International Journal of Management Science and Business Administration
Volume 1, Issue 6, May 2015, Pages 19-30
Human Capital Management: Taking Human Resources Management to the Next Level in Anglophone, West Africa
¹Enyonam Canice Kudonoo, ²Victoria Tsedzah
¹Ashesi University College, Accra, Ghana
²Methodist University College Ghana, Accra, Ghana
Abstract: In this article, we propose ways for organizations in Anglophone West African (AWA) countries to tackle their human capital challenges in order to attain a competitive edge and globally position themselves. Human capital is critical to an organization’s survival. While organizations in advanced countries are focusing their attention on building their human capital for the sustenance of competitive advantage, those in AWA countries lag behind, leading to poor service delivery and low productivity. Resource-based view and open systems theories highlight the importance of human capital management for organizational effectiveness. The paper adopts a conceptual approach and proposes a human capital centered model comprising six core factors that are vital in facilitating effective human capital management for sustainable competitive advantage. It concludes by emphasizing effective research collaboration between academia and industry in AWA countries and suggests testing of the model in organizations in AWA countries for applicability.
Keywords: human capital, management, competitive advantage, collaboration.
The human capital of individuals act as a giant invisible hand that pushes economic resources towards their most productive use – Keeley, 2007
In an attempt to have a competitive edge and to be able to compete both nationally and globally, organizations are becoming knowledge-based and have turned their attention to effective utilization of human capital for superior performance (Kwon, 2009; Lawler & Worley, 2006; OECD, 1998). Yet what pertains in Anglophone West Africa (AWA) is that it lags behind in terms of its human capital management (HCM). According to Blanke, et al. (2011), human capital with higher education in Sub Saharan Africa (SSA) including AWA is extremely below international standards. Consequently, the need for organizations in AWA countries to pay more attention to effective management of their human capital cannot be overemphasized since it is the prerequisite for high performance and success. Successful organizations in developed countries are focusing their attention on the best human capital available for the sustenance of success (Bartlett & Ghoshal, 2002; Morris & Calamai, 2009; Schuler & MacMillan, 1984).
Regional organizations in developed countries, for instance, Organization for Economic Co-operation and Development (OECD) including 30 countries like the USA and the United Kingdom have come out with strategies for effective management of their human capital for the economic growth of member countries (Keeley, 2007; Kwon, 2009; OECD, 1996; OECD, 1998). Although there are regional organizations in SSA including the African Peer Review Mechanism (APRM) and Economic Community of West African States (ECOWAS), they lack research capacity in several key areas including funding and adequate human capital (Kanbur, 2008) to undertake research, particularly, on human capital management (HCM) for the economic development of member countries. Literature on effective management of human capital in Sub-Saharan Africa including AWA countries is also sparse and those that are available pay more attention to negative cultural practices including corruption and the need to Africanize Western management practices – indigenization or hybridization (Abudu, 1986; Edoho, 2001; Jackson, 2002; 2004; Kamoche, 2011; Mufune, 2003; Nnadozie, 2001) neglecting how to particularly focus on HCM for improved productivity.
The purpose of this study therefore, is to suggest ways for organizations in AWA countries to tackle their HCM challenges in order to attain a competitive edge and position themselves globally. Our objective is not to offer a standard recipe for HCM in organizations in AWA, but to lay a foundation upon which firm specific human capital can be managed for competitive advantage. Accordingly, we strive to find answers to two major questions –What must organizations in AWA do to attract, acquire, develop and retain human capital? How can organizations maximize the use of their human capital that are congruent to their unique strategies, organizational context and competitive environment? To find answers to these questions, a conceptual approach is employed to investigate the elements of effective HCM using case illustrations. The utilization of case studies in this research is recognized as a useful approach that meets the subtleties of rigor (Patton, 1990; Stake, 1998; Yin, 2003).
This paper draws attention to the importance of HCM in AWA countries, which is the key to the emancipation of these economies, improve their standards of living and promote development. It also lays the foundation for sustainable development through effective HCM since there is sparse conceptual and empirical literature concerning HCM in AWA countries.
The paper is organized in the following manner. We briefly discuss the background of AWA countries and review literature on human capital in relation to resource based, open systems theories and point out the importance of HCM in AWA. Next we discuss a proposed model with six core elements, throwing light on how organizations in AWA can effectively manage their human capital. We conclude by discussing implementation strategies for sustained success and suggest areas for future research.
