CHAPTER ONE – INTRODUCTION
1.1 Background of the Study
Small and Medium Enterprises (SMEs) have been recognized by development experts, governments and other agencies of both developed and developing nations as engines of economic growth and development (UNIDO, 2006). They have also been highly recommended as principal means for achieving equitable and sustainable industrial diversification in developing economies, like Nigeria. International Labour Organization (ILO, 1982) reported that on the average SMEs represent between 80-90% of enterprises and 60-70% of domestic employment in the developed and developing economies of the world. It was the great attention to SMEs that brought about the growth of the developing countries of the world, otherwise known as the BRICS (Brazil, Russia, India, China, South Africa) countries – the word which was coined by Jim O’Neil in 2001 in his paper, ‘Building Better Global Economy’. Similarly, the rapid economic transformation of the Asian Tigers have been linked to the dynamism of their SMEs. For instance, In India, SMEs run 97% of the industrial units (10.5 million), employ 45% (25 million) of labour force, and contribute 45% overall export and 7% of GDP. In China, they contribute 60% of her industrial output with over 23 million SMEs, 60% contribution to GDP, employ over 75% of the work force, 60% of total exports and 99% of all registered companies, and create mostly new jobs. This shows that SMEs are relevantly present in all sectors of the Indian and Chinese economies (Banga and Sharma 2008). In Nigeria, since the Second National Development Plan, the then Federal Ministry of Economic Development had recognized the importance of this sector as well as the need to develop it. This was encapsulated in the Small Industries Development Plan (SIDP) of 1970-1975. The major goal of the plan was the provision of technical and financial supports to the existing and prospective small and medium scale Industries. Their contributions to the socioeconomic development of the economy can never be over emphasized. They have helped in the transformation of traditional indigenous industries and stimulation of indigenous entrepreneurship and technology. SMEs remain an unquestionable source for industrial growth and development (Eneh, 2005).
Kpakol (2007) asserted that over 60% of jobs and employment opportunities in Nigeria are being created by SMEs, together with wealth and income redistribution. Also they help in utilization of local resources; dispersal and diversification of economic activities; mobilization of savings; services to large scale industries; reduction of rural – urban imbalances and generally leading towards the achievement of the United Nations (UN) Millennium Development Goals. Ogunsanya (2007) noted that the realization of the significant and impressive contribution of these small enterprises to employment generation, entrepreneurial development, income generation, poverty alleviation and by extension promoting sustainable level of economic growth and development, in recent times, however, has created an increasing attention on SMEs.
In spite of the good works of SMEs to the Nigerian economy and its great contribution to the nation’s GDP, yet they still operate in a very chronic and hostile environment characterized with myriad of problems that thwart the capacity of the players (SMEs) to stand on the ground, thereby limiting their competitive strength of withstanding competition not only from the indigenous large industries but, also from foreign SMEs and Multinational Corporations (MNCs) in this globalization era. Apart from this, most of the owners (i.e managers) of the SMEs in Nigeria lack or have little knowledge of basic management (especially personnel) principles and practices. This has hindered them from managing their enterprises’ resources (man, machine, money and materials) effectively and efficiently. Resultantly, there is very high mortality rate among the SMEs in Nigeria.
The economic prosperity and functioning of a nation depend on its physical and human capital stock. Whereas the former has traditionally been the focus of economic research, factors affecting the enhancement of human skills and talent are increasingly featuring in the research of business, social and behavioural sciences. For any business or an organization to function effectively, it needs a reliable and consistent source of labour. The issue of retaining employees in businesses has recently remained a primary concern for many organizations, particularly the SMEs. Organizations invest a lot on their employees in terms of induction and training, developing, maintaining and retaining them in their organizations. Since human capital is central to an organization’s performance, workforce attrition can have a profound impact on an organization’s performance, growth and general business outcomes. Therefore, labour turnover is an important issue that poses a significant challenge for organizations.
