ABSTRACT
The level of employee productivity in Nigerian
organizations has been on the decline over the years and this could be ascribed
to poor performance management strategies put in place by these manufacturing
firms. It is in light of this, that this study aims to examine
the effect of performance management on employee productivity among Nigerian
manufacturing firms.
Descriptive survey research design was adopted for the study. The
population was 6026 comprising of the entire staff of five selected
manufacturing companies in Lagos State. Taro Yamane formula was used to derive
the sample size of 490. A structured questionnaire was administered resulting
in a response rate of97.5%. The instrument was validated and the Cronbach’s
Alpha used for the Pre-test Reliability Analysis of the major constructs ranged
between 0.778 and 0.879.
The data gathered was analyzed with the aid of Statistical Package for Social
Sciences (SPSS) version 21.0 software involving frequency distributions, linear
and multipleregressions.
Findings showed that indeed the four context of performance
management had a significant effect on employee productivity. Detailed simple
linear regression analysis showed that performance
appraisal (F = 39.60, R Square = 0.077, P
< 0.05) at 7.7%; performance feedback (F = 142.726, R Square = 0.231, P < 0.05) at 23.1%; employee training
(F = 7.803, R Square = 0.016, P < 0.05)
at 1.6% and compensation (F = 297.643, R Square = 0.385, P < 0.05) at 38.5% had a significant effect with employee
productivity, however, performance feedback and compensation had the strongest relationship
on employee productivity; multiple regression analysis also showed performance
management (F = 79.482, R Square = 0.402, P
< 0.05) at 40.2% had significant effect on employee productivity.
The study concluded that Performance
Management when well implementedimproves employee productivityespecially when
more emphasis is placed on positive feedback and compensation which was proven
to have a higher influence on productivity of employees. It was
recommended, among others, that manufacturing firms should encourage their
members of staff by giving them regular positive feedback and compensate them
fairly to improve productivity.
INTRODUCTION
1.1 Background
to the Study
In the turbulent
business environment, with changes in customer demands the main aim of every
manufacturing organization is to improve its productivity but this can never be
possible without the efficient performance of employees and one of the major
challenges facing many countries has been the need to improve the performance
of employees. Therefore, Performance Management (PM) came into effect as a
human resource management reform to address and redress concerns organisations
had about performance (Amir, 2012; Sharif, 2002). Performance management has
been seen as a tool which focuses on managing the individual and work
environment in such a manner that an individual or team can achieve set
organizational goals (Esu & Inyang, 2009; Fletcher, 2001). However,
performance management has come to signify more than a list of singular
practices aimed at measuring and adapting employee performance. Rather, it is
seen as an integrated process in which managers’ work with their employees to
set expectations, measure and review results and reward performance, in order
to improve employee performance, with the ultimate aim of positively affecting
organisational success (Mondy & Noe, 2008; Mondy, Noe & Premeaux,
2002).
Performance
Management has been used as a tool to enhance employees productivity by
managing their performance (Poister, 2003) specifically, PM intends to improve
accountability, performance, communication, efficiency and productivity among
employees. Sheriff, Alibaba, and Aliyu (2012) gave an understanding to the
concept of employee productivity that implies the level or degree of output
achieved from a defined input, it is rather more serious as it has been found
that it forms the core of achievement of corporate goals and objectives,
production, market, and sustainability of organizations in the manufacturing
industry. Effective utilization of performance management is critical to enhance
organizational performance, so as to achieve a competitive position in global
marketplace (Kovacic, 2007; Neely, 2005; Neill & Rose, 2006; Franceschini.,
Galetto & Turina, 2009)
In
the last 30 years, Performance Management has remained a static process that
consisted primarily of an annual appraisal. Today, Performance Management is
one of the principle tools executives, line managers, and employees are able to
use to achieve their collective goals (Potgieter, 2004).The 1990’s saw
widespread and rapid adoption of performance management requirements in U.S.
states. The adoption of these reforms continued through the 2000’s, albeit at a
slower rate. By 2004, 33 states had performance management statutes on the
books, and the remaining 17states had administrative requirements (Melkers
& Willoughby 2005). By 2008, a survey of the states found that 39 states
had performance budgeting laws, and 6 other states had some sort of management
requirement (Lu, Willoughby, & Arnett 2011). The majority of such laws were
adopted in the 1990s and 2000s. Many countries have experimented with
performance management initiatives but most of these were limited to the
introduction of performance-oriented staff appraisal systems. These have not
been very successful because in these systems promotions are linked to
performance, while in many developing countries promotion is still linked to
seniority or to relations (Waal, 2007).
