CHAPTER ONE
INTRODUCTION
1.1. Background to the Study
In this present 21st century, organization is seen as the most crucial point of administration. This is because without organization there can be no administration, and without human resources (employees) no organization can exist, since human (employees) are considered to be the most important assets in every organization. Therefore, it is very important for organizations to consider several ways to get employees motivated to perform their task willingly and enthusiastically, and be satisfied with their jobs. This brings us to the topic on financial reward and workforce productivity in Dangote Cement, Ogun State, Nigeria.
Globally, Freeman (2016) noted that productivity exists almost in all countries across the world which includes both the developed and developing countries. This is because of the increased productivity and performance and economic growth. Thus, it is widely recognized that financial rewards have to bear some relationship to employee productivity. Armstrong (2012) stated that rewards aims to support the achievement of business goals by helping to ensure that organization has the talented and engaged people it needs, promote high performance by ensuring that the reward system recognizes and encourages it, and as well help to attract and retain high quality people by providing competitive pay. He further said that the reward system covers all forms of financial rewards or remuneration (pay, benefits and allowances provided to employees). According to Stoner (2014) motivation is an individual mental attributes, which consists of factors that can motivate and demotivate the behaviour of an individual. The productivity of individuals, which in turn affects the performance of a company, is a very important parameter to watch as it measures a company’s competitive power. It is an indicator of a firm’s profit margin, a measure of the firm’s survival in business, a yardstick for remuneration of employees, and a means of involvement of hard work.
In Europe, it was affirmed by Bernardin (2014) that the importance of motivational factors cannot be underestimated by an organisation in increasing the productivity levels of employees most particularly when trying to attain competitive advantage. Bernardin (2014) claimed that there are various motivational factors which could enhance employee job performance such as pay rise, promotion, allowance, financial incentive and positive working environment. Cumming (2016) posited that the explanation of employees’ performance needs to acknowledge the motivation and human resources. Cole (2016) sees reward as what employees receive in exchange for their contribution to the organization. He claimed further that when reward is well managed, it helps the organization to achieve its objectives, and retain a productive workforce. Without adequate reward, current organizations employees are likely to leave and replacement will be difficult to recruit. Pay dissatisfaction could lead to low productivity and affect the quality of work life. It could as well lead to lower performance, cause strikes, increase grievances, and lead to various forms of physical or psychological withdrawal ranging from absenteeism and turnover to increase visits to the hospitals etc., (Cole, 2016).
In Africa, it was suggested by Stephen (2014) that organization managers must judiciously, moderately and constantly use rewards and punishments. Besides, he maintained that organization or management that do not take cognizance of reward system will likely de-motivate employees and thus leads to a drop in organizational productivity and overall performance. Therefore, it is important for reward system to be enshrined in the organizational culture both private and public sectors. Lawal (2016) further maintained that every good compensation or pay policy in an organization should be aimed at attracting, retaining and motivating high quality employees that will work towards achieving organizational productivity.
In Nigeria, organization can be said to be holistic, which consists of individuals, capital and material resources with the primary objective of achieving organizational goals and objectives (Sule & Ugoji, 2016). In an ideal world, every organization seeks to achieve its set goals and objectives. Though, financial reward is one among all the basic needs of an individual. This is because one main challenge confronting a graduate or job candidate in Nigeria is on how to get a good job with a good pay so that he or she can earn a good living (Sule, 2015). According to Obikeze and Anthony (2017) many organizations in Nigeria are confronted with the challenge of the best approach to motivate its employees towards job performance. This is because each employee has different need and thus, various factors motivate employees differently. As such, there is no one best way of motivating employees, since employees are not in any way same in their needs (Obasa, 2015). Critics from Agbonifoh, Agbadudu and Iyayi (2018) claimed that pay inequality can lead to frustration, jealousy, envy, disappointment and resentment. This is because pay does not only enable employees to support themselves and families; it is also a signal of employees value and status in an organization. Findings from Jim (2018) showed that executives are more likely to leave companies with high pay inequality. The bottom line here is that financial incentives, by definition, create inequalities in pay that often undermine performance, collaboration and retention. Aina (2015) identifies a number of key factors involved in monitoring employees for higher productivity, which consists of salaries and wages, incentives system, work ethic and social values, morale, social and psychological condition of workers. Others are quality and style of supervision, knowledge and skills of workers and the reward system management.
