IJCBS Vol 3, No 10 OCt 2012 Fadiora Richard Gbolahan

International Journal of Contemporary Business Studies
Vol: 3, No: 10. October, 2012 ISSN 2156-7506

Available online at http://www.akpinsight.webs.com
Impact of Human Resource Management

Practices on Organizational Performance in
Nigeria: An Empirical Study of Ecobank
Nigeria Plc in the Last Five Years
Fadiora Richard Gbolahan
MBA Human Resources Management Dissertation
Department Of Management Sciences
National Open University Of Nigeria Lagos Nigeria
ABSTRACT
This research study examines the impact of human resource management

practices on organizational performance in Nigeria focusing on Ecobank Nigeria
Plc in the last five years. A total of 50 samples were drawn from the bank
population at its corporate head office in Lagos. Out of the 50 self-reported
questionnaires administered in this research, 35 were returned upon which the
data analyses were based. The primary data collected through questionnaire
responses in this research were analyzed using Chi-square statistical techniques.
Secondary data were consulted by reviewing Ecobank’s Annual Reports and
Financial Statements. Selected HR Metrics such as Revenue Factor, Human
Capital Value Added (HCVA), and Human Capital Return on Investment
(HCROI) were used to analyze the secondary data respectively. The findings of
this research have shown that Ecobank Nigeria Plc has a well-articulated human
resource management policies and practices. Chi-square analysis indicated a
positive and statistically significant association of Ecobank’s human resource
management practices with organizational performance, (x2 = 29.11, p<.05). It
was also revealed that Ecobank’s human resource management practices
accounted for 3.1% return on investment in year 2010, 3.2% return in year 2009,
and 3.1% in year 2009 respectively. The study provides insight on the
management of human being as a valuable asset, rather than mere cost expense.
The study recommends that Ecobank should consolidate on its well-articulated
human resource management policies and to ensure some improvement in its
practices. Training and development programmes should be constantly revised
and updated to empower the workforce to be more flexible and respond
effectively to environmental demands. Similarly, high performance work culture
should be encouraged by Ecobank top management so as to communicate
achievement of high level of performance as a way of life. Ecobank Nigeria Plc
should leverage on its human resource management capabilities and wider
network of branches to optimize the advantage of recruiting and engaging diverse
workforce and making necessary investment in extending their skill base. These
would go a long way in fostering an understanding of a multicultural work
climate and enhancing the building of a truly agile Pan-African Bank that is
'Good to Great'.
Keywords: Ecobank Nigeria Plc, HR Metrics, Human Capital Management, Human Resources
Management, Organisational Performance, Performance Management, Recruitment and Selection,
Resource-Based View, Sustained Competitive Advantage, Training and Development.
International Journal of
Contemporary Business Studies 43 Copyright © 2012. Academy of Knowledge Process
Vol: 3, No: 10. October, 2012
Pp.43-63
©Academy of Knowledge Process
1. INTRODUCTION
Human Resources Management is the process of developing, applying and evaluating policies,
procedures, methods and programs relating to the employment, motivation, maintenance, and
management of people in the organization. Human resources management include activities like
strategic HRM, human capital management, corporate social responsibility, human resource
planning, recruitment, selection, training and development, reward management, performance
management, employee relations, health safety and employee well-being as well as provision of
employee services. It comprises a set of practices and policies designed to maximize
organizational integration, employee commitment, flexibility and quality of work (Armstrong,
2009). Effective human resource practices relate to company performance by contributing to
employee and customer satisfaction, innovation, productivity, and development of a favourable
reputation of the firm in the industry. A number of researchers have reported that HR practices
are positively linked with organizational and employee performance, but little evidence is
available about HR practices and employee performance from developing countries like Nigeria.
Researchers have argued that human resources may be seen as a source of sustained competitive
advantage for organizations (Barney, 1991; Becker & Gerhart, 1996). The underlying assumption
is that human resources are unique to the extent that competitors cannot imitate them. Research
has led to the identification of a number of human resource management practices that contribute
to company performance across different organizations (Huselid, 1995). In a literature review,
Delery & Doty (1996) identified seven such practices that have been consistently considered
HRM practices. They defined HRM practices as those that are theoretically or empirically related
to overall organizational performance. These practices include internal career opportunities,
formal training systems, results-oriented appraisals, employment security, participation, job
descriptions, and profit sharing. This approach has come to be known as the “best practices” or
universalistic approach. Within the best practices approach to strategic HRM, the first practice,
internal career opportunities, refers to the organizational preference for hiring primarily from
within. Second, training systems refers to whether organizations provide extensive training
opportunities for their employees or whether they depend on selection and socialization processes
to obtain required skills. Third, appraisals are conceptualized in terms of outcome-based
performance ratings and the extent to which subordinate views are taken into account in these
ratings. Fourth, employment security reflects the degree to which employees feel secure about
continued employment in their jobs. Although formalized employment security is generally on
the decline, organizations may have either an implicit or an explicit policy. Fifth, employee
participation, both in terms of taking part in decision making and having opportunities to
communicate suggestions for improvement, has emerged as a strategic HRM practice. Sixth, job
description refers to the extent jobs are tightly and clearly defined so that employees know what
is expected of them. Finally, profit sharing reflects the concern for overall organizational
performance on a sustainable basis (Delery & Doty, 1996).
Recent surveys have indicated that investments in the development of local employees are viewed
by foreign investors as important sources of competitive advantage (Shekshnia, 1998). Hence,
these employees may become an important resource which, due to the scarcity of such human
assets, is even harder to duplicate in a society like Nigeria than in other developed countries.
According to Fajana (2009), Nigeria is one of African countries troubled by abundant labour and
scarce talent. Attracting, developing, and retaining best talents has always become a challenge
amidst changing political and economic realities of the day. Consequently, Fajana & Ige (2009)
argued that the desire for top performance has driven the need for effective management of
available human resources. Over the years, researchers have suggested many HRM practices that
44 Copyright © 2012. Academy of Knowledge Process

