University of Nigeria Research Publications

UYANWUNE, Obiora Charles

PG/M .BA/00/0639

Title

Manpower Planning Strategies in a Changing Regulatory Environment:

A Case Study of Selected Banks in Lagos.

Facu

lty

Business Administration

Dep

artm

ent

Management

Dat

e

November, 2004

Sign

atur

e

MANPOWER PLANNING STRATEGIES IN A CHANGING REGULATORY ENVIRONMENT

(A CASE STUDY OF SELECTED BANKS IN LAGOS)

OBIORA CHARLES UYANWUNE CMD-UNNP G/EMBA/2000/0639

Department of Management Faculty of Business Administration

University of Nigeria Enugu Campus, Enugu.

NOVEMBER, 2004

MANPOWER PLANNING STRATEGIES IN A CHANGING REGULATORY ENVIRONMENT

(A CASE STUDY OF SELECTED BANKS IN LAGOS)

OBIORA CHARLES UYANWUNE CMD-UNN/PG/EMBA/2000/0639

BEING A RESEARCH PROJECT SUBMITTED "a THE

DEPARTMENT OF IMANAGEMENT, FACULTY OF BUSINESS

ADIMINISTRATION, UNIVERSITY OF NIGERIA, ENUGU

CAlMPUS, ENUGU IN PARTIAL FULFILLMENT OF THE

REQUIREMENTS FOR THE AWARD OF MASTER OF

BUSINESS ADMINISTRATION (MBA) DECREE IN

MANAGEMENT.

November, 2004

1

CERTIFICATION

Uyanwune C. 0. a post graduate student in the Department of Management

with registration number CMD-UNN/PG/EMBA/2000/0639 has satistactorily

completed the requirements for the award of Masters of Business

Administration (IMBA) in Management.

The work embodied in this report is original and has not been submitted in part

or in full fbr any other masters degree or award of this institution or any other

university.

...................................... Dr. U. J. F. Ewuruln Name/Sign. of Supervisor

Dept.

Date: .........,........................

..............................

Dr. U. I. F. Ewurum Name/Sign. of' Head of

Date:

DEDICATION

This is study is dedicated to my wife Stella Chinwe and my children lfeorna and

Ogechukwu far their support and patience.

ACKNOWLEDGEMENTS

Many people contributed in one way or the other to the successful conclusion of

this research work- First and foremost, I than Almighty God for the gift of life

and good health that enabled me complete this work. I wish to specifically

express my appreciation to my supervisor Dr. U.J.F Ewururn for his painstaking

guidance and suggestions that shaped the tinai document. 1 must also record

m y gratitude to all my lecturers for their extra ordinary dedication that ensured

the conclusion of the programme.

Finally, I wish to express my sincere gratitude to my family for their support,

understanding and encouragement throughout the priod of this course,

ABSTRACT

The purpose of rhis study was to determine whether companies espec~ally banks

have formal manpower planning.

For the purpose of the study, eight (8 research questions and three (3)

hypothesis were fomulatecl to guide the study. The instrument used for data

co i l t c t i~n were a 30 item questionnaire and interview schedule designed for

senior management staff of the participating companies. The samples consisted

OF 50 rnanagernent staff - 10 Executive management and 40 senior management

1'rom 1 U randomly selected banks whose headquarters are located in Lagos.

Simple percentages, linear regression and coefficient relations were used to

analyze the data.

The results revealed that banks engage in rnanpower planning and have

fonnalized recruitment polices specified in staff hand books: but they however

differ En the extent to which these strategies and policies were Ftnplemented in

practice. For some Banks, other factors and relalionship played a major role and

tended to over shadow merit. The study showed that banks whose ownership

base was more dispersed tended to implement their manpower planning and

recruitment policies better than the banks where a few shareholders are mare

doniinant or ~vhere the Chief Executive officer was also a major shareholder-

Balks of Iarer ... .,,rend w select staR based on factors exogenous to the

recruitment policies and even ar. variance with the manpower plans. ?'he study

also revealed that the banks who adopted manpower planning and followed

through their recruit~nenrs policies in the recruitment, selection and placement

of personnel tended to perform better than those who in certain cases operated

at variance with their manpower pram and recruitment plicies. Both groups

performed better than the banks that did not engage in manpower planning nor

have recruitment policies. Performance here was measured by return on assets

ROA and return on investment ROI as well as staff turnover.

Several suggestions were made towards solving the manpower planning

problems facing Nigeriw banks.

TABLE OF CONTENTS

T itIe

Certification

Dedication

Acknowledgements

Abstract

TabIe of contents

List of tables

List of fi gures

Chapter One: Introduction

Brief History of Banking in the Nigeria Economy

Statement of problem

Objectives of the Study.

Research Questions

Research hypothesis

Significance of the study

Scope of the study

Limitations of the study

References

1

I L

.,. 111

iv

v

v i

vii

vii

Chapter Two: Literature Review

3.1 Definition and importance of strategy

2.2 The concept of corporate strategy

ZT3 Planning - An overview

3.4 Definition of manpower planning

2 . The planning process

2.6 Components of manpower planning

2.6.1 Manpower

2.6.2 The Development of manpower action plan

2.6.3 Manpower Inventory

27 Relationship between inanpower planning

and corporate strategy.

Chapter Three

3.1 Population size of the study

3 -2 Sample size

3.3 Source of Data

3 -4 Research Instrument

3.5 Data collection procedure

3.6 Techniques of Data Analysis

Chapter Four: Data presentation and Data Analysis

4.1 Research Findings

4.2 Test for Hypothesis

... Vlll

LIST OF FIGURES

Human Resource Planning Process

Stages in Human Resource Planning

LIST OF TABLES

Human Resource PIanning Process 20

Stapes in Human Resource Planning

Distribution of Ages of Ranks 36

Educational Qualificatian of Staff 37

Classification of Staff by Level arid Sex 38

Schedule of Strategic Manpwer Planning activities of the Ten Sampled Banks 40

Hire or Retain to Fill Management and Other Key Positions of Respondents 41

Effect'Relationship Between Economic Depression and Manpower Planning variables 42

Compuration for s RepressioniCorrelation of Profit levels and Staff Remuneration 44

Computation for a Regression/Correlation of Turnover levels and Manpower Recruitment 47

Coinputation for a Regression Correlation of Capacity Utilization and Labour Turnover 50

Frequency of Response from Companies 53

Chapter Five: Summary of Findings, Conclusion. Recomine~~dations and

Suggestions for further studies.

5.1 Sulninary of Findings

5.2 Suggestions and Recommendations

5.3. Areas of further research

5.4. Bibliography

Appendix Z

Appendix I1

Appendix III

Appendix IV

1.0) INTRODUCTION

Organisations are identifiable social entities pursu iq multiple objectives through planned

coordination among its members and objectives.

As social constructs, organisations difler from other non-human systems in the sense that man is

its most imponant resource. An organisation may possess abundant resources - material.

finance, plant and machinery but unless there are men to mobilize, organix and harness these

materials for the production of' g o d s and services. those resources must remain idle. The

primacy of man as a motive forte for moving an organizafion is even more emphasized in an

organization that provides a senice than one thar produces a product.

In banking business which is built 011 trust and on the confidence. that the depositor can have his

money when he demands it, the position of the men ar~d women who own the organization. their

mttgity, skills and levels of compttence become even more critical.

In spite of the crucial role that 111411 plays in the successhI operations of organizations, it is

surprising that human resource planning does not quite receive thc level of anention given to the

plaiming of other resources. Many companies have elaborate plans for raw materials. finances.

technologia and marketing but pay only scant anenlion ta manpower planning. Even when

manpower planning is conducted, companies rarely conduce a detailed and systematic analysis of

their manpower nccds nor make derailed projections to establish future manpower requirements.

I t was discovered that banks pro jk t for as much as 5 years, what their requirements for deposits

will be and put in place detailed strategies and action plans on how to attracl the required

quantum of deposits. No much detailed attenrion is paid to manpower planning. This prhaps is

not peculiar ro the Nigerian envircjninent. The feeling is h a t men can always k found lo do the

oh. For banks. manpower planning may not ga beyond binding Rands to run the next branch.

b lanpo~w- needs as observed by Hencman Schwels tt a1 (1 1187) is ohen done " o n ad hoe basis.

often in response to crisis ard sclborn forr~lullating marc than cursory intended p r s u n x l I strategies." Tlxy agreed that persum2 strategies exist in organisation; but "are tmergent over

rime as major decisions concerning objecrives rather than k i n g formalIy laid out in a systematic

wa>,'', '

Strategy could be defined as a plan, some sort of ccmxIous intended course of action; a guideline

(or set of guidelines) to deal with a situation.

In Peter Drucker's opinion. it i s .-purposeful action" while to Moore, strategy is a "design for

action" '. These views are reinforced by the definition of strategy in management as *.a unified.

comprehensive and integrated plan designed ro ensure that the 'basic objectives of the enterprise

are achieved" j.

Corpomre strategy or strategic planriing as it is often termed is the over all analysis. choice and

implementation which senior rnanagement uses for dealing with existing probk~ns in its

enviroument. In Robert Anthony's view, it is the process of dealing on objectives or changes in

t ime objectives. on the resources used to obtain these objectives and on the policies that are ro

govern the acquisition. use and disposition of those resources" '. The overall objective of

strategic plan is ro enable the organization to achieve a dominant market position such that its

con~petitors can only hope to intervene over a long period of time and at prohibitive cost.

Implici~ in this deiinition is the requirement that organization must of necessity integrate

nmqxwcr planning into the overall company strategy in order ro cichicvc the stated objectives.

Given the rapidicy of changes - social. technological. political and others, the complexity a f

modern business is always an the increase. This demands that the process of strategic planning

should be formalized. In other \wrds, as part of rhe planning cycle and on regular basis. riw

senior managenlent team of mganization should consider or tecansider the overall straregies and

plans of the organization.

The ntlcd for strategic perspective in rnan@mrer planning as expressed by one nmr~ufacturing

coinpany is stparted by James Blaker (1980) thus -"As our company grows larger and complex.

we recognize the need to plarl more systcmaticaI!y for the people needed to staff the business. A

lack of adequate talenr may be the single major conarainr in our ability to sustain & m e

company growth. This process 1s a practical Step towards more comprehensivr employee

planning and developmentn Although this staremenl was made more then two decade ago* and

in the context of a manufacturing company. it i s apt for the Nigerian banking industry of loday.

For most banks. the constraint f i ~ the expansion of branch network has been the paucity of

experienced hands.

Manpower plaming in essence iu a systematic process of assuring that adequa~e numbem and

types of employees wirh the required skills are available when they are needed. At corporate

level. manpower planning focuss on the policy for recruitment/development. for the design and

review of manpower policies to s~1ppol-i strategy implementation.

Policies in the other hand are guides to action. P~licies define how affairs are to be conducted in

specific areas ao achieve predetermined objectives. Manpower planning activities of a corporate

organization wiil mostly impact on the recruitment policies of the organization including

selection. discharge (redundancy and retirements) job allocation, job design and re-design.

schedule of duty, staff training and development policy. promotion policy, staff transfer or

nwvement policy, remuneration a d career planning p l ic ies among others.

Many researches have been conducted on manpower planning practices of both public and

private companies. but limited studics have been cbmlucted in manpower planning in banks. Far

more less research has also been conducted rcz find a relationship between the efficacy of

manpower planning and the performance of banks. The research is therefore mtivated by the

researcher's belief that in the Nigerian environment. there should be a relationship between the

existence and practise of manpower planning in banks and the performance of such banks

particularly in an era of increasing competition in the banking section as we have witnessed since

mid eighties.

I . i ) Brief History of Banking in the Nigerian Economy:

The kistarq, of banking in Nigeria on the other hand dates back to 1894 when a branch of

the Hank of British West Africa (BBWA) was established in Lagos. Following the

success of this bank. a number of indigenous initiatives were taken to establish banks.

fhc Rgbomagbe Bank ( F m n m bank) joined in 1899 while Nature Bank Ltd bank and

African i'ontinenral Bank Limitd joined in 1933 and 1945 respectively.

