PERSONNEL OUTSOURCING AND ORGANIZATIONAL GROWTH (A STUDY OF SELECTED COMMERCIAL BANKS IN RIVERS STATE)

CHAPTER 1

INTRODUCTION
1.1 BACKGROUND OF THE STUDY

The strategic value of an activity determines its capability as a source of competitive advantage. Barney (1991) states that sustainable competitive advantage is a result of possessing immobile resources that permit clear product or service differentiation. However, not all resources have the potential to be a source of sustainable competitive advantage for the firm. Barney (1991) also affirms that for a resource to have that potential, it must satisfy four conditions: be valuable, rare, imperfectly imitable and non-substitutable. The resources that satisfy the conditions for being sources of competitive advantage are superior assets and capabilities and distinctive core competences (day &Wensley, 1988; Prahalad& Hamel, 1990). Distinctive core capabilities are those processes that involve a combination of physical and human resources and which are later responsible for the organization’s tacit and explicit knowledge. (Espino- Rodriguez, Pardon-Robaina, 2005).
The debate on personnel outsourcing is polarized. Personnel outsourcing is seen as an opportunity for the human resources function by some and as a human resource threat by others. the first view suggests that personnel outsourcing is an instrument creating time for human resources to become a strategic partner. the second view considers personnel outsourcing as a cost- cutting instrument gradually reducing human resources staff. (Delmotte, sels, 2008).
Outsourcing has been defined as work done for a company by people other than the company’s full-time employees. in the modern setting, outsourcing turns out to be highly complex and organizations use outsourcing vendors for a variety of reasons. according to analysts, companies usually cite cost reduction as the most crucial reason for human resources outsourcing. as companies were discussing how to cut costs in the face of an economic downturn, many look at outsourcing for some of their human resources processes. as the managing director of capita human resources solutions, Wayne story, rightly puts it, “human resources outsourcing is on every human resources director’s list of things to do. It has to be driven by the business case though the right partner at the right time, for the right reasons.” However, some analysts argue that by outsourcing major human resources activities, the number of human resources jobs is decreasing, others feel that on the contrary by outsourcing these kinds of repetitive and administrative jobs, higher-level human resources professionals get the time they need to tackle strategic workforce challenges. With more and more companies looking to rationalize employees on their payroll, manpower outsourcing is slowly becoming the new buzz in India. And the trend seems to have hit not just big multinational companies but the public sector and government undertakings as well, though on a very low key yet in the latter.
Human resources services are among the key elements in the enlarging outsourcing game. Recognizing the fact that senior management needs to get out of mundane day-to-day processing work and focus instead on strategic planning, core competencies, customer satisfaction and decision making, a number of large companies, across globe have begun opting for outsourcing of their human resources services. Some of the functions most commonly handed over to outside providers include payroll, benefits administration, background checks, drug testing, recruiting and training. Even small companies that might not get noticed much in big studies of outsourcing trends, turn to outside services to help with such chores. From the foregoing therefore the study is intended to examine the relationship between personnel outsourcing and organizational growth.
1.2 STATEMENT OF PROBLEMS
The debate on personnel outsourcing is polarized. Human resources outsourcing is seen as an opportunity for the human resources function by some and as a threat by others. The first view suggests that human resources outsourcing is an instrument creating time for human resources to become a strategic partner. The second view considers human resources outsourcing as a cost- cutting instrument gradually reducing human resources staff. (Delmotte, Sels, 2008).
Problems identified are Poor Training and Development, weak Recruiting Process, Poor Compensation/Salary system and Inadequate reward strategies.
1.3 OBJECTIVES OF THE STUDY
The main objective of the study is to examine the relationship between personnel outsourcing and organizational growth. The specific objectives are as follows:
i. To examine the relationship between Training/Development and organizational growth.
ii. To examine the relationship between Recruiting Process Outsourcing and organizational growth.
iii. To examine the relationship between Compensation/Salary organizational growth.
iv. To examine the relationship between reward strategies and organizational growth.
1.4 RESEARCH QUESTIONS
i. What is the relationship between Training/Development and organizational growth.
ii. WHAT is the relationship between Recruiting Process Outsourcing and organizational growth.
iii. What is the relationship between Compensation/Salary organizational growth.
iv. What is the relationship between reward strategies and organizational growth.
1.5 RESEARCH HYPOTHESIS
HO1:There is no significant relationship between Training/Development and organizational growth.
HO2: There is no significant relationship between Recruiting Process Outsourcing and organizational growth.
HO3: There is no significant relationship between Compensation/Salary organizational growth.
HO4: There is no significant relationship between reward strategies and organizational growth.
1.6 SIGNIFICANCE OF THE STUDY
This study is significant in the following ways;
Firstly, it will assist the organization to continually plan for the good of their employee’s and also make use of skilled manpower for the good of the organization.
Others who will benefit from this study include, managers, business organizations, higher institutions and the society in general.
1.7 SCOPE/LIMITATION OF THE STUDY
The study covers personnel outsourcing and organizational growth. The study limits scope to some selected commercial Banks in Rivers State which include First Bank PLC, Union Bank PLC and Eco Bank PLC in Port Harcourt.
The major limitation of the study is the short time frame the research lasted, coupled with the tight academic time table, which prevented a very comprehensive study. The fund available to the researcher was also limited and therefore the study was limited to a small portion of the survey population.
Another limitation is the difficulties, encountered by the researcher in obtaining all needed information and materials from the right source and compilation of data for the project.

1.8 DEFINITION OF TERMS
Growth: The process of increasing in size.
Outsourcing: Obtain (goods or a service) by contract from an outside supplier.
Personnel outsourcing: Personnel outsourcing (HRO) occurs when a business instructs an external supplier to take responsibility (and risk) for HR functions and perform these tasks for the business.
Growth: The process of increasing in size.
Organization: An organized group of people with a particular purpose, such as a business or government department.
Personnel: People employed in an organization or engaged in an organized undertaking such as military service.