The Role Of Management Consultant

CHAPTER ONE INTRODUCTION “You can get capital and erect building, but it takes people to build a business" Thomas J. Watson Founder, IBM. 1.1

Background of the study We cannot overemphasize the need for qualified, competent and experienced work force in the development process of any nation or organisation. The quality of the labour force and accelerated pace of development taking place in development economies have accentuated the need for seasoned managers to pilot development efforts. The event in Nigeria in the past decade where manufacturing subsector had been characterized by low capacity utilization (which average 30 percent to be modest), low and negative growth

rate,

and

high

import

content/dependence

for

technologies and inputs partly due to lack of proper strategic planning, call for properly groomed, seasoned and experienced managers

to

formulate

and

promote

good

corporate

governance. Most of the problems confronting the Nigerian nation are traceable to poor management. Management holds the key that unlocks the forces of economic and social development in any modern economy. It is therefore a must for managers and infact, the total workforce to learn 1

basic principles, skills and techniques including organisation behaviour and appreciate the difficulties encountered by key management in guiding and directing the organisation as an integrated unit. This invites an attempt to juxtaposition the essence of management in human capital development. Human Capital Development consists of the knowledge, skills and abilities of the people employed in an organisation or in a nation (Armstrong M. 2005). The human capital development in the words of Bontis'et al (1999) is defined as "the human factor” in the organisation; the combined intelligence, skills and expertise that gives the organisation its distinctive character. The human elements of the organisation are those that are capable of learning, changing, innovating and providing the creative thrust which if properly motivated can ensure the long-term survival of the organisation. Human

capital

is

the

most

important

element

in

an

organizations intellectual capitals and it consists of the stocks and flows of knowledge available to an organisation. It is the knowledge, skills and abilities of individuals that create value, which is why the focus has to be on means of attracting, retaining, developing and maintaining the human capital they represent. 2

As commented aptly by Davenport (1999) that "people possess innate abilities, behaviours and personal energy and these elements make up the human capital they bring to their work”. It is in this perspective of enhancing the value and relevance of the human capital on a continuous basis that the impact and eventual contribution of management consulting, and in fact training and performance consulting is appreciated and evaluated. Enhancing the value, updating the related management knowledge and development of attitudes, values, skills, competencies and techniques are the critical issue in developing and sustaining human capital development viz-a-viz intellectual capital of a nation. The agents of the change are leadership, entrepreneurship education, training and manpower development in a strategic focus. 1.2

STATEMENT OF THE PROBLEM OF THE STUDY. Terry Kendall Consult Ltd is one of the management consulting firms in Nigeria with a commitment to provide and encourage the acquisition of skills in industry and commerce with a view to generating a pool of indigenous manpower sufficient to meet the needs of the nations. Terry Kendall Consult Ltd (Terry Kendall in short) employees are 15 with a branch outside Lagos. The employees are made of both managers and non-managers.

3

The issue is how does Terry Kendall contribute to the development of human capital development in Nigeria by way of training and manpower development.

1.3

THE OBJECTIVES OF THE STUDY: The following objectives are defined for the study:

1.

To define the role of management consultant

2.

To appreciate and understand what human capital development is all about

3.

To examine the role of Terry Kendall Consult Ltd in meeting the challenges of improving or enhancing the value, stock and relevance of human capital development in

prompting

economic growth and development of the nation and 4.

Finally, to examine various factors impeding and enhancing the role of management consulting in assuming the indisputable agent or catalyst of change in economic growth and national transformation.

5. SCOPE AND LIMITATION OF THE STUDY The study is only about Terry Kendall Consult Ltd consulting and training role in an attempt to improve the stock and flows of human capital development of the nation. This means that no other aspect of the company is studied. The study therefore qualifies for the tripod (Kaplan, 1964: 78) or triangular principles of scientific research (Bringbeng and Nachimal's 1986 : 161)

4

The triangle represents what Nachimal's and Nachimal's (1974 : 56) call unit of analysis or locus of problem (Kaplan 1964 : 78) The figure below demonstrates the scope of this study.

A Training Discussion

Performance Consulting

B

C

Lagos metropolis SPACIAL DIMENSION (TERRY KENDALL GROUP).

Figure 1: Triangular - Scope of the study The triangular ABC fixes the subject of the research (consulting) in relation with its spatial (Lagos Metropolis) study population. The limitations of the study are that the study is situated in only one organisation. The implication is that the result will only be applicable or generallable to Terry Kendall group.

5

1.4

SIGNIFICANCE OF THE STUDY The results of this study will reveal the impact, though insignificant,

Terry

Kendall

group

is

making

towards

management education and training/consulting, management awareness and consciousness. The study will demonstrate the role of consulting in human capital development and the vision of the company to positively impact on the stocks and flows of human capital development in partnership with other management consulting firms in Nigeria and all over the world since the global world has exposed every transaction no matter how localized, to every body in every climate, apart from the ever increasing competitiveness.

1.5

DEFINITION OF TERMS ROLE When faced with any situation, e.g carrying out a job, people have to enact a role in order to manage that situation. The person must act within situations: situations are rule - governed and how a person behaves often prescribed by these socially acquired roles. Thus the person adopts a suitable role in order to perform effectively within the situation. 6

HUMAN CAPITAL It consists of the knowledge, skills and abilities of the people employed in an organisation. INTELLECTUAL CAPITAL It consists of the stocks and flows of knowledge available to an organisation. These can be regarded as intangible resources which, together with tangible resources (money and physical assets), comprise the market or total value of a business.

KNOWLEDGE MANAGEMENT The purpose of knowledge management is to capture a company's collective expertise and distribute the biggest payoff" Knowledge management is about getting knowledge from those who have it to those who need it in order to improve organizational effectiveness. Knowledge management is "any process or practice of creating, acquiring, capturing, sharing and using knowledge, wherever it resides, to enhance learning and performance in organizations. Knowledge management involves transforming knowledge resources

by

identifying

relevant

information

disseminating it so that learning can take place.

