HUMAN RESOURCE OUTSOURCING ON ORGANIZATIONAL PERFORMANCE IN THE OIL AND GAS SECTOR

HUMAN RESOURCE OUTSOURCING ON ORGANIZATIONAL PERFORMANCE IN THE OIL AND GAS SECTOR

This study is aimed at examining the relationship between Human Resource Outsourcing on organizational performance in the oil and gas sector in Rivers State Nigeria.

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CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Increasing and intense competitiveness in the market has made performance the most important issue for-profit and non-profit organizations for businesses. It comprises of three specific areas of firm outcome which includes financial performance, product market performance and shareholder return (Richard, Simon & Brut, 2009). It is very vital for managers to know which factors influence an organization’s performance in order for them to take appropriate steps to initiate them. Organizational performance guarantees the continuity of the organization to be competitive in a global market place. Organizational performance can be seen as a multi-dimensional construct consisting of more than simply financial performance (Baker & Sinkula, 2005). It describes the extent to which the organization is able to meet the needs of its stakeholders and its own needs for survival (Griffin, 2003). In this sense, organizational performance depicts that an organization is achieving its mission and goals.

Kaplan and Norton (1992) defined organizational performance as a set of financial and non-financial indicators capable of assessing the degree to which organizational goals and objectives have been accomplished. The challenge for any organizational performance is generally indicated by the effectiveness of an organization to achieve its objectives and efficiency to use the resources properly, the satisfaction of employees and customer innovation, quality products and services and the ability to maintain unique human resource pool (Dyer & Reeves, 1995; Katou & Budwar, 2007).

Recent years has seen an interesting debate on outsourcing. The outsourcing history has a direct link with the history of the growth of the contemporary business organizations. Outsourcing came as a result of over-diversification that occurred majorly in the 1970s and 1980s. The result of this was an increasing review of the core activities of the companies as they seek to focus on utilizing their core competencies and outsourcing none core functions (Lysons & Farrington, 2000). Firms generally outsource those functions that are resource-intensive, which is either high labor or capital costs, those that require specialist competencies, those that are dependent on the rapidly changing technology as well as those that require expensive investment.

The history of outsourcing is deeply rooted in the history of the growth of the modern business enterprise. Outsourcing was developed as a reaction to the over-diversification of the 1970s and early 1980s. This led many enterprises to review the core activities and concentrate on their core competences, i.e. what the organization believes they do best (Lysons & Farrington, 2000). The activities most easily outsourced are those that are: resource-intensive (high labor or capital costs), those requiring specialist competences, those subject to rapidly changing technology and those requiring expensive investment.

Though several scholarly works have been done on boosting organizational performance with the aid of outsourcing techniques, there seems to be less focus on the subject matter using or employing recruitment and training activities as dimensions of human resource outsourcing.

This work, therefore, sorts to enhance organizational performance by human resource outsourcing company’s activities such as training and recruitment process

1.2 Statement of the Problem

Today, the oil and gas industry is faced with fierce and intense competition due to the activities of rivals, their substitute service offerings, and some government policies. As a result of these pressures, increased productivity, profitability, improved quality of service, etc. are seemingly difficult to attain by some of these organizations. The responsiveness to the developing trend of outsourcing these functions constitutes a lot of problems.

The decision to outsource some of Human Resource (HR) functions may be encouraged due to the fact that external vendors could be in a better position to provide improved profitability, efficiency, and service delivery at relatively low cost than can be achieved by in-house operations, thereby increasing the competitive advantage of the firm. Finally, among the reasons for Human Resources Outsourcing is obviously to utilize and optimize management time and to become specialized in the operation of what they know how to do best (core competence), to enhance the competitive edge the firm has over its rivals, to improve service quality and to cut costs (cost reduction). The inability of firms to engage vendors to optimize and utilize the company’s resources, reduce overhead cost and exceed average profit margin remains a problem.

This study is therefore focused on examining the relationship between human resource outsourcing and organizational performance with the objective of proffering solutions to the identified problems.