Okeke (2017) defined motivation as a goal directed and therefore cannot be outside the goals of any organization whether public, private, or nonprofit. Motivation is one of the greatest challenges facing managers across the world due to the fact that it influences the performance of employees and thus the degree to which organisations are able to achieve their objectives and justify their existence (Agburu, 2017). Milton (2013) viewed incentives as variable rewards granted according to variations in the achievement of specific results. It is also called a stimulus to greater action. Pay is a factor of motivation and it is reward that an employee receives from organization in exchange for his or her service and that every organization has its distinct pay structure. Heathfield (2016) claimed that bonus is the pay over and exceeding the amount of pay that the employees received as a base salary or hourly rate of pay. Bonus plans are one of important part in reward systems. This is because a bonus that will be given to the employees will be based on their current performance in the organization. Therefore, irrespective of the organization size, management must incorporate several motivational packages into the work environment so as to spur, encourage and influence employees to productivity. Thus, from the ongoing, it is on this note that this study will examine financial reward and workforce productivity in Dangote Cement, Ogun State, Nigeria.
1.2. Statement of the Problems
Employee motivation has been extensively considered to be a crucial tool for increasing the productivity of an organization however the problem lies in identifying the very factor to put in use due to the fact that the society is very dynamic, and business environment has turned out to be more sophisticated due to technological advancement.
The problem of many organizations in Nigeria occurs from the problem of making available a high income for its employees and this has grave effect on performance. The issue of low income paid to employees has virtually led into a strong argument and counter argument on the part of government, labour and employees union. Employees through their labour unions have always asked for improved conditions of services and can go to any length to press home their demands (Okeke, Nwele & Achilike, 2017). In addition, a lot of organizations have experienced employee high turnover due to a low income paid to their employees, and this has affected the productivity and overall performance of such organizations, where talented and competent employees have left for a well paid job.
Past studies have showed that low performance and inefficiency has characterized many organizations in Nigeria (Mbogu, 2010); and findings from other studies have equally revealed that the low performance and inefficiency associated with organizations in Nigeria could be removed if they are provided with some financial incentives (Tongo, 2011). The study of Perry (2017) found that respondents perceived increase in pay and bonuses as a form of confidence that management places on them, and therefore were motivated to improve on their performance. Iyida (2017) found that increase in pay improves the productivity of employees. The study of Onyango (2015) showed a positive correlation between employee benefits and organization performance. Wasiu and Adebajo (2014) found a significant relationship between employee’s performance and salary package, employee job allowances and performance and in-service training and employee’s performance.
In contrast, Perry, Mesch and Paarlberg (2012) revealed that individual financial incentives are ineffective in the traditional public sector settings. Odoh (2011) found that irregular and inadequate incentives, low level of fringe benefits and lack of collective bargaining process brought about low productivity of employees. In addition, Agburu (2017) found an unwarranted lags between employee pay and productivity. However, the various empirical findings showed mixed findings and a number of the studies have methodological issues as most of them used nonparametric method in analyzing their data which is most often deep-rooted with errors.
Therefore, the study will fill the identified gap by examining financial reward and workforce productivity in Dangote Cement, Ogun State, Nigeria, and would use a more robust method in analyzing the data like the regression and ANOVA analysis.
1.3. Objectives of the Study
The primary objective is to examine financial reward and workforce productivity in Dangote Cement, Ogun State, Nigeria. In order to achieve the primary objective, the following specific objectives are:
To assess the effect of pay on efficiency in Dangote Cement
To examine the effect of bonus on productivity in Dangote Cement
To investigate the effect of allowance on profitability in Dangote Cement
To determine the effect of incentive on innovation in Dangote Cement.
1.4. Research Questions
The following research questions are poised for the study.
What is the effect of pay on efficiency in Dangote Cement?
To what extent is the effect of bonus on productivity in Dangote Cement?
What is the effect of allowance on profitability in Dangote Cement?
What is the effect of incentive on innovation in Dangote Cement?
1.5. Research Hypotheses
The research hypotheses for this study are formulated in their null form.
Ho1: Pay has no significant effect on efficiency in Dangote Cement
Ho2: Bonus has no significant effect on productivity in Dangote Cement
Ho3: Allowance has no significant effect on profitability in Dangote Cement
Ho4: Incentive has no significant effect on innovation in Dangote Cement
1.6. Operationalization of the Variables
The dependent variable is workforce productivity, represented by Efficiency (EF), Productivity (PD), Profitability (PT) and Innovation (IN). On the other hand, financial reward being the independent variable is represented by Pay (PA), Bonus (BS), Allowance (AL), and Incentive (IC).