7

and

then

MANAGEMENT CONSULTANT. Management consultant is a person or a group of people with relevant

management

techniques

and

what

skills, have

attitudes, you,

competencies,

purposed

to

proffer

management solutions to organizational problems and /or challenges. It is a professionally trained expert in specific area of management or vocation. TRAINING This is a process or procedure through which the skills, talent and knowledge of an employee is enhanced or increased. DEVELOPMENT This is concerned with preparing the employee so that they can move with the organisation as it develops, changes and grows. EDUCATION Education encompasses all the process and activities designed to improve the overall competence of an employee in a specified direction and beyond the job currently held. It entails preparing people for life. LEARNING This is any relatively permanent change in behaviour as a result of observation and experience 8

ORGANISATIONAL DEVELOPMENT This is a deliberate, holistic and planned intervention, inputs or stepping into remove obstacles and bottlenecks coming in the way of the effective running of an organisation with more emphasis on the people and their tools, processes and system and sub-systems of work for the achievement of organisation effectiveness. CAREER DEVELOPMENT This entails the development of the career of an individual employee along a clearly defined career path by harnessing his plan into the corporate plan CAREER This is a sequence of separate, but related work activities that provide continuity, order and meaning in some ones work life. It is a profession in which a person specializes in a permanent employment as well as the sequence of work related position occupied throughout a person's life.

CAREER PATH This is the modus of achieving a career through a successive patterned progression. 9

TRAINING EFFECTIVENESS The ability of employee training and development to achieve defined objectives. EMPLOYEE ATTITUDE The disposition of employee to accept or reject training and development MANAGEMENT ATTITUDE The disposition of management to approve or disapprove training and development SUCCESSSION PLANNING This has to do with the process of grooming the necessary manpower to fill those positions from which the incumbent will retire within a foreseeable future or for position where the incumbent resigns, dies or is terminated. PERFORMANCE CONSULTANT Where the purpose and focus of the role is to partner with management to identify and achieve performance excellence.

HUMAN RESOURCES MANAGEMENT (HRM) It is a strategic and coherent approach to the management of an organization’s most valued assets: the people working there

10

who individually and collectively contribute to the achievement of its objectives. HRM GOALS It helps the organisation to achieve success through people. It is concerned with both meeting human capital requirements and the development of process capabilities in other words, the ability to get things done effectively.

11

1.6

REFERENCES Michael Armstrong (1977), Human Resources Management Practice. 9th Edition London and Sterling, VA.New Delhc Kogan Page Limited, Dana Gaines Robinson & James C. Robinson (1905), Performance

Consulting:

Moving

Beyond

Training.

San

Francisio CA. Berret Koehler Publishers, Inc. Obisi C (2003) Organisational Behaviour - Concepts and Applications. Lagos Malt House Press Limited Obisi C (1996) Personnel Management, Ibadan, Jackbod Enterprises. Nwachukwu C.C. Management Theory and Practice, Onitsha Africana FEP Publisher Ltd Luthans Fred and Hodgetts m (1992) Business New york The Dryden Press.

12

CHAPTER TWO 2. BRIEF HISTORICAL BACKGROUND AND OBJECTIVES OF

TERRY KENDALL CONSULT LTD - (THE TERRY KENDALL GROUP). In an increasingly knowledge based economy, information is becoming at least as important as land and physical capital. If African countries cannot take advantage of the information revolution

and

sure

this

great

divide

and

experience

technological change, they may be crushed by it" - The World Bank

"The scarcity of human resources is not one of numbers, for our population has been increasing. It is rather a scarcity of trained people with adequate experience in doing difficult tasks willing and able to undertake the responsibilities that follow from greater innovation and greater complexity in business enterprises. - Daiton McFarland

2.1. BACKGROUND : TERRY KENDALL Consult Limited was incorporated on December 16, 1987 with the aim of providing and encouraging 13

the acquisition of skills in industry and commerce with a view to generating a pool of indigenous manpower sufficient to meet the needs of the nations. The following are the key areas of concentration by Terry Kendall Group. -

involved in organizing courses and seminars, training and retraining of staff to meet new challenges

-

focusing

on

appropriate

management

solution

for

developmental and business problems in emerging nations with particular emphasis on the Nigerian business environment -

combining practical experience with an understanding of global business realities and sensitivity to cultural differences, and

-

emphasizing

recruitment,

training,

performance

consulting, skills, competencies as well as technology.

TERRY KENDALL has three main subsidiaries: 1.

Ralph Maxwell Consulting (RMC) Is involved in Human Resources

Consulting,

Relations,

Performance

Training,

Recruitments,

Consulting

and

Labour

Management

Consulting. 2.

TERRY KENDALL Leadership Academy (TKLA). It organizes short-term and day release and weekend programmes in Leadership and Entrepreneurship Development. It also runs and conducts examinations on foundation and 14

professional certificates on Leadership and Entrepreneurship Development. 3.

The 21st Century Effective Manager. It is published on quarterly basis and focuses on management development.

It

also

publishes

books

on

Economics,

Management, International Relations etc and Revision packs for undergraduate and postgraduate/professional students in all fields of social and management sciences.

15

CHAPTER THREE 3.

THE ROLE OF MANAGEMENT CONSULTANT IN HUMAN CAPITAL DEVELOPMENT OF THE NATION Most managers have discovered that productive work cannot be achieved through command, order to executive fiat. Improved

employee

productivity

depends

on

individual

motivation. Brain Rapp. Public Management, May 1978. 3.1

The Management Consultant The task of planning an enterprise for profitability leads us to one inescapable conclusion: that there is no enterprise that can be so perfect that it will not have problems. Problems there will be, and the majority of these will be created for the enterprise by its operating environment such as changes in social, economic and political strategies within the national economy. There will be problems that will emanate from the activities of other

enterprises,

whether

they

be

competitors

or

complementary organizations. There will be problems, too, that will be imposed on the enterprise by the conflicting goals of the various interest groups within the enterprise itself. As a matter of fact, problems are the germs that make an enterprise tick; they are the milestones by which enterprises performance can be sensibly measured.