Starting from the mid 1980's. there was s great boom in the banking industry. This great

leap was facilitated in the main by the Structural Adjustment Programme (SAP) of the

Babagindn era. The emphasis was on opening up the economy and liberalization of the

cconorni~ space. The number of banks in the economy grew from 36 in 1980 to 130 by

1990. However, by the mid niimics, signs of distress in the banking sector were already

manifest ro the discerning obswver. This distress was lead to the demise of 34 banks in

[he period between 1994 and 19W. From May 29, 1999 when the present administration

took over power, some sanity has been restored to the banking sector.

111 terms of characterization. rhe Nigeria economy can be said to have entered a period of'

depression in the carEy 1980s fobv ing ahe c m h in the price of crude oil in the world

market. Given the externally oriented nature of the economy, the enormous growth in

governnlent expenditure in the 19709, related expansion in consumption. massive

dependent on imparted goods, raw materials and consumabks, the colfapse of the world

oil markets sen1 shock waves tllmugh the Nigerian economy and society.

Government reacted to this ctwehpmenr by introducing stringent austerity measures to

curb the utlbridlcd importation and return some sanity to the economy. First was the

auseerity measures of the Obasanjo regime in 1978. This was followed by the Ethical

Revohtion of [he Shagari xgime in 1978. By far, the most ambitious ~d jus tmen t

l 'wgamme was that introduced by General lbrahim Babangida (Rtd.) in 1986. The

Structural Adjusrnlent Programnle (SAP) as it was known was intended to enhance

allocative efficiency. achieve intcmal and exter~lal balance and initiate the resumption of

sustainable growth in the economy. These objectives were to be achieved through the

deregulation of interest and exchange rates while ensuring fiscal viability.

However. according ro Victor Udozi, a indications were that rhe initial succeuu recorded

in the esecurion of the programme were not sustained. He observed h a t since 1091. the

Nigerian economy had perforqd bebw expectation. Odozi hither reported that Gross

Domestic Product (GDP) which grew by 5.1 percent in 1991 rose by only 3.6Vo in 1992.

From the same source, rhe tare of gmwth in GDP had dropped 90 2.9% in 1993. The

inflation rare rose to 57.2 perccn! in 1993 from 44.6 percent in 1992. The current account

on the balance of payments which reflected a surplus amounting to 7.8 prcent of GDP.

Swung to a deficit of 1.5 per cent of GDP in F992. Odozi observed that the negative

indices continued in the immediate years fol1awing with the deficit in the ratio of Current

Account to GDP rising to 2.00 per cent in 1993.

Governnltnt was faced with an all time high fiscal deficit of N101.1 billion in 1993.

N 7 l .U 1 bil tian in 1994 artd hyper inflationary pressure running at about 75 percent as at

December lW4 .

The persistent deprwiation sf the Naira exchange rate, entrenched inflation. low

industrial capacity utiliza~ion. low GDP growth. increasing unemployment. declining

standard of living, large and rising fiscal deficit as well as prolonged political and labour

unrest resulting from the annulment of the June 12, 1993 Presidential election further

campounded the economic problems of the nation.

It was against the bxtckgsound of an economy in serious distress that the Abacha

goverlmlenr designed some major fiscal and monetary policies aimed at reducing

inflation and stimulating ecoi~urnic activities.

First, the fixed interest and exchange rate was re-introduced. This was later replaced by a

flexible exchange sate plicy. The mom%ry policy of the 1995 budget has at it is main

focus control of money supply and consequently. stabilization of the exchangz rate and

reduction in the rate of inflation. 10

In order ro achieve this objective, government mopped up substantial pool of liquidity

through the issue of stabilization securities and the sporadic intervention in the foreign

exchange market by the Ccnlral Bank of Nigeria. There was a sleep and sudden

devaluation of the naira from N22 KI N82:I ;W$' &llx imposing a three - digit inflation -

contrary to the declared i n t e n t h of gwernmenr.

In 1994, rrlanufacrurcrs were disturbed a b u t scarcity of foreign exchange in the face of

fiee flowing naira. But today foreign exchange is m w avaiIable to those who can muster

the huge naira required. The 1995 budger fixed maximum lending rate at 21 percent and

a deposit rate at a rnaxin~uin of 13.5 percent. 4 !ow deposit rate in an economy with

inflation galloping at a rate above 100 percenr is unrealistic as it is bound to discourage

saving. Low lending rate (2 1%) discourages banks from lending to industrialists thus

comgouding the problems ofn~anufactureru and invariably decision makers.

The current customs & excise miff (1995 - 2001) under the New Tariff Regime is about

40 pxce i~ t higher than that apparent reduction in the new rates. The rate of N82: $ 1 at

which duty and aH o t h e ~ pOr6 charges e.g. value! added tax [VAT), port surcharges etc, are

calculated negates he advantages of duty rates reduction in the new tariff 1 2 . It is not

surprising that most industries especiafly the sinall and medium size ones has died off,

many are still dying a d the su~rivorv are operating at w r y Cow capacity. Idustrim with

high impoi-t content in theia raw materials mix are hardest kit by the high cost of foreign

exchange and scarcity of funds, Apart from the Increased cosc of production and inability

to pas increased cost of input to cirstomn, the business section (particularly

manufacturers] faces difficulties in obtaining hg- te rn and working capital from the

moncylcapital market. Inclustries are faced with reduced demand for their products due

to fall in aggregate d ispsa l income.

The Banking subs t cm of the economy appeared to have paradoxically benefited from the

strucfural adjustment programme, The sector witnessed rapid growth in terms of new

entrants and vaIume of transactions. The number of banks which stood at h10 in 1986

rose to 120 by 1994. Tkre were also rapid and rather uncontrdteb growth in 111e number

and type of fringe banks and semi bank institutions such as Finance companies. Mortgage

banks. commdi ty banks all operating in an tnvironinent. where effective supervision by

\he Ccl~tral Bank of Nigeria had kc0me suspect. By I9W. the number of Finance

companies had reached 2000.

It was therefore not surprising that the same forces that fueled the growth in banking in

the structural adjustment years was also responsible for eventual distress in the banking

SecLOI'.

This study sets out to identify the rnanpawer planning strategies adapted by organizations

within the banking subsector of the financial system during the pccriod under review. It

shall also determine whether the srraregies did influence the performance af the banks.

1.2) STATEMENT OF PROBLEM

The harsh economic environment under which mast industries and banks Dperate today has

posed serious challenges to management. Most industries are groaning helplessly under scarcity

of cash caused by constant liquidity mop-up, low lending and high interest rates. as well as other

unfavourablc and unstable government policies. The banks in rum in the circumstances lack

credible customers.

Mast firms confronted with high cost of raw materials accruing from high exchange rate. Raw

material shortages lead to low industrial capacity utilization, low sales, dwindling profit and may

invariably translate to retrenchment and inconsistency in manpower planning activities of

organizations.

The question is. du the a b v c problems (associated with raw materials scarcity and continuous

changes in government policies) affect corporate. remuneration. training and development,

retirement, termination, rdurrdancy and career planning?

In the course of this study, ather problems and the various manpower planning strategies adopted

by organizations during this period of economic depression shall be identified.

1.3) OBJECTIVES OF THE STUDY

The focus of this research can be spelt out in terms of objectives stated below:

7'0 analyse the conoepa of corporate strategy and show it's relevance to manpower

planning.

To discover how well Nigerian banks engage in strategic manpower planning.

To ascertain if economic depression aflkcts manpower planning

To identify the various manpower planning strategies adopted by banks to survive h e

present economic depression.

To offer some suggestions leading to solution of identified manpower planning

problems,

RESEARCH QUESTIONS

Do banks undertake strategic manpower planning?

I s there any relationship bctwen profit level and staff pro~notion?

How does profit level affecl personnel training and development?

What is the relationship beiween profit level and staff renmnera~ion'?

Does manpower recruitment depend on turnover?

What manpower planning strategies do banks adopt to survive the economic depression''

RESEARCH HYPOTHESES

There is 2 strong correlation between Banks profit and srafFremuneration.

There is a significant relationship between Banks turnover and manpower planning.

SIGNIFICANCE QF THE STUDY

1. The findings will provide a too! for evaluating the effect of elternafire manpower actions and

policies on the organizarion.

2. The results will inlprave he ovc~all manpower planning strategies.

3. The results will promote greater awanms of the importance of effective corporate

nianpocwr strategy.

4. Ir will mablc rnanagemeni reduce manpower cost by anticipating shortages or surpluses of'

human resources and correcting imbalances before they become unmanageable and

espensi vc.

5. The result will add to informa~ion pool for mstnagers/orgmizarions and will guide them on

effective utilization of human talents even in the event of economic depression.

1.7) SCOPE OF THE STUDY

This study was limited ra ten (10) banks hsed in Lagos. Lagos, the sfate capita1 has the largest

concen~ation of banks. It is the administrative. commercial and fidarcial nerve centre sf

Nigeria. The choice of the Banks was guided by the basic similarity in size and age. They were

selmted to represent a spectrum of corporate manpower planning strategies.

1.8) LZ MITAT1 ON OF W E STUDY

The smdy was confined to ten (10) out of hundred (100) banks operating in Lagos State. This

was due to linlited resources such as time and firlarim. The manpower planning activities of the

banks were linzited TCI tathose manpower policies outlined in the introductory part of this research.

The period covered in this study ranged from I995 to 1999. The choice of this period was

informed by popular opinion that most banks started experiencing the impacl of fluctuation in

economic activities during these years. IT alsa made for ease of retrieval of related quantitative

information from rhc company's ac hieimments.

On the ivholc. it is believed that the findings made in the sampled banks will reflect the general

vend of the wrporak manpower planning strategies adopted by banks during this period.

FLEFERENCES

1. Heneman. H.G. Schweb. D.P.et al. PersonneWurnan Rtswrcev Marlayemeni

Homewood, Illinois: Richard D. Irwin lnc, 1983, P 177

2. lbid pp. 177 & I78 T 1 -. Drucker, P.F.

Management: Tasks, Responsibilities Practices

New Ynrk. NY: Harper & Row, 1974, P. 104.

4. Moore, D.G. -'Managerial Strategies," in W.L. Warner and N.H. Martins (edsj

industrial man: Businessman and Business organizations. New York. NY: Harper

and Row, 1959, Pg. 220.236

3. Clausewitz, C. Von On war translated by M. Howard and P. Parent - Princeton. NJ:

Princeton University Prcss, 1976, P. 177

6 . Anthony, R.N. Planning & Control system: A Framework for Andvsis. Boston:

Harvafd Graduate School of Business Administration 1965 p 10

CHAPTER TWO

REVIEW OF RELATED LITERATURE

2.1 DEFINITION AMT IMPORTANCE OF STRATEGY

The concept of strategy is ancient. Dating back to the Greeks. it was first used in the military to

describe the grand plan for winning a war. The concept thus comprised of both planning

components and decision making or action componenrs.

As defined by Alfred D. Chandler (1862), a strategy is: "the determination of the basic long-term

goaIs and objectives of 8n enterprise. and rhc adoption of courses of action and the allocation of

resources necessary for carrying ou t these goals?'.

Chandler's definition of strategy stresses both !Re formuIation of goals and objectives (ends) and

of action plans and resources commitments (means) utilized to achieve these ends.

l~nplicic in his definition is the nution of s suategy as a a"process'' rather than a m m p t .

However, his p r o ~ s i t i o n that a strategy follows strucrure is discarded as untrue far. as

demonstrated by Aharoni. Bower et al '. Structure also influences and constrains sttategy

selection in most firms.

Stoner and Freeman (1988) consider strategy from two perspectives: "'the broad program for

defining and achieving an organisation's objectives and implementing it's missions" '

The word "program" shows the active, conscio-us and rational role plaped by managers i11

formulating the organisation's strategy.

