CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Human resource working in small and medium scale sector plays a vital role in

economic growth without any space for their personal growth. Human resources are the

people who make up the work-force of an organization, business sector, or economy. "Human

capital" is sometimes used synonymously with "human resources", although human capital

typically refers to a narrower effect (i.e., the knowledge the individuals embody and economic

growth). In Nigeria, the National Council of Industry in 2001 define Small and Medium Scale

Enterprises as an enterprise with 11-100 workers and total cost (including working capital but

excluding cost of land) of not more than fifty million naira. Small businesses are common in

many countries, depending on the economic system in operation.

Human resource has been a distinctive approach to national development which seeks

to achieve competitive advantage through the strategic development of a highly committed

and capable workforce using an integrated array of cultural, structural and personnel

techniques for national economy growth, many believe that the sustainability of nation

economy growth lies in the quality human resource management and instruments of

economy, and one of the prominent part of it are Small and Medium scale businesses,

constitute a driving force for economic growth, job creation, and poverty reduction in

developing countries.

In Nigeria, the informal economy has grown to a stage where it contributes over 65%

of Gross National Product, and accounts for more than 70% of all new jobs in the country

(Osalor, 2010). Recent trends at different form in Nigeria have clearly revealed the amount of

respect attached to SMEs by government, educational institutions, and corporate bodies; and

the development of SMEs has been recognized as a veritable tool for promoting poverty

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eradication, job creation, rural development and sustainable livelihood for the populace

(Iwere, 2013). Nigerian economy is currently rated as the biggest in Africa with a nominal

Gross Domestic Product (GDP) of $510 billion, per capital income of $2,410. (Deutsche Bank

Research Report 2014:2) The country’s economy may look significant and impressive with

the above mentioned GDP and per capital income, however the nation is still regarded as a

poor country ranking 153rd out of 187 countries (United Nation’s Human Development Index

2014).

It is a fact that, unemployment remains high and the number of people living in

poverty has actually increased in Nigeria. Nigeria as a nation is endowed with numerous

investment potential, business opportunities, abundant, vibrant, dynamic human and natural

resources. Utilization of these resources requires the ability to identify potentially useful and

economically viable fields of endeavours as well as good policies to facilitate development.

This is even more so for small businesses, which rely more heavily on individual employee’s

contributions than their larger counterparts (Ojokuku, 2012). As Macgregor (2004) also

pointed out, the backbone of a small business is its core staff. It is therefore expedient to direct

research attention to the application of human resource to the creation and promotion of viable

small scale businesses that will drive sustainable economic development. It must be

recognized however, that the focus of Human resource researchers on SMEs has been very

limited, because SMEs have been considered for long, by human resource researchers as

second class citizens (Tansky and Heneman, 2003; cited in Zakaria, 2013).

However, since SMEs are not a scaled-down version of large firms, and they have

their unique characteristics and also face different challenges, the findings of human resource

research in large organizations cannot be generalized, in a wholesale manner, to SMEs

(Nguyen and Bryant, 2004; Kwang, Songan, and Kian, 2008; and Barret and Mason, 2006).

There is therefore the need for a shift of focus to human resource practices in SMEs, in view

2
of the limited understanding of the significant roles of human resource in small and emerging

firms (Cardon and Steven, 2004). Furthermore, given their financial constraints and other

resource limitations, SMEs too, are directing increasing attention to how they can utilize other

available resources more efficiently and effectively (Gallego et al, 2012).

The main objective of HR is to create and maintain an efficient workforce that is able

to meet the organization’s needs (Mayhew, 2014). Effective HRM can be a competitive

advantage for SMEs, because experienced and motivated employees are seen as valuable

resources, which have a significant influence on the overall performance of a business (Klaas,

2003; Mayhew, 2014; Ray, 2014).

Businesses with successful HRM practices are likely to have lower absenteeism and

employee turnover rates and better skills development and retention (Asadii, 2012). Due to the

characteristics of SMEs, employees are also usually required to perform activities in various

business functions. Therefore, HRM plays a crucial role in ensuring that the right employees

are hired to meet those demands and that there is relevant support structures available to

ensure work productivity. The role of human resources in sustainability of small and medium

scale enterprise than need reasonable attentions in order to achieve stable economy growth in

Nigeria.

1.2 Statement of the Research Problem

With the existence of a global economy, very dynamic and demanding, small and

medium scale enterprises struggle with the need for constant change to be able to adapt and

survive in the market. All the important components of a company need to find ways to

increase their competitiveness and efficiency. HR may not disregard these changes. As a vital

part of an organisation, HR need mechanisms, processes and practices that make them more

productive, motivated and committed. Arise, then, policies and practices of human resource

management (HRM) in order to convert human resource in strategic resources and in line with

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corporate strategies. It emerges the discussion of a strategic HRM, a strategic integration with

business policies (Legge, 1995). The approach to the HRM impact on organisational

performance, so far reported in the literature, has relied on research conducted in large

companies. Few studies address the idiosyncrasies of small businesses.

Studies of HRM in SMEs focus on HRM practices used in large enterprises, but

adapted to the size, resources and culture of small businesses. Only recently, authors like

Cassell et al. (2002), Kok and Uhlaner (2001) and Cardon and Stevens (2004), addressed the

issues related to HRM in SMEs, seeking to turn them off from large companies. Human

resource management in small and medium enterprises in Portugal 119 HRM has gained

visibility within the SMEs. There is a change of mind-set in the business environment and the

proof is in the increasing use of recruitment and selection, investment in training and

development and greater relevance of the performance evaluation of employees.

However, despite these changes, can we say that there are HRM in SMEs? Is it

rhetoric or reality? This study seeks to focus on the idiosyncrasies of small organisations and

try to understand if there are policies and practices of human resource management in small

and medium scale enterprises, allowing them to obtain a competitive advantage. In Portugal,

and according the context in which we stand, we can say that the role of HRM has gone

through an evolutionary process, as it happened in other countries, which has been described

and analysed by some academics. However, little is known about the HR function, as

mentioned by Cabral-Cardoso (2006). Studies on HRM are scarce and those that exist are

associated with large enterprises. This is the reason why the choice of this topic and its

relevance are linked to some extent to the low investment in research in management of

SMEs. Another interesting aspect is that, although organisations are smaller in size, HRM

may appear either in an informal and unsophisticated or on a complex and highly structured

form, allowing the researcher to contact with a wide variety of situations.

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 SMEs however, have fewer resource options than their larger counterparts to improve

performance, but one resource that is common to all organizations, irrespective of size, is

human resources, and this is becoming an increasing focus of theoretical, empirical, and

practical attention in SMEs (Sheehan, 2013). Effective human resource practices by small

scale businesses will not only bring about acquisition of new skills and knowledge among

employees, but will also bring about change of attitudes that will improve their performance

small and medium scales enterprises and through effective human resource in small and

medium scale enterprises, small scale businesses can get rid of traditional ineffective and

inefficient practices, and thus be able to maximize the achievement of its objectives. In the

same vein, Singh and Vohra (2005) affirmed that small and medium scale businesses that

successfully integrate their Human resource system with their vision and organizational

objectives, will achieve their goals in a more organized manner.

In Africa, the SME sector is the largest source of employment and constitutes the

backbone of almost every economy on the continent. However, over the years, the capacity

and productivity of SMEs in most countries of the Third World have been very low, and the

relative share of the sector in total output and exports, have been much lower as compared to

that of the more developed nations. Some identified challenges faced by SMEs, such as lack

of indigenous entrepreneurial initiative for industrial development, limited resource of capital

and skilled labour, lack of technological and managerial knowledge and limited markets have

been found to be responsible for this low performance.

Nigeria is currently witnessing an alarming rate of unemployment rate is growing in

geometric progression. The economy is also increasingly finding it difficult to cope as

Nigerian economy is waning. A lot of experts have called for the creation of an enabling

environment for human resources and sustainable small and medium scale enterprise to thrive.

The impact of human resources and small and medium scale enterprises sustainability in the

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development of Nigeria economy cannot therefore be over emphasized.

1.3 Objective of the Study

This study aims at finding impact of human resources in small and medium scale enterprises

sustainability in Nigeria economy growth.

