HUMAN CAPITAL DEVELOPMENT AND ORGANISATIONAL EFFECTIVENESS IN MERCHANT BANKS

HUMAN CAPITAL DEVELOPMENT AND ORGANISATIONAL EFFECTIVENESS IN MERCHANT BANKS

CHAPTER ONE

INTRODUCTION

1.1       Background of the Study

Human Capital Development has become a global issue in human resource deployment practices and it spreads across various sectors including the banking industry. This makes the need to develop employee’s knowledge and skills in contemporary organisations more important as a way to enrich their job-related experience. However, what remains contentious is whether the employees have the required stock of human capital that is knowledge, skills and experience to discharge their responsibilities accordingly. Studies have established shortage and deficit of competent employees in the Nigerian commercial banks as among the numerous factors that have contributed to ineffective operational performance to their customers (Ugoji, Mordi & Ajonbadi, 2014; Olalere & Adenugba, 2013; Sanusi, 2012).

Sanusi (2012) admitted that knowledge gap of regulatory requirements cum standards among bank employees has been a major factor, which has contributed to the inconsistent service quality, and service delivery failure of commercial banks in Nigeria to customers while Olalere and Adenugba (2013) admitted that there was a challenge of qualified personnel to support the industry’s rapid expansion. With the literacy level of Nigerian bank customers of today about risk, costs, and returns associated with various financial services, studies have shown increasing rate of dissatisfaction regarding the quality of banking services provided by the Nigerian banks to their customers (Woldie, 2003).

Based on the foregoing, researchers have divided opinion as to the effect of human capital development on customers’ satisfaction in the banking industry. While some agreed with the position above that inefficient service delivery from bank employees can lead to customers’ satisfaction, they oppose the view that it might directly affect customers’ retention in many commercial banks in Nigeria (Ugoji, Mordi & Ajonbadi, 2014; Olalere & Adenugba, 2013; Sanusi, 2012). This is because of customer loyalty and the fear of insolvency of the banks. Within the last two decades, some banks became distressed and folded up in Nigeria and this affected some depositors’ monies. This school of thought believe that dissatisfied customers prefer to leverage on complaints lodging procedures of the banks to address their dissatisfaction and grievances rather than leaving the bank they are very sure of its capital adequacy and financial health as they are much more concern with the safe-keep of their hard-earned monies. On the contrary, another group of authors argued that poor human capital development has affected customers’ retention. For instance, research carried out by Carlson (1994) on banks in developing countries revealed that, many banks have employees’ skill deficit as one of their most serious obstacles to improving banking performance while that of Ebiringaand Ibekwe (2011) decried the qualitative imbalance in the availability of ICT-skilled manpower in the Nigerian banking industry.