16

The question therefore is not whether managers will run into enterprise problems, but what managers will do with problems when they arise, and what the owners of business or their accredited representatives the Board of Directors will expect managers to do when problems of extra-ordinary nature arise.

3.1.2 MANAGERS ARE BUSY PEOPLE By the nature of their tasks, managers are very busy people. Ask any manager how he spends his day and if he is conscientious, he will tell you that he works between twelve and sixteen hours per day. He is lucky if he contains his daily routines within 80% of his working day. He spends the greater part of his working day helping other people out of their problems; he settles down to his own specific task after the official closing hours. Even this achievement depends on whether he is courageous enough to get rid of other peoples' problems by the close of the working day. In Nigeria, for instance, most people are tempted to believe that they will get better attention from managers after the official closing hours, and this is commonly believed to be the unwritten part of his job specification.

3.1.3 MANAGERS NEED HELP It could assume that managers working under such pressure as we have described would:

17

(a)

Reaffirm their total commitment to planning for the profitability of their enterprises.

(b)

Solicit support where they find themselves soaked by daily routines to the detriment of their first task as managers planning.

(c)

Deserve sympathy from the owners of business or their representatives the Board of Directors where and when the needs arise to give management a helping hand in planning work.

Unfortunately, none of these assumptions holds true. Managers either do not realize, or they are too conscious of their performance rating, that they hesitate to call for help when help is needed to sustain the planning aspects of their jobs. Consequently, managers grapple with the routines and allow their planning work to suffer. Enterprises run out of strategies and managers get blamed for mismanagement. In those instances where managers venture to propose an invitation to external experts to help sort out strategic issues or provide specialist planning data, tools and techniques, Boards of Companies often get scared by consultancy fee however meager this might be. As such, managers get gunned down by Boards, and once beaten twice shy the managers become. Managers deserve sympathy from owners of business or their representatives. it is sheer rhetoric to express confidence, as Boards often do, in the competence of management when 18

rejecting management proposals for consultancy work. True enough, managers are often recruited from the best of materials available at the time, but it is equally true that no organisation ever budgets for spare management personnel. This is understandable because skilled managers are both costly and scare to come by. Every managers experienced enough to understand the intricacies of his enterprises will already have been fully stretched to the extent that he may find it tough to find a few minutes a day for strategic planning work. The problem is therefore not one of managers being incompetent but that of their not being allowed by the ordinary pressures of the business and its environment to settle down to the often complicated and time consuming planning routines that

are

necessary

for

growth

and

survival

of

their

organizations.

3.1.4 CONSULTANTS TO THE RESCUE Since the days of industrial revolution, there has been an increasing use of management consultants. Henry Fayol (Time and Motion Study) Abraham Maslow (Hierarchy of Needs in Motivation) and Frederic Herzberg (Job Enrichment), to name a few

developed

important

management

principles

and

techniques borne out of practical experiences in enterprises. They became both eager and willing to share their experience so much so that they trained the people who later spread the use of the methods and techniques so developed across the

19

industrialized world. Since then, management consultants have come to stay for very good reasons. 3.1.5 WHY ENTERPRISES ENGAGE CONSULTANTS Some of the good reasons for engaging the management consultants are as follows: 1.

A manager may wish to have an objective study of his problem by an expert.

2.

He may want refresh original thinking done on his problem.

3.

He may want to have a techniques or procedure installed, a task which there is no spare person within the organisation to major on.

4.

He may want to develop the people in his organisation through contact with outside viewpoint.

5.

He may wish to augment his regular staff to handle a temporary overload of work for which

he may not wish

to add permanent employees. It is clear therefore that every enterprises will, one time or other, have cause to want to call in a management consultant, if only on the basis that "a new broom sweeps cleaner". In a number of situations, enterprises will find that some of their people are more open to external consultants concerning their work problems than they would have been to their own colleagues. People tend to fear that their own colleagues will expose or criticize them for incompetence thus undermining their self respect. 20

Like the judge sitting in the courts or the physician attending to thousand of medical cases, the management consultant worth his salt becomes exposed to a variety of business problems through his wide range of contacts and working experiences. This does not make him any better brain than the operating managers, but through exposure he is often able to compare and contrast business cases and the consequences on the tools and techniques that were used in resolving those cases.

3.2

CHOICE OF CONSULTANTS Certainly, all managers sometimes feel the urge to call in outside help in resolving certain types of business problems. They may be slow to act or will never act at all depending on their state of knowledge as to where to call for help and which particular consultant to call. In the absence of a body representing management consulting practitioners and regulating their activities, this problem is very real. Some of the several firms and individuals engaged in consulting activities are either unknown or are treated with suspicion

in

terms

of

their

integrity

and

professional

attainments. Many of the persons and firms posing as management consultants are either drop outs from the field of management or newly qualified persons with little or no experience looking for quick monetary gains.

21

These are the group that have done the greatest disservice to the course of management consultancy. They are mainly responsible for the volumes of reports that are often towed away somewhere in the achieves gathering dust and never used. They alone are responsible for systems that have collapsed soon after the departure of the "consultants" who introduced such system. They are the ones to dread. Having said that, managers should be rest assured that among the hundreds of management consultancy firms in modern industrial and commercial centres, there are a few with the requisite ability to handle the field of their claim. The one man show consulting firms can be particularly dependable and worth trying. They are usually people with a wealth of experience and a sense of mission in their chosen field who earn their living by their reputation for good job. They will usually prefer to start a project and finish it themselves, and will act more as a catalyst for the organizations engaging them, a posture which enables them to carry the organization with them in the changes that are introduced. The institutional consultants on the other hand are a mixture of 'good and evil'.