2. Theoretical review and conceptual model
It simply is not possible to have the fruits of a modern agriculture and the abundance of modern industry without making large investments in human beings –Schultz 1961
Why Anglophone West African Countries
Over decades, international agencies and world bodies including the United Nations and the World Bank have embarked on technology transfer activities in the areas of technical and social knowledge and innovations in the form of disease control and eradication programs, agriculture, public sector reforms and poverty reduction in third world countries including AWA. These activities take the form of basic skill building, team building, system building, process analysis, diagnostic activities, coaching and counselling, inter-group activities, strategic planning and techno-structural activities (Golembiewski & Luo, 1994; Kudonoo, 2013; Tenkasi & Mohrman, 1999). These attempts over the years have helped organizations and communities in AWA countries to achieve some levels of successes (Blanke, et al., 2011; Chuhan-Pole & Angwafo, 2011; Kudonoo, 2013; McKinsey Global Institute Report, 2010) but helped very little in effective management of human capital to sustain and improve successes achieved (Blanke, et al., 2011). Statement from Schultz’s (1961: 16) “The man without skills and knowledge leaning terrifically against nothing” paints a vivid picture of the prevailing situation in AWA countries.
The stance we take here is that the basic skills acquired by individuals during interventions in AWA countries are inadequate for the sustenance of past successes and continuous development. A typical example is the case study of the Community-based Health Planning and Services (CHPS) initiative in Ghana (Nyonator, Awoonor-Williams, Phillips, Jones & Millar, 2005). Although the experiment was successful in Navrongo and successfully replicated in Nkwanta district in Ghana, its implementation in most communities in the country was not as successful as anticipated because those expected to do so failed to thoroughly follow the procedure employed in the two districts the experiment was conducted. The situation could have been different if attention was paid to effective development of the human capital of those expected to initiate and facilitate the change, local cultural practices and measures taken to ensure that the institutionalized procedures were followed.
Another case illustration is the transfer of participatory farm management practices implemented by Dorward, Galpin, and Shepherd (2003), a project sponsored by the UK Department for International Development (DFID). They employed a local game called “oware” in the design of a research project that investigated the appropriateness of green manuring in wet season vegetable production in Bepoyease and Akrobi near Wenchi in Ghana. Although findings of the research showed the usefulness of the approach for better farm management, farmers and agricultural extension officers’ human capital were not yet developed to the level that will enable them to build upon the knowledge and experience gained during the research for improved use of green manuring for better farm management. Other examples where interventions by international bodies fall short of effective human capital development include the revamping of the tourism sector in Gambia and banking industry in Nigeria. The appreciative inquiry methodology was employed to revamp the tourism industry in the Gambia, but the intervention did not affect the development of human capital to enable beneficiaries to continue to improve on what they have learnt. The case study concerning the banking industry in Nigeria also revealed that although there was some improvement in the sector, much attention was not paid to effective HCM (Bah, & Goodwin, 2003; Shehu & Izuchukwu, 2011). We, therefore, posit that efforts being made to transfer technical know-how to people in AWA countries seem to remain at the basic level creating a gap to be addressed in human capital development. We advocate an aggressive approach to HCM in AWA countries for high productivity and improved service delivery.
Although literature reveals that there has been consistent growth in Africa for over a decade, according to Arbache, Go and Page (2008: 68), the whole region “lags at least 20 percent behind the average infrastructure measures” with low quality of services. Blanke et al., (2011) also noted that whereas students in tertiary institutions in rapidly growing economies such as Korea and China are pursuing courses in science, engineering, technology and business, most students in AWA, on the other hand, are pursuing courses in humanities to the neglect of those that promote development. Literature also reveals shortfalls in educational systems in AWA countries. For instance, tertiary institutions offer programs to students that lack entrepreneurial, risk-taking skill, creativity and innovative abilities (Afenyadu, King, McGrath, Rogerson, & Visser, 2001; Benneh, 2013; Fosu, & Boateng, 2013). Collaboration between tertiary institutions, local research institutions and industry concerning the development of the right human capital is also deficient leading to a gap between theory and practice and lack of knowledge concerning how to effectively manage human capital for organizational effectiveness (Kudonoo, Buame & Acheampong, 2012; Obiakor, 2004). Accordingly, we postulate that the infrastructure of AWA countries and quality of service delivery as well as manufacturing of products can be improved if special attention will be paid to the development and effective utilization of the human capital needed to resolve specific firm and industry issues.
