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HUMAN CAPITAL COST AND FINANCIAL PERFORMANCE OF MONEY DEPOSIT BANKS IN NIGERIA

| Format: Ms Word | 1-5 Chapters | Table of Content|

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Abstract

The study was carried out to examine human capital cost and financial performance of money deposit banks in Nigeria. The purpose of this research is to ascertain the effect of Human capital cost on Financial Performance of deposit money banks in Nigeria. The study adopted random sampling technique and simple percentage analysis to ascertain the relationship between the dependent and independent variables. In view of this, the researcher conducted a detailed survey on the subject such as questionnaire, oral interviews and close look at the views of other Authors was also an immense help in this project. The findings of the study reveal that human capital cost has significant effect on financial performance especially in money deposit banks; The average success and failure of any organisation depends mostly on the effectiveness’ and of bankers and accountant. It has been established that most bankers lack basic training, the best motivational technique therefore is for the management and government to direct their resources and time towards human capital development. The study concluded that money deposit banks should ensure to allocate adequate resources for the development of their staffs in order to enhance financial performance. Some relevant recommendations were suggested by the researcher based on the study findings.

                                                CHAPTER ONE

                                             INTRODUCTION 

1.1 Background to the Study

Financial performance cannot be achieved without conscious investment on human capital development of employees that will enable the banking sector achieve it primary objectives. In attempt to achieve organizational objectivity, it is imperative to evaluate the value and efficiency of human capital. The issue of human capital cost in money deposit banks is all about investing in improving the skill, innovation and technical capability of the workforce to enhance productivity. According to Odhong et al., (2013), human capital was defined by Bontis et al., (1999) cited in Baron and Armstrong (2007) as the combined intelligence, skills and expertise that gives the organization its distinctive character. Carnegie (1919:3) as cited by Ismaila (2013) notes that, “the only irreplaceable capital an organization possesses is the knowledge and ability of its people. The productivity of that capital depends on how effectively people share their competence with those who use it”. The banks in Nigeria are well known for a common phrase which says “our employees are our greatest asset”. If this assertion is critically evaluated, the said greatest asset has not been given the required attention that could bring out the best in an employee.

The highest recruiting industry in Nigeria is the banking sector. Recently, they recruit the First class graduates from the universities and also professionals in IT and finance. Training is one of the ways in which an organization can develop employees for improve performance. It helps to ensure that workers in an organization function effectively, through equipping them with required skills and knowledge and also upgrade their knowledge as condition changes. Many new employees come into the organization already equipped with skills and knowledge that will help them to start work. Others may require extensive training before they are ready to make such of a contribution to the organization. Majority, however, at one time or the other will require some type of training in order to maintain an effective level of job performance. While training may be accomplished on an informal basis, better results are usually attained through a well – organized formal training program.

Training is also planned process to modify attitude, knowledge, skill, behaviour, etc. through learning acquire effective performance in an activity or range of activities. The purpose of training is to develop the ability of an individual to satisfy current and future manpower needed to supplement education or to train for taking up higher responsibilities. The human resources available to an organisation constitutes its life wire and therefore the need for its training and retraining for efficient performance has become a major importance to management of all type of work and organization. The centrepiece of any organization is the workforce. Hence, the need for adequate training and development of its entire of its entire workforce should be paramount. Human capital cost is not restricted to workers alone but extends to even the employers/entrepreneurs because they too need to develop themselves for more efficiency and effectiveness in the management of physical and other human resources. This study therefore, examine human capital cost and financial performance of money deposit banks in Nigeria.

1.2 Statement of the Problem

There is no doubt that investing on organizational human capital will lead to improved financial performance. To send staff on off-job training now becomes difficult due to tight working schedule. Most bank employees find it difficult to get release for further studies. Financial targets become the order of the day. Even where banks commit enormous financial resources to staff training and development, staff health care and other personnel benefits become an issue. Besides, one thing is to acquire additional knowledge and skill, another thing is to have the required motivation to use the human capital acquired to bring about improved productivity. Therefore, there is need to investigate human capital cost and financial performance of money deposit banks in Nigeria.

1.3 Objectives of the Study

The primary aim of this study is to examine human capital cost and financial performance of money deposit banks in Nigeria. The specific objectives are:

  1. Determine the effect of Human Capital cost on the profitability of deposit money Banks in Nigeria.
  2. To ascertain the relationship between training and financial performance of deposit money Banks in Nigeria.
  3. To appraise the extent to which human capital cost influence the total revenue (TR) of deposit money Banks in Nigeria.
  4. To determine the relationship between internship (on – the – job raining) and performance of employees in deposit money Banks in Nigeria.

1.4 Research Questions

To arrive at the above stated objectives, the study aims at addressing the following questions:

  1. Does Human Capital cost affects the profitability of deposit money Banks in Nigeria?
  2. Is there any significant relationship between training and financial performance of deposit money Banks in Nigeria?
  3. Does human capital cost influence the total revenue (TR) of deposit money Banks in Nigeria?
  4. Does training modify behaviour, attitude, skill and knowledge of individual staff?
  5. Have training and development been able to promoted accountability in the Access bank plc?

1.5 Significance of the Study

The findings of this study will give bank managers an insight into the need to invest on human capital cost which will help to improve the financial performance of their organizations. The employees will also see the need for proper career development in terms of possessing more expertise and relevant skills to face challenges in their jobs. When completed, the findings from this study will apart from advancing academics on the subject of human capital cost and financial performance in money deposit banks, it will also be relevant to stakeholders, ultimately in arriving at an appropriate mix for decision to enhance their returns. This study will highlight the different aspects of human capital development and performance. Researchers in the field human resource generally will also find the study quite useful when completed. The findings from this study will highlight the problems associated with human capital cost and how such problems can be tackled for sustained financial performance. Finally the findings from this study will be of immense benefit to the general public in various ways.

  1. Scope and Limitation of the Study

The scope of this study cover the comprehensive appraisal of human capital cost, benefit and status of training and manpower- development- It also provides an insight to ethical standard in which training and development evolved around organizational performance.

Due to time and financial constants, the study will not be able to cover all the banks in the country. The study will therefore be limited to Access Bank PLC Port Harcourt metropolis in Rivers State as a case study.

1.7 Research Methodology

This chapter is exclusively devoted to the principles on which this study was based. The researcher drew immensely from the opinion and advice of some human resources manager sought on the appropriate methodology. Items covered in this chapter therefore,

Include research method and design (case study of Access Bank plc.) methods and sources of data collection, instrument validity and liability, sampling and sample size and analysis of data.

1.8 Definition of Terms

Human Capital

This skill general or specific acquired by an individual in the course of training and work experience.

Human Capital Cost

Human capital is the measure of the economic value that an employee provides, through their knowledge, skills, and abilities. On average, total human capital costs are almost 70 percent of a company’s operating expenses.

Human Capital Development

 This is the process of improving an organization’s employee performance, capabilities and resources. If a manager or human resources department were to ask, “What can be done to make employees more productive?” the answer would be considered to fall within the scope of development.

Human Resource Management

The management of people to achieve individual behaviour and performance that will enhance organization effectiveness.

Financial performance

Financial performance is a subjective measure of how well a firm can use assets from its primary mode of business and generate revenues.

Financial Statements

Financial statements are formal records of the financial activities and position of a business, person, or other entity. Relevant financial information is presented in a structured manner and in a form which is easy to understand.

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