have the potential to improve and sustain organizational performance. These practices include
emphasis on employee selection based on fit with the company’s culture, emphasis on behaviour,
attitude, and necessary technical skills required by the job, compensation contingent on
performance, and employee empowerment to foster team work, among others. Patterson et al.,
(1997) observed that HR practices explained significant variations in profitability and
productivity in organizations. Similarly, Purcell et al., (2003) pointed out that the most successful
companies had 'the big idea', they had a clear vision and a set of integrated values. They were
concerned with sustaining performance and flexibility which reveals a clear evidence of positive
attitudes towards HR policies and practices, level of satisfaction, motivation and commitment, as
well as overall operational performance.
2. LITERATURE REVIEW
In recent years, human resources have been recognized as an important source of sustained
competitive advantage. Much of the empirical and theoretical works on human resources have
been grounded in the Resource-Based View (RBV) of the firm. This theory maintains that in
order to develop a sustainable competitive advantage, organization must create resources in a
manner that is valuable, rare, inimitable, and non-substitutable. Barney (1991), has argued that
because the resources that have historically provided organizations with competitive advantage
are easily and rapidly imitated, the human resources of the organization may be an extremely
important source of sustained competitive advantage. The RBV of the firm is a theoretical
paradigm originating in the field of strategic management. The RBV assumes that resources and
attributes of the firm are more important to sustained competitive advantage than industry
structure and competitors’ actions. Resources have been defined as “the tangible and intangible
assets a firm uses to choose and implement its strategies” (Barney, 1995). This broad definition
includes human, organizational, financial, and physical resources.
According to Barney (1995), competitive advantage arises when firms within an industry are
heterogeneous with respect to the strategic resources they control, and when these resources are
not perfectly mobile across firms, and thus, heterogeneity can be long lasting. Technology,
natural resources and economies of scale can create value, RBV argued that these sources of
value are increasingly available to almost anyone anywhere and they are easy to copy, whilst
human resources as defined by Wright & McMahan (1992), as the pool of employees under the
firm’s control in a direct employment relationship, can provide the firm with a source of
competitive advantage with respect to its competitors. The first of these criteria is the value added
to the company’s production processes, the contribution made by each employee having its effect
on the results obtained by the organization as a whole. Also, since employees are not all the same,
their characteristics are in limited supply in the market. In addition, these human resources are
difficult to imitate. Since it is not easy to identify the exact source of the competitive advantage
and reproduce the basic conditions necessary for it to occur. Finally, this human resources is not
easily replaced, though short-term substitutes may be found, it is unlikely that they will result in a
sustainable competitive advantage like the one provided by humans. Barney (1991) argued that
organizations may not obtain the maximum utility from their employees because the employees
are not contributing to their fullest potential. It was argued that organizations, through the effects
of their HRM practices could maximize the knowledge, skills, and abilities of employees. From a
strategic perspective, Resource-Based View (RBW), suggests that resource advantage of valuable
knowledge, unique skill sets, and decision-making capability result in a firm's competitive
advantage within the market place (Offstein et al., 2005). The RBW was originally proposed as a
shift from an organizational product perspective to a resource perspective in order to better
explain strategic management of business. From a resource-based view, an appropriate HR

system creates and develops organizational capabilities that become sources of competitive
advantage (Lou & Ngo, 2004). Intensive competition, shorter product life cycles and volatile
product and market environments have contributed to the complexity faced by businesses. These
emerging changes in global economic environment will present some interesting challenges and
opportunities to organizations. Some organizations will go under, while some will continue to
exist, and some will not only continue but flourish. As a result, firms constantly search for newer
sources of competitive advantage, and one of the most important being human resource
management. HRM has the potential to improve and sustain organizational performance by
determining the organization's fate (Terpstra, 1994).
Recent academic research has attempted to demonstrate the impact of HRM on firm performance
and the relationship between the practices and firm outcomes is discussed best in the strategic
human resource management literature (Pfeffer, 1998; Rogers & White, 1998). Early studies
linked individual HR practices such as training, selection, performance appraisal and
compensation to firm financial performance (Milkovich, 1992; Huselid, 1995; Guest, 1997).
Traditional HRM factors alone are no longer sufficient in maintaining firm strategy. Even though
HR departments have historically been bureaucratic within organizations, its role has been
focused on pursuing more flexible and creative means to deliver services in constantly changing
environments (Lepak & Snell, 1999). HR professionals are increasingly expected to become
much more responsive, efficient, and ultimately make a strategic contribution to their company.
Designing and integrating human resources systems is one of the ways to ensure the creation of
value for customers and sustain organizational effectiveness. The notion of best practices in
human resource management has received a lot of attention in recent years. It has been suggested
that there is a universal set of human resource best practices that can maintain a firm's
performance (Lau & Ngo, 2004).
There is a growing evidence that corporate HRM practices are associated with high financial
performance, and can encourage employee behavior and attitudes towards strengthening the
competitive strategy of an organization (Hiltrop, 1996). Due to external and internal forces,
various contingencies can be found which put identifying "best practice" into question. However,
today's more effective HR managers look for information and ideas on best practices and they
ignore paradoxes that mask the truth about best practice. One of the three paradoxes identified by
Fitzenz (1997) is the expectation of managers to find simple solutions to today's complex
business problems. The second paradox is that the visible program is neither generalizable nor a
best practice. In most cases, follow-up studies show that the practice was not repeatable with the
same or better results. Final paradox is the irony of seeking enlightenment about the future from
studying the past. For instance, some HR practices are related to financial outcomes while some
others may relate more to staff turnover (Lau & Ngo, 2004).
Successful firms create a bundle of employee practices to reinforce the organizations` strategic
position (Enz & Signaw, 2000). Hiltrop (1999), in his research asked the HR managers and
personnel officers in 319 companies in Western Europe about HR policies and practices of their
firm and found out that employment security, opportunities for training and development,
recruitment and selection from within, career development and teamwork, participation and
proactive personnel planning are the most important practices. In fact the role of HR is to acquire,
develop, manage, motivate and gain the commitment of the employees. The focal point is how to
determine the best practice in various HR-related decisions (Baruch, 1998). In a comprehensive
study on best practices in the lodging industry, Enz & Signaw (2000) examined five categories of
HR best practices; (i) Leader development, (ii) Training and knowledge building, (iii) Employee
empowerment, (iv) Employee recognition and (v) Cost management. Similarly, Jayaram et al.,