Attention is paid to AWA countries due to the following reasons. AWA is made up of five English speaking countries in West Africa. They are Nigeria, Ghana, The Gambia, Sierra Leone and Liberia. Nigeria is the most populous and largest country in the African continent. Its consumer spending combined with that of South Africa amounts to 51% of the whole continent (Hatch, Becker & Zyl, 2011; Blanke, et al., 2011). The Gambia is the least popular one. Sierra Leone and Liberia are recovering from civil wars. Ghana is one of the first countries in the continent to obtain independence from colonial rule. It has been currently classified with three other African countries (Ghana, Kenya and Senegal) as one of the countries having transition economies (Mckinsey Global Report, 2010) and asserted to be an island in a region of turmoil. All five countries are endowed with rich natural resources, but categorized as less developed (Kudonoo, 2013; Maher, 2011; Remmert-Fontes, & Ngeba, 2006). Table 1 provides an overview of the status of AWA nations as indicated by world organizations such as the World Bank and United Nations Development Program
Table 1. Summary of Economic Background of AWA Countries
|Country||The Gambia||Ghana||Liberia||Nigeria||Sierra Leone|
|Population||2013= 1,849 million||2013= 25.90 million||2013 = 4.1294 million||2013= 173.6 million||2013= 6.092 million|
|Adult literacy rate –age 15 & above||2012= 51.1%||2012= 71.5%||2012= 42.9%||2012= 51.1%||2012= 43.3%|
|Primary School Enrolment||2013= 87%||2014= 107%||2006= 39%||2006-2007= 61%||2013= 134%|
|Poverty Headcount ratio||2010 = 48.4%||2012= 24.2%||2007= 63.8%||2004= 54.7%||2003= 66.4%|
|Under – 5 mortality rate||Estimated 2014 = 73.8||Estimated 2014= 78.4||Estimated 2014= 71.1||Estimated 2014= 117.4||Estimated 2014= 160.6|
|Life expectancy at birth||2013= 58.8||2013= 61.1||2013= 60.6||2013= 52.5||2013= 45.6|
|HD1 value||2013= 0.441||2013= 0.573||2013= 0.412||2013= 0.504||2013= 0.374|
|GDP||2013= $903.5 million||2013=$48.14 billion||2011= $1.161 billion||2011= $235.9 billion||2013= $4.136 billion|
|GDP growth||Estimated 2015= 5.3%||Estimated 2015=4.6%||2009= 4.1%||2009= 2.9%||Estimated 2015= 2.0%|
|GNI Per Capita||2013= $1,557||2013= $3,532||2013= $752||2013= $5,353||2013= $1,815|
Source: http://data.worldbank.org; Human Development Report (2014)
A critical look at Table 1 shows that apart from Ghana, which is classified under “Medium Human Development” (Human Development Report, 2014), all four countries have their human development index below 0.55, which places them in the category of low developed countries. Moreover, none of the AWA nations have adult literacy rate above 70% apart from Ghana. If AWA countries must continue to compete with countries such as China that has 90% adult literacy rate, a situation regarded as one of the factors contributing to its fast pace of growth (Keeley 2007), then their human capital gap must be bridged. In this perspective, what theories underlie the concept of human capital? What is human capital? What are its characteristics and how does it contribute to productivity? The next section discusses answers to these questions focusing on the aspects of the relevant theories.
Education is not the filling of a pail, but the lighting of a fire –Yeats
Theories that underlie human capital management
According to human capital theory, any stock of knowledge, skills and characteristics of workers in the innate or acquired form contributes to productivity, as a result, regarded as human capital. The theory further states that human capital can appreciate or depreciate depending on its development and usage. It appreciates when an individual’s knowledge, skills and competencies are in constant use and upgrade to meet the changing job requirements. On the other hand, it depreciates when one is out of work over a period of time or is unable to upgrade his/her skills, knowledge and competencies to meet the changing job requirements; using old ways to resolve current issues leads to unsatisfactory results (Becker, 1964). This situation exist in AWA country organizations where some employees work for decades and go on retirement without building on the qualifications that they had at their point of entry apart from the experience they gain on the job.