On the credit side they are always able to

deploy a mixed team of expert, an accountant, an economist, a behavioral scientist, statistician and an engineer. Such a team attacking a business problem is likely to come up with a solution that satisfies the needs of most of the functional areas of the enterprises. 22

On the liability side, an institutional consulting firm may well allow a highly qualified hand but one who has had little or no real practice on line management to introduce solutions that turn out to be good only in theory. In practice, however, this disadvantage is usually kept under control through supervision of the work done. Team leaders in well organized consulting firms are usually people of extensive practice and experience, who are able to control the output of the less experienced members of their team. However, consultants do not generally advertise their services. In societies where there are associations of management consultants, the problem of choice will be minimized through contact with such associations either directly or through their publications, reports and grading. Where such associations do not exist, it may still be possible to obtain useful information from the Business Registry, banks and investment institutions. Management consultants, the good ones, are management partners. Where they are used, the cost of the work can be returned to the user many fold.

23

3.3

POSSIBLE AREAS OF CONSULTANCY Enterprises will find consultants readily useful in the following areas:

1.

UNION NEGOTIATIONS: There is no better judge than the man who is looked upon as natural to a dispute. A management consultant will fade out of business if he cannot prove himself as an impartial judge. Most good consultants know this and capable of winning the respect of management and workers as a judge. It pays to engage them on union negotiations.

2.

MARKET INTELLIGENCE: The greatest asset a consultant has is his knowledge of sources of facts.

3.

PRODUCTIVITY IMPROVEMENT: Techniques are his stock in trade : Job evaluation, job enrichment, work measurement, attitude control and incentive schemes are some

of the well known tools a trained and

experienced consultant will use in motivating people to greater productivity. Workers become suspicious when the same tools are used by internal management personnel in introducing work

24

changes. Used by external consultants, the same tools often meet with acceptance. 4.

STOCK CONTROL : Installation of dependable inventory control measures is often a complicated exercise. Line managers will never find the time needed to accomplish such tasks. It is not worth while employing permanent staff specialists for special projects of a temporary nature. Call in the external consultant and pay him off once the assignment is completed.

5.

MARKETING Marketing research, image research, attitude sampling outlet surveys, test of advertising effectiveness, sales cost appraisals, etc are short term projects that are best accomplished by use or consultants.

6.

MANAGEMENT INFORMATION SYTEM: A well trained and experienced consultant will install a dependable management information system in a matter of few months. Management control is incomplete without an effective information system.

7.

RECRUITMENT: Consultants will save management time and the attendant costs

over

such

issues

as

executive

search,

testing,

arrangement of interviews and securing of reliable references on new recruits. 25

8.

TRAINING: A consultant is not successful unless and until he has been able to transfer knowledge, skill and techniques to the non expert. If he is successful, he is a good trainer. Use them on training assignments. Some of them may be willing to run in plant training sessions that save for the enterprise the enormous accommodation and traveling costs that would have arisen if trainees were to participate in external courses.

9.

WORK SIMPLIFICATION: Get the consultant to chat with your people and you will find that he comes back to you with a list of things to do to cut your costs and increase your profits.

10.

OPERATIONS PLANNING: Each functional area within an enterprise (Production, Sales, Buying, Distribution and Services) will usually be engaged in planning work. Conflicts, departmental walls, duplication of efforts and the attendant waste in time, money and manpower will be avoided or minimized by the introduction of an integrated planning system that coordinates all the planning efforts within the enterprise. The installation of such a system and the requisite planning aids is a short term task that is best handled using a management consultant with the necessary expertise and experience in grassroots planning.

26

11.

STRATEGIC PLANNING Change in operating circumstances, technological advance, changes in the size and fortunes of an enterprise will have important consequences to the strategies of the enterprise. These changes may affect the profitability of an enterprise as they may also create new opportunities for the enterprise. Consultants will be found to be useful in handling the complex analytical routines that are necessary for establishing the strengths and weaknesses of the enterprise in the new situations.

3.4. PERFORMANCE CONSULTING In the words of Marc Rosenberg (1990-1991, President, National society for performance and Instruction), he aptly remarks that, “Remember training is not what is ultimately important ………. Performance is”. A lot of money had been expended on training especially in the developed industrial economies of the world. Consider these facts: •

In North America in 1994, more than $50 billion was

spent on formal training and development of employees. These are direct costs only; if the cost of having employees attend training off the job is added into the equation, the figure rises to more than $300 billion 27

•

To remain competitive in today’s world, organizations must have a highly skilled, adaptive, and motivated work force. There must be

a return for the investment made

in training •

Can the average only 10 to 20 percent of training transfers to the job so that the performance of the employee has been changed (Brond and Newstrom, 1992 P7).

Unfortunate, what we in the human resources development (HRD) field have been doing for many years is not working, if “working” is defined as changing human performance. As Gloria A. Regalbuto (1992. p.31) has observed : “organizations do not ask as to deliver what they need; they ask us to deliver what they believe we can provide --. And what we are asked to provide – training – is often ineffective, unnecessary, and expensive. Occasionally it is even harmful we do just what we are asked to do – delivering training. We do not do what we are not asked to do – improve human performance in the workplace. It is therefore important to transit from the role of traditional trainer to the role of performance consultant in this regard, one should be held responsible for the delivery of training programmes to a responsibility that focuses on changing human performance and having an impact on the organization. There must be a programmed change: being viewed as “just a

28

trainer to being valued as a partner to management in the achievement of performance and business needs. Performance consulting centres on the following * Identify performance requirements that are directly linked to the operational and business goals of an organization. *

Contract with management to take all the actions that are needed if the identified performance is to be

successfully *

implemented

Work in a consultative manner with critical people so that you become a valued business partner.