(1999) stated that the broad range of human resource management practices affecting
performance can be classified into five major topics: (i) Top management commitment; (ii)
Communication of goals; (iii) Employee training; (iv) Cross functional teams; and (v) General
HRM practices. This classification implies that human resources management practices can be
analyzed using the five broad groupings of practices (Jayaram et al., 1999). On the other hand,
Pfeffer (1998) has proposed seven HRM practices that are expected to enhance organizational
performance. The practices he proposed are: (i) Employment security. (ii) Selective hiring of new
personnel. (iii) Self-managed teams and decentralization of decision making as the basic
principles of organizational design. (iv) Comparatively high compensation contingent on
organizational performance. (v) Extensive training to provide skilled and motivated workforce.
(vi) Reduced status differentials and barriers, including dress, language, office arrangements, and
wage differences across levels. (vii) Extensive sharing of financial and performance information
throughout the organization (Pfeffer, 1998).
In a knowledge-based competitive economy, the adoption of appropriate HRM practices is

important to ensure effective strategy implementation. HRM practices create procedures that
constitute the building of employees` knowledge and skills throughout the organization to
promote valued and unique organizational competencies which support competitive advantage
(Werbel & DeMarie, 2005). Strategic human resource management has become a more central
issue to management literature from empirical research view linking HRM practices with firm
performance and profitability (Delaney & Huselid, 1996; Becker & Gerhart, 1996). The focus of
this study is to examine the impact of human resources management practices on the performance
of Ecobank in the last five years. To a very large extent, the philosophy and approaches to HRM
practices are underpinned by the resource-based view, which states that it is the range of
resources in an organization, including its human resources, that produces its unique character
and creates competitive advantage. According to Barney (1995), competitive advantage arises
first when firms within an industry are heterogeneous with respect to the strategic resources they
control, and second, when these resources are not perfectly mobile across firms and thus
heterogeneity can be long lasting. Creating sustained competitive advantage therefore depends on
the unique resources and capabilities that a firm brings to competition in its environment. These
resources include all the experience, knowledge, judgment, risk-taking propensity and wisdom of
individuals associated with the firm.
For a firm resource to have the potential for creating sustained competitive advantage it should
have four attributes: it must be valuable, rare, imperfectly imitable and non-substitutable. To
discover these resources and capabilities, managers must look inside their firm for valuable, rare
and costly-to-imitate resources, and then exploit these resources through their organization.
Wright et al., (2001) noted that there are three important components of HRM that constitute a
resource for the firm and are influenced by HR practices: (i) The human capital pool - the stock of
employee knowledge, skills, motivation and behaviours. (ii) The flow of human capital through
the firm - the movement of people and of knowledge. (iii) The dynamic processes through which
organizations change and renew themselves. They suggested that HR practices are the primary
levers through which the firm can change the pool of human capital as well as attempt to change
the employee behaviours that lead to organizational success. Resource-based HRM can produce
what Boxall & Purcell (2003) referred to as human resource advantage. The aim is to develop
strategic capability. This means strategic fit between resources and opportunities, obtaining added
value from the effective deployment of resources, and developing people who can think and plan
strategically in the sense that they understand the key strategic issues and ensure that what they
do supports the achievement of the business’s strategic goals. In line with human capital theory,
the resource-based view emphasizes that investment in people increases their value to the firm.

