THE EFFECT OF EMPLOYEE MOTIVATION ON ORGANIZATIONAL PRODUCTIVITY OF AIICO INSURANCE PLC

ABSTRACT

Motivation is seen as the force that convinces employees or workforce to behave and perform in a way that leads to reward, as a result, employees expect that they will be rewarded with all those reimbursement that they anticipate for themselves and their families in return of their services and efforts. The issue of motivation has continually posed a big challenge to business organizations around the globe especially in the banking industries where high levels of productivity affect or play a major role in determining the profitability, growth, development, stability and future success of an organization. Therefore, the study examines the effect of employee motivation on organizational productivity of AIICO Insurance Plc.

This study adopted a quantitative survey research design in investigating the effects of motivation on organizational productivity. A well- structured self-administered questionnaire was used as the main tool for data collection and was administered to 130 respondents out of which 118 were retrieved and appropriately filled. Data collected were analyzed using descriptive statistics, correlation and multiple regression analysis. From the hypotheses tested, the result indicated among others that there is a significant relationship between employee motivation and organizational productivity

The findings of the study revealed that; financial benefit has positive and significant effects on employee effectiveness in AIICO Insuarance Plc; there is positive and significant relationship between training and development and employee productivity of staff in AIICO Insurance Company; the finding reveals also that work environment has positive and significant effects on job performance of employees of AIICO Insurance Plc; employee motivation has positive and significant effects on organisational productivity of AIICO Insurance Plc.

The study concluded that employee motivation significantly affect organisation productivity. The study recommended that management of organizations should take appropriate measures in figuring out those factors that motivate their employees and seek ways of ensuring that they are adequately motivated in order to improve their productivity.

Keywords: Organizational Productivity, Employee Motivation, Financial Benefits,Work Environment,Training and Development,Organizational Effectiveness, Job Performance, Employee Productivity

 

CHAPTER ONE

INTRODUCTION

1.1  Background to the Study

Globally, business organizations have continued to adopt strategies to increase the amount of goods and services that they produces (organizational productivity) in a given amount of time in order to stay relevant in the competitive market. Oliver (2014) argued that in almost all the countries of the world including US, Europe, Asia and Africa, challenges of productivity is in the area of management and utilization of resources effectively and efficiently, this has been an hindrance in achieving the projected level of organizations productivity.

In US and Europe, business managements are preoccupied with improving employee’s productivity, productivity gains of management and labor productivity growth which are seen as useful measures of the US economy’s performance. This is observable from the fact that the major issue of productivity in US and Europe is poor management of human resources (Lebergutt, 2012). Furthermore, Sunia (2014) argued that for organizations to survive and remain relevant and competitive in South Africa, it is essential for them to be able to entice and maintain efficient and effective employees and improved job performance in a bid to enhance productivity.

Moreover, it is a well known fact that the productivity of an organization is key in determining the success or failure of that organization (Cummins, 2010). However, efficiently utilizing resources to achieve optimum productivity has proven to be a huge challenge to business organizations all over the world and especially in Africa. Furthermore in Africa, achieving and sustaining organizational productivity on a consistent basis has proven to be a huge challenge to business organizations due to limited resources at the disposal of these organizations (Odera & Akerele, 2013). Major prevalent challenges includes employee ineffectiveness, poor job performance, reduced work output, brain drain in the service sector etc. One of the resources that has proven to be limited to organizations are the human resources with there being a massive brain drain in Africa as intellectuals migrate from Africa to other parts of the world due the economic hardship in most countries in Africa. Especially in Nigeria who has the highest percentage of people with at least a Bsc Degree who are overseas among African countries (US Census, 2015). Therefore, the challenge for organizations in Nigeria is the need to motivate the limited human resources available to achieve optimum productivity on a consistent basis.