* Move from focusing on delivery of training services to be focusing on performance. Performance consulting rests on using a rigorous approach of a systems engineer to analyze design programmes that change or improve human performance. It is also hinted that the work environment within which employees operate has a tremendous impact upon their job output. The majority of human resource executives who were interviewed explained the primary reason for a lack of performance results from human resources initiatives to be “a failure to lack of human performance systematically to involve all aspects of the organization, and then to apply comprehensive solutions to performance problems”.

29

The challenges of performance consulting can be summed up this way : 1.

The competitive advantage, and perhaps the survival of an organisation demands that employees perform at a high level. Traditional training approaches in support of performance

2.

change are not working, primarily . because they are not system – oriented in their approach to resolving performance problems – this despite the fact that significant leaders in the field have been writing about performance approaches for over thirty five years. Conclusively, for those in the training and development field at this time, management and others will seek out those people who can partner with them to install the performance required by the organisation. Those who work effectively in the future must be able to : •

Develop collaborative working relationships with key managers and other partners

•

Clearly understand the vision and strategies that management is striving to achieve

•

Identify the performance required of employees if the organisation is to thrive.

•

Determine the conditions in the work of environment that must be modified if needed performance is to take root.

30

•

Work with people in and out of management to determine

all

the

interventions

required

if

high

performance is to be achieved. •

Clearly, these activities are outside those of the traditional training processes.

•

We must evolve from a training to a performance perspective. If we do not rise to the occasion now, others will. We will have missed an opportunity to be viewed as a value – added partner and will risk being seen as peripheral to the mainstream of the business.

•

The time is now! Opportunities wait for no one. Performance consulting is the process by which we can work with management and others to identify and achieve performance excellent linked to business goals.

•

The message is from now on is : Think performance, not training !!!

3.5

What is Human Capital Development? Human resource management policies and practices may be adopted to deliberately instigate career and human capital development. Human capital development can be defined according to Bantis et al (1999) : “Human capital represents the human factors in the organisation; the combined intelligence, skills and expertise that gives the organization its distinctive character. The human elements of the organization are those that are capable of learning, changing, innovating and providing the creative thrust 31

which if properly motivated can ensure that long-term survival of the organization. The term ‘human capital’ was originated by Schutt3 (1961), who elaborated his concept in 1981 as follows: “Consider all human abilities to be either innate or acquired. Attributes … which are valuable and can be augmented by appropriate investment will be human capital. Human

capital

is

the

most

important

element

in

an

organization’s intellectual capital, as defined below

3.5.1 INTELLECTUAL CAPITAL It consists of the stocks and flows of knowledge available to an organization. These can be regarded as intangible resources which, together with tangible resources (money and physical assets), comprise the market or total value of a business. The three elements of intellectual capital are: •

Human capital (as earlier defined)

•

Social capital: the stocks and flows of knowledge derived from networks of relationship within and outside the organizations. The concept of social capital has been defined by Putman (1996)as ‘the features of social life – networks, norms and trust – that enable participants to act together more effectively to pursue shared objectives. 32

The world Bank defines it as “social capital which refers to the institutions, relationships and norms that shape the quality of a society’s social interactions…… social capital is not just the sum of the institutions which underpin a society – it is the glue that holds them together •

Organizational capital Youndt (2000) defines this as the institutionalized knowledge possessed by an organization, which is stored in databases, manuals and so on. This is often called structural capital (Edvinson and Malone, 1997), but the term organizational capital is preferred by Youndt because he argues, it conveys more clearly that this is the knowledge that the organization actually owns.

This tripartite concept of intellectual capital indicates that, while it is individuals who generate, retain and use knowledge (human capital), this knowledge is enhanced by the interactions between them (social capital) to generate the institutionalized knowledge possessed by an organization (organizational capital) It is necessary to capture individual knowledge through knowledge management processes, but it is equally important to take into account social capital considerations, that is, the 33

ways in which knowledge is developed through interaction between people. Bontis et al (1999) point out that flows as well as stocks matter. Intellectual capital develops and changes over time, and a significant part is played in these processes by people acting together.

3.5.2 THE SIGNIFICANCE OF HUMAN CAPITAL The focus is on the means of attracting, retaining , developing and maintaining the human capital they represent because it is the knowledge, skills and abilities of individuals that cerate value. (Davenport) It is severally commented that ‘people posses innate abilities, behaviours and personal energy and these element make up the human capital they bring to their work. And it is they, not their employers, who own this capital and decide when, how and where they will contribute it. In other words, they can make choices. Work is a two-way exchange of value, not a one – way exploitation of an asset by its owner” The point emphasized by Davenport, that workers as well as employers invest in human capital, is in accord with the 34

economic theory of human capital. Human capital theory conceptualizes workers as embodying a set of skills which can be “rented out” to employers. The expected returns on human capital investments for the worker, are a higher level of earnings, greater job satisfaction, better career prospects, and at one time, but less so now, a belief that security in employment is assumed. Investment by workers in developing transferable skills can be attractive as means of increasing employability. The costs of such investments take a psychological social and monetary form, as spelt out by Elliot (1991) -

Psychological costs are those borne by individuals, perhaps the less able, who may find learning difficult.

-

Social costs take the form of foregone

market

opportunities (opportunity costs – the time spent devoted to investing in human capital could have been spent in other activities). -

Monetary costs include both direct financial outlays and foregone market opportunities

-

The decision to acquired skills is an investment decision.

-

Individuals will invest in human capital if they believe that the benefits to them will exceed the costs they will incur.

-

These benefits consist of the net addition to lifelong earnings that results from selling skilled rather than unskilled labour.

35

-

For the employer, the returns on investment in human capital are expected to be improvements in performance, productivity, flexibility and the capacity to innovate that should result from enlarging the skill base and increasing levels of knowledge and competence.