Labour turnover or staff turnover refers to voluntary resignation or involuntary loss of job. According to Kirton and Greene (2009) decisions on staff turnover are usually based on subjective interpretation of a range of factors some of which may be internal or external to the workplace. Therefore, a combination of internal and external factors can provide impetus for adequate understanding of staff turnover in organizations which are decided by the performance of male and female managers of those organisations. The internal factors which have traditionally provided a basis for the increase or decrease of staff turnover include job satisfaction, organizational commitment and age (García-Serrano, 2009). The external factors usually comprise the social environment, educational experiences, family responsibilities, religious beliefs and changing work values (Izamoje, 2011).
Research estimates indicate that hiring and training a replacement worker for a lost employee costs approximately 50 percent of the worker’s annual salary (Johnson et al, 2000). However, the costs do not stop there. It is presumed that each time an employee leaves the firm, productivity drops due to the new employee’s learning curve involved in understanding the job and the organization. Meaghan et al (2002) further expatiated this when they asserted that the loss of intellectual capital adds to the cost of staff turnover since not only do organizations lose the human capital and related capital of the departing employee, but also competitors are potentially gaining these assets. Therefore, if employee turnover is not managed properly it would affect the organization adversely in terms of personnel costs and in the long run it would affect its liquidity position.
The persistence of labour mobility has disturbingly become a problem to employers in Nigeria, especially in small and medium enterprises (SMEs). Many of these enterprises have in one way or the other experienced both voluntary and involuntary turnover of labour as a result of the search for job satisfaction and higher wages. A typical Nigerian youth presently wants to get rich quick, unlike the situation in the colonial era. Izamoje (2011) opined that this attitude appears to reinforce the incidence of labour mobility in SMEs. The rate at which turnover increases in different SMEs has led to this research to determine whether staff turnover is directly connected with the way male and female managers carry out their duties as entrepreneurs. This study therefore, sought to examine the difference in staff turnover (if any) among male- and female-headed SMEs in Enugu urban, as well as the factors that influence employees’ decisions (intentions) to quit their job.
1.2 Statement of the Problem
Goffee and Scase (1983) believe that proprietorship for females is a means of empowering women who have been economically and socially deprived, and that through this ownership, they can escape this deprivation by owning a business which can provide the opportunity for self-determination through owning and controlling resources as well as through an increased flexibility of working outside the home and from their domestic lives. However, these same authors also observe that the proprietorship tends to support the capitalist institutions, which “sustain the domain of men over women” and as supporting economic deprivation of females in employment. This implies that females cannot be independent even though they establish their own businesses.
Rosa, Carter and Hamilton (1996) corroborated this assertion when they stated that the female managers are not completely free from influence of husbands and male relatives, which can undermine their self-determination. This persistent behavior, they added, can decrease the psychological confidence of female entrepreneurs, and as a result, they are less likely to be successful in obtaining full legitimacy and creditability as business owners, namely, experience in dealing with banks, business support officials, customers, suppliers and clients. Also, the most serious issue for employers today in all industries is hiring and keeping qualified and capable employees. When an employee quits his or her job, it does not only impact on the organization but also the individual employee and wider society. The purpose of this study therefore, is to examine the different factors influencing employees’ turnover intentions in male- and female-headed SMEs and how they affect the concerned businesses in Enugu Urban of Enugu State, Nigeria, using gender-based analysis.
Despite the inherent problems associated with the growth of small and medium enterprises, women entrepreneurs are increasingly venturing into ownership of small-scale enterprises either on their own or in partnership with male entrepreneurs (ILO, 2005). This has been made possible primarily because of ease of entry, limited access to other enterprises and lack of employment opportunities in formal sector of the economy
Aqino, Griffeth, Allen and Hon (1997) posit that current explanations of employee turnover fail to offer either predictive or explanatory power. Also, given the growth of entrepreneurship among women compared to that of men counterparts, understanding the social and managerial factors of the male and female entrepreneurs influencing their successful performance and turnover of their staff is of critical importance. Though Khatri (1998) posits that the extent of controllable turnover is much greater than uncontrollable turnover and that poor management practices are the major source of employee turnover, he did not distinguish these findings among male and female. Therefore this study is interested in investigating differentials, if any, in staff turnover intentions among male- and female-headed SMEs in Enugu Urban.