The specific objective of the study include in the following:

i. To assess the importance of human resources in small and medium scale enterprises in

Nigeria;

ii. To identify the roles of human resources management in sustainability of small and

medium scale enterprises in Nigeria;

iii. To evaluate the problems encountered in the utilization of the available human

resources in small and medium scale sustainability;

iv. To suggest ways by which these problems could be tackles in order to improve the role

of human resources in Small and medium Scale business to sustain an impactful small

and medium scale enterprises in Nigeria.

1.4 Research Question

1 What are the importance of human resources in small and medium scale enterprises in

Nigeria?

2 What are the roles of human resources management in sustainability of small and

medium scale enterprises in Nigeria?

3 What are the problems encountered in the utilization of the available human resources

in small and medium scale sustainability?

4 What are the ways by which these problems could be tackled in order to improve the

role of human resources in Small and medium Scale business to sustain an impactful

Small and Medium scale enterprises in Nigeria?

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1.5 Significance of the Study

The study is thus important because of its potentiality in the development of the small

business sector which has been characterized as the “man carrier of development and the

engine of social and economic growth” in Nigeria. The study will also help in identifying why

people don’t go into small and medium scale enterprise despite its numerous advantages. It

will also find out problems encountered while running the business. Also the importance of

the study is that it allows us to provide relevant information to the following categories

people: managers and business men will be able know role of human resource and the

principles of SMEs, the level of implementation of sustainability as well as show their

weaknesses and strengths in terms of sustainability; provide information for government to

draw policies and practices of human resource management (HRM) in order to convert HR in

strategic resources that in line with corporate strategies. Workers will know needed

mechanisms, processes and practices that will make them more productive, motivated and

committed; Unemployed youth will able to know the role human resource in SMEs and help

them to know needed strategies for sustainable business before going into any business of

their interest; it will also help financial institution to prepare budget that will cater for

employees training, development and welfare, and support for entrepreneurs; On the other

hand, Academia will be motivated to do more research that will provide tools to Nigeria

SMEs to know the degree of their maturity in sustainable management of their business and to

monitor the progress made in this area.

1.6 Scope of the Study

The research will base her study only on selected small and medium enterprises in

Ondo West Local Government Area, Ondo State, Nigeria.

1.7 Definition of Terms

Entrepreneur: - According to Hagen, an entrepreneur is an individual who conceives the

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idea of business, design the organization of the firm, accumulates capital, recruits labour,

establishes relations with supplies, customers and the government and converts the conception

into a functioning organization business.

Human Resource: Human resource has been a distinctive approach to national development

which seeks to achieve competitive advantage through the strategic development of a highly

committed and capable workforce using an integrated array of cultural, structural and

personnel techniques for national economy growth

Small and medium Scale enterprise: the definition is varies by country and by industry. The

European Union generally defines a small business as one that has fewer than 50 employees.

In Nigeria, the National Council of Industry in 2001, defined small scale business as an

enterprise with 11-100 workers and total cost (including working capital but excluding cost of

land) of not more than fifty million naira. Small businesses are common in many countries,

depending on the economic system in operation.

Development: This entails growth of the business, increases in goods and services and the

improvement of lives of the citizen.

Sustainability: defines companies that create value at the level of strategies and practices to

move towards a more sustainable world, with a formula of profitability on a human scale, that

through the connection with all groups of interest (Stakeholders) and the natural environment,

face the challenge of minimizing waste from operations and reorienting their portfolio of

competences towards sustainable and competitive technologies. It is also the development that

meets current needs without compromising the ability of future generations to meet their own

needs.

Economic growth is the increase in the inflation-adjusted market value of the goods and

services produced by an economy over time. It is conventionally measured as the percent rate

of increase in real gross domestic product, or real GDP.

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 CHAPTER TWO

LITERATURE REVIEW

This chapter explores the work of the other authors and researcher that are related to this

study. The related literature review of this study discussed under the following Sub Heading:

 Concept of Human Resource

 Responsibilities of Human Resources

 Human Resources Development

 Concept of small and Medium Scale Enterprises

 Human Resources and Small and Medium Scale Enterprises

 The role of Human Resources in Small and Medium Scale Enterprises

 Sustainability of Small and Medium Scale Enterprises

 Human Resources and Sustainability of Small and Medium Scale Enterprises

 Problems of Establishing Small Business Enterprise In Nigeria

2.1 Concept of Human Resource

Human resources are the people who make up the work-force of

an organization, business sector, or economy. "Human capital" is sometimes used

synonymously with "human resources", although human capital typically refers to a narrower

effect (i.e., the knowledge the individuals embody and economic growth). Likewise, other

terms sometimes used include manpower, talent, labor, personnel, or simply people.

A human-resources department (HR department) of an organization performs human resource

management, overseeing various aspects of employment, such as compliance with labor

law and employment standards, administration of employee benefits, and some aspects

of recruitment.

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2.1.1 Responsibilities of Human Resources

Human resource managers are in charge of many duties pertaining to their job. The

duties include planning, recruitment and selection process, posting job ads, evaluating the

performance of employees, organizing resumes and job applications, scheduling interviews

and assisting in the process and ensuring background checks. Another job is payroll and

benefits administration which deals with ensuring vacation and sick time are accounted for,

reviewing payroll, and participating in benefits tasks, like claim resolutions, reconciling

benefit statements, and approving invoices for payment.  

Human Resources also coordinates employee relations activities and programs

including but not limited to employee counseling. The last job is regular maintenance, this job

makes sure that the current Human Resources files and databases are up to date,

maintaining employee benefits and employment status and performing payroll/benefit-

related reconciliations.  In May 2014, the U.S. Department of Labor stated that human

resource assistants earn about $38,040 annually and human resource managers earn about

$104,440 annually.

2.1.2 Activities of Human Resources

A human resources manager has several functions in a company

 Determine needs of the staff.

 Determine to use temporary staff or hire employees to fill these needs.

 Recruit and train the best employees.

 Supervise the work.

 Manage employee relations, unions and collective bargaining.

 Prepare employee records and personal policies.

 Ensure high performance.

 Manage employee payroll, benefits and compensation.

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  Ensure equal opportunities.

 Deal with discrimination.

 Deal with performance issues.

 Ensure that human resources practices conform to various regulations.

 Push the employees' motivation.

 Mediate disputes internally.

 Upgrade learning knowledge of employees

 Disseminate information in the organization so as to benefit its growth

Managers need to develop their interpersonal skills to be effective. Organizations

behavior focuses on how to improve factors that make organizations more effective.

Human resource management used to be referred to as "personnel administration." In the

1920s, personnel administration focused mostly on the aspects of hiring, evaluating, training,

and compensating employees. However, they did not focus on any employment relationships

in an organizational performance level or on the systematic relationships in any parties. This

led to a lacked unifying paradigm in the field during this period. 

According to Human Resources Magazine article, the first personnel management

department started at the National Cash Register Co. in 1900. The owner, John Henry

Patterson, after several union strikes and employee lockouts, he organized a personnel

department to deal with grievances, discharges and safety, and training for supervisors on new

laws and practices after several strikes and employee lockouts. This action was followed by

other companies, for example, Ford had high turnover ratios of 380 percent in 1913, but just

one year later, the line workers of the company has doubled their daily salaries from $2.50 to

$5, even though $2.50 was a fair wage at that time. This example clearly shows the

importance of effective management which leads to a greater outcome of employee

11
satisfaction as well as encouraging employees to work together in order to achieve better

business objectives.

During the 1970s, American business began experiencing challenges due to the

substantial increase in competitive pressures. Companies experienced globalization,

deregulation, and rapid technological change which caused the major companies to enhance

their strategic planning - a process of predicting future changes in a particular environment

and focus on ways to promote organizational effectiveness. This resulted in developing more

jobs and opportunities for people to show their skills which were directed to effective

applying employees toward the fulfillment of individual, group, and organizational goals.

Many years later the major/minor of human resource management was created at universities

and colleges also known as business administration. It consists of all the activities that

companies used to ensure more effective utilization of employees.