According to Westphalen (1999), human capital is “knowledge, skills, competencies and other attributes embodied in individuals or groups of individuals acquired during their life and used to produce goods, services or ideas in market circumstances”. This definition encapsulates our perspective of human capital because we perceive human capital as the total make-up of an individual, which encompasses knowledge, skills, competencies, attitudes, appearance, reputation and credentials that enable this individual to achieve excellence in all areas of an assigned task as well as contribute ideas for organizational success and national development.
Human capital positively impacts the individual, organization and society. Developed human capitals become highly productive and its productivity effects on the organizations leading to increase in individual and organizational revenue. Society as a whole consequently benefits because the standard of its people’s life improve due to higher income levels as a result of human capital. Human capital is categorized in general (transferable across jobs and industries – can be referred to general skills and competencies) and specific (firm or task specific). Firm specific human capital has to do with the core values and general skills of a firm that enable employees to perform in a specific firm, whereas task specific human capital enables one to perform a specific task that makes up one’s job. Firm specific human capital enhance one’s performance and increase productivity in a firm, however, it is not transferable to other organizations or industries. Likewise, task specific human capital increases an individual’s productivity on a specific task in a firm but it is also not transferable to other tasks in the same firm or other organizations and industries (Crook, Todd, Combs & Woehr, 2011; Gathmann, 2010; Kwon, 2009).
According to Schultz (1961), human capital is the bedrock of all developmental activities. It contributes immensely to socio-political development and freedom of every nation. He emphasized its importance by stating that assistance given to underdeveloped countries to help them achieve economic growth must necessarily include HCM. He argues that assistance to underdeveloped countries to expedite their economic growth to the world level is one sided and does not include human capital development, which is central to the sustainability of success. He further explains that although some growth may occur, the lack of knowledge, skills and competencies will not promote its further continuation. It is simply not possible to have the fruits of a modern agriculture and the abundance of modern industry without making large investments in human-beings (Schultz; 1961). We concur with Schultz’s statement, which sums it all. Some levels of successes are being achieved in the numerous interventions taking place in AWA countries due to activities by international non-governmental organizations (NGOs) and donor agencies.
Keeley buttressed Schultz’s (1961) assertions by explaining that “the human capital of individuals act as a giant invisible hand that pushes economic resources towards their most productive use”. This giant hand is needed in AWA countries to push their abundant natural resources towards more productive use for economic growth. The proposed human capital centered model gives guidelines concerning how organizations in AWA can build their human capital and turn them into giant hands pushing them into continuous successes.
The resource-based theory emphasizes the uniqueness of organizations and suggests that the key to profitability and competitive advantage is to develop and maximize the use of human capital in a different way than competitors do (Barney, 1991; Crook, et al., 2011; Grant, 2010). AWA countries need unique human capital tailored to suit their unique cultures and ways of doing business but at the same time capable of meeting the demands of their external environments. The theory states that for a resource to be used to achieve competitive advantage, it must be rare, valuable, imperfectly imitable and not substitutable. It also emphasizes that human capital at management level must be rare so as to promote the formulation and implementation of strategies that cannot be emulated by competitors (Barney, 1991). This explanation corresponds with the one given to firm and task specific human capital earlier. It, therefore implies that in utilizing human capital for a competitive advantage, human capital must not be readily available in the labor market, but organizations must develop their own unique human capital through firm and job specific training to meet specific needs and thereby making their human capital scarce and relevant to address the key success factors of the targeted market. These key success factors are obtained as the results of analysis of demand leading to the identification of the firm’s specific clients and their needs (Grant, 2010, p. 89). Consequently, human capital is relevant if the right people are acquired, properly trained, assigned the right tasks, appropriately rewarded and constantly upgraded to solve present and anticipated problems in the internal and external environments of organizations in AWA. This is the crux of the “Human Capital Centered Model” proposed in the later part of this paper.
Another theory that underlies the effective management of human capital is the open systems theory. According to Katz and Kahn theory (1978), organizations are systems that have permeable boundaries which enable them to interact with their external environments where all the resources (inputs) needed for production including human capital are obtained. The interacting nature of systems provides information and resources that enable the systems to either thrive or to become extinct. Although organizations in AWA countries are interacting with their external environments (developed and emerging economies) in various activities including education, conflict reduction, better farm management practices, environmental health and sanitation, disease eradication and gender issues, they are still lagging behind in terms of economic development. The feedback concerning human capital received from the external environment show that they are performing below international standards. We propose a paradigm shift from the traditional way of managing human resources in Ghana and AWA as a whole to HCM and suggest the use of the human capital centered model for obtaining results. 21st century consumers are becoming very enlightened due to knowledge explosion and technological advancement resulting in a high demand for improved goods and services (Lawler, Worley & Creelman, 2011). This demand can only be met if organizations in AWA effectively manage their human capital for the production of goods and services that meet consumer expectation.