CONCEPTUAL FRAMEWORK OF HUMAN RESOURCE OUTSOURCING AND ORGANISATIONAL PERFORMANCE

Source: The dimensions of human resources outsourcing were adopted from the work of Jirawuttinunt (2015); while the measures of organizational performance were adopted from the work of Pamela, Umoh & Worlu (2017).

1.3 Objectives of the Study

The general objective of this study is to examine the relationship between Human Resource Outsourcing on organizational performance in the oil and gas sector in Rivers State Nigeria. The specific objectives are to:

1. Ascertain the relationship between recruitment activities and customer satisfaction of oil servicing firms in Port Harcourt.
2. Determine the relationship between recruitment activities and productivity of oil services firms in Port Harcourt.
3. Investigate the relationship between training and development activities and customer satisfaction
4. To examine the relationship between training and development activities and productivity

1.4 Research Question

The following research questions will help in achieving the above-stated objectives.

1. What is the relationship between recruitment activities and customer satisfaction of oil servicing firms in Port Harcourt.?
2. What is the relationship between recruitment activities and productivity of oil services firms in Port Harcourt?
3. What is the relationship between training and development activities and customer satisfaction?
4. What is the relationship between training and development activities and productivity?

1.5 Research Hypotheses

Ho₁: There is no significant relationship between recruitment activities and customer satisfaction of oil services firms in Port Harcourt.

Ho_2: There is no significant relationship between recruitment activities and productivity of oil services firms in Port Harcourt.

Ho₃: There is no significant relationship between training and development activities and customer satisfaction

Ho₄: There is no significant relationship between training and development activities and productivity

1.6 Scope of the Study

The study is limited to examining the relationship between human resource outsourcing and organizational performance of oil and gas firms in rivers state.

Geographical Scope: the study covers selected oil and gas companies in rivers state

Content Scope: the content scope will focus on human resource outsourcing and organizational performance as well as their dimensions and measures.

Unit of Analysis: the unit of analysis for this study is at the organizational level which is the macro level

1.7 Significance of the Study

The practical significance of this study will enable oil and gas firms decision-makers to understand outsourcing practices that would promote performance in the workplace. It will also provide the government with more insight into reviewing policies of companies outsourcing their operations since it impacts job creation helps in the development of the state and country at large.

The study will further help organizations to estimate the relative cost of outsourcing to their companies. It will also help management to use the appropriate ways to select vendors that are competent and qualified. The study also intends to provide the academic community with information that students studying in the related field could access for reference purposes.

1.8 Organization of the Study

The study was organized in five chapters as follows:

Chapter one comprises of the general introduction of the study. This includes the background of the study, statement of the problem, objectives or the relevance of the study, research questions, and significance of the study, limitations, and overview of the study.

Chapter two focused on the literature review which was devoted to the review of related and existing literature and the related current study. Chapter three will be focused on the methodology used for the study that is the mode of data collection and analysis procedure. It comprises of population size, sample size, sampling techniques, research instruments, sources and types of data.

Chapter four discusses the results of the study. It covered the findings and discussions of the findings from data analysis. It also dealt with the interpretation of the findings by the use of descriptive analysis.

Chapter five contained a summary of the study, conclusion, and recommendations.

1.9 OPERATIONAL DEFINITION OF TERMS

Human Resource Outsourcing: This is a process in which the resource activities of an organization are outsourced to focus on the organization’s core competencies. Human resource functions are often complex and time-consuming that it will create difficulty in managing the other important thrust areas.

Organizational Performance: Organizational performance comprises the actual output or result of an organization as measured against its intended outputs (goals and objectives).

Recruitment Activities: This refers to the overall process of attracting, shortlisting, selecting and appointing suitable candidates for jobs (either permanent or temporary) within an organization

Training and Development: This is a human resource function concerned with organizational activity aimed at bettering the job performance of individuals and groups in the organizational setting.

Customer Satisfaction: Customer satisfaction is a measure of how products and services supplied by a company meets or surpasses customer expectations.

Productivity: Productivity describes various measures of the efficiency of production. It is expressed as the ratio output used in a production process that is an output unit of input