Now, human resources focus on the people side of management. There are two real

definitions of HRM (Human Resource Management), one is that it is the process of managing

people in organizations in a structured and thorough manner. This means that it covers the

hiring, firing, pay and perks, and performance management. This first definition is the modern

and traditional version more like what a personnel manager would have done back in the

1920s.  The second definition is that HRM circles the ideas of management of people in

organizations from a macro-management perspective like customers and competitors in a

marketplace.  This involves the focus on making the “employment relationship” fulfilling for

both management and employees. 

Some research showed that employees can perform at a much higher rate of

productivity when their supervisors and managers paid more attention to them.  The Father of

Human relations, Elton Mayo, was the first person to reinforces the importance of employee

communications, cooperation, and involvement.  His studies concluded that sometimes the

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human factors are more important than physical factors, such as quality of lighting and

physical workplace conditions. As a result, in today's society, individuals often value more in

how their feels than in other workplace environments.  For example, the rewarding system in

Human resource management applied effectively, as in, all the employee's work should be

valued and awarded, can further encourage them to achieve their best performance

(McGaughey(2018).

2.2 Human Resources Development

Human resources play an important part of developing and making a company or

organization at the beginning or making a success at the end, due to the labor provided by

employees. Human resources is intended to show how to have better employment relations in

the workforce. Also, bring out the best work ethic of the employees and therefore making a

move to a better working environment (Maugans and Chris, 2015).

2.2.1 Human Resources Planning

Administration and operations used to be the two role areas of Human Resource. The

strategic planning component came into play as a result of companies recognizing the need to

consider HR needs in goals and strategies. HR directors commonly sit on company executive

teams because of the HR planning function. Numbers and types of employees and the

evolution of compensation systems are among elements in the planning role. Various factors

affecting Human Resource planning Organizational Structure, Growth, Business Location,

Demographic changes, environmental uncertainties, expansion etc. Additionally, this area

encompasses the realm of talent management (Mathis and Jackson, 2003).

2.3 Concept of Small and Medium Scale Enterprises

In many respects, the meaning and concept of small businesses cannot be completely

isolated from the operational environment. Thus the perception and definition is highly

dependent on the particular economy that provides the environment of operation. In Nigeria,

13
there seems to be no clear cut definition or scope for determining small business enterprise.

However varied definition and scope were made by some agencies as follows:

(a) The national directorate of employment defined it as being able to accommodate

project with capital investment as loan as N5,000 and employing as few as three

persons.

(b) The Central Bank of Nigeria in its monetary policy guidelines (1980) Stated that small

scale business as an enterprise whose annual turnover rangers between N25,000 and

N50,000, also the Federal Ministry of Industries before the Structural Adjustment

Programme [SAP] and Foreign Exchange Market, defined small scale business as any

manufacturing, processing or service industry with capital investment of not more than

N150,000 in plant and machinery.

(c) The Nigeria Bank for Commerce and Industry (2001) also defined the small scale

enterprise as firms’ or companies with assets [including working capital but excluding

land] not exceeding N750,000 and paid employment of up to 50 persons an such an

establishment be wholly owned by Nigerians.

Measuring the appropriateness of some of these definition, Nwakobi (1985) stated that

most of the definition describing them as merely “institutional” Nwabobi holds the views that

the definitions do not pain a health picture of the growth of small scale business enterprise,

considering the difficulties involved in capital formation and other discrimination of attitudes

of the banks towards the owners of small scale business enterprise. In July, 2001, the national

council on industries at the 13th meeting in Markurdi, Benue State, reviewed and adopted the

following classification of industrial enterprises and came up with the definition that “A small

scale industry is an industry with total capital employed of over N1.5 million but not more

than N50 million including working capital but excluding cost of land and of a labour size of

11 -100 workers.

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 However, comparatively, most develop countries seems to have agreed on a maximum

unit of 500 employees as a small firm (Feldman 1989). However, a review of the performance

induct of small scale business can be best anchored on the United Nations industrial

development organization definition of small scale business as “an economic venture” that is

characterized by the following:

(a) Ownership and management being vested in the same Individual

(b) Capital being made available by an owner on whom the policy Decisions rest

(c) Having a coalised operational area

(d) A situation of a venture controlling a small share of the market Their by constituting a

little quota in the large sized market

(e) The owner participating very actively in all decision making Processes on a day to day

operation basis with a high degree of rigid control. Reflecting the characteristics, small

scale business enterprises have emerged, especially in the developing world, with roles

of employment generation, encouragement of rural development, assisting

substantially in lifting gross domestic product, developing entrepreneurship and

proving avenue for self-employment.

2.3.1 Basic Characteristics of Small Scale Enterprise

The overall business scene and activities in Nigeria appear to be dominated by small

businesses which are established by individual, groups, companies and cooperatives. Most

business start off as small but with proper planning and management, then expand and grow.

However, it will be risky to assume that small enterprises are exactly like big ones

after all the difference is size. But it is necessary to differentiate the small business from the

large ones and to associate those characteristic with problems inherent in small business. In

summary, characteristics as identified by several writers among who Broom and Longnecker

(1972), Musselman And Huglice (1973) and yewande (1991) are presented here. It must not

15
however be taken that these characteristics are all embracing or that all must be present in the

same magnitude in a business for such a business to qualify as a “small scale business”.

1. Management is not independent- generally; the managers are also the owners. This

means that the manager/ owner can run the business as he pleases. Discipline as the

control factor in this case may sometimes be missing. This lack of proper managerial

discipline leads to business failures.

2. The size of the small business firm within industry is usually small. Thus they are not

dominant in their individual field or operation.

3. Capital requirement is small and therefore within reach of the indigenous

entrepreneurs.

4. Majorities of the modern small business units are labour intensive and are able to

achieve high productivity. These units are concentrated in areas of low technology.

5. Capital is supplied and ownership is held by a small group or an individual. The initial

capital usually equity holdings is supplied by the owner or co- owners of the business.

Often for working capital, they depend on trade credit or credit finance or both.

6. The area of operation is mainly local employees/workers and owners all like in one

home community. Most small scale firms even those identify ed as modern utilizing

plants and machinery are run along family line. However, markets served by them are

not always local, modern small firm’s serves market across ethnic cultural and even

nations or state boundaries.

7. On other all embracing characteristic of small scale business in Nigeria is the apparent

lack of attention to managerial functions of planning, organizing, directing

coordinating and controlling. In Nigeria, the entrepreneur usually sets out to achieve

high return on investment. The workers generally are not adequately remunerated or

sufficiently motivate.

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2.3.2 Types of Small Business

No doubt, the future of economic prosperity of Nigeria lies in the structuring and eventual

growth of medium and small scale enterprises. This situation has been confirmed by the

Nigeria institute of social and Economic Research (NISER), THE National Association of

small scale Industry (NASSI), and the German based Frederick Elbert Foundation. It is the

existence of this kind of scenario that had given impetus to the growth of some small scale

industries like the ones that constitute the objects of the study. Their very existence also

confirms Oshagbenius (1985) categorizing of small scale industries as those which include,

weaving, carpentry, pottery, ceramics, farming, fishing, piggery, animal husbandry, poultry,

wood and metal works, brick and block making and a host of others, operating under

registered names and depending largely on local raw materials.

2.3.3 Human Capacity Building

Human capacity building can be described as a deliberate effort by government and

people to provide the right number of workers at the right areas of need and at the right time

in an economy (Anyanwu, 2014). This definition suggests a deliberate attempt to forecast and

provide the labour needs and requirements of the economy over a period of years in respect of

each industrial and occupational group supported with policies and programmes that

guarantees their sustainability. It must be appreciated that the existence of a large pool of

human population does not translate automatically to a productive resource.

Human beings become productive resource only when they are able and in a position to

contribute meaningfully in achieving organizational goals. Human capacity building embodies

the inculcation of relevant general and technical knowledge skills and competencies through

comprehensive human resource development programmes that will facilitate the resolution of

the set goals.

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2.4. Human Resource and Small and Medium Scale Enterprises.

Human resources development for SMEs require a comprehensive approach including

social structures and system such as broad educational reforms, encouragement of

entrepreneurship, business skills acquisition and innovation in society, mechanism for self-

learning and ongoing training and enhancement of human resources.