In AWA countries, there are certain cultural influences that inhibit performance, contrary to what human capital, resource-based view and open systems theories stand for concerning productivity. Examples of such practices include subordinate compliance and loyalty to their superiors even if their actions inhibit organizational progress, the negative effects of personal connections and relationships, time mismanagement and work ethics (Abudu, 1986; Edoho, 2001; Kuada, 1994; Nnadozie, 2001; Kudonoo et al., 2012). These practices on the contrary, can be employed positively to facilitate high productivity rather than allow them to inhibit development (Nnadozie, 2001). The proposed Human Capital Centered Model throws more light on how to overcome cultural bottlenecks to boost productivity through HCM.
Human capital centered model for AWA countries
Based on the human capital gap and the three theories discussed, we propose a model (figure 1) made up of six core elements indicating how human capital can be effectively managed in AWA countries for sustainable competitive advantage. The underlying factor of the model is that human resources managers should work closely with Chief Executive Officers (CEOs) to realize organizations’ strategic goals through compelling human resource strategies. The model, therefore, takes into consideration local practices of AWA countries and builds on its positive aspects for transformation. It is made up of elements such as attract, acquire, network, grow, manage, and reward. These core elements are joined with feedback loops that make room for necessary adjustments when outcomes at a stage fall short of expectations. Figure 1 provides an illustration of the processes linking one step to another.
Attracting the Right People (Attract)
The first and most important step in the model is to attract the right people. Organizations in AWA countries, therefore, need to create culture that naturally draws people to enable them to generate the right pool of prospective employees. The services of full time recruitment experts can be employed for this purpose. Their duties include continuous searching and linking with experts in the industry in order to attract the right people for employment. Advantage can also be taken by hiring retrenched staff of other companies whose values and human capital correspond with that of the organizations. Also, organizations need to create environments that promote learning, belongingness, trust, and openness, which lead to satisfied employees. Generating a pool of applicants also requires organizations to spread their net to every level and from every source available. Accordingly, methods that ensure objectivity need to be employed. Tertiary institutions, technical and vocational schools need to align with industry, and tailor their courses to suit the needs of industry so as to produce the right caliber of people for industry. A positive example exists in Unilever (which operates in AWA countries) and Volta Aluminum Company in Ghana where they have positioned themselves to attract the right pool of applicants (Puplampu, 2004). Another way of generating a pool of applicants is employee referral. This approach is reliable if managed effectively because it leads to conscious, emotionally stable, confident, longer tenure employees who are able to adjust and fit into the organization faster (Barrick & Zimmerman, 2009) because the referrer can serve as an emotional support for the referee.
Figure 1: Human Capital Centered Model
Acquiring the Best from the Pool of Applicants (Acquire)
The second stage of the HCM process is to acquire the best from the pool of prospective applicants. Although the selection process is similar to attracting the right people, the distinct difference is that the process results in the selection of the best from the best. This requires setting standards that indicate levels of outcomes showing specifics in terms of desired knowledge, skills, competencies, attitudes, personalities and values required to achieve them (Crain, 2009; Morris & Calamai, 2009). Accordingly, methods that ensure objectivity need to be employed. Accordingly, methods that ensure objectivity must be employed. In looking out for the best of the best, smart, creative and innovative applicants who are adaptable and ready to learn should be the target of recruiters. The process must ensure that there is a fit between the values of the applicant and that of the firm. A comprehensive assessment is required in order to identify other competencies which may not form part of the requirements of the vacant position. This will enable organizations to make maximum use of employees’ potentials.
Linking New Hires with Buddies (Network)
For the purposes of ensuring that employees are transformed into engaged, productive and committed members of organizations, stage three of the model emphasizes networking. This enables new hires to transit faster from the state of anticipatory socialization to change and acquisition and thereby settle down and start performing. This is done effectively if they are networked (bonded) or given buddies who are experienced employees of the organization to coach and support them. Networking promotes knowledge sharing, teaming up with people, operating in support of those who understand human motivation and social interaction in order to make new hires feel they belong, reduce turnover, eliminate the shock of entry and maximize their potential for high productivity. Senior management’s perception about the importance of human capital also contributes immensely towards the bonding (networking) process because they see beyond the economic objectives of the organization to the extent of realizing that it is also a social entity where people interact with one another as well as work together to achieve best results (Bartlett & Ghoshal, 2002; Crain, 2009).