“The general message is persuasive : skills, knowledge and competencies

are

key

factors

in

determining

whether

organizations and nations will prosper” as suggested by Schuller (2000)

3.5.3 AN INSIGHT INTO HUMAN CAPITAL THEORY Human capital theory can be associated with the resource based view of the firm as developed by Barney (1991) This proposes that sustainable competitive advantage is attained when the firm has a human resources pool that cannot be imitated or substituted by its rivals. Boxall (1996) refers to this situation as one that confers “human capital advantage’. But he also notes (1996 and 1999) that a distribution

should

be

made

between

“human

capital

advantage” and “human process advantage”. -

The

former

results

from

employing

people

with

competitive valuable knowledge and skills, much of it tacit. -

The latter, however, follows from the establishment of ‘difficult to imitate, highly evolved processes within the firm,

such

as

cross-departmental 36

cooperation

and

executive development. Accordingly advantage”,

the

superiority

of

“ human resource one

firms

labour

management over another’s, can be thought of as the product of its human capital and human process advantage 3.5.4 WORKERS AS ASSETS : The added value that people can contribute to an organization is emphasized by human capital theory. It regards people as assets, and stresses that investment by organizations in people will generate worthwhile returns. The theory therefore underpins the philosophy of human resources management which, as developed in the 1980s, stated that employees should be treated as assets rather than costs.

3.5.5 ITS LIMITATION: But as Davenport (1999) maintains, the concept is limited, indeed questionable, because •

Workers should not be treated as passive assets to be bought, sold and replaced at the whim of their owners. -

Increasingly, they actively control their own working

lives The notion that companies own human assets as they own machines is unacceptable in principle and inapplicable in practice

37

-

It short-changes people by placing them in the same category as plant and equipment

•

No system of ‘human accounting’ has succeeded in producing a convincing method of attaching financial values to human resources; in any case, this demeans the more intangible added value that can be delivered to organizations by people.

It should be emphasized that employers need to remember that workers, especially knowledge workers, may regard themselves as free agents who can choose how and where they invest their talents, time and energy. Investments by employers in training and developing people are a means of attracting and retaining human capital as well as getting better returns from those investments. This position governs the role of management consultants, to a large extent, in human capital development of any nation.

3.6

HUMAN

CAPITAL

AND

OTHER

ASPECTS

OF

INTELLECTUAL CAPITAL THEORY As important as human capital theory might be, interest in it should not divert attention from the other aspects of intellectual capital – social and organizational capital – which are

38

concerned

with developing and embedding the knowledge

possesses by the human capital of an organization. Schuller (2000) hints that “The focus on human capital as an individual attribute may lead – arguably has already led – to a very unbalanced emphasis on the acquisition by individuals of skills and competencies which ignores the way in which such knowledge is embedded in a complex web of social relationships. Measuring human capital has led to different views which may not attract us in this paper. There is a good case for evolving methods of valuing human capital and how it it used as an aid to decision making. This may mean identifying the key

HR

drivers and modeling the effect of varying them. The issue is to develop a framework within which reliable information can be collected and analyzed. However, the significance of the concept of human capital does not depend on the ability to quantity its value. What human capital theory can do is to provide the rationale for a ‘resource capability’ approach to strategic HRM, as advocated by Kamoche (1996) which will be concerned with the acquisition, development and retention of human capital in order to achieve competitive advantage. At this junction, we may need to note the practical implications of human capital theory.

39

It focuses attention on 1.

Resourcing : Resourcing strategies are concerned with matching human capital resources to the strategic and operational needs of the organization, and ensuring the effective utilization of those resources

2.

HRD

Strategies

–

Human

resource

development

strategies are business – led in that they are initiated by the strategic plans of the organization and driven by the human resources plans which define knowledge, skills and competency requirements. It aims to attract and retain human capital as well as develop it 3.

Reward strategies : The implication of human capital theory, from a financial reward point of view, is that investment in people adds to their value to the firm. Individuals expect a return on their own investment, and have firms to recognize that the increased value of their employees should be rewarded. Human capital theory encourages the use of skill based or competence based pay, a method of reward. It also underpins the concept of individual market worth. This indicates that individuals have their own value in the marketplace, which they acquire and increase through investments by their employer and themselves in gaining extra expertise and competence by means of training, development and experience.

40

The market worth of an individual may be considerably higher that the market rate of their jobs, and if they are not rewarded accordingly they may market their talents elsewhere. Non-financial reward considerations should also be taken into account. If workers are investing their human capital they want to obtain a return not only in the form of opportunities to grow and to achieve, but also in terms of being valued by their employer. Organizations recognize

need therefore to consider how to

accomplishments

through

performance

management processes and formal recognition schemes 4.

knowledge management Organizational effectiveness depend upon making good use of knowledge,

which needs to be developed,

captured and exchanged (knowledge

management) in

order to create organizational capital. In doing so, it

should be

remembered that as stated by Daft and Weick (1984), ‘ individual’s come and

go, but organizations preserve

knowledge over time’ or as expressed more colourfully by Fits-enj (2000) , ‘organizational capital (knowledge) stays behind when the employee leaves; human capital is the intellectual asset that goes home every night with the employee’.

41

3.7

REFERENCES : Fajana, Sola (2002) Human Resource Management An Introduction, Lagos. Labofin and company. Robinson

D.G

and

Robinson

J.C

(195)

Performance

Consulting, Moving Beyond Training, Sam Francisco, Beret – Koehler Publishers . Muyiwa – Oni, R.A (2007) Employee Training and Development Practices in the Banking Industry (A case study of United Bank for Africa Plc). Unpublished MBA, (LASU) dissertation. Armstrong, Michael (1997) Human Resource Management Practice, Va. Kogan Page Ltd

42

CHAPTER FOUR HUMAN CAPITAL DEVELOPMENT AND TERRY KENDALL Consult Ltd : Problems and Prospects. “The prosperity of a country lies not on the abundance of public buildings,

its

nor on the strength of its military forces

but in the number of its cultivated

citizens,

in

its

men

of

education, enlightenment and character” Martin Luther 4.1 THE SYNOPSIS : Human Capital Development and the Consultant With our perspective on the key concepts and an insight into human capital development, the role of any management consultant is defined by the following factors: 1.

