CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Every organization shares a common objective: to overcome challenges by providing products, services, or both. This primary goal defines the organization's mission, vision, and core values. Achieving this objective heavily relies on the efforts of individuals who possess valuable knowledge and expertise, which organizations can and should make use of. Therefore, in the present context, recruiting and retaining competent employees play a crucial role in an organization's success (De Kok and Uhlaner, 2001).
The role of Human Resource Management (HRM) is pivotal in ensuring that organizations attract and retain the right talent necessary for their prosperity. HRM encompasses various activities such as recruitment, training, compensation, policy development, and formulating strategies to maintain a skilled workforce. Over the last two decades, HRM has undergone significant transformations, becoming increasingly important in the modern organizational landscape (University of Minnesota, 2023).
In the 1970s, the HRM division was referred to as "Personnel." As time passed between 1945 and 1979, it evolved into "Personnel Management," which influenced employee legislation and administration. The concept of Human Resource Management continued to develop in the 1990s, finally transitioning from "personnel management" to "Human Resource Management." In the last two decades, Human Resource Management has been recognized as an essential function among all aspects of organizational management (Aslam et al., 2013).
Since the establishment of formal HRM functions and departments, there have been significant shifts in both HRM theory and practices. Nowadays, people and their management play a crucial role in achieving competitive success, as many traditional sources of advantage have lost some of their previous power (Pfeffer, 1994).
According to the Resource-Based View (RBV), organizations can attain a competitive edge through their valuable, rare, and difficult-to-imitate internal resources. In this context, it can be argued that a high-quality workforce can create such an advantage. Over the past decade, the most impactful change for organizations has been the realization that their human resources are the primary source of competitive advantage. It is now widely recognized that having highly skilled employees and effectively managing them is vital for gaining a competitive edge. As the business environment, technology, globalization, and labor market dynamics undergo continuous changes, HRM must also adapt accordingly (Bal, 2011).
Over time, HRM managers have evolved from merely handling basic personnel matters to making significant strategic contributions to an organization's future directions and growth. This shift from traditional HRM to a more strategic approach has garnered increased attention, highlighting the heightened roles and importance of HR functions.
Today, HR functions and processes have taken on a more strategic role, with HR managers becoming integral members of top management teams. This strategic orientation has led HRM to actively participate in strategic planning and decision-making processes by coordinating all human-related aspects for employees. Aligning the organization's strategies with HR functions has become a crucial aspect of gaining a competitive advantage.
The HR role for the 21st century is termed "strategically reactive" in implementing business strategies, involving support for long-term strategies through acquiring the necessary employee qualifications and fostering cultural and technical capabilities required for the organization's strategies. In this era, managing employees strategically also demands increased flexibility in management and organizational structures.
As a result of these developments, the work system has undergone significant changes, including the introduction of autonomous work groups with highly skilled workforces, outsourcing of some operational HR functions, downsizing, delayering, increased employee participation in decision-making processes, offering higher wages to highly qualified human resources, and the rise of virtual and network organizations.
This case study aims to explore the current HRM practices in selected tech firms in Lagos and assess their future prospects.
1.2 Statement of the Problem
The 21st century has been marked by significant technological advancements, leading to the digitalization of workplaces and a complete transformation in the way businesses function (Prasad, 2018). Across the African continent, tech hubs are emerging, rivaling similar hotspots in Europe, Asia, and the Americas, with Lagos being one of the most prominent examples.
Lagos has witnessed a growing prominence in the tech scene, attracting attention from some of the world's largest tech companies. It is poised to play a central role in the African technology movement and is often referred to as Africa's Silicon Valley. A report by GSMA in March 2018 highlights Lagos as having the largest tech hub ecosystem in Africa, and the city is witnessing the rise of coworking spaces to accommodate the increasing number of digital nomads making it their home (Sammonds, 2019).
As these tech firms continue to expand, they encounter distinctive challenges and opportunities in the realm of Human Resource Management (HRM). Traditionally, HRM focused on administrative tasks like recruitment, payroll, and compliance. However, the dynamic nature of the tech industry necessitates a shift towards strategic HRM practices that nurture innovation, creativity, and employee engagement. The competition for talent in this sector is fierce, making it imperative for companies to implement effective HRM strategies to attract and retain skilled professionals.
This study aims to delve into the HRM practices of selected tech firms in Lagos, examining how they adapt to the demands of the 21st century and leverage technology to enhance their human capital. By understanding these practices, both tech organizations and businesses in other industries can gain valuable insights to optimize their HRM processes and maintain competitiveness.
1.3 Aim of the Study
The primary aim of this study is to examine the Human Resource Management practices in the 21st-century business environment in selected tech firms in Lagos and assess their future prospects.
1.4 Objectives of the Study
To achieve the aim of this study, the following specific objectives will be pursued:
- To assess the current HRM practices in selected tech firms in Lagos, focusing on recruitment, training, performance management, and employee engagement.
- To identify the HRM challenges faced by tech firms in Lagos.
- To explore the strategic initiatives and innovative HRM approaches adopted by these tech firms to address the identified challenges and optimize their human capital.
- To examine the future prospects of HRM in the tech industry, considering potential trends and developments that may shape HRM practices in the coming years.
1.5 Research Questions
To guide the research process, the following research questions will be addressed:
- What are the current HRM practices in selected tech firms in Lagos, Nigeria?
- What are the major HRM challenges faced by tech firms in Lagos?
- What strategic HRM approaches do tech firms adopt to address these challenges?
- What are the future prospects of HRM in the tech industry, and how can firms prepare for upcoming trends?
1.6 Research Hypothesis
The study will be guided by the following research hypothesis:
H0: There is no significant relationship between strategic HRM practices and the success of tech firms in Lagos.
Ha: There is a significant relationship between strategic HRM practices and the success of tech firms in Lagos.
1.7 Justification of the Study
This study's significance lies in its contribution to the existing body of knowledge on HRM practices in the tech industry, specifically in Lagos, Nigeria. By examining the current practices and future prospects, this research will provide valuable insights that can benefit both academia and practitioners.
Academically, the study will fill the gap in the literature regarding HRM practices in the rapidly growing tech industry in Lagos. It will serve as a reference for future researchers interested in exploring HRM trends and challenges in similar contexts.
Practically, the findings of this study will offer tech firms in Lagos and other regions essential guidance to optimize their HRM strategies. By understanding how successful tech firms tackle HRM challenges and leverage technology, other organizations can adopt similar practices to enhance their human capital, innovation, and overall competitiveness.
1.8 Scope of the Study
This study will focus on the HRM practices of selected tech firms located in Lagos, Nigeria. While there are numerous tech firms in Lagos, this research will select a representative sample based on their market presence and growth trajectory. The study will cover areas such as talent acquisition, training and development, performance management, employee engagement, and workforce diversity.
However, it is important to note that the study's findings may not be generalized to all tech firms in Lagos or other regions, as HRM practices can vary based on company size, industry sub-sector, and organizational culture. Nonetheless, the insights gained from this research will be valuable for organizations seeking to enhance their HRM practices and remain competitive in the dynamic 21st-century business environment.