The human resource benefit that is based on commitment is focusing on the

psychological links between organizational and employee goals. It is associated with higher

involvement in managerial decision, participation, providing training and rewards. A human

resource system is based on crucial focuses on directly monitoring and rewarding employee

behavior (Arthur 1994). Human resources are considered as the most valuable asset in an

organization, they make a difference only for a few organizations.

2.4.1 The Role of Human Resources in Small and Medium Enterprises

HRM is concerned with all aspects of employment and management of people in

organizations. HRM covers the following activities: strategic human resource management,

human capital management, corporate social responsibility, knowledge management,

organizational development, securing resources (human resource planning, recruitment and

selection, and talent management), management performance, learning and development,

compensation management, employee relations, employee welfare, health and safety and the

provision of services for employees.

HRM practice has a strong conceptual basis borrowed and based on the science of

organizational behavior and strategic management, human capital and theories of industrial

relations. This database was built with the help of a large number of research projects by

different researchers in the field of management.

The purpose of this paper is to give a general introduction to the practice and concepts

of HRM. The paper defines HRM objectives, theories, characteristics, components of HRM

18
systems, development of HRM as a method for managing people, the views expressed in

relation to key performers, the context in which it works HRM and ethical dimensions that

affect the human resource policy and practice.

Among others the author Ronald R. Sims says "The key to a continued survival and

successful organization is not rational or quantitative approaches, but differs significantly in

activities of employees and managers that are based on the support and mutual loyalty. The

success of the organization today and tomorrow is being seen more and more dependent on

the effectiveness of human resource management" (Sims, 2002).

HRM is a strategic, integrated and coherent approach to recruitment, development and

welfare of the people working in organizations. Human resource management involves all

management decisions and actions that affect the nature of the relationship between the

organization and its employees its human resources. HRM also has to do with the

management of the workforce in organizations (Wright and Snell, 1997).

HRM includes a set of policies designed to maximize organizational integration,

employee commitment, flexibility and quality of work, or working and people management in

achieving desired goals. According to this aspect of HRM has to do with human resources

policies, which should be integrated with strategic business planning and used to reinforce an

appropriate organizational culture (or to change an inappropriate one). Human resources are

the source of competitive advantage, because they can relate more effectively by mutually

consistent policies that promote commitment and, therefore, are able to feed to the employees

a willingness to act in a more flexible way in the interest of pursuit of excellence "appropriate

for the organization." Moreover, the management of human resources is a particular method

of employment management which seeks to achieve competitive advantage through the

strategic development of a workforce more dedicated and capable, using a variety of

techniques integrated cultural, structural and personnel (Boxall et al., 2008; Legge, 1989).

19
 The overall goal of human resource management is to ensure that the company will be

able to achieve success through people. HRM aims to increase the effectiveness and

organizational skills, which means the ability of an organization to achieve its goals using the

available resources in the best way possible. Some authors in their studies have found that

HRM systems can be the source of firms' organizational capabilities that allow one to learn

and benefit from new opportunities. But HRM has an ethical dimension, which also means

that one should be concerned for the rights and needs of people in organizations through the

exercise of social responsibility (see: Beer et al., 1984; Grimshaw and Rubery, 2008; Guest,

2008; Storey, 2007; Ulrich and Lake, 1990).

SMEs’ productivity and likelihood of survival may increase if they adopt HRM

practices (Bacon & Hoque, 2005). Carlson, Upton & Seaman (2006) state that managing

employees effectively has a positive effect on organizational performance. However, there is a

lack of interest with regard to HRM in SMEs (Anderson, 2003). Managers/owners of SMEs

often view HR practices as costly, bureaucratic and time consuming (Anderson, 2003).

Therefore, many SMEs are informal in terms of HR practices and are less likely to practice

HRM compared to larger organizations (Bacon & Hoque, 2005).

Dunn et al. (2008) stated that the following functions of human resources management are

important. These will now be discussed.

(i) Hiring and firing of employees. Hull (2013) states that one of the most crucial and

challenging decisions faced by managers/owners is hiring employees. Hiring the ‘right’

employees is good for business, as they are likely to attract more customers and to be more

productive (Nichols, 2006; Truck, 2014). Shamis (2014) points out that hiring great

employees is fundamental to the success of any business, as hiring employees who cannot

meet the demands of the business or do not fit the business culture, is a huge cost to the

20
Organization (Hull, 2013). Mazzarol (2003) states that one of the main problems experienced

by SMEs is finding and retaining high quality employees.

(ii) Analyzing and classifying work tasks. Another important role of HR is to analyze and

classify work tasks. Managers/owners should do this before hiring employees to ensure that

they know exactly what is needed or expected from an employee (Hull, 2013). Nakhata

(2008) states that work tasks need to contribute to a desired goal or output that meets the

business’s needs and long-term goals. Adler (2013) emphasizes that clarifying expectations

upfront and clearly indicating the performance requirements of a job is good management

practice. When employees do not have a clear purpose, they tend to lack enthusiasm and are

less likely to become involved or take on new responsibilities (Govindarajulu & Daily, 2004).

(iii) Motivating employees. Nohria, Groyberg & Lee (2008) stated that one of the most

challenging tasks of a manager/owner is to motivate employees to always do their best. The

reason being that people are different and there is no one-size-fits-all approach to motivating

them (Lazenby, 2008). Motivating employees is linked to other aspects of HR management,

namely creating a culture that promotes teamwork and collaboration, designing jobs that are

meaningful and interesting, providing those that excel with promotion opportunities,

implementing transparent and fair resource allocation processes and having an effective

reward system which is linked to performance evaluations (Nohria et al., 2008).

(iv) Training and development. SMEs are generally hesitant to provide funds for

employee training and development (Mazzarol, 2003). Not only is training and development

expensive, but it also incurs loss of work, because employees are attending the training

sessions (Frost, 2014).

However, Sarvadi (2005) stated that training and development should be viewed as an

investment and not an expense, because it is essential and not optional for the success of the

business. In order to retain the high quality employees that the owners/managers have hired, it

21
is fundamental to have training and development, because it helps to build loyalty (Lipman,

2013). Furthermore, training and development may result in improved job performance,

acquisition of new skills and self-efficacy or self-management skills of employees (Aguinis &

Kraiger, 2009). An organization as a whole may also experience improved overall

performance, increased quality and quantity of output and enhanced reputation (Aguinis &

Kraiger, 2009).

(v) Performance evaluations. Performance evaluations are the formal process of

monitoring employees in order to improve performance and productivity (Shahzad, Bashir &

Ramay, 2008). Rynes, Gerhart & Parks (2005) suggested that performance evaluations

improve performance in two ways: through constructive feedback on individual performance

and through administrative decisions linked to rewards and punishments aimed at motivation.

Therefore, the purpose of performance evaluations is to provide employees with information

that enables them to perform better and give them an incentive to use that information (Rynes

et al., 2005). Managers/owners need to conduct performance evaluations to ensure that

employees are performing as expected (Hamlett, 2014).

(iv) Compensation and benefit plans. Compensation and benefit plans consist of monetary

and nonmonetary components such as pay scales, reward programs and benefit packages,

which allow an organization to compete for high quality employees (Lister, 2014; Johnson,

2014). Johnson (2014) states that compensation and benefit plans affect recruitment and

retention rates, as well as employee satisfaction.

Furthermore, Carlson et al. (2006) state that the design of compensation and benefits used by

an SME is critical to its success. However, it should be designed in a manner that is fair to

ensure employee satisfaction (Li, 2011).

(vi) Personnel policies and procedures. Moore (2014) stated that policies as guidelines

which regulate employee actions and procedures as customary methods of handling activities.

22
According to White (2014), HR policies and procedures consist of employment and work

policies, work schedules, performance evaluation guidelines and employee remuneration and

benefit plans. Policies and procedures act as a guide for all employees on how they should

conduct themselves (Amico, 2014).

2.5 The Role of Small and Medium Scale Enterprises in Nigeria

Hardly, can any major industry succeed in isolation of the services and contributions

of small business enterprise. The relative strength of their importance and role vary from one

industry to another. In fact the importance of small scale business in any economy cannot be

overestimated. Firstly, continuous growth in the economy of any nation depends to a large

extent on the startups of small businesses. Even on a recessionary economy, small scale

enterprises are a legitimate and viable component in any strategy for reconstructing the

economy.