The state and level of industrialization, entrepreneurship awareness and education in any economy

2.

The rate of growth of the economy and the capacity utilization ratio.

3.

The consciousness on the part of the organization (employers) and employees (individuals) to train, develop, and retain the staff on a strategic basis and be goal driven and self – fulfilled.

4.

The challenges posed by globalization, competitiveness and intercommunication trainings.

5.

The performance management scheme and the reward systems; and 43

6.

Finally the government/industrial infrastructural frameworks to create a conducive working environment.

The role of a training/performance consultant in particular and that of management consultant in general can be appreciated when the governments place emphasis on human capital development in collaboration with other agents of economic growth and socioeconomic development. These are: 1. The institutional frameworks 2. Policy changes and relevance 3. Human capital development 4. Culture 5. Leadership and 6. Entrepreneurship The fundamental issue: How do they train, develop and retain the manpower? Is the human capital developed substantially by both the private and public sectors in addition to individual’s awareness and commitment to develop portable and transferable skills and competencies? Is the human capital development nourished and supported by good health care schemes? Are the manpower not being ravaged by HIV/AIDS and accidents on our roads for non or inadequate maintenance. Are the leadership both at the industrial sector and at Federal, State and Local governments responsive to and effectively managing change?

Are the resources not been deliberately wasted by

inadequate planning and unstructured growth in the tertiary institutions thereby promoting a wide – scale unemployment apart 44

from apparent under-employment in virtually all sectors of the economy? These are the critical challenges apart from poor industrial and social infrastructures, corruption and mismanagement here and there. 4.2 THE EDUCATION SECTOR AND TRAINING AND DEVELOPMENT. The educational sector does not attract adequate and proper attention it should obtain. The budget allocation is grossly inadequate apart from mismanagement of budgetary provisions. One can not effectively claim that the educational sector is well planned to address the issues of national, sectorial and industrial needs from year to year. Manpower planning has not been able to address critical issues of optimal utilization of manpower resources in most of developing or more appropriately les-developed nations including Nigeria. The importance of training and performance management has not attracted the attention of the governments as well as the private sector. Only few foreign-based or turned organization do not pay lip service to human capital development and the growing financial sector. There have been a lot of problems faced by the management consulting outfits. Some of the problems are :

45

1. Poorly

qualified

“management

and/or

unqualified

consultants’

with

no

and

unprofessional

input

to

make

in

performance enhancement challenges/tasks 2. Inadequate training by the would be consultants] 3. Inadequate training infrastructure in addition to poor reading culture 4. They

emphasis

more

of

training

than

embarking

on

performance consulting. 5. Brickwalls often erected against new consultants who want to win new clients and extend effective training and manpower development strategies. 6. Corruption and unethical practices which do not expose consultants to competition and challenges. In not companies and government establishments, their cronies are used as consultants which in most cases can hardly deliver. 7. The consciousness that every retrenched employees and unemployed

graduates/Nigerians

brand

themselves

as

consultants’. And a host of other factors. TERRY KENDALL Consult Ltd in a concerted effort to contribute positively to the growth of the human capital development has been variously engaged as training/performance consulting consultants to both private and public sectors of the Nigerian economy. The added focus of the establishment Terry Kendall Leadership Academy is to train and equip Nigerians with sound and

life-challenging

transformational

leadership

and

entrepreneurship skills and competencies. The campaign is on; we

46

are challenged through Ralph Maxwell Consulting to embark on training, project management and HR services. Our recent launching of The 21st Century Effective Manpower is a step in the right direction to publish

management Journals on

quarterly basis and also produce revision packs for undergraduate, postgraduate students and teeming population of working managers/supervisors and the unemployed youths. This is purposed to positively influence the level of management literacy and eventual growth of the human capital formation/development. This is challenging; but with a total commitment and dedication’ we can effectively influence the sustained growth of the human capital if other colleagues join hands to lift Nigeria up. With a spirit of commitment and nationalism, we shall be there! For any professional consultant to make a worthwhile contribution to the development of the nation human capitals, there is need for continuous learning and updating of knowledge, skills and techniques that are fundamental, portable and transferable to the trainees and organizations from time to time. Adequate knowledge of KT is a sine qua non for effective consulting and management. There is also an ever increasing need to partnership with the tertiary institutions, the private and the public sectors of the economy. As a mater of utmost urgency, there must be an increasing awareness,

application

and

development

of

sound

and

performance – driven management systems. And functional 47

human resource planning that determines the human resources required by the organization to achieve its strategic goals must be in place to take care of the immediate, short-term and long-term needs of the organizations. In this

perspective, there must a concentrated programme on

productivity enhancement through attitudinal change and the need for personal development and transformations. The effect of 1+1 =3 principle of multiplier should be brought to bear on the management process. And more importantly, the culture and climate of the organizations/business should be conducive, challenging and investment receptive. Terry Kendall group can only contribute positively and effectively to grow the human capital formation/development in cooperation and conjunction with other consulting firms, the private and the public sectors as well as the avowed interests of working population and in fact every individuals with fervent commitment to add – value to lives and workplace responsibilities and tasks