The strategic goal emerging from the resource-based view according to Boxall (1996), will be to
‘create firms which are more intelligent and flexible than their competitors’ by hiring and
developing more talented staff and by extending their skills base. Resource-based strategy is
therefore concerned with the enhancement of the human or intellectual capital of the firm.
As Ulrich (1998) commented: ‘Knowledge has become a direct competitive advantage for
companies selling ideas and relationships. The challenge to organizations is to ensure that they
have the capability to find, assimilate, compensate and retain the talented individuals they need.’
The significance of the resource-based view of the firm is that it highlights the importance of
human capital management approach to HRM and provides the justification for investing in
people through resourcing, talent management, and learning and development programmes as a
means of enhancing organizational capability.
3. RESEARCH METHOD
Case study method was chosen for this research. Case study is an empirical inquiry that
investigates a contemporary phenomenon within its real-life context, especially when the
boundaries between phenomenon and context are not clearly evident. A case is what a researcher
focuses on in order to investigate a phenomenon. It can be an individual, a group such as a
family, or a class, or an office; an institution such as a school, a company, a large scale
community such as a town, an industry or a profession (Gillham, 2000; Melvok, 2005). This
approach is also popular in business research as it allows detailed investigation of a specific case
but on the cost of generalizability. It is concerned with the development of detailed, intensive
knowledge about a single case, or a small number of related cases (Robson, 1993). The case study
approach has the ability to generate answers to the question “why” as well as “what” and “how”.
The data collection methods may include questionnaires, interviews, observations and
documentary analysis (Saunders et al., 2000).
3.1 Research Hypotheses

i. H1: Recruitment and selection practices are not positively related to Ecobank performance in
the last five years.
ii. H2: Training and development practices are not positively related to the performance of
Ecobank in the last five years.
iii. H3: Performance appraisal systems are not positively related to the performance of Ecobank
in the last five years.
iv. H4: Compensation and reward practices are not positively related to Ecobank performance in
the last five years.
3.2 Study Population

This research was conducted at Ecobank Nigeria Plc at its corporate head office in Lagos, using
all the organization employees as the study population. These included all the senior personnel,
junior officers, as well as all the contract staff of Ecobank respectively. A detailed structured
questionnaire was prepared and distributed among all the members of this population.
3.3 Sample Size and Procedure

A total of 50 employees of Ecobank Nigeria Plc at its corporate head office in Lagos was sampled
to analyse the impact of human resources management practices on the performance of Ecobank
in the last five years. The sampling procedure was a purposive sample in a non-probabilistic
selection technique. However 35 questionnaires were returned fully attended, representing 70%
response rate of Ecobank HR staff. This formed the basis of the data analysis.

3.4 Research Instruments

Human Resources Management practices was measured in this research using a modified 20 item
questionnaire that has been used for previous research purpose, while organizational performance
was measured using a 10 item questionnaire. These research instrument has been validated by
earlier researchers to be ideal for measuring HRM practices that include recruitment and
selection, training and development, performance appraisal, compensation and reward, and
organizational performance. The Cronbach’s Coefficients Alphas for HRM practices tested in this
study ranged from 0.78 to 0.86 respectively, which is clearly acceptable (Nunnally, 1978). The
response was required on a five point Likert scale.
3.5 Psychometric Properties of Research Instruments

3.5.1 Employee Recruitment and Selection Inventory
Recruitment and selection of employees is the process that firms will need to take into account
the variation of external labor market conditions. In this study, recruitment and selection are
considered as one construct for ‘acquisition of firm employees’. This inventory has 5 items which
include ‘hiring employee with specialised skills’, ‘hiring people with creative thinking skills’,
‘recruitment and selection process fit the candidates with the jobs’, ‘organisation prefers
promotion from within (as opposed to external) when filling vacant position’. These items have
been developed and used earlier by many researchers and the Cronbach Alpha for this scale was
0.79 (Muhammed, 2010; Siengthai & Bechter, 2001; Purcell & Hutchinson, 2007).
3.5.2 Employee Training and Development Inventory

This inventory has 5 items which include ‘new employees familiarise with organisational norms
and values (orientation)’, ‘organisation provides continuous training for updating employee skills
and knowledge’, ‘training programmes are constantly revised or updated to fit with present
requirement’, ‘employees are offered opportunities for professional growth’. These items were
used by many researchers and the Cronbach Alpha for this scale was 0.81 (Muhammed, 2010;
Huselid, 1995; Siengthai & Bechter, 2001; and Dechawatanapaisal, 2005).
3.5.3 Employee Performance Appraisal Inventory

This inventory has 5 items which include ‘employee evaluation criteria are clear’, ‘performance
appraisal is result oriented’, ‘feedback is provided on a regular basis by the management’,
‘employees satisfied with performance appraisal result’, ‘employees commitment towards their
work performance’. These items were developed and used by several authors and the Cronbach
Alpha for this scale was 0.85 (Muhammed, 2010; Pfeffer, 1998; Ngo et al., 1998).
3.5.4 Employee Compensation and Reward Inventory

This inventory has 5 items which include ‘compensation system level with employees’
knowledge and skill’, ‘compensation system is competitive’, ‘good job performance is noticed
and rewarded’, ‘top management cares about workers’ overall satisfaction and well-being at
work’. These items were used by previous researchers and the Cronbach Alpha for this scale was
0.79 (1998; Paul & Anantharaman, 2003; Collins & Smith, 2003; and Minbaeva, 2005).
3.5.5 Organizational Performance Inventory

In this study firm performance was measured by a 10 item inventory. Some of these items are
‘employee turnover’, ‘adoption of new technology’, ‘organisational goal achievement’, ‘HRM
practices’, ‘customer satisfaction’, ‘employee incentives’, ‘workplace environment’, ‘non
financial benefits’etc. The response format was required on a five point Likert scale. The
Cronbach Alpha value for this scale was 0.82.