Furthermore, it is emphasized that the small scale enterprises make the possibility of

the equitable distribution of national income more realistic of providing employment

opportunities on a large scale. By creating more employment will help in mobilizing capital

and human resources that would otherwise be left idle. Some small businesses no doubt,

provide certain distinct services that in most cases may not be matched success of large

businesses. Implicitly, if the small businesses would by and large find themselves over

saddled with a myriad of activities, which would only be able to manage minimally.

The role of small scale businesses in the development and sustainability of Nigeria

economy has made it very possible for firms to depend less on imported goods or materials.

They often rather depend on locally made machines and local raw materials as inputs. One

can buttress this point further by the fact that non dependence of small businesses on imported

raw materials as inputs leads to a reduction in the demand of foreign raw materials thereby

saving the foreign exchange earnings of the nation. Worthy of mention also is the advantage

23
of solving payment problems as a result of less dependence on imported inputs. This has an

attendant blessing of creating an interest in the promotion or home made products. In this way

small business ventures generate revenues and strengthen the Nigeria economy.

Small industries have a shorter gestation period and as a result, yield quicker returns

on investment. They facilitate balanced industrial development in that only such small scale

ventures can easily be established in many rural areas. In this regard, that presents a potent

means of reducing rural urban migration and its consequential urban congestion,

unemployment and other social vices. Small businesses also serve as a training school for

indigenous entrepreneurs and provide the opportunity for acquisition of skills for a large

number of workers. They facilitate a speedy development of Nigeria economy.

2.6 Sustainability of Small and Medium Scale Enterprises

Business sustainability (BS) is the term adopted here since it is a term encompassing

all business forms, including small and medium firms, which follow sustainability strategies

and practices (Kerr, 2006). Potts (2010) believes that BS originates from socially progressive

influences on the traditional business base, but the points of distinction relate to the

commitment to sustainable development. Cost, managerial time and knowledge/skills are

reported as the three important limitations or barriers to the adoption of BS in the study of

Collins et al. (2010). Despite these barriers, Collins et al. (2010) argue that businesses are

influencing significantly by customers in the adoption of sustainability issues.

SMEs are in a unique position to embrace sustainability practices, as Trainer (1998)

believes that growth and development of SMEs is a significant part of a sustainable world. In

particular, SMEs develop close relationships with their Customers, so they can depict the

value of sustainable services and products to their customers (Kerr, 2006; Aragon-Correa et

al., 2008). Also, SMEs can easily respond to sustainability issues in the communities through

their diversity and flexibility (Hawken, 1993; Sinha and Akoorie, 2010) provided that they

24
receive enough support and incentives to match their diversity and adaptability (Welford,

1997). Similarly, their low usage of non-renewable resources due to their small size means

they are able to adopt sustainability in their businesses easier than large businesses (Jones and

Welford, 1997).

Management attitudes play a prominent role in the level of adoption of sustainability

by SMEs. In some cases, the owners/managers of SMEs feel little responsibility towards the

environment and society because they think that their businesses have little individual impact

on the environment (Yu and Bell, 2007). However some studies argue otherwise. For

example, in UK, where SMEs constitute 99.8% of the businesses in private sector, a study

about the environmental practices of 220 UK SMEs by Revell et al. (2010) reports that a large

number of sustainability in SMEs This study also shows that owners/managers are encouraged

to adopt sustainability not just by push of legislation but also by the pull of cost saving, new

customers, higher staff retention and good publicity for their firm‖(Revell et al. 2010).

Furthermore, SMEs are usually unaware of the advantages that are available from

sustainability adoption (O‘Laire and Welford,1996) because management models are unable

to integrate SMEs‘ management strategies into the sustain-ability issues (Hass,1996). As a

result, strategies and tools for adopting sustain-ability practices are usually developed for

large companies and it is very difficult for SMEs to transfer and incorporate them into their

management processes (Holtet al.,2000; Ammenberg and Hjelm,2003). So, a different

approach to SME business sustainability is needed to be developed. About 60% of the micro

enterprises which are run by the women annually at the world level fail due to the problem of

sustainability. Here one can raise the question that what is meant by sustainability?

Sustainability means ability to maintain at a certain level. After the definition, the

further question is what are the factors affecting the sustainability of micro enterprises? To

answer this question, Investment occupies first place followed by environment marketing,

25
network etc. A study by Kamuku, Sesyline (2015) pointed out that in the absence of

technological intervention and marketability, the functions of micro enterprises fail. However

number of studies Razak (2010), Kassim & Sulaiman (2010) and Albey etal (2012) states that

Micro enterprises have been registered as the main source of economy.

John Elkington(1994) introduced the concept of “Triple Bottom Line”, in which he explained

the idea that for a company to be sustainable, it has to ensure a triple objective:

(i) Being economically viable;

(ii) Being socially beneficial; and

(iii) Being environmentally responsible.

With everything focused on a gain-gain-gain situation for business, society, and the

environment. In this sense, this author considered it important to move from environmental

management to sustainable management so that companies manage environmental, social, and

economic aspects in an integrated manner, enabling organizations to improve their

performance in these three areas, and this becomes a factor of competitiveness.

Sustainability incorporates the notions of economy, governance, the environment, and

society, so it is not surprising that the creation of value from a company perspective shows

overlaps with the concepts of a conventional, social, and environmental company. Although

each of the concepts emphasize one or two aspects of sustainable development, sustainable

development requires a holistic perspective in the creation of business value. As a result,

sustainable enterprises need to balance the competition objectives of creation of economic,

social, and ecological value. This leads to an increase in the complexity of sustainability

compared to other forms of entrepreneurship, which could be one-dimensional or two-

dimensional in nature. In short, there are three sustainability dimensions.

26
(a) The economic dimension refers to the economic viability of the company, which is

necessary because it generates benefits, employment, and means that contribute to

social and environmental welfare in general.

(b) The social dimension comprises the responsibility of companies to the environment in

which they operate and combines the interests of employees and society in general

with the aim of doing business following an ethical approach.

(c) The environmental dimension refers to the impacts of companies on natural systems.

Nowadays, sustainability is considered one of the key factors of success in a long-term

business strategy, since for a company to be profitable today it must be able to manage the

economic, social, and environmental impact on the environment. On the other hand,

integrating sustainability into companies provides many benefits: “better reputation,

transparency and good governance, reaching better economic results, which are more

appealing to work, less vulnerable to crises and more attractive for responsible investors; they

achieve greater quality in their commercial offer, in labour quality, ethical, environmental,

social and innovation responsibility and manage to reconcile economic development with the

care of the social environment and the protection of the environment”.

2.7 Human Resources and Sustainability of Small and Medium Scale Enterprises

The SME sector is a manufacturing and services sector and performance assessment

generally depends on the performance of the staff employed in them. A highly qualified,

motivated and happy staff is the main factor for the success of SMEs. Good customer service

remains the main factor to distinguish from one SME to another SME and the competitiveness

of each market. There are several reasons for this:

(a) Good service is a key factor that explains why a potential customer chooses a

particular SME or why existing customers stay or leave an SME.

27
(b) Best impressions of a service, expressed from a friend or relative, effects in choosing a

SME. Moreover, a bad impression on service will send customers to other competing

firms.

(c) High customer service gives all SMEs sustainable and long term competitive

advantage. This service will be difficult to duplicate and surpassed by competitors in the short

term. Good service is not reached immediately; it takes many months, if not years, of

investment in the training and dedication to achieve it.

Most people don’t believe in themselves, they think they can’t do it. They are always

waiting for others to take the lead or nothing for them. They also lack the foresight to think

ahead of others, no creativity in them. Always afraid that the business must fail like other ones

that failed. They think they cannot make a difference and therefore there is no point in trying

to establish once. They make the money but the fear of the unknown will not allow them to

invest (Armstrong M., 2009).

In the small firms, where the organizational structure is limited, there are usually few

managers, and ownership and control are often concentrated in the hands of a single person.

Consequently the attitudes and values of the owner/manager will have a profound impact on

the enterprise’s organizational framework, policies, and social relations (Boer et al., 1997).