 

Many studies have shown the importance of employees to any organization in the world. Pierce & So, S (2013) observed in France business settings that employees are vital and crucial to the organization achieving its set goals and objectives. In US and Europe, where the level of competition among business organizations is very high, employee effectiveness serve as a factor that can distinguish an organization from its competitors and give the organization a competitive edge over similar organizations. However, for an organization to attain this, the employees need to be motivated to be at their best and to achieve consistent and great results. But organizations in US and Europe are confronted with the issues on the choice of types of employee motivation that will improve productivity in an organization. This has made the subject of employee motivation a much debated subject as human resource practitioners and researchers try to find ways in which employees can be motivated to increase organizational productivity.

Furthermore, all organizations in the world face the issue of employee motivation whether they are in the public or private sector (Chintallo & Mahadeo, 2013). According to Ackah (2014) many business managers in major companies in countries like America face difficulties motivating employees and surveys have backed this up by showing employee motivation is one of the top ten challenges of human resource managers in America. Furthermore, in Africa the diversity of cultures and nationalities currently reflected in most organizations in the world has meant that no two employees are the same and as such employees vary in their styles, personalities, their beliefs and culture which makes it harder to figure out the best way to motivate them as a unit (Dessler, 2015). This challenge is also present in Nigeria with studies showing that Nigeria is a diverse multicultural country consisting of over 371 tribes (Vanguard, 2017). This has made many workforces and employee base in Nigeria full of various people with different backgrounds, beliefs, value system and motivations. This has made it difficult for many employers and managers particularly in the insurance industry to determine the right type of motivation for their employees that will improve their organizational productivity.

Heneman (2012) observed that motivated employees are significant in affecting organizational outcomes like productivity, employee performance and customer satisfaction. According to Ouchi(2004)organizations would be more profitable, effective and efficient when its workers are motivated and this will lead to increased organizational productivity and a high level of involvement. In realizing this new generation organizations all over the world are adopting new techniques to overcome the challenges of employee motivation and increase their organizational productivity as a result. For example, companies like Toyota, Starbucs and Oracle are adopting techniques of motivation that include hiring professional psychologists to attend to employees in each department of their organizations who can work with the employees and prepare them mentally for the job at hand (Brian, 2013). Furthermore, in African countries like South Africa companies like ABSA give their employees non-monetary incentives like work flexibility and the permission to telecommute in order for them to work from the convenience of their homes (Achamfour, 2013). More so in Nigeria, startup companies in the IT industry have adopted innovative techniques to keep their employees motivated. For example, companies like Andelahave recreation tools like Foosball that help to create a relaxed environment for employees in order to increase their motivation and ultimately productivity (Muogbo, 2017). These organizations having realized the importance of employee motivation were quick to adopt techniques to improve their employees’ motivation and benefited from the resulting increase in productivity of their employees and their organization as a whole. However, this has not been the case in the insurance industry as managers in the insurance industry have still struggled with motivating their employees to improve the organizations’ productivity.

Manzoor (2015) noted that the financial benefits received by employees can go a long way in determining their effectiveness. Similarly, Sekiguchi (2013) noted that companies with good financial benefits tend to attract better quality of employees which also determines the efficiency of the employee base as a whole due to the fact that high quality employees tend to be more effective than poor quality employees. However, Ehsiteti, Okaka, Maragia, Odera and Akerele (2016) noted that in the insurance industry many employees have complained that the financial benefits they receive are inadequate and as a result they are not motivated to be effective while on the job.

Chappins (2005) stated that the work environment in which employees are surrounded by is important in influencing their satisfaction and convenience and ultimately their job performance. Similarly, Koima (2015) opined that the quality of the workplace environment impacts on employees’ job performance. However, a KPMG survey (2015) noted that employees in the insurance industry have made the point that working in insurance companies is stressful with  a high output demanded from employees and many times long hours of shifts well beyond the stipulated working hours also demanded of them without any overtime payment. According to Ajala (2016) this has affected the job performance of employees in insurance companies.