3.6 Data Collection Procedure

Primary data was collected by questionnaire administration on the respondents in the HR Unit of
Ecobank Nigeria Plc at its corporate head office in Lagos. Expressed authorization was sought
from the Director of Human Resources before conducting the survey. Also, secondary data on
human resources management practices was obtained by reviewing Ecobank’s five financial
years annual reports from 2006 to 2010.
3.7 Treatment of Data

Descriptive statistics was used to analyse the primary data collected from this study. A non-
parametric statistical method of Chi-square was used. The secondary data was analysed using HR
Metrics such as Revenue per Employee (which measures human capital effectiveness in the area
of productivity and sales revenue generated by each full-time employee); Human Capital Return
on Investment (HCROI - which shows the amount of profit derived from investments in labour,
the leverage on labour cost); and Human Capital Value Added (HCVA - which shows the
productivity attributable to human effort in an organization) respectively.
4. DEMOGRAPHIC CHARACTERISTIC OF SAMPLE
This section provides information on the primary data collected in this research and the
demographic characteristics of the respondents. The distribution of respondents by sex, age, years
of employment, academic qualification, and staff category are presentented in tables and charts
below:
Legend: SA= Strongly Agree: A= Agree: N= Neutral: D= Disagree: SD= Strongly Disagree:
MIS= Mean Item Score
Table 4. Descriptive Statistics of Primary Data

No. SA A N D SD MIS
(22.9%) (60%) (11.4%) (5.7%) -
1. 8 21 4 2 0 4
(34.3%) (25.7%) (25.7%) (14.3%) -
2. 12 9 9 5 0 3.8
(34.3%) (54.3%) (8.6%) (2.9%) -
3. 12 19 3 1 0 4.2
(25.7%) (54.3%) (11.4%) (8.6%) -
4. 9 19 4 3 0 4.4
(11.4%) (51.4%) (25.7%) (11.4%) -
5. 4 18 9 4 0 3.6
(34.3%) (54.3%) (11.4%) - -
6. 12 19 4 0 0 4.2
(34.3%) (54.3%) (8.6%) - (2.9%)
7. 12 19 3 0 1 4.2
(25.7%) (57.1%) (17.1%) - -
8. 9 20 6 0 0 4.1
(8.6%) (51.4%) (31.4%) (5.7%) (2.9%)
9. 3 18 11 2 1 3.6
(8.6%) (60%) (22.9%) (5.7%) (2.9%)
10. 3 21 8 2 1 3.7
(54.3%) (45.7%) - - -

11. 19 16 0 0 0 4.5
(17.1%) (54.3%) (20%) (8.6%) -
12. 6 19 7 3 0 3.9
(17.1%) (45.7%) (20%) (11.4%) (5.7%)
13. 6 16 7 4 2 3.6
(11.4%) (62.9%) (14.3%) (8.6%) -
14. 4 22 5 3 0 3.7
(8.6%) (45.7%) (25.7%) (14.3%) (5.7%)
15. 3 16 9 5 2 3.4
(11.4%) (68.6%) (14.3%) (5.7%) -
16. 4 24 5 2 0 3.9
(11.4%) (54.3%) (31.4%) (2.9%) -
17. 4 19 11 1 0 3.7
(14.3%) (68.6%) (14.3%) (2.9%) -
18. 5 24 5 1 0 3.9
(5.7%) (25.7%) (34.3%) (25.7%) (8.6%)
19. 2 9 12 9 3 2.9
(8.6%) (51.4%) (25.7%) (11.4%) (2.9%)
20. 3 18 9 4 1 3.5
(5.7%) (65.71%) (22.9%) (5.7%) -
21. 2 23 8 2 0 3.7
- (62.9%) (22.9%) (11.4%) (2.9%)
22. 0 22 8 4 1 3.5
(5.7%) (71.4%) (14.3%) (8.6%) -
23. 2 25 5 3 0 3.7
(8.6%) (62.9%) (22.9%) (5.7%) -
24. 3 22 8 2 0 3.7
(11.4%) (57.1%) (17.1%) (14.3%) -
25. 4 20 6 5 0 3.7
(22.9%) (60%) (17.1%) - -
26. 8 21 6 0 0 4.1
(14.3%) (65.71%) (17.1%) (2.9%) -
27. 5 23 6 1 0 3.9
(28.6%) (62.9%) (8.6%) - -
28. 10 22 3 0 0 4.2
(25.7%) (62.9%) (11.4%) - -
29. 9 22 4 0 0 4.1
(42.9%) (40%) (11.4%) (5.7%) -
30. 15 14 4 2 0 4.2
Source: Field Survey @ Ecobank Nigeria Plc Lagos, 2012.
4.2 Presentation of Secondary Data

This section shows the analyses of the secondary data used in this research. The Annual Reports
of Ecobank Nigeria Plc for the financial years of 2006 to 2010 were carefully reviewed and
analysed using some selected HR metrics in order to inform a valid conclusion on Ecobank's
human resource performance indicators. Revenue Factor - which measures human capital
effectiveness and productivity was analysed to reveal the actual revenue generated by each full-
time employee of Ecobank; Human Capital Value Added - which shows the operating profit per
full-time employee was used to reveal the profitability attributable to Ecobank's human effort;

while Human Capital Return on Investment - a measure of the return on capital invested in labour
was also used to reveal the leverage on Ecobank's labour cost.
Table 4.2.1 Summary of Ecobank Financial Statements (2006 - 2010)

