiveness.
In another study by Daniel, Williams and Issac (2019), which finds out that the business
environment within which organizations compete is becoming more hyper-competitive given fast
technological advancement and globalization. Organizations need to create and sustain
competitive advantages to survive. Organizations that thrive are those that can create capabilities
and competencies that are hard to come by, difficult to imitate, non-substitutable and able to
create substantial value for their clientele. The attainment of such a feat requires the systematic
development of its human capital as it represents the most dynamic resource among all the
resources owned by the organization. Developed human capital creates value and generates
revenue, able to spot opportunities and take advantage of them, able to develop and implement
strategies that make the organization a market leader, and ultimately optimizes organizational
performance. Human capital consists of knowledge, skill, and experience. Human development
is achieved through coaching, training, and development, empowerment, delegation, and
participation
In view of Ali, Nor & Muhammed (2020), which paper aims to analyze the relationship
between the human capital management (HCM) practices which include training and
development, recruitment and selection, Performance appraisal and employee’s job performance
in the telecom sector of Pakistan. To find the influence of HCM practices on employees job
performance within telecom sector of Pakistan. This is a survey based research study. The
sample of the study is employees’ who are working in public and private sector
telecommunication companies in Pakistan. Data are collected through questionnaires. Sample
size was (n=272); therefore, descriptive statistics, correlation and regression analysis have been
used. The overall results support that HCM practices have prominent and indispensable role in
the performance level of employees; knowledge and skill through training and development,
compatibility & competence through recruitment and selection, confidence and morale through
performance appraisal. HCM practices are highly correlated with each other and also correlated
with employee’s job performance.

2.4 Gap in Literature

This research tilted impact of human capital development on Organizational performance has not
gotten enough studies. However, most studies discuss the human capital development on employee’s
performance in an organization. As against the above, little or no effort has been made to investigate how
the contribution of Human capital development can go a long way in affecting organization as a whole.
Several studies have been carried out on employee performance especially on human capital
development, but not much on organizational productivity. The need to sever this ground so as to extend
the frontier of knowledge in order to help improve Human capital development. This research work will
go a long way in addressing the issues of human capital development in an organization.
Reference
Ali, Z., Nor, H., & Muhammad, A. (2020). Impact of Human Capital Management Practices on
Employees’ Job Performance. International PostGraduate Conference on Applied
Science & Physics, 3(4), 23-33.
Charles, E.E.(2016) Effect of human capital development on the financial performance of banks
in Nigeria: a study of selected public quoted commercial Banks (2005-2015). Journal
of Advance Research in Business, Management and Accounting, 3(11), 1-32.

Daniel A., Williams, K., & Isaac, A. (2019). Human Capital Development and Organizational
Performance: A Conceptual Review. International journal of innovative research and
development, 8(1), 49-54.

Emily, A., & Jaco, O.(2015). Effect of human capital investment on organizational performance
of pharmaceutical companies in Kenya. Global Journal of Human Resource
Management. 3(6), 1-29.

Oforegbunam, T.E., & Okorafor, G. F. (2010). Effects of human capital development on the
performance of small and medium scaled enterprises in the southeastern region of
Nigeria Journal of Sustainable Development in Africa, 12(8), 49-58.

Mba, P., Celestina, C., & Onyia, E.(2018). Effect of Human Capital Development in
Organizational Performance in Manufacturing Industries in South-East Nigeria.
International journal of academic research in economics and management
science,7(3), 60-70.
Mohanad, A.K(2019). The Impact of Human Resource Development on Organizational
Effectiveness: An Empirical Study. Management dynamics in the knowledge economy,
7(1), 29-50.

Nordhaug, O. (1998). Competencies specificities in organizations. International Studies of

Management and Organisation, 28(1), 8-29.

Rafiya, S., & Chandran, M. (2109). Impact of Human Capital Management on Organizational
Performance- A Study with Reference to Private Sector Banks .International Journal
of Innovative Technology and Exploring Engineering, 8(2), 327-331.

Romer, P. M., (1994). The origin of Endogenous Growth. Journal of Economic Perspectives,
vol. 8, pp. 322

Rumelt, R. (1984). Towards a strategic theory of the firm. In R. Lamb (Ed.) Competitive
Strategic Management (556-570). Englewood Cliffs, CA: Prentice-Hall.

Seleim, A., Ashour, A., & Bontis, N. (2007). Human capital and organizational performance: A
study of Egyptian software companies. Management Decision. 45(4), 789-801. 78

Selvarajan, T. T., Ramamoorthy, N., Flood, P. C., Guthrie, J. P., MacCurtain, S., & Liu, W.
(2007). The role of human capital philosophy in promoting firm innovativeness and
performance: Test of a causal model. International Journal of Human Resource
Management, 18(8), 1456-1470.

Schultz, T.W. (1993). The economic importance of human capital in modernization.Education

Economics, 1(1), 13-19.

Tamkin, P., Giles, L., Campbell, M. and Hillage, J. (2004). Skills Pay: The contribution of skills
tobusiness success. Institute for Employment Studies.

Thomson, K. (2000). Emotional capital: maximizing the intangible assets at the heart of brand
and business and success. Oxford: Capstone.
Udu, G., & Ewans, C.(2016). Human Capital Development and Employee Job Performance: A
Study of Double Diamond Plastic Manufacturing Firm, Aba, Abia State, Nigeria.
International Journal of Research in Business Management, 4(6), 41-50.

Vyacheslav A., Elena, V., & Elena, S.(2016). Evolution of the Concept of “Human Capital” in
Economic Science. International Journal of Environmental & Science Education,
11(15), 7649-7658.
Wright P. M., Gardner L. M., Moynihan L.M., & Allen M.R. (2005). The relationship between
human resource practices and firm performance: Examining causal order. Personnel
Psychology, 58, 409-446.