Ihe second perspective drawn from Ran E. Schendel and Charles W. Hofer's view of strategy

regards it as T h e pattern of the organisalion's responses to it's environment over-time".'

This uicw o r stratesy cncornpasses organizations whose manager's behaviour is reactive. i.e.

managers who respond and adjust ro the environment as the need arises.

'-The actions manager take to achieve success for organizational goals in a competitive and

uncertain environment'' '

Our definition of arategy in this stud'; shall be as conceived by stoner and Freeman as well as

~VcFasIa~d

'Without a strategy, the organization is like a ship without a rudder, going around in circles, it is

Iike a m n p . it has no phce to go." "

Leontindes in his study of diversification, providing through time short case studies very

outstanding evidence from the American business scene of the importance of making strategic

decisions. Using the areas of computers and two retailing sectors, as examples, the study showed

that successful organizations are those which, as events have turned out had correct version of

I~ow things .- were to be in the future and deployed their resources accordingly?

Nun~ci;ous case studies of businesses operating successfu1Iy in declining markets of corporate

acquisicions. and of "turnaround" situations where business; Rave been moved quite rapidly from

Ioss nlaking to profitability provided further examples of the way in which companies can be

made tu succeed despite adverse enxironmenlt.

This was attributable to the key role of a single Chief Executive Officer and apparently of 8 superior strategy - making. Uoinmenting on the results of successful strategy. Mace and

Montgomery (1969) showed that small firms size in a declining market dominated by a single

large producer is not barrier to a new business succeeding through adopting the righ~ strategy.

Other studirs have related perfor~nance to the presence or lack of formal strategy. The h d i n g s

of the study of 100 firms drawn from four industries revealed that those with clear well-defined

strategies generally out-performed companies that has informal, unclear strategies. The study

showtd [hat the "winners" identified their distinctive areas of competence and took dvantage oS

hem through pIanning while Ihe "Lmsers: more often simply reacted lo [he external

environment. The reactive approach aec~rding to the findings seemed to work in the air

rrwsport industry which was heavily regulated and protected at the time of the study and was

subject to minimal uncertainty.

2.2 THE CONCEPT OF CORPORATE STRATEGY

Kenneth R. ARdrews defines "Corporate Strategy" as "the pattern of decisions in a company that

deiermines and reveals it's objectives, purposes or goals, produces the principal policies and

plans for achieving these goals, and defines the range of business the company is to pursue. the

kind of econonlic and human organization it is or intends to be, and the nature of the ecominic

and non-economic contributions it intends [a make to it's shareholdets, employees. customers

and cornmunications."

Hicks and GuIlet ( 1 981) regard corporate strategy as "the firms overall plan For dealing with and

existing in it's environmmt."'2 Kate( 1970)'~ developed the notion that corporare Hrategy "is

not sratic" bur is rather a living thing that evolves over time. He went further to introduce the

idea of "strategic psture" d "strategic, plan" into the concept.

'.Strategic posture" he defines as past or present strategy of an organization and is the "actual

r4ationship" between the firms and it's environment. Thus, a firms' current strategy posture

could be determined by identifjjing three fundamental elements.

1. Specifications (measurable factor (hat identi@ the essential performance qualities of the

organization) such as;

a. Size in terms of sales volumes, assets, net worth, number of employees and past

trends of these Factors.

b, Market share and it's rate of change over the years.

c . Measures of profitability such as net profit, relurns on assets and so on.

2 . Scope and deployment, product and market scope determined by identifying policies such

as, financing policy, jn-oduclt p o k y , customer poky among others.

Strategic plan on the other hand. is future oriented. It describes the intended future relationships

between the organization and the environment and a general action plan devised to achieve the

posture.

According to Kate, all firnu have strategic plans. Strategic planning in Akpala's words is:

.'action by management in combining organimtional resources 'taking into account it's internal

and external opportunities and constraints so that the organizations can reap the besf possible

advantages and grow". ''

Corporate strategy therefore is formulated by top management to oversee the interests and

operations of orgmisarion~ that are made up of many lines of business (product divisions),

(Stoner and Freeman: 1489)''. The basic strategic issues concern the mix of business that the

org,anization should be in, how it's resources should be aIIocated among these businesses and 16 how they should be managed (Gray and Smeltzer: 1989). .

Thompson and Strickland (1983)" advanced ten options for dealing with corporate strategy. Of

all the options. the recxnchrnent srrateg): lends itself to poor economic performance.

The strategy is a common shon-nm actiorddecision some firms adopt. At the corporate level. it

can assume two dimensions; he first variation is -'stringent'' across - the board cost cutting to

improve efficiency. The second demands the selective mvanlping of the weakest facilities or

products.

This study shall adopt some of the elements of Katz's "strategic posture" to determine the

corporate strategy in manpower planning.

2.3 PLANNING - AN OVERVIEW

Planning is basic to he ptrfimnance of 011 managerial functions. Even ahough managerid

functions are inter-related, a manager must of necessity pIan to be able to work towards the

attainment of organizational objectives which themselves artt the product of planning.

Planning. Akpala (1988)Is maintains: is carried out To select in advance. future courses of action

from among alternatives for an organization a$ well as it's functianal areas. It is the process

by which managers visualize and determine future actions that will lead to rhe realization of

desired ob-iectivcs (Trewariha and Newport: 1 ~ l . i ) ' ~

Hicks and Gullet (1981) define planning from the perspective of it's role in an organisation.

Planning they summarized:

1. Sets organizational goals or objective.

2, I t forecasts the envirunments in which objectives must be ~ccomplished and

3. Fixes precisely the modes by which the goals and objdcrives arc to be a c c ~ m ~ l i s h e d ' ~

fmplicit in thz above definitions is the notion of a formal conscious course of action which leads

us to the importance of formal planning.

A major study by Thume and House (1970)" proved that companies that planned did betler 011

average than companies that bid not plan.

Another study by Herold (1972)22 vaIidated this conclusion. Further evidence is offered in the

study of kIie benefits of planning on acquisitions carried out by H.1. AnmR et al (197023. In all

studies. differences existed in individual p r fomance and some compmies that planned in the

samples out-perfomled non-planning companies.

I11 Summary, planning is a process of setting goals and establishing method3 crr paths for

reac.hing them; and, a plan itself is the outcome or result of the planning prmss. So, planning is

tiindsmcntal to all managerial functions.

2.4 DEFTF4LTION OF MANPOWER PLANNING

The t e r m "manpower planning" has been defined in a variety of ways. This problem of

definition has k e n aggravated by the utilization of such related words as human resource

management. manpower management, people planning and other variation of the same theme.

Some observers coatend that manpoker ptanning is simply a synonym for a more d ightened

style of personnel management.

Lester (I966)24 opined that manpower planning at the "macro" or societal level is concerned

with the national labour force and includes projections of Labour supply and forecasts of

mcupational, industrial, and total Labour force requirements.

Micro manpower planning has been construed to encompass a wide range of activities from the

staristical forecasting of personnel needs through the full range of traditional persormcl functions

". Also, some manpower planning approaches have concentrated on specific employee groups 27 such as managers and professionals ". while others have covered the entire workforce. .

Hughss has suggested that there cannot be one standard avenue for manpower p l a n n i n g . 2 ~ e

rather contends that there must Ix. !lighly flexible approach whereby the manpower planning

programs can be designed to suit the specific needs of each individual firm.

Manpower planning according T o Ubcku (1975) is part of organizational planning. He urges tktha~

it should not be considered in imlation, but in the total context of the organimfional growth.

Manpower planning hc continued covers more than simply planning the future manpower

requirements of an organization since i t relates to all aspects of t 1 ~ business?

Gcssell ( 1 97 1 ) view9 manpower planning as a mechanism for resolving a set of simultaneoils

decisions concerning recruiting and screening methods. living standard, job structure and

mobiIity. quantity and qualiry 01' !raining, compensation, and related personnel factors which

have traditionally unrelated decisions. h3

Sc.kuller (1983) briefly states that personnel planning invdvcs predicting hunian resource needs

and planning the step3 necessary to meet these needs. 3 F

According to Gordon and Monday et a1 (1990). it is the "process of systematically reviewing

personnel requirenwnts to ensure that the required number of employees with the required skills

arc available when they are needed."33,

Manpower planning is also construed as a strategy %r the acquisition, utilizafion, Improvement

and retention of the organisation's l~uman resources in order to achieve it's objectives. 33.

Burack and Gutteridgc in Biles and Hornberg (1980) have reported scvtral research studies of

the stare-of-the-art developme~lt of manpower planning, ranging fmrn the 197 1 study of 220

large US. corporations conducted by Towers, Pernin, Forstrr and Crosby (TPF&C) to the 1972

American society of personnel aclminis~ration carried out in collaboration with the Bureau of

National A f f h 34. The studies according ro Ihem involved questionnaire surveys of specific

target groups and were dlated to lthi surveyed organizations general experience with manpower

pIanning. The findings revealed that the company's personnel expressed widely different ideas

regarding their definition of manpower planning. Manpower planning to some was essentially a

number's game to facilitate ressnte and sepIacrment planning, Other mangers equated

manpower planning 2a the creation of a personnel database and others wifh the existence of a

capability to deal with "manpower acts" such as Equal Employnlenc Opportunity (EEO)

Prugl-amme.

Probably. the most co~nmonly accepted definition of manpower planning is "a pmeus concerned

with providing the right number and kind of people, at the right place. at the time doing things

wI~ich help to fulfill organizational as well as individual objectives." 35

2.5 THE PLANNING PROCESS

Ahel Ubcku 36 acknowledges two main stages in manpower planning. The first stages concerns

tile dmiled manpower inventoq of all types and levels of employees (unskilled) supervisory

and managerial Throughut the manpower planning period. The second is concerned with

manpower supply sources.

Coleman (I978)37 regards the process as a five-stage system. The first stage involves the

determination of organizational objectives and plan for the planning period. The secord stage is

tlw ascertainment of the gross manpuwer requirement for he plan period. The third stage is the

n~anpower inventxy or currenr in-house capability. The fourth stage involves the definition of

net manpower requirements for eht: planning period. The fifth stage requires programming to

meet r l x net manpower requirements.

This process in Coleman's opinion operates in reality as an integratcxl system, Far it .to operate

effectively, there must. be feedbwk control and continuous evaluation to ensure that programmes

are being achieved, are providing for requirements rmd are in turn proper for providing personnel

to meet organizational objecltivr and plans. The foregone implies that manpower planning and

programming must of significance ,bc ilpg~aded conceptually nnd operati~nally if organiiatio~ls

art. to meet the challenges of the fiiture.

Schuler ( 1 983) identifies four phases in the manpower planning process.

1. Gathering and analpzinl~, dare through pen~nnd inventories, and forecast (and

creating a human nmurce information system}.

7 . Establishing human resources objective and policies and gaining approval and

suppofl for them from top management.

2. designing and implementing plans and action programs in such areas as recruitment.

training and promotion hat will enable the organization to achieve it's Inanpower

objecrives.

4. Conrmlling and evaluating personnel plans and programs to facilitate progress toward

human resource o b j ~ t i ~ ~ c . 3s

'I'ablc 1 below s h o w the relationship among the various phases as we11 as their relation with

cal-parate objectives. policies, plans and environmental cornpnenrs. The interaction of this

aspect of human rzsaurct planning helps. to determine the current resource situation and future

human resource needs.

TABLE 1

SOURCE: The Human Resource Planning and Programming Process (Adapted from the

E.bJ. Vertcr manpower planning for High Talent Personnel (Am Arbor) Mich: Bureau of

Industria1 Relations, Graduate School of Busi~~szi . the University of Michigan. 1767). P929.

PIunklett and Atrner (192)39 on the other hand hold that the overall manpower planning process

for an organinlion eiltails 'rhe demand for and supply of personnel". Thus, they identify three

elements to planning:

1 . Conduct personnel audit of the srganizacion.