According to Lerner and Haber (2000), the level of performance of the small venture is

primarily attributed to the education, experience, and skills of the entrepreneurs, as well as to

their personal entrepreneurial characteristics.

Boer et al. (1997) assert that entrepreneurs generally value their independence highly

and exhibit dominant psychological characteristics, which result in a managerial style that is

typically autocratic, impulsive, egocentric, and unpredictable. For these reasons, human

resources practices vary highly among small firms, are often determined by the ideology and

28
pluralistic goals of the small business owner, and as a result of its informality, are more

sophisticated than usually expected (Brand & Bax, 2002).

Although human resources play a vital role in developing and sustaining a competitive

advantage for small businesses (Brand & Bax, 2002), the blame for failure in these firms has

often been placed with personnel-related problems (McEvoy, 1984). However, human

resources play a vital role in developing and sustaining a competitive advantage for these

firms. In light of the emerging research indicating a positive relationship between firm

performance and HRM practices (Becker & Gerhart, 1996), the effective management of

employees is emerging as a key variable in the survival of small firms (Wagar, 1998).

2.8 Problems of Establishing Small Business Enterprise in Nigeria

Armstrong M. (2009) stated that Small scale enterprises owning to their peculiar

nature are beset with myriad of special problems which directly or militate against their

survival and growth. A lack of indigenous entrepreneurial initiative for industrial development

is a characteristic of most development countries. Limited resource of capital and skilled

labour, a lack of technological and managerial knowledge and limited markets are important

handicaps to the acceleration of industrial development in Nigeria.

In large industrial establishments, some of these handicaps are alleviated by foreign

assistance collaboration. Unfortunately, the small scale industries do not enjoy such benefits

and as such dependent almost entirely on indigenous entrepreneurs. Some of the problems

facing small scale industries come from the owners while some come from unpredictable

environmental forces which are external to the business and they include government unit’s

competition etc. Some other problems can be identified in different functional areas such as

manufacturing marketing, financial and labour. But generally, the following problem has been

identified by the researched as the major factor militating against the establishment of small

scale enterprises in Nigeria.

29
(a) Lack of Start-up Capital - The early stage financing is usually is usually the most

difficult and costly to obtain. There two types of financing at this stage. Seed capital

and startup capital. Seed capital is relatively small amount of fund needed to prove

concept and fiancé feasibility study. It is the most difficult to obtain because the

venture capitalist is usually not interested at this level of funding. While start-up

capital is involved in determines if commercial sales are feasible. It is also very

difficult to obtain. No good business ideas can ever surface without fund.

(b) Lack of Land and Good Locations: - before any small scale industry is established,

this is the need to acquire land on which the factory site or the warehouse will be built.

In urban areas, land is not usually available and when available, it will be very

expensive beyond the reach of the small scale entrepreneur. In the rural area where

land is bound to be available at the reduced cost, other necessary infrastructures will

be lacking. Good location of our businesses is very important for the easy survival of

the enterprise but it is very difficult to get and where available, the cost will not be

affordable for any small business operator.

(c) Poor Government Policies - Nigeria government has not been able to help

entrepreneurs in establishment process of small scale business. Instead, one obnoxious

policy or the other was used in making things difficult for young entrepreneurs.

Government is only interested in revenue generation without noticing how is has

hindered the establishment of more small business in Nigeria. Every new business that

is still struggling to survive is expected to pay between N5,000 to N20,000 as business

premises and a lot of other permit. The business is also expected to pay almost the

same amount of the local government where it is situate. All these end up pulling the

business down.

30
(d) Insecurity of Lives and Properties – security problems are one of the major

problems of establishing small scale enterprise in Nigeria. Even the large scale

businesses that can afford to employ the services of security personal are not free from

this social menace. Any business that deals on highly valued products are not safe.

Consequently, many prospective investors opted to keep their money in banks or use

item and buy empty lands for re-sale in future than to risk the money by establishing

any business at all.

(e) Psychological Factors such as: Lack of Self Confidence, Lack of Creativity and Fear

of Failure Another factor that has seriously militates against the establishment of small

scale enterprise in Nigeria is psychological factors.

31
 CHAPTER THREE

RESEARCH METHODOLOGY

This chapter focuses on the methodology that will be adopted in carrying out the

study. The procedure is structured under following sub- headings:

 Research Design

 Population of the Study

 Sample and Sampling Technique

 Instrument of Data collection

 Method of Data Collection

 Method of Data Analysis

3.1 Research Design

The design that will be used for this study is descriptive survey. Descriptive survey

design is suitable for eliciting information from respondents without interfering with their

responses (Dorotolu 2006).

3.2 Population of the Study

The target population of the study will consists of all small scale enterprises in Ondo

West Local Government Area of Ondo State.

3.3 Sample and Sampling Technique

The sample will consists of four selected area by random sampling from all areas in

Ondo West local Government. Sample will adopt the total number of 100 small scale

enterprises will be selected from four areas which contained 25 small scale enterprises in each

area from Ondo West Local Government Area of Ondo State.

3.4 Instrument of Data Collection

A structured questionnaire will be used to elicit information and responses from the

respondents in this study. The questionnaire will be divided into two sections. Section A will

32
elicit information on the personal data of respondents such as age, sex, etc. while Section B

will be used to elicit information that provides answers to the research questions. The research

instrument will be initially developed by the researcher and will be given to the supervisor

who will assess it.

3.5 Method of Data Collection

The researcher will ensure that the respondents are guided in proper filling of the

questionnaire to improve the quality of the data; the questionnaire will be self-administered by

the researcher. The completed questionnaire will also be checked by the researcher to

ascertain whether items are properly responded to or not.

3.6 Methods of Data Analysis

All information collected from respondents will be properly organized and tabulated

for easy and effective analysis; the data will be analyzed using Chi-square method. The

findings will be reported and discussed in Chapter Four.

33
 CHAPTER FOUR

RESULTS AND DISCUSSION

4.0 Introduction

This chapter represents the demographic information of the participants that were

selected for this study. It presents answers to the research question raised. The chapter also

presents answer to the discussion of the findings which are generated from the research

questions

4.1 Demographic Presentation

Description Frequency Percentage

Male 43 43.0
Female 57 57.0
Total 100 100.0

The table 4.1 shows that one hundred respondents were involve in this study. 43% of

the respondents were male while the remaining who constitute 57 % were female. The result

from this table is an indication that the female respondent who participated in this study were more

than the male ones.

Age Frequency Percentage

18-25 years 18 18
25-30 48 48
31 and above 34 34
The table revealed the age of the respondents. Approximately 18 % of the respondents

were 18 to 25 years, about 48 % of the respondents were within 25 to 30 years but younger

and about 34 years were 31 and above.

4.2 Answer to the research Question

Research Question 1: What are the importance of human resources in small and medium

scale enterprises in Nigeria?

Table 4.2

34
Chi-Square Calculated T-Tabulation Degree Of Freedom Level Of Significance

X2C X2 DF Α
117.07 19.68 10 0.05

From the above table, shows that the chi-square calculated of (117.07) is greater than

the table value calculated of (19.68). Therefore, this implies that human resources in small and

medium scale enterprises in Nigeria is of great valued.

Research Question 2: What are the roles of human resources management in sustainability of

small and medium scale enterprises in Nigeria?

Table 4.3

Chi-Square Calculated T-Tabulation Degree Of Freedom Level Of Significance

X2C X2 DF Α
94.57 18.31 6 0.05

Table 4.5 the above table, shows that the chi-square calculated of (94.57) is greater than the

table value calculated of (18.31). Therefore, this implies the roles of human resources

management in sustainability of small and medium scale enterprises in Nigeria is of great

extent.

Research Question 3 What are the problems encountered in the utilization of the available

human resources in small and medium scale sustainability?

Table 4.5

Chi-Square Calculated T-Tabulation Degree Of Freedom Level Of Significance

X2C X2 DF Α
132.25 22.36 8 0.05

35
 From the above table, shows that the chi-square calculated of (132.25) is greater than

the table value calculated of (22.36). Therefore, this implies that there are problems

encountered in the utilization of the available human resources in small and medium scale

sustainability.

Research Question 4: What are the ways by which these problems could be tackled in order

to improve the role of human resources in Small and medium Scale business to sustain an

impactful Small and Medium scale enterprises in Nigeria?