Nurturing Employees in Task and Firm Specific Skills (Grow)
It is a strategic imperative for organizations to nurture (train and develop) their employees for high productivity. This fourth stage requires providing opportunities for employee participation in decision making and personal growth. Creating learning centers that facilitate collaborative research between academia and organizations to address firm specific issues and generate knowledge for future use is paramount. Clear understanding of organization’s strategies by all employees is also very important because it enables everyone to work towards their achievement. Employees can only be effective if they know how their performance is contributing towards the achievement of goals. The right training and development centers on the core values of the firm and task specific technical skills and knowledge enlighten employees to appreciate the fact that, their work brings value to the organization. Feedback mechanisms need to be in place to enable employees realize that if they do not perform to expectation they will be shown the exit; their pay checks depend on the survival of their organizations; their organizations thrive on their performance and are competing with others in the same industry (Crain, 2009). The training and development stage of the model aims at sensitizing employees to change their negative cultural attitudes prevailing in AWA countries, including time elasticity, nepotism, social obligations and deference to authority. It strives to help them reorient their perceptions about work, encourage them to be committed with the view that their attitudes in workplaces can either mar or build a vibrant organization they can depend on for their living. Their entrepreneurial skills need to be developed to enable them come out with novel ideas for high productivity and competitive advantage. Training should not be ad hoc but based on performance review and training needs analysis results (Noe, 2005).
We propose the development of succession plans to address the human capital challenge in AWA countries. Though critical, it is the most neglected aspect of managing human resources in AWA. There have been several instances where private businesses have collapsed because the original owners have retired or have passed away. It is therefore expedient to develop the right human capital at the right time through proactive leadership that continuously identifies positions to be filled when both planned and unplanned departures occur. Succession planning is an ongoing supply of well trained, broadly experienced, well-motivated people, who are ready and able to step into positions as needed by the organization. It caters for the future human capital needs of the organization, by identifying people who can move into crucial positions without unnecessary operational disruptions. It helps keep leadership personnel in the organization and assures the continuing supply of capable successors for each of the important positions included in the succession plan. Training and development that are linked to succession planning ensures having the right human capital at all times.
Maximize Human Capital for High Productivity (Manage)
Maximizing human capital requires a strategic and coherent approach to the management of the organization’s most valued asset. HCM employs performance management module tailored to meet the specificities of organizations and ensuring that the right targets are set with standards based on strategies developed out of organizations’ visions.
Effective communication of an organization’s vision leads to its internalization by managers who in turn translate it into targets for employees to achieve (Clawson, 2009). Respect for authority, one of the tenets of the culture of AWA countries must be exploited in organizations by demanding exemplary lives from leaders. Good leaders must be flexible, open to the views of their subordinates (colleagues), and trust those working under them enough to accomplish tasks. Fairness should be the hallmark of all their dealings with all employees. They should be trustworthy and seen to be leading exemplary lives worthy of emulation for high productivity. Employees must know exactly what to do, how to do it and the exact time to accomplish it. Milestones must be set with agreed timelines for evaluation (agreement between manager and employee). Excellence and successes must be acknowledged, celebrated and rewarded in order to motivate others to work harder (Bellman & Ryan, 2009; Kudonoo, 2013). It takes effective communication to undertake effective evaluation. We propose that organizations in AWA should assess the performance of employees more than once a year in order to link the process to their training and development activities, instead of once a year that is often done, which also takes the form of ‘the prosecutor and the accused’ where the supervisors’ opinion about the appraise is final. The process and the outcome are often based on loyalty and compliance which is one of the AWA cultural practices that inhibit effective HCM. Objective assessment based on set targets is the only way to obtain the right results for rewards.
The human capital centered model also advocates for employee engagement where employees are encouraged to actively participate in generating novel ideas for the improvement of organizations by widening the circle of involvement and thereby ensuring that everyone’s voice counts and good judgment found (Axelrod, 2010). This perspective can be likened to staff and community durbars where employees come together to find solutions to pressing organizational issues in AWA countries. We encourage organizations to exploit the use of such durbars to create a critical mass of energetic participants who design and support the needed changes. The few, should no longer decide for the many (Axelrod, 2010). Good human relations and effective team work are the hallmarks of a productive organization. Effective design of jobs to match the right human capital is also very essential.