Total Revenue Operating Expenses Labour Cost
(N'million) (N'million) (N'million) Year
58,313 30,521 13,107 2010
59,864 30,614 13,423 2009
55,156 25,974 14,113 2008
32,709 15,469 8,612 2007
17,258 9,149 4,402 2006
Source: ECOBANK Annual Reports (2006 - 2010)
Table 4.2.2 Summary of Ecobank Employees

Average Number
Employee Category 2010 2009 2008 2007 2006
Executive Directors 6 5 3 3 3
Management 118 130 138 130 125
Non-management 2,652 2,917 2,727 2,319 1,942
Total 2,776 3,052 2,868 2,449 2,070
Source: ECOBANK Annual Reports (2006 - 2010)
4.3 HR Metrics Analyses

1. Revenue Factor
Total Revenue
FTEs
N58,313,000,000
2776 = N21,006,124 - 2010
N59,864,000,000
3052 = N19,614,697 - 2009
N55,156,000,000
2868 = N19,231,520 - 2008
N32,709,000,000
2,449 = N13,356,063 - 2007
N17,258,000,000
2,070 = N8,337,198 - 2006
2. Human Capital Value Added

Total Revenue - Nonhuman Expenses

FTEs
N58,313,000,000 - N17,414,000,000
2776 = N14,733,069 - 2010
N59,864,000,000 - N17,191,000,000
3052 = N13,981,979 - 2009
N55,156,000,000 - N11,861,000,000
2868 = N15,095,886 - 2008
N32,709,000,000 - N6,857,000,000
2,449 = N10,556,145 - 2007
N17,258,000,000 – N4,747,000,000
2,070 = N6,043,961 - 2006
3. Human Capital Return On Investment

Total Revenue-Nonhuman Expenses
Labour Cost
N58,313,000,000 - N17,414,000,000
N13,107,000,000 = 3.1% - 2010
N59,864,000,000 - N17,191,000,000
N13,423,000,000 = 3.2% - 2009
N55,156,000,000 - N11,861,000,000
N14,113,000,000 = 3.1% - 2008
N32,709,000,000 – N6,857,000,000
N8,612,000,000 = 3.0% - 2007
N17,258,000,000 – N4,747,000,000
N4,402,000,000 = 2.8% - 2006
5. DISCUSSION
This research was conducted to empirically analyze the impact of human resource management
practices on organizational performance in Nigeria, focusing on Ecobank Nigeria Plc. The study
was intended to explain the various human resource management practices that add values and
contributed to Ecobank's success as a formidable enterprise in the banking sub-sector of the
Nigerian economy in the last five years. Results of this study offered empirical support for the
existence of a positive and statistically significant relationship of HRM practices such as
recruitment and selection, training and development, performance appraisal, and compensation
and reward on the performance of corporate organizations in Nigeria. The study has helped to
increase our understanding of how appropriate HRM practices contribute to organizational
performance in Nigeria, given the extent of the prevailing global economic recession. In a

knowledge-based competitive economy, the adoption of appropriate HRM practices is important

to ensure effective strategy implementation. HRM practices create procedures that constitute the
building of employees` knowledge and skills throughout the organization to promote unique and
valued organizational competencies which support competitive advantage (Werbel & DeMarie,
2005). Similarly, Enz & Signaw, (2000) observed that successful firms create a bundle of
employee practices to reinforce the organizations` strategic position.
In the context of this research, recruitment and selection practices were found to be positively
related to Ecobank performance in the last five years. Recruitment and selection primarily aims at
attracting maximum number of highly talented applicants and selecting the best to achieve long-
term competitiveness. A stringent recruitment and selection practices provides those employees
who are selected with a sense of elitism, imparts high expectations of performance and sends a
message of the importance of the people to the organization (Pfeffer, 1994). To sustain the high
level of competitive advantage, a firm requires talented and skilled workers that must be engaged
and maintained in the economic interest of the organization. Cascio (2006) argued that without
excellent induction, the execution of organizational strategy may vacillate. Effective selection
system based on modern and need-based tests is essential to affect desirable selection.
Compatibility of individual and organizational values (person-organizational fit) is an essential
dimension that should receive priority for sustained retention. Matching an individual to the
demands of the job (person-job fit) yields sustainable results in many instances (Jyothi &
Venkatesh, 2006). Merit-based and transparent induction system enhances organizational
credibility and makes the workforce loyal to the organization. In addition it communicates
prospects of excellent performance and conveys the employees’ oriented value of the firm.
Delany & Huselid (1996) established that practicing an effective recruitment and selection
process has positive relationship with organizational performance. Huselid (1995) found that
organisational productivity and high performance depends on the selection of the right person,
which is also a pathway to reduced turnover. In an evolving knowledge economy, competencies
development forms an essential dimension of a firm’s competitiveness. Knowledgeable and
highly skilled employees improve productivity, enhance quality of products and services, affect
positive changes in processes and deliver quality service to customers.
Similarly, training and development practices were also found to be positively related to Ecobank
performance in the last five years. Training and development generate tangible outcome like
improved productivity, quality output, and resource optimization; and intangible results in terms
of enhanced self esteem, high morale, and satisfaction of employees due to acquisition of
additional knowledge, skills, and abilities. Since employee roles and responsibilities shift rapidly
in line with environmental demands, it follows that some sort of training and development
concerning new roles is vital to the success of the employees and the business enterprise (Cardon
& Stevens, 2004). Employee development can be expected to be an important determinant of
company performance. Blair & Sisakhti (2007) found that expenditures on training and
development yield enormous benefits, and as Bitner & Zeithmal (2001) observed, investment in
employee training yields strategic advantage to the organization. Dynamic environment and
changing customers' needs require a unique set of approach and technique, as well as up-to-date
skills to provide differentiated and superior services. Changing business environment necessitates
that learning organizations should invest in employees' training and development so as to enhance
organizational capability in responding positively to the dynamic environmental demands
(Jarventaus, 2007). According to Tai (2006), training and development plays a crucial role in
increasing work adaptability, ability, flexibility, maintaining necessary competence, motivating
employees, and influencing employees productivity. Strong evidence exits in literature that
organization with effective training programme experience lower employee turnover (Fey et al.,