4.3 THE PROSPECTS AND CHALLENGES No nation attains a sustained economic growth and socioeconomic development without adequate planning and strategic orientation matter is neither created non destroyed, every object remains a in a state of nature until a force is applied to it. The economic manpower should be tasked to plan and plan effectively and harness al the economic resources to the benefits 48

of her citizens. Every Nigerian should be challenged to rededicate himself/herself to render the best of services and continually improve its contribution to the concept of productivity and value creation and management. The industrial and socio-economic infrastructures such as energy which now assumes an important factor as an agent of production, spirit of nationalism, good business ethics and value systems and opportunities to grow and be creative as entrepreneurs should be put in place. The educational system should be revitalized and planned so that the amount required in specific sectors are produced on a strategic basis. Management education should be emphasized and functional and heavily subsidized health care services should be put in place. There are prospects. There are no underdeveloped countries, we only have under managed or mismanaged nations. Management is the prime mover and development is the consequence of effective management The application and constant training and retaining of staff in the financial sector of the nation has prompted good and result – oriented management practices. This has positively impacted on their

operational

performances,

attitudinal

change

and

development of characters that attract value added appreciation. Most of the thriving organizations in Nigeria particularly in the oil sector and foreign – based organizations apply good and effective management practices with emphasis on strategic management, 49

transformational leadership and performance consulting and management.

50

4.4

REFERENCES Oladimeji Alo (2000) Managing the Human Capital for National Development, Institute of Personnel Management, Anmal Lecture, Mouson Centre

Ray Killean, (1976) Human Resource Management: An ROI Approach, AMACOM ; A Division of American Management 74 Association p8 Armstrong Micheal (2005) Human Resource Management Practice, VA Kogan Page Limited Muyiwa – Oni, R.A (2007) Employee Training and Development Practices in the Banking Industry: (A case study of United Bank for Africa Plc) Unpublished MBA – (LASU) dissertation. Nwachukwu, CC (2005) Management Theory and Practice, Onisha, Africana FEP Publishers Ltd Obisi C (2003) Organizational Behaviour – Concepts and Applications, Lagos, Matt House Press Limited Muyiwa – Oni, R.A (2008) An overview of ‘Improving your Operational Performances’ A seminar paper delivered to MFM ministries Battlecry, Tapes & Publication unit on October 29, 2008.

51

CHAPTER FIVE SUMMARY

OF

FINDINGS,

CONCLUSIONS

AND

RECOMMENDATIONS “Since we are capable of modifications the future will be in many ways only as good as we have the courage to make it” - June Tapp 5.1 SUMMARY OF FINDINGS: Management involves working with and through people to accomplish organizational objectives. And the field of management is the totality of concern with the human resources of organizations. Management holds the key that unlocks the forces of economic and social development in any nation. The driving force behind this is man. And man constitutes the human capital of any organization or nation. Human capital development consist of the knowledge, skills and abilities of the people employed in an organization. It is the human factor in the organization. It is the most important element in an organizations intellectual capital and it consists the stocks and flows of knowledge available to an organization. The value of the human capital must be continually enhanced and motivated to ensure its optimal utilization.

52

The management consultant as a professional expert works with the members of staff of any organization to find out the areas that need advice, diagnosis and proffering of management solutions. The

consultant

is

charged

and

equipped

with

excellent

professional ethics, skills, attitudes, techniques and what have you to get the desired results through the cooperation with others in any organization. In this perspective the consultant, as a training and performance consultant consulting would enhance the skills, competencies, attitudes and techniques of the staff with a view to positively influence and increase the human capital formation of any organization or nation. This is achieved by instituting good policies and establishing good environments and climate that would propel increased productivity: Investment in human capital is a two-way affair the workers as well as employers invest in human capital. Investment by workers on developing transferable skills can be attractive as means of increasing employability. It is incontrovertible that for management consultants to positively influence the stocks and flows of human capital, fundamental infrastructures

must

be

available,

industrial

growth

and

performance management must be established and more importantly every emphasis must be placed on developing the human capital.

53

In fact, the critical importance of people in the achievement of organizational objective should be the focus. 5.2 RECOMMENDATIONS : In view of the foregoing, it is hereby recommended that for a nation or indeed an organization to enhance its human capital development through training and manpower development, education and modern technology, the following issues must be taken into consideration : 1. There is need for strategic planning and transformational

leadership skills to proactively position itself for competitiveness and meeting the challenges of the present and the future 2. The management consultants should be continuously trained

and updated to evaluate training objectives and the impact and relevance of performance consulting and management 3. Both the private and public sectors should use professional

consultants

optimally

to

advice

and

solve

day-to-day

management problems/challenges. 4. The educational system should be well focused and dynamised

to take account of development in human capital management and developments all over the world as the whole world is now “global village”. The educational system vis-à-vis the production of graduates of tertiary institutions should be tailored to the present and future needs of the organization/nation. 5. The health/medical care services should be adequately funded

so that life expectancy of the people can increase. There is no point spending a lot of money developing the human capital only to be ravaged by HIV/AIDS. 54

6. The cultural factors should also attract attention so as to

increase the level of productivity which would stimulate the gross domestic products as well as the need for consultancy services.

FINAL NOTE There should be a functional partnership between the private and the public sectors to harness the potentials of the people to propel the human capital

development through effective educational

policies, training, performance consulting and creating the awareness and consciousness to continually improve ourselves and our performances. Here lies the challenge! The issue of human capital development is fundamental and every attempt should be made increase its stocks and flows from one generation to another. Our commitment to grow and meet the goals and objectives of organizations or nations is premised on the development and optimal utilization of human capital.

55

5.3

REFERENCES: Nicholas Harman, “The most African Country: Nigerian Survey”. The Economist, Jands’ Oladimeji Alo (2000), Managing the Human Capital for National Development, Institute of Personnel Management, Annual Lecture Mouson Centre. Fredrick H. Harbison (1973) Human Resources as the Wealth of Nations, New York Oxford University Press p.3 Ray, Killan (1976) Human Resource Management An ROI Approach, AMACOM. A Division of American Management Association p8 Aina, Sola, (2005) Managing the Human Capital in Nigeria Ikeja, Fountain Training Consult.

56

57