2. Comparing the requirements to the invenrory of potential candidates within the

organization. and

3. Developing specific plans for bow many people ro recruit (from outside) or whom to

train (from inside).

Below is an illustration of the human resourR r(manpow~) planning process.

FIGURE 1 : 'HUMAN RESOURCE PLANNING PROCESS"

9

Human Resource lnvenrory (Compare with initial forecast)

(a) Present quaIification of employees

(b) Training pstcntia! of einp foyees.

Hutnan Resource Forecasting

Plans For

Training

A

t

Plans For

I

Recruitment

Sourct: W. R. Punkett and R. F. Atter, Introduction to Management 4"' ed.

In Plunkett and Antmer's diagram. che personnel requirements having been developed are

modified by statistics on employee turnover. The initial forecast reflects the number of

retirements, resignations and terminations. The figures are in turn compared with the personnel

inventory figures to determine final plans,

Ln a survey of human resource activities Hill and Gabarro (1 9992)40 illustrates the diversity that

characterizes the planning process ar sbphistimted companies. He grouped the sample

companies into stages. based on tlmc criteria;

1. The number of people - planning elements used in the company

2 . The degree to which humm resources are integrated in the business plan and

3. The expressed amount of interest in commitment to the planning process.

Companies were asslgned highel stages depending on the number of eiements. the degree of

inrzgralion. and the degree of Inreresr in their ptaming process. The findings revealed rhat

majority of the survey companies felI 'between two extremes: the companies that do little or no

people plaming or those that integt& long-range human resources planning into their strategic

business plans. Table below show the result of the survey cond~ted by miils on the various

stages in Human Resources Planning.

FIGURE 2: STAGES IN HUMAN RESOURCE PLANNING

( STAGES -

NUMBER OF COMPANIES

I Advanced

I

I

RESPONDENT

I5 16

SOLJRCE: Mills, D, Quinn n Gabarro (1992) Ibid P. 454

PERCENT OF ACTIVI'T'IES

Company picnic short-term head count forecasting

Longer-ram head count forecasting

Skills inventories and succession planning as part of a long-term business plan. Scenarios. trend analysis, management development, morale management.

According to the survey, stage(" companies have no long-term human resources planning.

Managers build morale by traditional methods such as picnic. One executive in Mill's words

said. "we go on Faith".

Eve11 through companies in stage 2 have a hng- te rm business plan, senior managcr tends to be

skeptical of human rcsourcc planning. Respodenr ar stagc 3 companies !he study also

discovered, cited several manpower planning components in nddition to Long-term staff

forecasts that project human resource iwxls to tive years out. IT however, found out that they

mosrly do not integrate thee aclivities into their corpor;tte plan.

Companies in stage 4 of the study RLSO revealed do a great deal of people planning and 87

percent is reported. have ar, least o w human resource component integrated into the long-range

plan. Stage 5 companies Mills also L-;ound out include human resources component in their long

-term business, plan and they are enthusiastic on business plan and also enthusiastic an

manpower planning. He reparts that one corporate executive commented: "HRP is our nurnkr

one priority - the most important thing we do relative to productivity. TO get people involved,

HRP has to be aware and credible" '%ill's srudy a k a illusuatcs how conlpanies at the differenr

stages differ with respect to their hiring and training activities. The result show a steady

progression from stage 1 compnies emphasis O n anticipatory acrions. In specific rerms, stage 1

and 2 compar~ics were shown to Ilave a tendency rowards hiring and reraining people only when

\hey have imrndiate vacancies where thosic of stages 4 and 5 anen look as far as three or six

years allcad. These differences were identified in hiring or retaining to fill scientific a d

technical positions as well as managerial and professional positions.

Another majot building black in manpower planning as identified by ,Mill is succasion planning

or the identificatim of ipeopk to filI key adrninisrrative positions. He observed that in spite of

the wide-spread use of formal and infor~nal succ~sian into it's long term strategy plans only

about one company in ten integrates: succession into it's long term strategic plan.

It could be deduced fmm the above study that integration of the manpower plaming p m e s s in

the coqmrarc: strategic plan is critical to organisation long-term growth and survival.

2.6 COMPONENTS OF MANPOWER PLANNING

There are diverse views on the manpower mix of an organization. Burack and Guttteridge in

Biles and Holmberg (1980) contend that: "At present time considerable misunderstanding and

disagreement exist as to what constitutes "manpower planning" (MP) and likewise. there is a

yea1 diversity in human resources management program espoused by various organization^.'^^

Another school of thought attests ~hstt; "One finds "splinter of manpower forecasting. manpower

inventory, replacement planning and recruitment planning rather than comprehensive,

grneralised efforts towards carefully thought -out

In his study, Geister 44 outlined in details the diverse activities associated with manpower

planning and highlight those he concluded to be centrally important functions of personnel

mangers in the area. Also, his finding from a questionnaire survey of 65 of fortune's 500 longest

con~panies though exploratory rather than conclusive, stresses the unsettled nature of manpower

planning in discussing problems experienced in these companies.

In spite of the assumed difference in the composition of manpower planning, many writers confined manpower planning to manpower forecasting and inventory.

2.6.1 lM~np0wW Manpower forecasting is described by Biles and Holmberg (1980) as that aspect of' manpower

planning concerned with projecting the organisation's internal demand for labour and

ascertaining whether that supply of talent will be available within the firm at the appropriate

time."

The outcome of the manpower forecast in their opinion is a projection of net manpower

requirements.

Gordon and Monday ( 1 'NO)% identify two aspects to manpower planning - requirements and

ay~ailability. Manpower planning forecast in their view involves determining the number and

type of employees needed in terms of skill levels and locations. When analysis indicates a

personnel shortage, recruitment effort is initiated whereas, a projected personnel surplus

demands restricted hiring reduccd hours, early retirement or lay - offs. This view is in

aprerrnent with Plunkett and AtfnerS' ( 1 992147.

Gray and Srneltzer (19'89)48 have added another dimension to the human resource forecast.

They held that Beside strategies, plans and nature of rhe current employees, other internal and

external factors influence Lhe necd for crnployces. The emernat fx tors they belizvt: include

economic. techno!ogical, social political and legal fictors.

The result of the study conduc~cd by Heneman (Jr.) and Steltzer 1968, shows that managers

cornmonlg assumed that the following fwts constitutes a minimum base data for a foremsr.

P r d w t demand (sales and workload)

- Eficiency (technological and administrative changes)

Expansion (facilities expansion, new product$)

- Budgets

- Internal Labour Supply (quality of manpower lurnover)

External Labus Supply

These researchers used qwsrimnaircs and interviews to collect categories dare from a sample of

companies. It is aeprtcd that 81 ixrcenr of the Minnesota companies' studies used manpower

forecasts for planning recruitment programmes. Training, transfer and promo~ians followed in

frequency.

They however, recognized that the relevance of the variables, will vary with circumstances and

that each orgnisation must determine it's own appropriate method of forecasting.

2.6.2. FORECASTING FOR FUTURE MANPOWER NEEDS.

In ihe studies reported by Burack and Cutteridge, about one-third of the firms ciairned they

forecasted manpower demand on a "fairly frequent" (10 Percent) o r "regular (20 Percent basis.

An additional 40 percent conducted forecasting for manpower needs at ~irneu and overall. some

90 prccnr had varying cumrnitrne~~ts in this area.50

Reserve and replacement planning for key position in a related area the eprt further disclosed,

was conducted on a fairly frequent or regular basis by 40 percent of the companies and at times

by another 40 percent. Only about 5 pelrent of the respondents reported that they did not

develop succession plans.

Biles and Hollwrgs7 study cmf i rnd that though forecasting is a fairly common manpower

planning technique, much emphasis is piaced OII short-range projection. They also observed that

relatively simple (such as mmpowcr inventories and counts of jobs vacancies) rather than more

advanced (such as prducrivity m~aiysis) manpower forecasting techniques are the most, widely

used. The focus in short-range manpower forecasting is on budgeting and contrdling manpower

costs as we11 as identifying human resources talents manpower forecasts nvcr long range period

[five or more years in the future) are used in planning corporate strategy, hcility planning and

identifying managerial replacement.

The Nigerian National Manpower Board in it's 1963 survey reported that: "Some employer'

expressed inability or unwillingness to fomasr manpower requirements because according to

them, there were too many variables to consider. for exampIe, the rate of growth of competitions,

whether internal or external, movements in terms of trade, etc. Other establishments appear to

have no definite plans for the furu1.c of those who made n forecast, there was rhe tendency to k

cautio~s".

2.6.3. THE DEVELOPMENT OF MANPOWER ACTION PLAN

The PTF & C and the Civil Service Commission research reported by Bureak and AntterIdege

suggest that "the major problem encountered in manpower forecasting is a genera1 lack of

credibility in the projection of manpower requirements.

Biles and Holmberg's study showed that a b u t me-half of the mganizacions indicated they

utilized a planned program for the development of promotable mangers rsn n 'fairly regular'

basis. Furthermore, about one fifth of the respondents it gathered -replied that they held career-

counselling sessions with their employees on a fairly frequent or regular basis.

Conversely one-thirds undertook very few career planning activities. Accordingly, khe

urganiation that provided some career planning assistance showed great variations in the

attontion t h q provided ca managm and supervisors.

The report also showed great disparity with respect to ckar guidance assistance provided by

firms in the Towers study. Biles and Homkrg's srudy revealed that career planning assistance

was mostly limited to a selected group of high potential employees.

2.6.1 RIANPO WER INVENTORY

The l~urnan resoumv inventory according to Gray and Smeltzer "presents a continuous record

that catalogues the skills. interest and needs of the present work force.

'I'he inventory or audit involve a11 other aspects of the bumarl resources system among which are

performance review, training records, succession plans or replacemem charts for higher level

managers. This view is shared by Plunkett and Atner (1992J55 and Rawlins (1992)56.

Biles and Halmberg opined that a basic requirement for a suecessfuE manpower planning system

in a data base which comprises iaforrnatkm on the personnel, professional, educational. 4 job

rdated particulars of the work forces.

The FPF & C study reported by Burack and Gutter idge indicated that 85 percent of a11 the

sample companies in their study utilized manpower information systems. This s~udy also

rcvcaled that about one-third of the manpwcr information system operated at the departmental

or individual level rather than corporate wide level.

Vmer (1967) emphasized the need for invmtories and capability of the computer in this area:

--Inventory efforts may range from a detail& analysis of job duties and position requirements to

summaries of the number of managers at wuious organization levels by age and advmernenl

potential, The inventory should enable the analyst to determine the existing manpower by

significant categories (functions. cxpcriencr: training, age, prfonnancc qual i ty and the like),

where it is being utilized and how it is being utilized. The data can be inregrated into metric$ Car

analytical purposes. To be effective and eccmornic, the inventory efforts shouId be co-ordinated

wi th the data retrieval system and performance and potential appraisal pmgrams."s7

Rrenner (in Crook, 1967) dmri'ad one application of manpower information to succession

planning at an executivz s tudy conferc~lce sponsored by the Educational Testing Service. This

program identifies Leadership talent among the .200 employees in Xerox leadership

develvpnlent program, yielding a register of 50 people assessed as Raving greatest executive

potzntial. An executive succession program was formulated as well as information on the

quantity and quality of back-up talent. Employment were selected by both order of rank and

rating on the scales. 5 6

2.7 RELATIONSHIP BETW,EEN MANPOWER PLANNING & CCORPORATP: STRATEGY.

As SchuIer puts it "Human resource planning is directly tied to strategic business planning.

Stra~egic business plan define steps that the organization will take to meet the demands of the

future. H u m a n resource plan ensures that the right number and the right khd of people become

available a[ the right time and placc so that orgwizaticmal needs can be met.