2000). Researchers have also established that comprehensive training and development activities
are positively related to productivity, reduce staff intention to leave, and improving organizational
effectiveness (Lee & Bruvold, 2003).
Also, in this study, performance appraisal systems were found to be positively related to Ecobank
performance in the last five years. Performance appraisal is based on demonstrated achievement
of performance objectives established pertaining to a specified job within a given time period.
This process plays a vital role in influencing the perception of employees about self and about
their contribution toward organizational goals. Bdernardin & Russel (1993) argued that wider
communication of performance appraisal policies within organizational is essential to make
employees well informed about their role expectation as a contribution to organizational
performance (Landy & Far, 1980). Haunstein (1998) argued that the process of appraising
performance should be based on objective and quantifiable results. The performance appraisal
system should be based on ethics, fairness, objectivity, inclusiveness, standardization, and should
be widely communicated (Bernardin et al., 1998; Webb, 2004). Regular monitoring of employee
performance and constant feedback about performance outcome is essential to get the desired
results. Researchers established that employees’ participation in setting performance goals, clarity
about performance standards, flexibility of the system in responding to the changing needs, and
employees' right to appeal against performance evaluation are vital attributes of an effective
performance appraisal systems that contribute toward superior employee performance (Islam &
Rasad, 2006; Wu, 2005). Stone (2002) observed that in the rapidly-changing competitive
environment, organisations need to keep improving performance in order to survive. The
effective process of monitoring performance and the feedback between employees and
supervisors strengthens their relationships and promote better industrial harmony (Cook &
Crossman, 2004).
Lastly, the findings of this study has also shown that compensation and reward practices were
positively related to Ecobank performance in the last five years. Compensation refers to all
monetary payments and all commodities used instead of money to reward employees.
Compensation is viewed from total rewards perspective as it encompasses psychological rewards,
learning opportunities, and recognition, in addition to monetary rewards of base pay and
incentives (Heneman et al., 2000). A comprehensive compensation mix augmented by an
effective system of disbursement plays an important role in attracting the best candidates, shaping
employees behaviour and performance outcome, and facilitating retention of talents. Mathis &
Jackson (2004) argued that a balanced, fair and competitive compensation and reward system
affect the retention of employees. Huselid (1995) observed that the compensation system is
recognised as employee merit and it is widely linked with firm outcomes. The expectancy theory
(Vroom, 1964) suggests that rewards, that can be understood as a form of direct and indirect
compensation packages, have potential to influence employee work motivation. A valence-based
reward philosophy act as the driver of both individual and team performance (Dreher &
Dougherty, 2005). Jyothi & Venkatesh (2006) found that competency-based pay and rewards
improves quality of products and services, improves employees’ behaviour, and reduces accidents
rates in the organization, thereby making strong contribution toward organizational performance.
Researchers have evaluated the relationship of compensation and reward, and organizational
performance. These studies concluded that an effective compensation and reward system
increases sales, reduce staff turnover, and improve firms’ performance (Dreher & Dougherty,
2005; Gomez-Mejia et al., 1988).

6. CONCLUSION
This study has examined the impact of human resources management practices on the
performance of Ecobank Nigeria Plc in the last five years. From the analyses of primary data used
in this research, it was found that 82.9% the of respondents agreed that Ecobank recruits only the
best applicant for a particular job; 62.8% were of the view that Ecobank prefers to promote
internally (as opposed to external) when filling vacant position; while 71.5% accepted that
Ecobank HRM practices influence organizational productivity. Hence, it was concluded that
recruitment and selection practices are positively related to Ecobank performance in the last five
years, (x2 = 25, p<.05); (x2 = 29.11, p<.05). Similarly, the analyses of secondary data on Ecobank
Annual Report revealed that given a Total Revenue of N58.31billion in the year 2010, an
Operating Expenses of N30.52billion, and Labour Cost of N13.11billion, Ecobank Human
Capital Return on Investment stood at 3.1% for 2010 financial year. It is very evident that
corporate investment in quality employees would generate more value for the organization in
meeting the needs of all its stakeholders. Effective human resource management practices
influence company performance by contributing to employee and customer satisfaction,
innovation, productivity, and development of a favourable reputation of the firm in the industry.
Through a well coordinated HRM practices, value added to the company’s production processes
and the contribution made by each employee have more effect on the results obtained by the
organization as a whole. As pointed out by Thang (2004), how well employees are performing on
their jobs, is due to how well a suitable HRM related decision is made.
Also, from the primary data collected, 88.6% of the respondents were of the view that Ecobank
provides continuous training programmes to update existing employee skills and knowledge;
82.8% agreed that Ecobank training programmes are constantly revised or updated to fit with the
changing environment; while 82.9% confirmed that customer satisfaction (quality product, lower
price, efficient delivery time and after sales service) is the main objective of Ecobank. It was
concluded that training and development practices are positively related to Ecobank performance
in the last five years, (x2 = 23.85, p<.05); (x2 = 15.4, p<.05). Secondary data analyses also shown
that given a Total Revenue of N59.86billion in the year 2009, an Operating Expenses of
N30.61billion, and Labour Cost of N13.42billion, Ecobank Human Capital Return on Investment
was 3.2% for 2009 financial year. This also shown that investment in people increases their value
to the firm, corporate investments in both technical and non-technical training are likely to have a
positive impact on the extent to which a firm actually succeeds in developing the skills and
knowledge of its employees. Kundu (2000) stressed that companies should invest heavily in
training the workforce for implementation of customer focused strategy. In a research by
MacDuffie (1995), training was suggested to be a high performance HRM practice.
Similarly, 71.4% of the respondents agreed that they were always satisfied with their performance
appraisal result; 62.8% are of the view that merit or performance rating alone is the basis for
Ecobank promotion decisions; while 82.86% confirmed that high performance working is more
important in Ecobank. It was then concluded that performance appraisal systems are positively
related to Ecobank performance in the last five years, (x2 = 18.89, p<.05); (x2 = 11.37, p<.05).
Secondary data analyses also shown that given a Total Revenue of N55.15billion in the year
2008, an Operating Expenses of N25.974billion, and Labour Cost of N14.113billion, Ecobank
Human Capital Return on Investment was 3.1% for 2008 financial year. It is clear from these
analyses that Ecobank performance appraisal systems impact positively on the overall
profitability. Organizational turbulence necessitating a tighter budget, downsizing and pressure
for greater employee accountability has resulted in more emphasis on performance appraisal in
relation to organisational objectives. Lee & Lee (2007) found that effective performance appraisal