Cummins (2010) also stated that training and development of employees can go a long way in determining how productive they will be on the job. However, according to Kolawole (2016) majority of insurance companies are still reluctant to invest significant resources in the training and development of their employees and as a result have experienced poor employee productivity.

Therefore there is a need to understand and examine various factors that can serve as motivation to employees and how these factors impact upon the organization’s productivity. Therefore this study will be an inquisition into the relationship between employee motivation and organizational productivity.

1.2  Statement of the Problem

The business world is growing increasingly competitive and this means that business organizations are facing ever-growing challenges regarding employee motivation and how it can be used to improve organizational productivity. Several researchers has also conducted different studies on the subject, the major general  identifiable gap from this studies is the uncertainty regarding the outcome of both financial and non-financial system of motivation. However, due to the prevalent employee ineffectiveness and poor job performance that is ravaging many business are effects of employee motivation on organizational productivity, many business managers, human resource managers and human resource practitioners especially in the insurance industry in Nigeria are not sure of the right combination of employee motivation techniques to adopt that would have a positive impact on their organizational productivity. Many studies have been carried out on employee motivation in Nigeria. For example, Eshiteti et al (2016) studied the effects of employee motivation programs on staff retention in the manufacturing industry, Muogbo (2017) studied the impact of employee motivation on the organizational performance of some selected banks in Anambra state. However, there is still a gap in the body of knowledge with regards to the effect that various employee motivation techniques have on organizational productivity in the insurance industry.

In addition, according to Moses (2013) many insurance companies have failed to adopt adequate financial packages to compensate their employees for the work they are doing. According Jobberman (2017) many employees in the insurance industry in Nigeria feel they are underpaid. The issue with the low salary structure in place in the insurance industry has to do with the fact that it is not competitive (Moses, 2013). According to Ilesanmi (2014) when compared with other sectors in the economy, the financial benefits package rendered in theinsurance industry is low comparatively. Ommawumi (2015) suggested that this has led to poor effectiveness of employees in the insurance industry.

According to Kabiru and Abdullahi (2014) there have been constant complaints raised by employees in the insurance sector of the poor working environment in their companies. Particularly, there have been complaints raised by employees of insurance companies’ concerning the poor and archaic equipments they have been given to work with especially in insurance industries in rural areas in Nigeria (Kabiru & Abdullahi, 2014). This has often led to poor job performances by employees of insurance companies.

Mukalia, Essien and Adekunle (2013) noted that majority of insurance companies in Nigeria have failed to invest in the adoption of proper training and development schemes or programmes. Abomeh and Nwakoy (2015) noted that this was due to the fear among insurance companies that if they invest significantly in employee training and development, they may reap the desire dividends in terms of increase profitability. Furthermore, many insurance companies fear that investment in employee training and development maybe an investment on behalf another company even a rival company as modern day employees are not loyal and committed to a single organization. However, the failure of insurance companies to invest in employee training and development has led to low productivity of employees.

Therefore this study aims to solve these problems of employee ineffectiveness and poor job performance by determining the effect of employee motivation on organizational productivity in the insurance industry in Nigeria.

1.3 Objectives of the Study

The general aim of the study is to determine the interaction between employee motivation and organizational productivity in the insurance sector. The specific aims of the study are:

  1. To determine the effect of financial benefits on employee effectiveness.
  2. To determine the effect of working environment on job performance.
  3. To determine the relationship between Training and development and employee productivity.
  4. To determine the combined effect of employee motivation on organizational productivity.

1.4  Research Question

The research will seek to answer the following questions:

  1. What effect does financial benefits have on employee effectiveness?
  2. How does working environment affect job performance?
  3. What is the relationship between Training and development and employee productivity?
  4. What is the combined effect of employee motivation on organizational productivity?