The case history of the Harris corporation, a Cleveland based firm is reported by Aplarlder

(1980) as demonstrating 'the importance of planned executive succession to the success of che

According to the study, the Harris corparation, in 1464, as an important goal QP it's five year

plan, planned to boost sales from 5 100 million to $250 million in 1969. The firm realized that

during it's growth, it had not been developing it's future managelnent t a r n In necessary derail Or

depth. I t therefore, revitalised the existing junior mstnagmenk training program. initiaRd a

senior executive program to develop the necessary managerial calenrs and formed a manager-

manpower planning program whi+ requirrd the manger of each division ta meet with c q m a t e

top management to discuss the pl-ogms of : i s or her organization.

The results of these progress revealed thar the 1969 sales goal was reached one year akad of

sr.t-~cdiile and that the Harris col-vation wpassed 8 half-billion dollars in saks by J u n e 30,

1 974.

I t could be deduced from the report that manpower planning can save organisations huge Iosses

and enable it attain it's strategic goals. In an illustrative case study on "Human Relations at Sony

Corporation" Stoner ( 1 5 8 9 ) ~ ~ states thaf Akio Morita's (founder of Sony corporation) human

resources policies accornrndatr the overall strategy of management and employees. Sony,

according to the study, develops among it'^ worken s sense of commitment 10 the uverall goals

of c11e firn~. Sony Corporation has, partly because of employee commitment k e n able to stay

competitive in terms of wages and benefits and to motivate highly competent people 1s continue

Fenel and Hin (1989) 62 repon that Proc~x & Oarnble (one of the Largest Companies in the

United State) under the leadership of I a r x s Scalie (Chairman and Chief Executive Oficer)

understands that his employees are the secrct ingredient in the company's successful p d u c r . In

a profile on "Jones Scale of Prwter & Gamble" sourced from Dale Kciger (19871, Julie Franz

(1987) and Cecilia Read (1987). they outlined the strategies the corporation adopts towards it's

manpower plan 63. The plan includes: shortzr work-week, profit sharing plan for employees. best

renuneration package. internal promotion:r, life nnd health insurance and a variery of orher

benefits. These as well as other policies mil pioneering efforts in human resources management

is believed to be the secret to 'the c~rnpany's success.

In another case report. Few ( 1 8 8 7 ) ~ . Hillkirk (1987) ". Serafin (1986fb and Higgins (1986)~'

sl~owtul how cffec~ivc manpower strategies resulted in "Domino Pizza"" growth and

pr*o!itability. According to the ri'porl. in 1987. Domino's annual sales totalled over $2 billion.

Their stores increased fmm five hundred s~or~-$ in 198 I t6 3000 in 1987.

In 1937. the company opened two new stores a day. Effective training of employees was vital to

maintaining the company's quality image given the rapid growth. It's success is believed

resulted ftom it's ability to hire nhe employ2es and tmin them well. The above maIysis shows

that there is a relationship betwen cwpdrate strategy arid manpower planning.

2.8 RELATIONSHIP BETWEEN ECONOMIC DEPRESSION AND CORPORATE MANPOluWER PLANNING STMrEGlES

In a case research on .'Ohio's Lincoln Electl-onic company" Sharplin 6u in three different studies

ranging from 1982 to 1984 summarized the strategies adopted by the organization toward it's

manpower pian in the period of economic recession af 1479-1984. According to the report, in

I982 alone. the firm's revxm dropped by 30 percent. For most companies. this spetld disaster

as business bankruptcy as at it's peak.

Lincoln however. remained profitable, As .he report carried. not a single worker was laid off.

Managers responded quickIy to [he recession by immediately making the difficult decision to

cut workers back to the guaranreed minimum thirty hours per week and also reducing their

bonuses. By 1987, sales and protits in the Lincoln company had recovered and it has remained

-~economicaIly sound and opthistic about it's abiIity to take the good and the bad in a ~tride.'?"~.

Henry. Pettigrew er all conducted a one :rear case study into the "The role of Vocational

Education training in Employer's skill supply strategies and the plam of Human Resources

Development (HRII), and Vocation Educaticn Training (VET).

Using a sample of 20 firms, the contextual factors involved particularly hnding of VET and how

chanses in these factors might afTect ski11 supply strategies in future, the study was interested in

firms' processes of decision making towards training. Ten of the firms drawn from an existing

project on Torporate strategy change and Hunlml Resources Management" were studied

intensively than others with an average of 40 interviews and pericds o f "real-time" observation.

In the remaining ten firms, an atwage of six interviews were compIeted. The interviewees

included personnel directors. scniur'line managers. training managers. middle and supervisory

management, shop-floor employees arid shop stewards. These inrewiew were supported by

company documents and report and quanritative data on manpower training activities and

training expenditure. The business envirorm~ent of sample firms was rhe substantial change

occasioned by the post 1980 econoniic recession o l the United Kingdom and the consequent

ad-iusrmrnts in the fortunes of their own and rcla-ted industry sectors. Such external and internal

changes ii was reported raised varying issues across the firms Human Resouws Management

activity.

First. a business performlance gap resulted h r n the competitive pressures and, firms responded

by the development of their products and their market positions as well as technical change

within the organization. These responses led to perception of skills performance gap which in

turn raised central issue of skill supply.

The research evidence shows that the strategies employed by firms -to overcome the skill gap

included recruitment, more flexible and varied employment contracts, training and development

and both the upgrading of recruitment criteria. Firms raised secmitmenl standard ~o devdop

tlexible skill base while others (in diverse sector) reIaxed them ta broaden the net and increase

the volume of recruits.

For many of the firms, part-time employmenb has become more important. Firms in banking and

retailing moved to more flexible warking t i ne patterns. The use of freelances temporary staff

and sub-contracted labour was ,TI important strategy for firms harrased by head-counts and

subject to seasoned fluctuation in deinaild.

The study further revealed that one of the sample firms computer service 8" pursued a deliberate

policy to reduce its dependence on kmtraet staff both to cut costs and secure knowledge of it's

systems in house. In the alternative, they al:w established a graduate recruitment scheme with a

two-year programme of training and placement both in the company and in other companies in

the group and, to ensure i t provided the intrinsic and extrinsic satisfaction to retain them once

rl-ained.

Mansfield ( 1989) comments; "This is a classic insranee, rhenhre of howH what'? The result

also showed cases where several companies redesigned product or process tehnology reducing

the ski11 level of existing jobs. Sorrie scRods of though are however skeptical about the abiIity to

determine a consistent patter in the use of "deskilling'" as a strategy to ease skill supply

problems. Thcy argued that ir is debatable whether pal-ticular ~hanges En job requirements

constitute .-deskilling" or .'unskilling"?'

For h/Iant>ld, a shrinkage of the business and employee numbers during the recession had k e n

for mainly a niatter of simple survival, and not conducive to "strategic beha~iour."'~

frruinye~. Mayes and Mckiernen ( 1 98374 examined twenty six British companies over a ten

year period [up to 1981) tmd concluded that -'SharpeMersh (those organizations which has

successfi11ly gone through major changes) w r e characterized by two main stimuli; either there

has bwn intense extenlal pressure to change, w there had k e n the internal pressure of a change

initiated by the ChieFExecutive.

Sharpbendecs, the study indicates occurred in priods of general economic difficulty such as the

recession of 1980-1989 and T R ~ oil crisis of 1974. One of the hallmarks of the successfuul tirms it

gathered, was investing the spax resources i n t ~ the Future (explicitly on human and machinery).

According to the study. inveshnent, training and cp l i t y were p a t ofthe coprate nission.

Wilson and Rosenfeld ( 1 9 ~ ) ~ ' observed that during the 1980 75 many British companies

experienced major dislocations of their business due to e t ~ n ~ m i c recession,

This they acknowledge had also the effect of acting as a spur to change. They further stated that

employment in the manufacturing indusrrieg has over the k t fiffeen yean dropped, by over 20%.

This shows that economic swession had impact on manpower plaming practices.

CHAPTER THREE

3.0. RESEARCH METHODOLOGY

3.1 POPULATION SIZE OF THE STUDY

Population is a complete set of individuals, group, objects or measurement having some common

features which can be observed. For the purpose of this study. the finite population studied was

forty six (46) banks operating in Lagos state consisting of 39 privart Fimird companies and 7

public companies.

3.2 SAlClPLE SIZE

Sample may t>e defined as collection of individuals, which form part of a class of population

observed for the purpose of maktng scientific statement a b u t the ppulation. This research

could not be conducted on all the banks mainly because of financial and time constraints. A

sample size of ten bank5 which represents a b u t 22% of the entire p~pulaltion was randomly

chosen for the study. Of the ten ( [ o ) banks studied, five (5) were private limited companies

while five (5) were public limited companies (see appendix 1 for list of sample companies). In

all. 111e subjzcts who participated in the study were fifty (SO), management staff (10 senior

management and 40 middle) management staff.

The selection of sample for the questionnaire and personal interview was by smple

randomization. This is a method of san1pIir;g in which selection is carried out such that every

unit within the population has an qua1 chance of being chosen as a member of the sample.

3.3 SOURCE OF DATA

In caIIzcting data for: this research. both primiuy and secondary date sources were employed. All

primarj- hfor~nation and data were obtained t h u g h personal interview with senior management

scaff of the sample banks and questi~nnaires adminisrered to the divisional head (middle

managcinent siaff) who represent the bulk of the respondents used in this srudy.

The major secondary date sources include: books. journals, company's annual reports and

prospectus. the Lagos State Federal Office of Statistics, and University of Lagos. Data from

these sources were extremely useful in designing rht research instrument - questionnaire and

interview schedule. It was also of particular importance in con~piling the literature review.

3.4 RESEARCH INTRUlMENT

The major instruments used for data collection were queshmaires and personal interview. The

questions were constructed in a simple Iangutlge such that as much information as needed couId

be obtained. The questionnaire consists of 20 items some of which were multiple type questions

that required the respondent to pick either one option or as many as applied to their

circumstance. "Yes'' or "No" questions were employed while om or two questions gave the

respondents room for open ended opinions. Special cpestions were designed to elicit

infor~nation on he performances of the compmies over a five - year period. This was a h e d at

establishing the trend in the manpower plannhg activities of the sampfe banks, It also sought to

determine if significant relationship exist between the major variables of economic indices and

manpower planning strategies.

All questions were organized in a logical and xquential manner. This was meant to improve the

accuracy of the information obtained and increase the number of respo~~dents per question. The

result was that one qucstiomairc \vhich rquireb inputs fiom four (4) respondents was

adminis[ered per company.

In order to ensure the reliability and validity of the questionnaire, some quesrions were

deliberately repeated in differena forms. Tle idea was that a lack of unanimity in responses to

the same question is an indicatim of the unreliability of the particular questionnaire.

An imervicw schedule was designed for face ro face interview with senior n~anagcmcnt

(Managing DirectodChief Executive or planners) in these Banks. The questions were directly

related to the strategies adopted by companies towards manpower planning.

3.5 DATA COLLECTION PROCEDURE:

The questionnaires were distributed in person by the researcher. This was precded by the

presentation of a Ielter of introductidn from rhe department of management. A brief explanatiorl

of tllc purpose of the study besides that gated in the covering letter of introduction was ~ n d e to

each of the managers visited. A Sew questionnaires were completed immediately while majority

had to be collected at a later date, The departmental heads, of personnel, finance, and operations

participated in the study.

With respect fa the personal intel~icw, the researcher arranged an appoirlrmenr with the Chief

Exccutive/Managing Director or any sen ix management stafT versed with the Corporate

manpower planning strategies of each bank. Most of the interview questions wen drawn from

the questionnaire. It is assumed that the interview responses will aid the detailed analysis of the

objec tivehypothesis of this study.

On the whole, out of 16 questionnaires adninistered, 13 were colIected while 3 were wrongly

completed and therefore rejected. '

3.6 TECHNIQUES OF DATA ANAL,YSIS:

For ease of comprehension and analysis, most of the information presented as findings of this

research have been reduced to tables as we11 as simple graphs. In answering the first four and

l a x questions. simple percentages were employed in data treatment. For the remaining

questions. linear regression and coeEcient of correlation was applied to variables of economic

indices and manpower planning. It vd'l be desirable to give a brief introduction of the major

statistical tools before its application in [he next chapter.