system improves quality and productivity. An organization's performance appraisal system that is
comprehensive, fair and customer-focused improves business performance in the long-run (Sang,
2005). Similarly, Rahman (2006) found that comprehensive performance appraisal system
enhances employees’ commitment to the organization's goal, employees understand their
performance expecations and how to sustain them.
Finally, from the primary data collected in this research, 80% of the respondents agreed that
Ecobank employees’ compensation is competitive; 60% were of the opinion that Ecobank cares
about workers’ overall satisfaction and well-being at work; while 88.6% believed that their
workplace environment influence productivity. It was concluded that compensation and reward
practices are positively related to Ecobank performance in the last five years, (x2 = 35.97, p<.05).
The analyses of secondary data also revealed that given a Total Revenue of N55.15billion in the
year 2008, an Operating Expenses of N25.974billion, and Labour Cost of N14.113billion,
Ecobank Human Capital Return on Investment was 3.1% for 2008 financial year. It is clear from
these analyses that effective compensation and reward practices motivate employees to superior
performance, and it also enhances the organization’s employee value proposition. Studies have
showned that effective compensation and reward system increases sales, reduce staff turnover,
and improve firms’ overall performance (Dreher & Dougherty, 2005).
7. RECOMMENDATIONS
This study has investigated the impact of human resource management practices on
organizational performance in Nigeria. The findings of this research suggest that Ecobank Nigeria
Plc should consolidate on its well-articulated human resource management policies and to ensure
some improvement in its practices. Training and development programmes of Ecobank should be
constantly revised and updated in order to empower the workforce to be more flexible and
respond effectively to environmental demands. A comprehensive need analyses should be
conducted to reveal current and future competency gaps. Training and develoment programmes
should be re-designed to support corporate strategy and accomodate employees' view.
Similarly, high performance work culture should be encouraged by Ecobank top management so
as to communicate achievement of high level of performance as a way of life. Roles and
behavioural expectations should be clearly defined, and employees should be empowered to
collaborate in problem solving and exercise discretionary behaviour. Workplace arrangements
should be designed to facilitate employee skills, knowledge, and attitude in responding to
customers' needs. Performance goal should be communicated and understood by employees, and
positive feedback provided to encourage organizational learning.
Finally, Ecobank Nigeria Plc should leverage on its human resource management capabilities and
wider network of branches to optimize the advantage of recruiting and engaging diverse
workforce and making necessary investment in extending their skill base. These would go a long
way in fostering an understanding of a multicultural work climate and enhancing the building of a
truly agile Pan-African Bank that is 'Good to Great'.
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International Journal of Contemporary Business Studies

Vol: 3, No: 10. October, 2012 ISSN 2156-7506

Impact of Human Resource Management

This research study examines the impact of human resource management

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In a knowledge-based competitive economy, the adoption of appropriate HRM practices is

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3.1 Research Hypotheses

3.2 Study Population

3.3 Sample Size and Procedure

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3.4 Research Instruments

3.5 Psychometric Properties of Research Instruments

3.5.2 Employee Training and Development Inventory

3.5.3 Employee Performance Appraisal Inventory

3.5.4 Employee Compensation and Reward Inventory

3.5.5 Organizational Performance Inventory

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3.6 Data Collection Procedure

3.7 Treatment of Data

4. DEMOGRAPHIC CHARACTERISTIC OF SAMPLE

Table 4. Descriptive Statistics of Primary Data

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4.2 Presentation of Secondary Data

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Table 4.2.1 Summary of Ecobank Financial Statements (2006 - 2010)

Table 4.2.2 Summary of Ecobank Employees

4.3 HR Metrics Analyses

2. Human Capital Value Added

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Total Revenue - Nonhuman Expenses

3. Human Capital Return On Investment

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knowledge-based competitive economy, the adoption of appropriate HRM practices is important

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