1.5       Research Hypotheses

The following hypotheses are formulated for testing:

H0(1):    Financial benefits have no significant effect on employee effectiveness

H0(2):    Working Environment does not significantly affect job performance

H0(3):    There is no significant relationship between Training and development and employee productivity.

1.6 Operationalization of Variables

The variables adopted by this study are: Employee Motivation and Organizational productivity. The study will seek to investigate the impact of Employee Motivation; the independent variable, on the dependent variable; Organizational productivity.

The variables for this research are consequently operationalized as follows: 

Y = f(X)

Y = Organizational Productivity

X = Employee Motivation

where Y = Dependent variable

            X = Independent variable

y = f (x1, x2, x3…xn)

x1= Financial Benefits

x2= Work Environment

x3= Training and Development

y = (y1, y2, y3)

y1= Organizational Effectiveness

y2= Job Performance

y3= Employee Productivity

y= f(x1) __________________ (1)

y = f(x2) __________________ (2)

y = f(x3) __________________ (3)

            The study will focus on equation (4) above.

            Based on regression, we have

y1 = α0 + β1x1 + μ…. (1)

y2 = α0 + β2x2 + μ…. (2)                  

y3 = α0 + β3x3 + μ…. (3)

Where, α is the constant of the equation, β is the coefficient of X the independent variable where μ is the error or stochastic term in the equation.

 

1.7 Scope of the Study

The study will focus on the interaction of employee motivation and organizational productivity. The study will be carried out in AIICO Insurance Plc, Ikeja, Lagos State, Nigeria. The population of the study is 1,797 employees of AIICO Insurance plc, Ikeja, Lagos State. The geographical location of the study will be AIICO Insurance Plc, Ikeja, Lagos State. The choice of AIICO Insurance plc, Ikeja, Lagos State is based on the number of employee of the organization being one of the highest among insurance companies in the nation. The headquarters of the organization is also located in Lagos, hence, the choice of Lagos State.

1.8 Significance of the Study

This study will help policy formulation. Outcome of the study will enlighten the government and policy makers on how employee motivation can be used as a tool fpr improving organizational productivity in the insurance sector.

Insurance industry will improve their services through the outcome of this study. This study will be relevant to the sector as it will make stakeholders to know the needs of employees in terms of motivation and also to know how effective their current motivation techniques are. Furthermore, the study results will also enable the industry to upgrade in their motivation strategy.

This study will also be significant to academics and scholars It will also serve as a resource base to other scholars and researchers interested in carrying out further research in this field subsequently, if applied will go to an extent to provide new explanation to the topic

1.9 Definition of Operational Terms

Employee Commitment:  Anemployee's positive emotional attachment to the organization (Bhatti & Qureshi, 2007)

Employee Engagement: It is an employee who is fully absorbed by and enthusiastic about their work and so takes positive action to further the organization's reputation and interests.

Employee Motivation: Employee motivation is the level of energy, commitment, and creativity that a company's workers bring to their jobs (Muogbo, 2017). 

Employee Participation: Employee participation is the process whereby employees are involved in decision making processes, rather than simply acting on orders (Bhatti & Qureshi, 2007)..

Employment Performance: Employee Performance Management is about aligning the organisational objectives with the employees' agreed measures, skills, competency requirements, development plans and the delivery of results (Ezulike, 2011).

Job Security: It is an assurance that an individual will keep his or her job without the risk of becoming unemployed

Salary: A salary is a form of periodic payment from an employer to an employee, which may be specified in an employment contract. It is contrasted with piece wages, where each job, hour or other unit is paid separately, rather than on a periodic basis (Ezulike, 2011).

Work Relationship: A relationship with a colleague, boss or employee (Cummins, 2010)

Work-Life Balance: Work–life balance is a concept including the proper prioritization between work (career and ambition) and lifestyle (health, pleasure, leisure, family) (Cummins, 2010).

Work Quality: Work quality is the value of work delivered by an individual, team or organization (Cummins, 2010).

 

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