The use of technology facilitates effective HCM. Human resource information systems ought to be acquired and utilized for managing changing organizational requirements in order to achieve long term organizational strategy. Technology need to be employed to combine people, and processes, and used to keep employee records, making it easy to keep track of their training and development activities to find out how far they have progressed in order to assign the right tasks that make them work smarter to improve productivity.
Commensurate Rewards with Performance (Reward)
Employees get motivated and committed when they are rewarded for the value they create in organizations. The objective of rewards management in organizations is to reward people equitably, fairly, and consistently leading to the improvement of organizational, team and individual performance. Consequently, rewards processes ought to be created based on organizations’ strategies, what they value and are capable of paying. Rewards come in two forms –financial and non-financial as a result, strategies and policies must be put in place to administer them appropriately (Lundy & Cowling, 1996). We suggest that both financial and non-financial rewards are maximized to meet organizational and individual needs and in so doing ensuring that non-financial rewards are given in the form employees value most. For instance a reward of a set of cooking pots to someone going on retirement rather than finding out what the person really needs and will appreciate, and rewarding the person accordingly will be preferable. Moreover, people in AWA countries value recognition and respect; as a result, recognizing them publicly boosts their morale. The administration of the right type of total rewards positions organizations, to attract prospective employees who have the ability to add value to them.
3. Conclusion, Contributions and Limitations
This study identified human capital gaps in AWA countries and suggested ways to address the gaps using a proposed human capital centered model comprising elements such as attract, acquire, network, grow, manage and reward. Data gathered from published literature in the form of reports and articles revealed that AWA lags behind at least about 20 percent under average in infrastructure measures, and low quality of service provision with regard to electricity and water supply, which are frequently unreliable and unpredictable (Arbache, Go & Page, 2008). We have attributed this lag to lack of effective management of human capital in AWA countries, which is confirmed by reports including McKinsey Global Institute’s Report (2010), Blanke, et al., (2011), Brenton, & Gözde, (2012), and Rao, (2011). There is sparse literature in HCM on Africa, most especially AWA. Those that exist focus on differences between Western management theories and African cultures (Abudu, 1986; Jackson, 2002; 2004; Kamoche, 1997; 2011; Mufune, 2003; Kudonoo et al., 2012) to the neglect of HCM.
We supported our arguments with theories such as the human capital theory, which explains the essence of managing human capital for economic development. The resource-based theory is used to elucidate how HCM brings about competitive advantage. AWA countries do not exist in isolation. They interact with other countries globally in trade and for resources for survival. The open systems theory was therefore used to shed light on the need for AWA countries to manage their human capital in order to be abreast with emerging trends and successfully compete globally in resource acquisition and trade. The proposed human capital centered model provides steps organizations can take to address their human capital needs.
Given high relevance of HCM in this 21st century, this paper is important for organizations in AWA countries because it clearly demonstrates the essence of human capital and how it can be managed from attraction to rewards stage in order to increase productivity, sustain success, as well as gain competitive advantage. From a theoretical point of view, this paper is relatively one of the first that utilized human capital, resource-based, and open systems theories to shed light on the usefulness of human capital in AWA countries for organizational effectiveness and overall economic development. It has also laid the foundation for more discussion concerning how AWA countries can address their unique human capital needs. The use of case illustration to develop a conceptual paper is also a unique contribution to literature on Africa.
Although this paper contributes to theory and practice, one major study limitation is that, the researchers depended solely on published data, and experiences gained from their consulting activities in organizations in AWA, which has limitations including total dependence on publishers’ views, which may not be the absolute reality on the ground. Our wish is to complement published literature with unpublished data from organizations in AWA countries but unfortunately, attempts to collect data from some organizations in Ghana failed because most of them are not used to research activities of this nature. Those that allowed them access were “positive biased”. They provided answers that were not verifiable.
4. Areas for future research
Accordingly, we suggest that future research should include unpublished data from organizations in addition to published data and link them with their prevailing culture. Furthermore, we believe that not all organizations in AWA countries lack human capital. A case study on organizations with promising human capital practices that have incorporated local practices in AWA will set the tone for others to also come out with their unique “next practices” since every organization has its unique strategies. Finally, future research is needed to test the workability of the model in organizations in AWA.
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