1.3 Objectives of the Study
The broad objective of this study is to compare the extent of staff turnover in male and female headed SMEs in Enugu urban of Enugu State, Nigeria. Specifically, the study will attempt:
- To ascertain any significant difference in staff turnover among male and female headed SMEs in Enugu urban.
- To compare the difference in factors responsible for staff turnover among male and female headed SMEs in Enugu urban.
- To compare the difference in staff welfare packages of male and female headed SMEs in Enugu urban.
- To ascertain the effect of the rate of staff turnover on the performance of male and female headed SMEs in Enugu urban.
1.4 Research Questions
Based on the above objectives, the following research questions ensue.
- Is there any significant difference in staff turnover among male and female headed SMEs in Enugu urban?
- Is there any significant difference in the factors responsible for staff turnover among male and female headed SMEs in Enugu urban?
- Is there any significant difference in staff welfare packages of male and female headed SMEs in Enugu urban?
- What is the effect of the rate of staff turnover on the performance of male and female headed SMEs in Enugu urban?
1.5 Hypotheses of the Study
The research will be guided by the following null hypotheses:
Ho1: There is no significant difference in staff turnover among male and female headed SMEs in Enugu urban.
Ho2: There is no significant difference in the factors responsible for staff turnover among male and female headed SMEs in Enugu urban.
Ho3: There is no significant difference in staff welfare packages of male and female headed SMEs in Enugu urban.
Ho4: The rate of staff turnover has no significant effect on the performance of male and female headed SMEs in Enugu urban.
1.6 Significance of the Study
The significance of this study can be viewed from two major stand points – practical and academic.
(a) Practical significance
SMEs managers in Nigeria will tap information from the findings of this research and use it to enhance their human relationship management skills. Specifically, the selected SMEs will get empirical facts about the factors that influence the rate of staff turnover and its implication. This will serve as source of insight and re-enforcement for improved performance in human management and the attendant desired output. The result of this research will also be helpful in contributing to the SMEs support agencies and policy makers in Nigeria.
(b) Academic significance
This study will contribute to the enrichment of the existing literature on staff turnover in SMEs and suggest intervention measures (based on empirical evidence) that can help to reduce the rate of staff turnover among SMEs in Nigeria. Finally, the study will serve as a body of reserved knowledge to be referred to by researchers.
1.7 Scope of the Study
Not only that all the fourteen state-owned enterprises in Enugu State had gone moribund and were in the process of being privatised or commercialised, their chief executives could not qualify for a study on entrepreneurs because of regular government interventions in the affairs of such enterprises. Therefore, the study targeted the SMEs in Enugu urban that were registered with the organised private sector (OPS) groups.
The recognized OPS groups are Manufacturers Association of Nigeria (MAN); Enugu Chamber of Commerce, Industries, Mines and Agriculture (ECCIMA); Nigerian Association of Small and Medium Enterprises (NASME); and Nigerian Association of Small-scale Industries (NASSI). Only those enterprises that passed the standard for SMEs were selected. They were nine (9) in number. The study reached all the staff (both management and non-management) of the nine (9) selected SMEs in Enugu urban.
The focus was on their managers’ human resources management function, specifically, the rate of staff turnover. By implication, the research captured some information about how staff quit their place of work either voluntarily or involuntarily and how they were also retained in female and male headed small and medium enterprises (SMEs).
Enugu was selected for the study because of its strategic position as the political headquarters of the former Esatern Region of Nigeria with the fastest growing economy and industrialisation. It has been described as the home of business minds. The major inhabitants, Igbos, are known for industry.