3.6. I . THE LINEAR REGRESSION

The linear regression is usually interested ;n establishing tk linear relarimship between two

variables and is described by using the equdon of the straight line - the least square method.

The general formula is given as:

b =JCXJ--E&C~

nCx' - (Ex>'

3.6.2 TEST OF HYPOTFIESIS

The Person's Product Moment Correlation coefiicknr @ is essentially the basis for testing

Hypotheses I and if a h e a r relaiianship exias between the cwo variable, the prduction moment

coefficient of correlation provides rt precise quantitative measure of the degree of correlation

w e n as: (association). The fonnula i s b'

If r = -+I the correIatim is perfect and pasi'ive between the two variables. When r = - 1. the

correlation is perfect and negative. There is a strong, positive correlation when r approaches + 1

while we have a strong, negative correlation if it approaches -1. However. a weak correlation

exists when r approaches zero.

Thc? formula for testing hypothesis 3 is given as:

An appropriate degree of freedom (Df) of the above tesL is defined by: Df = N - 2

WI~err N - Number of observations -

LS = Level of significance.

'I'he null hypothesis is rejected if the calculated t is greater than or equal to the corresponding

critical (significant] t.

CHAPTER FOUR

4.0. DATA PRESENTATION AND ANALYSIS

This chap~er deals with the general arcatmen: of data consisting sf the general discussion of the

research questions cis well as the tests of hypothesis adopted in this work.

4,1 RESEARCH FINDINGS:

TABLE 4

DISTRIBUTION OF AGES OF RANKS

YEAR OF NUMBER OF OPERATION COMPANIES

Under 5 -

PERCENTAGE Y o

Over 15 8 80

Table 4 shows the distribution of ages of the sample banks. It could be o'bsewed from the a b v e

table that none (0%) of the companies has been in opration under 5 years; 2@%) fall between

the age brackets OF 5 - I f years while 8(80%) are over IS years in businm. The result shows

that all the companies Rave been i l l business long enough ro experience b t h economic boom and

depression and could establish the differences between low and high performance.

TABLE 5

EDUCATIONAL QUALIFECATON OP STAFF

5 1 AFF I PROFESSIONAL. I Linriperted I-IN13 ONLY

Chief Executive Executive 2 20 Directm - - - Operntions 6 60 hjlanager - I Personal

I Manager - . I reasury --+ E M - !', Manager / 1 2o

Suacrvisor 2

OND, QUALIFICATION

W AEC PtIOFESSKWAL ONLY

PROFESSIONAL QUALIFICATION QULAlFlCATlON -I-- NO ] % [ N O 1 %

--

I 1 I

FSLC !

The dara on table 5 indicate that all the executive and managers employed in the ten (10)

companies have higher diploma and Universiry degree with other professions qualification.

Siinilarly, the supervisoiy staff if equally skilled, whik majority of the operatives had WAEC or

technical school certificates as well as firsf. school leaving certificates. This shows that siaff

e~nplo)~ed in [he industry is highly skilled.

CLA4SSIFICAT10N OF STAFF BY LEVEL AND SEX

I CATEGORY OF STAFF T T l FEMALES CATEGORY TOTAL CATEGORY OF MALES %OF 1 , IN OVERALL

I I

Table 6 shows that of the total number of 2.134 staff in the sample banks, 4 percent belong ta the

senior management category, I 1 percent constitutes middle management and 85 percent are

operatives. Of the 93 senior managenlent staff, 77 percent are males while only 23 percent are

fe tnales,

Similarly, out of the 234 middle management staff, 74 percent are male while 26 percenr are

females. Furthennore, of the 1807 operatives, 74 percent represent male's staff while 26 percent

make up the female staE

The result shows chat there is a significant se.c difference in the employment composition of most

banks. The total staff composition of the simple companies reveals that 35 percent are males

while a meager 25 percenl are females,

4.1 ANALYSIS OF RESEARCH QUESTIONS

Tllc first research question was: "Do organization undertake manpower planning?"

EXISTENCE OF STRATEGIC MANPOWER PLANNING:

To find out if organization engage in strategic manpower plano i~~g , both personal interview and

questionnaire were used. The responses from the personal interview conducted in this study

revealed that 9 out of 10 companies have had corporate skategy over the years. Only bank Y

began strategic planning recently and it yielded some responding benefits.

'The chief executive repfle8. "Strategic planning is being introduced more scientifically. The

turn around observed in the 1093 bank's: turnover and protic is the product of the new

managemem and ownership structure. "The above shows the importance of straregy and

managemen( cornrnitmenr in straregy implementation. It was nlso discovered that those

cornpanics. which engaze in strategic plat-ning, have a f'orrna'l process for formulating these

strarcgies and a h integrate manpower planning into their mate& plan. The survey interview

also ~rvsals a variety of startling response on the importance of st~ategic manpower planning. In

rhe words of one senior management 5ta.T- 'Since we put a high premium on manpower

development, manpower planriing is la core part in our strategic plan"

Ta another "strategic nlanpower planning is nnevitable to us"

Despite thc realization of the need to inregrate manpower planning into the bank's strategic plan,

a great disparity exists in the degret: af detailed stra~egic manpower planning.

Out of the 10 sample banks, only 3 were found to have a formal written manpower plan. Also

only one bank engaged in iong-range rnanpDweF planning to cater for perids rsf economic

expansion. gmvth and decline. This systematic planning is reflec~ed in thc constancy of their

staff strength over the five-year period under study. (see Appendix 2 for the staff strength of the

sample banks.

The manpower requirement forecast is done such that a cer~ain level of staff is maintained over

the years. The andysis of the straregic manpower planning activities of the sample banks is

further highlighted in table 7.

TABLE 7

SCHEDULE OF STRATEGIC MANPOWER PLANNING ACTIVITIES OF THE 10 SAMPLE BANKS

I -< Zonr - Range Strategic Plan - ( 9 1 90

Source: Questionnaire Questions l7,! 8, &19,

/ VARIABLES I

Existence of Career Plmling

The responses from TabTc 7 shows [had 7 [7C)Oh) of t k companies have career

plailnrng/deveiopn~nt progmnmes while the remaining 3 130%) do not undertake such a

programme. I t was discovered that those companies without career ldevebpment programmes

place fewer premium an n'lanpower development.

The table also reveals that 8(80%) af the suwey companies draw up a format management

succession or replacen~ent plans. In contrast, 2 (20%) of the respondents reported that they have

no succession plans. The result is that the time-lag between the search for replacement ~ m d

z r u d rccruitrnent leads to disruption of achit ies related to the particular position. Succession

Planning. or the identification of people to fill key positions, it should be noted is probably the

most widely used building block in macpower p1anning. I t zherefore. requires maximum

attention.

RESPONSE

Yes

Norwithstanding. the widespread use of succession plan only 1 (10%) (1000/o) of the companies

integrate succession plans into it's long-range sfrategic plan. Apparently, mast Chief Executives

conceive of succession plans as nothing move than a devise for coping with crisis such as

resignation. or serious illness, Tf thesc execs~tives considered the plans, potential of well laid-out

career advancement, the wisdom of entrerd~ing them into the strategic plan (which identify

opportunities and therefore pronlotion possibilities) would be obvious. Besides preparing for

disaster. succession planning sp~ l igh t s people in the ranks to fmus their career potential thus,

Programme No Yes

clravhg them to top management attention.

4 1

NO. OF RESPONDENT - 7

-- - .. PERCENTAGE % 70 --I

I

3 8

30 80 I

f urthennore, it identifes and directs mansgemenr> sftention to possible coslly vacancies thar

cannot be tilled readiIy.

Table 8 below shows the time frame of tna~~puwer decisions

TABLE 8

HIRE OR TO FILL MANAGERIAL AND OTHER KEY POSlTIONS

PERCENTAGE OF RESPONDENTS

As Table 8 indicates, 90 percent of the a m p l e companies f a x e d attention on Riring or

retraining to fill managerial and other key positions as need arises while an insignificant 10

percent emphasized anticipatory action. The implication is that majority of the companies hire

and retain people only when they are immediate vacancies, while only one company Iwks as far

as three to six years ahead. 'The later scenx to be applying the same lime frame used for lthcir

capi~al investment and projected business growth and expansion to their manpower invesrmenr.

On the whole. the foregone shows that majority OC the companies base rheir manpower planning

decisions 011 their strategic plans. However, the findings from the personal interview revealed

that due to the unpredictability of the Nigerian economy, they also adopt ad hoc techniques for

resolving their pecuIiar manpower .problem;. There was a yeneral mnsensus that under the

present economic situation. planning has b e c ~ m e more hazardous and tasking.

I 1 advance

=Total

Sub~equcnt six research qumians seek to establish the efTects of economic depression on

manpower planning, In order to answer questions 2.3 and 4 asked abut the eCfecrslreIationship

be twcen

i> Advcne economic environmenr and manpower recruitment

100% 100% 100%

ii) Profit levels an$ staffpromotion iii) Profit, levels and personnel training and devekpn~enr. simple

percentages were used for analysis.

Table 9 shows the reactions of the respondents to questions on thest guiding variables.

TABLE 9

EFFECT/ELATIONSHIP BETWEEN ECONOMIC DEPRESSION AND MANPOWER PLANYINC VARIABLES

FARIABEES ADVERSE I ACTIONS/DECISIONS 1 NO. OF ] PERCENTAGE

] Reduced ,. 14 1 40

I RESPONDENTS Normal Recruitment + i -

( y o ) -

I Training I Reduction in Promotion ) 5 1 50

1 Manpower Recruitment I Profit levels Vs Persomel

T r i g Training 1 1 '" Normal Training Reduced Staff Training No. Staff Training

No. ., 16 Normal Promotion 11 3

-

Profit Levels Vs Persona1

Source: Questionnaire Questions 14, 15 & 16.

60 3 0

The data on Table 9 show that during adverse econon~ic environment 40 percent of the banks

No. in Operation. Increased in Staff

reduced recruitment while 60 percent did not recruit at all. This implies that adverse economic

environment affect manpower r ~ r u i t m e n ~ adversely.

2 4

On the relationship between profit levels and staff promotion, we discover that 50 percent of the

20 40

companies promoted normally whell profit level is low. 5 (5%) of the banks reduced promotion.

while 2 (20%) did not promote at all. This confirms the findings made from thc personal

intewiew with senior management staff ~f the surveyed banks. As one manager puts it,

.-Promotions are rare excep for operational exigencies''. Thus, one can safely conciude that low

profir levels have an appreciable effect on staff pmmotion.

I t is evident from the table that most companies subscribe ro manpower training and

development when their profit level is low. 4(40 percent) of the companies increased snanpwer

training, 2 (20 percent) trained nornlafly while only 4{40 percent) reduced this activity.

This preference for manpower training am! dwetopment could be attributed to the inability of the

banks to embark on fresh recruitment. Thus, to keep their business afloat, they encourage in-

house rraining of general emplayecs and Target manpower training tawards key ~perational mas.

As palhered from the personal inlerviews. those banks that reduced their training pruyralnnw

drastically placed fewer premium on this activity.

1-0 answer qurstions 5.6. & 7 which seek to establish if any relahmship exist between -

i) Profit level and Staff'rc~nunera~ion

i i Staff level and manwwzr recruitment, and

iii) Low capacity utilization and labour turnover,

A simple regression was adopted tbr data analysis while the regression line is represented

graphically. The data on Table 10. 1 1 and 12 shall be used for the computation of the Linear

regression and co-efficient of correlation.