Table 4.6

Chi-Square Calculated T-Tabulation Degree Of Freedom Level Of Significance

X2C X2 DF Α
136.90 22.36 8 0.05

From the above table, shows that the chi-square calculated of (136.9) is greater than

the table value calculated of (22.36). Therefore, this implies the problems could be tackled in

order to improve the role of human resources in Small and medium Scale business to sustain

an impactful Small and Medium scale enterprises in Nigeria.

4.7 Discussion of findings

The level of human resource in small and medium scale enterprises is Nigeria was one

of major concern of this study. According to the findings on the important of human resources

in small and medium scale enterprises 97% of respondent agreed the staff provides me with a

competitive advantage in business while 3% disagreed; 100% agreed that staffs add real

value to business; 98% stated that their staff take responsibility and produce results beyond

my expectations while 2 % disagreed; 100% agreed that training and development of

employees promote business; 94% revealed that their business operates on a true partnership

36
basis with our people while 6 % disagreed; 92% business aims to build partnerships with all

their key staff while 8% are not intended to business aims to build partnerships with all our

key staff. Confirmed by Lerner and Haber (2000), the level of performance of the small

venture is primarily attributed to the education, experience, and skills of the entrepreneurs, as

well as to their personal entrepreneurial characteristics. Boer et al. (1997) assert that

entrepreneurs generally value their independence highly and exhibit dominant psychological

characteristics, which result in a managerial style that is typically autocratic, impulsive,

egocentric, and unpredictable. For these reasons, human resources practices vary highly

among small firms, are often determined by the ideology and pluralistic goals of the small

business owner, and as a result of its informality, are more sophisticated than usually expected

(Brand & Bax, 2002).

On the role of human resource in sustainability of Small and medium scale enterprise,

the findings revealed that 95% agreed manager analyzes and classifies works of staff which

yield effectiveness and reasonable performances while 5% disagreed with this statement; 95%

affirmed that performance evaluations of staffs are well managed by human resources

manager while 5% disagreed; 96% confirmed that employees are seen as valuable resources,

which have a significant influence on the overall performance of their business while 4%

disagreed; 81% stated that employees have been the pillar of success, their productivity is the

surviving strength for their business even in the hard time.

However, human resources play a vital role in developing and sustaining a competitive

advantage for these firms. In light of the emerging research indicating a positive relationship

between firm performance and HRM practices (Becker & Gerhart, 1996), the effective

management of employees is emerging as a key variable in the survival of small firms

(Wagar, 1998).

37
Based on the problem of militating against the sustainability of Small and medium Scale

enterprises Incentive initiate is unnecessary for good performance since they are collecting

salary or wages for their services 34 % agreed that Incentive initiate is unnecessary for good

performance since they are collecting salary or wages for their services while 66% disagreed

with this statement; 27% stated that there is no need for human resource manager since am

competent to control their business by myself; while73% disagreed; 72% disagreed with that

there is no need for hiring professional for support as long as customers have best impressions

of their services while 28% agreed; 83% disagreed that with statement that since they have

enough experiences and abilities to manage their business, marketers, Marketing researcher

and developers has nothing new to offer while 17% agreed. 70% disagreed with the statement

that new employee doesn’t need training for their job descriptions because it cost time and

efforts while 30%.

Armstrong M. (2009) stated that Small scale enterprises owning to their peculiar

nature are beset with myriad of special problems which directly or militate against their

survival and growth. A lack of indigenous entrepreneurial initiative for industrial development

is a characteristic of most development countries. Limited resource of capital and skilled

labour, a lack of technological and managerial knowledge and limited markets are important

handicaps to the acceleration of industrial development in Nigeria.

On ways of solving the problems encountered significant of Human Resources in

SMEs, based on the findings, 85% agreed that staff give it their all when their welfare is been

taken care of while 15% disagreed; 85% agreed that good set of incentives for all staff

encourages and create bit of extra commitment that progress business while 15% disagreed;

82% stated that they do assign a person to mentor or mentor new employee by themself for

the first week or weeks, depending on their ability, in order to foster confidence and

knowledge he or she needs to be successful in my company or business while 8% disagreed;

38
87% confirmed that ensured that each employee sign an acknowledgement form stating that

he or she has read and fully understands the documents to avoid discrimination lawsuits while

13% disagreed; agreed that it important to keep some level of professional distance from

employees to provide feedback, communicate expectations and organizational direction, and

act as a leader.

SMEs can easily respond to sustainability issues in the communities through their

diversity and flexibility (Hawken, 1993; Sinha and Akoorie, 2010) provided that they receive

enough support and incentives to match their diversity and adaptability (Welford, 1997).

Similarly, their low usage of non-renewable resources due to their small size means they are

able to adopt sustainability in their businesses easier than large businesses (Jones and

Welford, 1997). Management attitudes play a prominent role in the level of adoption of

sustainability by SMEs. In some cases, the owners/managers of SMEs feel little responsibility

towards the environment and society because they think that their businesses have little

individual impact on the environment (Yu and Bell, 2007).

CHAPTER FIVE

SUMMARY, CONCLUSION, AND RECOMMENDATIONS

5.1 Summary

This study focused on the human resources and sustainability of small and medium

scale enterprises in Ondo west local government Area, Ondo State. This study employed a

well-structured questionnaire to elicit data from respondents at random; twenty (20) questions

39
were draw to examine the view and human resources and sustainability of small and medium

scale enterprises in Ondo state.

The study has also shown the importance of human resources in small and medium

scale enterprises in Nigeria which are determine of staff, determine to use temporary staff or

hire employee to fill the need of small and medium scale enterprises, supervises the work,

manage customer relation and ensure employee relation, union and collective bargaining to

ensure high performances in service their provide, deal with performance issue, deal with

marketing process, disseminate information in the organization so as to be benefit its growth.

The roles of human resources management in sustainability of small and medium scale

enterprises in Nigeria concerned with all aspect of employment and management of people in

organization; most of the activities of human resources are strategic human resources

management, human capital management, corporate social responsibility, knowledge

management, organization development, securing resources (Human resources planning,

recruitment and selection and talent management), management performance, learning and

development, compensation management, employee welfare, health and safety and the

provision of services for employees.

The problems encountered in the utilization of the available human resources in small and

medium scale sustainability as follows: the lack of set-up capital, lack of land and good

location of the business, poor government policies, insecurity of lives and properties,

psychological factors such as lack of self-confidence, lack of creativity, fear of failure.

Ways by which these problems could be tackled in order to improve the role of human

resources in Small and medium Scale business to sustain an impactful Small and Medium

scale enterprises in Nigeria which are provision of good welfare, good incentive for all staff to

encourage extra commitment, good mentoring depending on the employee ability, in order to

foster confidence and knowledge he or she needs to be successful in my company or business,

40
staff welfares, provide feedback and good communicate in organizational.

5.2 Conclusion

Based on the findings of this study, it can be concluded that, overall, human resources

impact significantly on small scale business performance in Ondo State, Nigeria. Also,

financial resources and firm size are major factors that significantly influence the adoption of

HRM practices in small scale businesses in Nigeria. The implication of these findings is that

an enabling environment, that will encourage adoption of HRM practices by small scale

businesses, should be provided. This is expected to facilitate their ability to grow and build up

the required capacity for the promotion of sustainable development in the nation.

Respondents seem to have notion of the importance of HRM for their companies, there

are HR practices, but in a piecemeal and little strategic. Recruitment and selection, as well as

training and development practices seem to be more developed. Nevertheless, there seems to

be a constant informality in all-critical processes in the development of HRM.

Small industries have a shorter gestation period and as a result, yield quicker returns

on investment. They facilitate balanced industrial development in that only such small scale

ventures can easily be established in many rural areas. In this regard, that presents a potent

means of reducing rural urban migration and its consequential urban congestion,

unemployment and other social vices. Small businesses also serve as a training school for

indigenous entrepreneurs and provide the opportunity for acquisition of skills for a large

number of workers. They facilitate a speedy development of Nigeria economy.