Where Y= Dependent variable
X= Independent variable
α˳ = Constant
ꞵ1 ꞵ3 = Coefficient of independent variable
µᵢ = Stochastic value or error terms
Y= f(X)
X= Financial Reward
X= f(x1, x2, x3, x4)
x1 = Pay (PA)
x2 = Bonus (BS)
x3 = Allowance (AL)
x4 = Incentive (IC)
Y= Workforce Productivity
Y= f(y1, y2, y3, y4)
y1 = Efficiency (EF)
y2 = Productivity (PD)
y3 = Profitability (PT)
y4 = Innovation (IN)
The four specific objectives are operationally expressed as:
To assess the effect of pay on efficiency in Dangote Cement
Y1 = f (x1) ………………………………………. equation 1
Y1 = b0 + b1x + u ……………………………… regression 1
To examine the effect of bonus on productivity in Dangote Cement
Y2 = f (x2) ……………………………………….. equation 2
Y2 = b0 + b2x + u ………………………………. regression 2
To investigate the effect of allowance on profitability in Dangote Cement
Y3 = f (x3) ………………………………………… equation 3
Y3 = b0 + b3x + u ……………………………….. regression 3
To determine the effect of incentive on innovation in Dangote Cement
Y4 = f (x4) ………………………………………… equation 4
Y4 = b0 + b4x + u ……………………………….. regression 4
1.7. Scope of the Study
The study is limited to financial rewards on workforce productivity in Dangote Cement, Ogun State, Nigeria. The unit of analysis of the study is the employees of Dangote Cement at Junior, Middle, Senior, and Management level positions. The simple random sampling technique will be adopted to administer the questionnaire in order to ensure that both male and female employees have equal chance of being selected for the study, while data will be gathered using the questionnaire and analyzed using the regression and ANOVA analysis. The geographical location for this study is Dangote Cement, Ogun State, Nigeria.
1.8. Significance of the Study
This study will be important to the management of Dangote Cement as it will offer ways through which the management can review their existing motivation packages with the aim of enhancing employees’ productivity. In addition it will be important to organization as it will provide them with adequate information on the importance of financial rewards such as increase in pay, bonuses for performance, allowance and other incentives in enhancing the productivity of employees and organization performance as a whole.
This study is important to the industry in that, it will increase and expand the industry level of knowledge on the present motivation packages in the Nigerian manufacturing sector, and offer them with vast understanding and knowledge on deciding a minimum pay for employees in the manufacturing sector.
The study is important to the government since they have the capacity to formulate policy and guidelines that will be of positive interest to employees. Thus, the government can formulate policy that will enhance employee minimum pay across all sectors in the country.
The findings of this study will be of benefit to University authorities as it will provide them with information that will be useful to motivate its employees both academic and non-academic staff. In addition, findings will be of benefits to students and other researchers who will want to carry out future research in relation to the study.
1.9. Definition of Operational Terms
Pay: refers to the weekly or monthly payment an employee received for his services to the organization.
Reward: refers to when an employee is offered reward packages such as bonuses, salary increment, etc in order to enhance his or her job performance.
Productivity: refers to the output per unit of Labour input, it is the balance between all factors of production that will give the greatest output for the smallest effort.
Motivation: refers to an inner drive that energizes activities compels and moves an individual to act or behave positively on a certain manner.
Performance: is defined as the ability to achieve result or given objectives
Bonus: is the extra amount of money paid by the organization when the employee performance is outstanding over the whole year
Efficiency: refers to an employee 'doing the right things or occupying oneself with the right things towards task accomplishment.
Profitability: refers to the state of an employee being productive in his or her output in achieving profit.
Incentive: provides a platform through which the organization can motivate its employees to improve their productivity.
Innovation: refers to the act of employees being creative or innovating in the organization.
1.10. Historical Background of Dangote Cement Plc
Dangote Cement is a subsidiary of Dangote Industries, which was founded by Aliko Dangote in 1981 as a trading business with an initial focus on importation of bagged cement and other commodities such as rice, sugar, flour, salt and fish. Dangote Cement Plc is Sub-Saharan Africa’s leading cement company, with a production capacity of 48.6 million tonnes per year across ten countries. Together, these operations make us the largest cement producer in Sub-Saharan Africa. Dangote Cement Plc is Africa’s leading cement producer with existing operations in 10 African Countries.
The vision of the company is to be a global leader in cement production, respected for the quality of our products and services and for the way we conduct our business, while its mission are to deliver strong returns to our shareholders by selling high-quality products at affordable prices, backed by excellent customer service; to help Nigeria and other African countries towards self-reliance and self-sufficiency in the production of the world’s most basic commodity, by establishing efficient production facilities in strategic locations close to key growth markets; to provide economic benefits to local communities, by establishing efficient production facilities in strategic locations close to key growth markets; to provide economic benefits to local communities by way of direct and indirect employment in all countries in which we operate; and to lead the way in areas such as governance, sustainability and environmental conservation and to set a good example for other companies to follow.
The company’s value is: customer service, as a world-class organisation, the company understands that it exist to serve and satisfy their customers. Accordingly, the company customer orientation reflects intimacy, integrity and learning. Entrepreneurship, the company continuously seeks and develop new business, employing state-of-the-art methods to retain their market leadership. Excellence, the company is a large organisation, working together to deliver the best products and services to their valuable customers and stakeholders. To achieve this, the company demonstrates teamwork, respect and meritocracy. Leadership, the company thrive on being leaders in our business, markets and communities. To drive this, the company focused on continuous improvement, partnership and professionalism. (www.dangotecement.com)