TABLE 10

COMPUTATION FOR A REGRESSIONICOWLATION OF PROFIT LEVELS AND STAFF REMUNEZiATION

PERCENTAGE AVERAGE

Annual Change Profit X

5 13,

39

139

42

5 0

135

32

14

292

20

1,275

Annual Change in Remuneratibn 78

33,

4 8

24

44

3 0

26

2

6 8

18

371

using, the equation of the straigh Fine, we have;

1' Q a + bs

Y E % Axrage h l u a l Change in Remuneration

x - -- '30 ,! , I +. Profit

A - - Y-BX

B - - n C x Y - Cs C y

N - .- Number of Banks

Substituting the values in Table 4 in the equations, we obtain;

- .- 0.13

and

- .-- 20.50 approximately = 20

Therefore,

T11c Linear relationship of profit levels and staff remuneration is represented graphically. (see appendix 3 for rhc colnpu~ation of valws; orx and y).

PROFIT LEVELS AND STAFF REMUNERATION

60 Average Annual Change in 5 5ph Remuneration

5 0

20 40 66 80 100 220 140 l W 180 200 220 Average Annual Change in Profit (%)

The graph shows a posifive relationship between profit levels and sraff remuneration (10 =

0.130). Thus. with a 20 percent increase in Average Annual Profit, the Annual Staff

Rernunzration will be the average increase of 13.13 percent. This reveals that despite the low

economic activity occasioned by high interest rates, adverse economic environment and high

cast of foreign exchange, companies increase staff remuneration when profit performance is

high. This encourage stas retention, reduces stan' mobility in the face of poor sector

performance.

TABLE 11

COMPUTATION FOR A REGRESSION/CORRIELATION OF

TURNOVER LEVELS AND MANPOWER RECRUITMENT

Applying l11e equation of the rtmight lint, we have:

I Ranks

I

B I; E

i I I I i J

--

Y - - Absoiute Average Annual Recruitment

X - % Average Annual Sale k v e i

65

20

67

33

3 2

54

26

I2

7 8

2 7 424

X*

1

16

49

4 1

64

64

225

1

1

1 2896

% Averngc Annual Sales Lcvcl (X)

1

4

7

1

(8)

(8)

(15)

( 1

( 1 )

( 1 ) (2 1)

Y*

65

80

469

4 3

(256)

(43 2 )

(390)

(1 2)

m (27) (538) I

Absolute I Average 1 Annual

Recruitment (y)

4225

2400

4489

1849

1024

2916

676

144

6084

729 22536

C -- - & ; x - & N N

Substituting tlw values in TabIt I 0 in the equations we derive;

- .- 0.08 and

Therefore,

The Linear relationship between turnover and recruitment levels is represented graphicalIy

below, (see Appendix x4 ) for detailed computation of x & y vaIues.

LINEAR RELATIONSHIP OF TURNOVER & RECRUITMENT LEVEL /

Average Annual Sales Level (%)

The graph show a positive relationship Between turnover and recruitment levels, Since the co-

efficient of regression, b =: 0.08. it means that at the average annual turnover levels 0.08 percent

estimated average annual recruitment decreases by 5.49 [in absolute terms). This implies hat

manpower recruitment depends on ltiirnover level.

COMPUTATlON FOR A REGRESSION CORRELATION OF CAPACITY U'TILIZATION AND LABOUR TIJK3'OVER

! Companies I % Average I Average I : 1 Annual AnuuaI 1 Caprrrity Labour Utilization Turnover

The equation of the straight line is given as;

- Y - Average Arulual Labour Turnover

- S - Average Annual Capacity Utilization (%)

Substituting the values in Table 1 1 in the equation we derive;

and

Therefore,

The linear rclati~nskip betweal capacity utilization and labour turnover is represented graphically below.

RELATIONSHIP BETWEEN C A P A C I V UTILIZATION AND LABOUR TURNOVER

Average Annual Capacity utilizstian I%) +.

I he graph reveals that a negative relationship exists betwen law capacity utilization and labour

turnover. 'The co-efficient of regression is b a - 0.71. This means that when average annual

capacity utilization is - 0.7 percknt Is = 0) awrage annual labour turnover stands at 6.2 (in

units). With a relative increase in capacity utilization, a decrease in labour turnover is recorded.

Thus. implying zhat low capacity utilization encourages high labow turnover.

The last research question asked about the manpower planning strategies adopted by

organizations during this period of adverse economic environment. The responses stre shown on

Table 13 belo\\.

TABLE 13

MANPOWER PLANNING STRATEGIES DURING ADVERSE ECONOMIC E K y l RONMENT ECONOMY

lUuestion 14 in the Ouestiannaire)

FREQUENCY OF RESPONSE FROM COMPANIES

Thc above table shows the re-action of the respondents on their manpower planning strategies in

an dve r se eonomic environlnenr.

The response reveals that 3 (B 3%) 01' the banks reduced working hours and pay; 4 { I 8%) of' them

laid off ccaaual k h u r and redundsn~ staff while 2(%) of the wspndelit terminated staff

appointments. The results also indicates that 5 (22%) of the sample companies retrenched their

staff: 7 {30'l/o) engaged in retrainhg and reassignment and only I (40%) dispatched their staff on

c o m p u l s o ~ annual leave as well as reduce overtime. These results are ccmslsteua with the

interview responses elicited fim1 tRe sample banks . O t h r strategies adopted included

manipulation of recruit~~lent criteria (many companies raised recruitment standards),

Recruitment of first school Ieaving certificate holders is phased put by most bank, while the

minimum requirement is pegged at OND. The idea is to merge roles and achieve cost reduction.

rhe interview further revealed thar about 50 percent of rhe companies engaged largely the

services of contract staff. Hence. during Ithis period of ecoeomic rewssion, they are easily laid-

off. ~vhile most of the permanem staff are unaffected by thc retrenchenl exercise. For many of

the firms. multi-skiling has become more important. 50 percent of the companies either fuse

staff functions or increuse work lead to reduce the ~veral l staff strength.

The personal interview also sbwcd hat other s~rategies adopted by firms to survive the general

economic instabiliry included staff trimsfers and rotation 10 ensure maximum uriIiration of staff,

increased training of key staff as uell as compulsory annual leave irrespective of schduled leave

period pending anticipated improvement in turnover.

4.2 TEST FOR HYPOTHESIS

The above hypothesis. we may recall. seek ro establish some relationship between the guiding

variables (adverse economic tnvironmcnt and manpower planning) of this research).

HYPOTHESIS 1

There is a strong correlalion Lretwcen profit I e d s and staff remuneration. In testing hypothesis

I . 1j.e adoprcd a simple linear chrelation statistic - the Pearson's Correlation coefficient "r" and

this is given by the formula:

Substituting the values in table 10 i11 the equation, we have

A s previously noted, correlation analysis measures the strength of linear relationship between

variables. Based on the parameter already stated in chapter 3, the 0.86 correlation coefficient

show that there is a strong positive rclationship Between profit levels and staff remuneration.

T'Ris is admittedly tlue when one looks at the rrend in the bank" profit levels and staff

n.munention. A compardve analysis of thc percentage average annual profit and recruitment

reveals that banks with high percentage of profit recorded high level of remuneration. This is in

agreement with the interview responses where aIl the banks maintained that staff remuneration

(despite lthc profit levels) is based on industry agreed rate. Hence we amep the hypothesis and

conclude that there is a strong conelat ion between proi3 levels and staff remuneration.

There is a significant relationship between turnover and manpower recruitment. To accomplish rhe above test, we shall also use the Pearson's correlation coefficient "r" which is given as

substituting the values in Table I1 in the equation. we have:

The coefficienr OF correlation (0. I ) reveals the existence of strong positive correlation between

urnover level and manpower recn~itment. 01 the average. the annual percentage turnover level

01' 42.4 percent is low. These I-esult in a - 21(-2.1) average emiial recruitment [tigures from

Table 11) which indicates that here is no recruitment in all the banks. This hrther confinns the

findings from the personal intervit?.~ which revealed that during low turnover, most companies

either placed embargo nn ~ c r u i m e n t or reduced it drastically.

Hence. with the evidence on ground, we are made to accept the hypothesis and concl'rdc that here is a significant relationship between sales levels and manpower recruitment.

HYPOTHESIS 3 Hqpotlxsis 3 shall be stated En the null fom, Thus, Ho represents Null Hypothesis whik MI

signifies the Alternative HyptI~csis.

Ho: High Labour Turnover couId be traced to low capacity utilization

HI : High Labour Turnover camof be traced to low capacity utilization.

In resting the above hlpothesis, the Pearson's correlation coef'ficient "r" shall k adopted to

deccrmine the degree of association. Applying the formula we have:

The coefficient of correIation. r = -0.43 show a weak relationship between low capacity

utilization and labour turnover. This could be interpre~ed ta mean that Iabour turnover cannot be

tmced to low capacity rltilization only. Other variables such as profit and sales levels would also

detcrlnine the rate of labour turi~uvir. However. to test for real correlation, we shall subject the

data to further analysis using the I'ormuIa:

tlrherc r ' correlation coefficient

DECISION RULE

Degree of freedom (DF) = N - 2 - - 'lo - 2 = 8

DF = 8

Critical value = -2.3 1

Level of significance = 0.03

The test statistics when computed is:

DECISION:

5i1zcu -1.33 3 -2.3 1 [i.e. the coinpitted t-value is greater than the con-esponding critical t-value a1

0.05 significance level, we have evidence to accept the Nu11 Hypothesis. Thus, we conclude thal

high labour turnover could be traced to low capacity utilization.

CHAPTER FIVE

5.0. SUMMARY OF FINDINGS, CONCLUSION, FLECOMMENDATIONS AND StlGGTESTIONS FOR FURTHER STUDIES.

5 . 1 . SUklMARY OF FINDINGS

Thz main conccrn of this chapter is rn discuss the iindings accruing from the study, summarize

the research work and make suggestions based on the findings.

The study revealed that most of the sample companies have been in business for over I5 years.

They can firl!y appreciate the strategic manpower posed by econamic enviroment and

exigencies.

The findings also slwwcd that highly skilled staff is employed in the banking sector. This is due

to the fact that banking is service oriented and competitive pressures are rising.

The research findings also revealed significant sex differences in the staff composition of the

survey banks. There arc higher percentages of males than females at both senior and middle

nlanagelnenr as well as operative levels. The differences could be attributed to the notion that

thz natiw of the job and Iong I l o m entailed in the job is most appropriate to males.

Another result arrived at this study was that strategic manpower planning exists in majority of

the banks. Thosc banks with \v&-defined strategic manpower plans experienced growth in

Itunlover and profit had reduced labour turnover and consistent staff strength. This corresponds

uith thc findings ~f Thune and House (1 970). Only onc bank was found to engage in long-range

strategic manpower planning. Others Ireat manpower problems as the need arises. This supports

S c h m b et al (1 989) subn~ission that even though personnel strategies exists in organization. the]!

are done on ad hoc basis.

Strategic manpower planning the research findings also revealed has been frustrated by

colltii~uous changes in government policies. Tactical ptanning seems to overtake long-range

planning. since most banks are struggling for survival. This corresponds with the observation of

Mansfield (1989).

It has also established by the findings of this s~udy that ecommic downturn bas a significant

effect on manpower planning. It could be o k n l e d that low lturnover levels resuIted in reducrion

if not con~plete ernbargo in rwn~itr~lcnt thus, increasing thc general pool of unemployed l abu r .

With fluctuating sales/profits levcls, companies are induced to increase investment in manpower

training and development. This is in as bid to deveIop the right ca l ik r of stafT to occupy the

vacant positions that cannot be filled through exteiml recruitment, This is in agreement with the

views expressed by Wenernan, Schwals et, a1 (1 983) and Grinyer, Mayes and Mckiernan 11 987)

as reviewed in the literature.

A strong relationship was also found between profit level and staff remuneration. the degree of

correlation was established by a c o r d a ~ i o n coefficient of 0.86.

Also. the results showed that high labour turnover could be traced to; low capacity utilization.

This is supported by the fact that the computed t - value - 1.33 was greater than the

corresponding significant t - value of - 2-21 at 0.05 level of significance.

