STRATEGIC HUMAN RESOURCE PLANNING AND PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES (SMES)

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CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND OF THE STUDY

The performance and growth of small and medium enterprises (SMEs) is a major driver and indices for the level of industrialization; modernization; urbanization, gainful and meaningful employment for all those who are able and willing to work, equitable distribution of income, the welfare, income per capital and quality of life enjoyed by the citizenry (Aremu and Adeyemi, 2011); this is because SMEs contribute to employment growth at a higher rate than larger firms (Farouk and Saleh, 2011). The SMEs sector with global recognition is view as an important force of driving the economic growth and employment creation in both developing and developed countries (Ariyo, 2008; Kpleai, 2009).

Whether SMEs or larger firms, organizations are today becoming increasingly aware of the place of strategic human resource planning (SHRP) in management. This awareness in a system is a critical dimension in the performance of organizations. The real life experiences substantiate the assumption that no matter how sophisticated and modern the business activities of the organization may become, it will be extremely difficult to sustain its growth and effectiveness unless there are strategies and plans that complement its operations (Rees, 2006). The history of planning is as old as man himself. Planning has started from the ancient era during the primitive period when there were no industries or firms. Planning is the process of setting goals, developing strategies, and outlining tasks and schedules to accomplish the goals of an organization. It includes the selection of objective, policies, procedures and programmes from among alternative. A plan is a determined cause of action to achieve a specified goal. It is an intellectual characterized by thinking before doing.

According to Terry (2002) planning is a continuous process and there is no end to it. It involves continuous collection, evaluation and selection of data, and scientific investigation and analysis of the possible alternative courses of action and the selection of the best alternative. Through planning, organization goals and objectives are determined; the resource available must be strategic to achieve the goals and objectives. An organisation without planning becomes random in nature and decisions become meaningless and ad hoc choices (Koontz and O’ Donnell, 1972).

Strategic human resource planning (SHRP) is a systematic analysis of human resource needs in order to ensure that correct number of employees with necessary skills are available when they are required (Igbinomwanhia, 2010). The human resource department of small and medium scale enterprises (SMEs) complete several tasks relevant to its workers including collecting of information, creating objectives, goals and making conclusion in order for the business to achieve its goals. The reason for using strategic human resource planning in SMEs is to find out how many employees do the business have, what kind of workers the enterprise have, how an enterprise should use their available resources and how can the enterprise stay and maintain its workers. In this way, strategic human resource planning (SHRP) is used to systematically and continuously analyse a firm’s human resource needs under mutating conditions and developing workforce policies suitable to the longer term effectiveness of the organization  in a bid to achieve better corporate performance (Fajana, 2002). Therefore, this research investigates the effect of Strategic Human Resource Planning on Performance of small and medium enterprises (SMEs).

1.2    Statement of Problem

Inadequacy of Human Resources Planning has been cited as the reason why most small and medium enterprises (SMEs) today are facing a chaotic situations as they did not at onset plan their workforce neither did they have any systematic human resource (HR) management programme that put the organizations goals first (Anyadike, 2013). Resulting from this is the dwindling in business performance and productivity which is giving entrepreneurs, government and other stakeholders cause to worry and work all around the clock. The cause of this unfortunate development is primarily a lack or absence of strategic human resource planning (SHRP). If not, what else can explain the sharp increase in workers strength as soon as any new chief executive emerges?

Another fundamental problem facing SMEs organistions in Nigeria is the shortage of qualified human resources as a result of poor planning. Human resources being the set of individuals that makes up the workforce in the organization and makes productivity to take place must be well planned for and must be placed in the appropriate positions in other to be effective. Whether in fact the use of strategic human resource planning (SHRP) affects SMEs performance positively or negatively in practice for the typical firms is an empirical question that remains open. It is on this premise that this study seeks to explore the effect of Strategic Human Resource Planning on Performance of small and medium enterprises (SMEs) in Nigeria with particular reference to Alaba informal industrial sector in Lagos State.

1.3    Objectives of the Study

The major objective of this study is to examine the effect of strategic human resource planning on organisational performance in selected SMEs in Alaba informal industrial sector in Lagos State. While other specific objectives are:

a.To identify the manpower planning policies and key performance indicators in SMEs in Lagos

b.To examine the effect of strategic human resources planning on organisational profitability.

c.To assess the role of manpower planning on employee commitment in the SMEs sector

d.To identify current challenges of implementing strategic human resources planning amongsmall and medium enterprises (SMEs) in Nigeria.

e.To recommend strategies for enhancing human resources planning for effective performanceof SMEs in Nigeria.

1.4   Research Questions

The undertaking of this research project will beam a searchlight on the following research questions;

1.Does strategic human resources planning have any effect on productivity among SMEs in Lagos?

2.To what extent do effective human resources planning influences organisational profitability?

3.What is the relationship between manpower planning and commitment in the SMEs sector?

1.5    Research Hypotheses

The under listed hypotheses will be tested in the course of this research.

Hypothesis One:

Ho: There is no significant relationship between strategic human resources   planning and productivity among SMEs in Lagos.

Hi:There is a significant relationship between strategic human resources      planning and productivity among SMEs in Lagos.

Hypothesis Two:

Ho: Manpower planning is not a significant predictor of employees’ commitment     in theSMEs sector.

Hi: Manpower planning is not a significant predictor of employees’ commitment     in theSMEs sector.