5.3 Recommendation

41
 The study is a justification of human resource in small and medium scale enterprises in

Nigeria. Specifically based on the findings of the study, the researcher recommends the

following:

1. Both the management and the Nigerian government should strive to make coherent

HR policies that fit closely with overall business strategy. Employment discrimination

has not been adequately addressed because of the ‘quota system’ that is still present is

most of the public service organisations.

2. Entrepreneurs and employees should be trained in new and current technology with

new software that will enhance the productive capacity of the SMEs thus resulting in

employment generation.

3. Employees should be encourage to further their education, attend conferences and

seminars where new ideas are showed among colleagues so as to brace up with time

and currency of discoveries. Human resource capacity is paramount to growth, thus,

training, workshops are welcome development.

4. SMEs should engage employees with good quality of education and work exposure, as

these would check the quality of personnel employed and the quality of the output of

the employee, thus advancement in human capacity building.

5. Entrepreneurs should ensure that each employee sign an acknowledgement form

stating that he or she has read and fully understands the documents to avoid

discrimination lawsuits.

6. It Important that employer should keep some level of professional distance from their

employees to maintain formal provide feedback, communicate expectations and

organizational direction, and act as a leader.

42
7. Good set of incentives for all staff encourages and create bit of extra commitment that

progress business, so this principle should be adopted in all small an medium scale

enterprises.

8. Proper supervision and mentoring should be adopted, employers should assign a

person to mentor or mentor new employee by themselves for the first week or weeks,

depending on their ability, in order to foster confidence and knowledge he or she needs

to be successful in my company or business.

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APPENDIX I
OBAFEMI AWOLOWO UNIVERSITY, ILE-IFE
DEPARTMENT OF ECONOMICS
QUESTIONNAIRE ON HUMAN RESOURCE AND SUSTAINABILITY OF SMALL
AND MEDIUM SCALE ENTERPRISES IN NIGERIA.

47
 The purpose of this questionnaire is to gather information on the topic mentioned
above. Please help to fill the item below correctly. Your information will be confidentially
treated.
SECTION A: Demographic Information (Tick as Appropriate)
Age: 18-25 ( ) 25-30 ( ) 31 and above
Sex: Male ( ) Female ( )
Name of Business Enterprise……..……………………………………………………….
SECTION B
S/N Items SA A D SD
The importance of human resources in SMEs
1. My staff provides me with a competitive advantage in
business.
2 My staff add real value to my business.
3 Our people take responsibility and produce results beyond
my expectations.
4 Training and development of employees promote my
business.
5 My business operates on a true partnership basis
with our people
6 My business aims to build partnerships with all our key
staff.
Role of Human resources management in SMEs
7 My manager analyzes and classifies works of staff which
yield effectiveness and reasonable performances
8 Performance evaluations of staff are well managed by
human resources manager.
9 My employees are seen as valuable resources, which have
a significant influence on the overall performance of my
business.
10 My employees have been the pillar of success; their
productivity is the surviving strength for my business even
in the hard time.
Problems of Human Resources in SMEs Sustainability
11 Incentive initiate is unnecessary for good performance
since they are collecting salary or wages for their services
12 There is no need for human resource manager since am
competent to control my business by myself.
13 There is no need for hiring professional for support as

48
 long as customers have best impressions of my services.
14 Since I have enough experiences and abilities to manage
my business, marketers, Marketing researcher and
developers has nothing new to offer.
15 New employee doesn’t need training for their job
descriptions because it cost time and efforts.
Solution to Problems of Human Resources in SMEs
16 My staff give it their all when their welfare is been taken
care of.
17 Good set of incentives for all staff encourages and create
bit of extra commitment that progress business.
18 I do assign a person to mentor or mentor new employee
by myself for the first week or weeks, depending on their
ability, in order to foster confidence and knowledge he or
she needs to be successful in my company or business.
19 I ensured that each employee sign an acknowledgement
form stating that he or she has read and fully understands
the documents to avoid discrimination lawsuits.
20 important to keep some level of professional distance from
your employees to provide feedback, communicate
expectations and organizational direction, and act as a
leader

APPENDIX II

S/N Items SA A D SD
The importance of human resources in SMEs
1. My staff provides me with a competitive advantage in 47 50 3 0
business.
2 My staffs add real value to my business. 55 45 0 0
3 Our people take responsibility and produce results beyond 31 67 2 0
my expectations.
4 Training and development of employees promote my 58 42 0 0
business.
5 My business operates on a true partnership basis 37 58 4 1
with our people
6 My business aims to build partnerships with all our key 43 48 7 2
staff.
Expected (E) = fr x fc = 271 x 100

49
 N 600 = 46.5

E2 = 310 x 100 = 51.6

600
E3 = 16 x 100 = 2.6
600
E4 = 105 x 100 = 0.5
600
Chi-square X2c = 6.5 +8.5+15.5+11.5+9.5+3.5+1.6+6.6+15.4+9.6+6.4+3.6+ 0.4+ 2.6+1.4+
4+4+ 0.5+0.5+0.5+0.5+1.5 =108.2 X2= 11707.24

X2c = 117.07, df = 10, X2 0.05 = 19.68

SN Role of Human resources management in SMEs SA A SD S

7 My manager analyzes and classifies works of staff which yield 56 38 5 1
effectiveness and reasonable performances
8 Performance evaluations of staffs are well managed by human 23 72 3 2
resources manager.
9 My employees are seen as valuable resources, which have a 44 52 4 0
significant influence on the overall performance of my
business.
10 My employees have been the pillar of success; their 30 51 10 9
productivity is the surviving strength for my business even in
the hard time.
Expected (E) = fr x fc = 153 x 100
N 400 = 38.25

E2 = 213 x 100 = 53.25

400
E3 = 22 x 100 = 5.5
400
E4 = 9 x 100 = 0.5
400
Chi-square X2c = 17.75+15+25+18.75+ 1.25+2.25+ 0.5+2.5+1.5+ 4.5+2+1+3+6 =97.25.
X2= 9457.56.

50
X2c = 117.07, df = 6, X2 0.05 = 18.31

SN Problems of Human Resources in SMEs Sustainability SA A SD S

11 Incentive initiate is unnecessary for good performance since 12 22 37 29
they are collecting salary or wages for their services
12 There is no need for human resource manager since am 8 19 55 18
competent to control my business by myself.
13 There is no need for hiring professional for support as long as 10 18 50 22
customers have best impressions of my services.
14 Since I have enough experiences and abilities to manage my 9 8 38 45
business, marketers, Marketing researcher and developers has
nothing new to offer.
15 New employee doesn’t need training for their job descriptions 17 13 42 41
because it cost time and efforts.
Expected (E) = fr x fc = 46x 100
N 500 = 9.2

E2 = 80 x 100 = 16
500
E3 = 220 x 100 = 44
500
E4 = 144 x 100 = 28.8
500
Chi-square X2c = 2.8+1.2+0.8+0.2+7.8+6+7+2+8+2+7+11+14+0.2+9.8+6.8+16.2+1.2= 115

X2c = 13.225, df = 8, X2 0.05 = 22.36

S/N Solution to Problems of Human Resources in SMEs SA A SD S

16 My staff give it their all when their welfare is been taken 50 35 13 2
care of.
17 Good set of incentives for all staff encourages and create 45 40 12 3
bit of extra commitment that progress business.
18 I do assign a person to mentor or mentor new employee 49 43 7 1
by myself for the first week or weeks, depending on their
ability, in order to foster confidence and knowledge he or
she needs to be successful in my company or business.

51
19 I ensured that each employee sign an acknowledgement 50 37 12 1
form stating that he or she has read and fully understands
the documents to avoid discrimination lawsuits.
20 important to keep some level of professional distance from 46 43 10 1
your employees to provide feedback, communicate
expectations and organizational direction, and act as a
leader

Expected (E) = fr x fc = 240 x 100

N 500 = 48

E2 = 198 x 100 = 39.6

500
E3 = 54 x 100 = 10.8
500
E4 = 9 x 100 = 1.6
500
Chi-square X2c = 2+3+1+2+ 2+4.6+ 0.4+3.6+2.6+ 3.4+2.2+1.2 +3.8 +1.2 +0.8 +0.4 +1.4 +0.6
+0.6 +0.6 =37
X2= 136.5

X2c = 117.07, df = 8, X2 0.05 = 22.36

52