The research showed that she strategy employed by banks to survive include, reduction sf

working hours and pay. laying -off of casual labour and redundant staff, termination of

appointments. retrenchment, retaining and reassignment, compulsory annaul leave and reduction

and overtime. Other strategies adopred are. manipulation of recruitment- criteria, rnulti skilling

(fusion of staff functions, skills-upgrading) as well as staff transfers and rotation, In general.

tl~ese findings agree with those of Sharpline (1983). Hendry, Pettigrew. et al f 1989). and

Hencman. Schwab et al (1983). Generally, it could be deduced from the above discussion that

strategic manpower planning exist in urganizatictns bur qgtanization differ in the degree of

strategic manpower planning. A n appreciable relationship has also been found between

ccmomic depression and manpowr planning.

- 7 ? SUGGESTIONS AND RECOMMENDATIONS

I n rhe light of the foregoing discussions and findings, the following suggestions are made

towards soJving the strategic manpower planning problems facing Nigerian banks.

1. Organisations sisuld place emphasis on long-range (five or more years in future)

manpower forecast. Thc wisdom of such a plan is to guide them in identifying their

manpower needs and requirements such that. economic circu~nstances such as boom

or depression does not affect their employees. Besides. long-range strategic

manpower planning aids [he identification of managerial repIacement and minimize

rerrenclunent.

2. Tu ensure that their strategic manpower plans remain viable, management of banks

should conduct periodic reviews of the assumptions on which the strategic manpower

plans were built. This will determine the effectiveness of their strategies and how

well they are accomplished. 1 3. Government should make haste to remove unnecessary andlor inhibitory regulations

that discourage bank's lending to industrialists.

AREAS OF FURTHER RESEARCH

Bascd 017; the insight gained in this research study. the following suggestions are made:

i 1 A similar st~idy should be carried out using larger samples in other states of the

federation.

ii) Another research should be conducted m study other factors which influence

nianpower planning.

I L is assumed that through the utiliza~ion of results of such studies, Nigerian banks will be able to

appreciate the need for integrating manpower planning into their strategic plan.

BIBLIOGRAPHY

BOOKS

Akpala A. Management: An Introduction and Search for Nigerian System, Enugu. 1988.

Andrews, K. R. The Concept of Corporate Strategy; Homewood III Irwin (3rd Edition) 1987.

Barthooomew, D. J. and Morris, B. R. (eds) Asoects of Manpower Planning, New York: American Elservier Publishing Co. 197 1.

Biles, G. E. and Holmberg, S. R. Strategic Human Resources Planning New Jersy: Thoinos Horton and Daughters. 1980.

Chandler, A. D. Strategy and Structure: Chapters In the History of American Industrial Enterprise Cambridge, Mass: No. IT. Press 1962.

Ferrel, 0. C . and Goeffery H: Business Boston, Houghton; Mifflin Co. l989.

Gordon, J . R. Mondy, R. W. et al Management and Organisational Behavour: Massachusett: Allyn and Bawn - A Division of Simson and Schuster, Inc. B 990.

Gray, E. R. and Srneltzer L. R. Management: The Competitive Edge. New Y ork: Macinillan Publishing Co.

Howe, W. S. Coi~oia te Stratenv. Hong-Kong: Macrnillan Education Limited, 1986.

Hussey, D. E. Introduction Cornorate Planning - Guide to Strategic Management Oxford Perganon press (4Ih ~d i t i on ) l991 .

Leontiades, M. Strategies for Divenification and Change. Boston: Little Brown & Co. 1980.

Mcfarland, D. E. Action Strategies for Managerial Achievement (ed) U.S. A: Amacon, 1977

Plunkett, N. R. and Attner, R. R. Introduction to Management. Boston: PWS KENT Publishing Co., 1992.

Rawlins, C. Introduction to Management. New York: Harper Pernnial - A Division of Harper Collins Publishers, 1992.

Schuller, R. S. Effective Personnel Management New York West Publishing Co. 1983.

Ubeku, A. K. Personal ~anagement In Nigeria. Benin: Ethiope Publishing Corporation, 1975.

Gabarro, J. J. Managing People and Organisations: Boston Massachussets: Harvard Business School Publications 1992.

Heneman, H. C. (Jr.) and Seltzer, G. Manpower Planning and Forecasting in the firms: An Exploratory Probe. Minneapolis: Industrial Relations Centre, University of Minnesota. 1968.

Heneman, H. G., Schwab D. P. et al. Personnel/Human Resources Homewood, Illinois: Richard D. Irwin, Inc, 1983.

Hicks, H. G. and Guilett, C. R. Management. Singapore: McGraw Hill Inc. (4th Edition). 1 98 1 .

Ketz, R. L. Cases and Concepts in Corporate Strategy. - . Eaglewood Cliffs N. J. Preiitice - Hall 1970.

Manfield, R. Frontiers of Management: Research Practices. Canada: Routeledge, a division of Routeledge, Champman & Hall Inc. 1989.

Ross J and Kami, M. Corporate Management - in Chan~ing - - Society New York: McGraw-Hill, 1974.

JOURNALS

1. Financial lnstitution Training Centre ( 1 991 ): Deregulation in t he Nigerian Banking Industry - Direction; Challenges, Problems and Prospects. Pp. 50 -61.

2. CBN (1998) Economic and Financial Review: Val. 26 No. 4, p. 50 - 6 1

7 1. NIDOC ( 198 1) Nigerian Banking, Finance Auditing and Actuarial Science

Abstract, Vol. 1, No. 1 - 7 , pp, 33 - 39. -

4. CENBANKNEWS ( l999) - Linkage Banking. Vol. 2, Nos. 3 1 - 34.

APPENDIX 1

LIST OF SAMPLE BANKS,

Hallmark (Nigeria) Plc. Citizens International Bank Ltd, First Bank of Nig. Plc Diamond Bank Ltd. Oceanic Bank Ltd. Union Bank of Nigeria Plc African Intelmational Bank Ltd. NAL ~ e r c l m h Bank Ltd. InternationaI Merchant Bank Ltd. African Express Bank Ltd.

APPENDIX 2

SCHEDULE SHOWING SAMPLE RANK'S STAFF STRENGHT.

I 1 h* I I992 1993 1994

( COMANIES I

APPENDIX 3

RELATIONSHIP BETWEEN PROFIT LEVEL AND STAFF REMUNER4TION

Computation ibr x , values T u determine rhe regression Iine. we find the vaIues of y for selected values of x.

Recalling the linear regression function we have: y - a A 6 (x)

Substituting t h ~ . calcdatcd vaIues in the equation we have: Y

- - 20 + 0.13(x)

Thus, x = 0

Similarly.

LSJhen s = 2, y = 24.2

x = 50, y =26.5

x = 135. y = 37.6

x = 292, y = 58

Subsequent computation of x, y values for the regression line a n similarly derived.

APPENDIX 4

Relationship between Turnover and Recruitment Levels:

The x. y value representing the regression line for the above variables are shown below.

Substituting the calculated values in the linear regression function we have y = -5.49 + 0.08 (x)

When x = 0. y = -5.49 + 0.08(0) - - -5 .5

APPENDIX 5

Depxtment of hdanagernent

Fac~llty of Business Admin

Unilwsity of Nigeria

Lagos Campus

Lagos Stare

Dear SirlMadarn,

OCIESTTONNAIRE ON CORPORATE STRATEGY IN MANPOWER PLANNING IN A

DEPRESSED ECONOMY

I aim C. 0. UYANWUWE - a graduate of the above institution. This questionnaire is part of

student's research work and, the findings shall be used strictly for academic evaluatioli leading to

the award of a Masters Degree in Htrsiness Adminis~rstion.

The list of questions h w e been made 8s interesring arid comprehensive as possible. You are

please requested to answer the questions a ~ c u r a t e l y and truthfully as possible. There are no

right or wrong answers, You are assured .that all information given will be t~eattvi with strict

confidentiality.

Yaur co-operation wilI bc most appreciated.

1, When was your bark incorporated?

2. How long has your maganisation been in business?

(Please tick thc relruanl b s )

(a) Under 5 years

(b) 5 - 10 years

(c) 10 - 1 5 years

(d) Over 15 years,

3 . What servicedproducts docs your bank offer ?

4. Does your company depend largely on imported or locally sairced raw materials'? (please indicate as relevant)

5. Do you have probIems sourcing for your raw materials'? (a)Yes (b) No.

6. If yes, what is the nature of the problems?

(a) Lack of funds i'b) Scarcity of hnds ( c ) High cost of raw mattrials Id) Nnt applicable

7. PIease kindly state your bank's turnover, profit, production, remuneration IeveIs and staff strength in each of the following gears.

1- PROFIT I CAPACITY 1 REMUNERATION I STAFF I

8. How many employees docs your organization have'?

I

1996 l Ys17

j 1998

3 . Please classify them as fallows:

UTILIS ATION - STRENGTH

1

NO. OF FEMALES

I

2

LEVELS OF STAFF TOTAL Senior Management -- Middle h~lanapement O~erat ives

SEW% NO. OF MALES

10. Plrsse fill in the spaced below the appropriate number of' employees with respect to the following in respective years.

' Recruited

1 1 What are the educational qualifications of the following caregories of staff?

1

i Terminated

Ke:t~n",hed

STAFF -

4

Executive Director Production Manager Personnel Manager Admin. Manager Finance Manager Finance Manager

7- Trained --

I Pronmtrd ?-

Supervisors

I

WAEC OND HND

13. During high production Ievels, how do you cater for your persrrrnnti needs'?

BSc.

(a) Permanent reciuitrnent. (b) Contract staff (c) Shift (d) Others (please indicate)

1 When production level is low what measures does your company adupt fa avoid manpower problems'?

(a) Reduce working hours shifts and pay {b) Layoff casual labourlrcdundant staff c Premature retirement of employees (6) Retrenc hrnen~ (e) Rerraining and reassignment. ( f) Others @lease indicate).

14.

15.

16.

17.

IS .

19.

20.

During raw material shortages which of the following options do you employ with respect to recruitment? (a ) Normal recruitment (6) Reduction in recruitment Is) No recruitment

During periods of low saledpr~f3, what action does your organization take with respect to staff promotions. la) Normal Promotions (b) Reduction in promorions (c) NO. promotions.

When capacity utihation is low. what do you & a b u t staR training? (a) Increase staff training (b) Reduce staff training (c) No staff mining.

Docs your argmization have career planning'developl~~nt plqyammncs? (a) Yes (b) No.

Do you have succession or replacement plans far higher level managers? (a) Yes (b) No.

Is succession p3anning integrated into your Iong term strategic plans? (a) Yes (b) No.

How often do you hire or retrain for managerial and other key positions?

21, Do you 11avc furtller comments on any aspects of his questionnaire? (Please utilize the space below or if need be. make use of additional sheets of paper).

i POSITION

positions

Suprwisory

, Oaeratiue

AS NEEDED, SIX MONTHS TO ONE YEAR IT4 ADVANCE

TWO YEARS IN ADVANCE

THREE TO S ~ X YEAR IN ADVANCE

!

APPENDIX 6

INTERVIEW SCHEDULE FOR SENIOR MANAGEMENT

1. Does your bank have a corporate strategy?

2. Do you have a formal process for formulating this strategy?

3. Is manpower planning part of the process?

4. If no, how is manpower planning carried out in your organization?

5 . In developing your corporate level strategy, do you consider the potential changes in the

external environment such as changes in government policies, the labour force.

availability of financing or the market?

(a) Yes (b) No.

6. Does the present downturn in economic activities favour your organization?

7. If no, in what ways does it affect your manpower planning strategies?

8. In responding to this problem, do your actions/decisions in dealing with inanpower

surplus derive from the organizations strategic plan or do you treat manp6wer problems

as they arise?

9. During low sales, dwindling profit, low capacity, utilization and raw material shortages

what actions/decisions does management take with respect to the following:

(a) Remuneration:

(i) Salaries and wages

(ii) Fringe benefits/compensation.

(b) Recruitment

(c) Job allocation/schedule of duties

(d) Training and development

(e) Promotion

(f) Staff transfer or movement

(g) Career planning.