Although
performance management is relatively unknown in many African countries, the
interest in such an improvement tool is growing among African organisations and
in specific African countries. Despite this growing awareness, performance
management is not widespread yet in Egypt (Abdel Aziz et al., 2005), in South
Africa, the term ‘performance management’ is relatively new in the field of
management (Motswiane, 2004), in Kenya, performance management was
traditionally defined as the process of financial control, in which the mission
and strategy are translated into budgets, and subsequently results are compared
with budgets (Malinga, 2004), in Ethiopia, there are some developments for the
benefit of performance management (Tessema, 2005) and in Uganda, there were
inadequacies in setting performance targets and performance management planning
were hardly done (Lutwama, Roos & Dolamo, 2013). However, the overall lack
of management skills and expertise often makes it not viable for developing
countries to develop complex structures such as sophisticated performance
management systems (Waal, 2007). And the lack of precise definition and no
consensus on an appropriate strategy for initiating and sustaining PM is a
factor that sometimes militates against the unity of purpose required to make
performance management initiatives work in the public service in Africa (Balogun,
2002).
Although
there is a plethora of studies on the reasons why businesses failed, it was
argued that most public sector businesses and industries have failed because of
ineffective and inefficient implementation of performance management (Esu, 2003).The
performance of these businesses is predicated on several factors. Many
businesses have failed to meet the objective or purpose of its formation. This
has been the experience in all economies. It is more worrisome in the
developing economics of the world where managers lack the requisite managerial
skills in management. It is one thing to formulate individual and
organizational objectives, and another thing is to achieve the set targets,
sustain task-level and later improve on performance. The fact that most of the
businesses (both large and small scale business) that we saw in our
communities, states and country are no more in existence, means that something
is wrong somewhere especially in the absence of performance management which
was determined to contribute to the high rate of business failures in
Nigeria(Ellis & Chinedu, 2011; Esu & Inyang, 2009). Hence, the
foregoing sets the pace for an understanding of the effect of performance
management on productivity.
1.2 Statement of the Problem
The
issue of employee productivity has suffered from high level of neglect as
indicated by Gerhart and Milkovich (2010) that the level of
employee productivity in Nigerian organizations has been on the decline over
the years and this could be ascribed to poor performance management strategies
put in place by these manufacturing firms. Watkins (2007) elucidates that some
public sector business organizations like those in Delta State of Nigeria have
not given adequate attention to performance management review as a tool for
improving performance even when recent studies suggest that performance reviews
benefit organizational performance in both private and public sectors.
Aidah,
(2013) opines that an employee may have the ability and determination, with the
appropriate equipment and managerial support yet such employee may be
underproductive. According to Adeniji (2013) the missing factor in most cases
is the lack of adequate skills and knowledge, which are acquired through
training and manpower development that brings about increase in absenteeism
rate, low output, poor quality and results. Bartel (2004) asserts that majority
of governmental, private organization and international organizations have
failed to recognize the importance of training, as when not done appropriately
it tends to decrease the employee's productivity, those that attempt to conduct
trainings for their employees do so in an ad- hoc and haphazard manner, and as
such, training in those organizations is more or less unplanned and unsystematic
(Nwachukwu, 2007). The absence of these major variables of PM which have been
proven to improve employee productivity (Armstrong & Baron, 2005; Caruth
& Humphreys, 2008; Edward, 2012;
Greve, 2003; Moynihan &Landuyt, 2009; Thompson &McGraw, 2010) may have
resulted in low productivity in Nigerian companies as established by Esu (2009)
who attributed failure of businesses to ineffective and inefficient performance
management.
Feedback
is sometimes viewed as not accurate or useful by employees, potentially leading
to feelings of discouragement and anger (Brett & Atwater, 2001). Feedback
that directs the recipient’s attention to the task is more effective than
feedback that directs the recipient’s attention to the self and away from the
task. Negative feedback is often given to harass or punish the employees; it is
typically misperceived or rejected. Caruth and Humphreys (2008) states that
when performance feedback is not fair, timely and specific in highlighting the
employees’ progress or, if participants in appraisal perceive the system to be
unfair, the feedback to be inaccurate or the sources to be incredible, they are
likely to ignore the feedback they receive which will however lead to the
reduction in the levels of productivity. Feedback then becomes least useful
when it is inaccurate or untrue, biased due to favoritism or politics (Levy
& William, 2004).
Wright
(2007) states that compensation, such as pay and promotion is not coupled to
performance levels. This has however led to the failure of manufacturing
companies to reach their set objective as it is understood that an
organization’s success relies heavy on how much attention is paid to its
employee compensation policies (Wright, 2007).
Barton (2000) states that manufacturing industry over the years regard
employees as additional cost, hence do not remunerate them appropriately; most
times, employee’s compensation does not commensurate with the efforts and
skills that workers put into the activities. However Broady-Preston and Steel
(2012), establish it that compensation plans are not usually linked with
performance of the employee; and when this is happens productivity in the
organisation is threatened and as a result might have effect on the overall
productivity. In some organizations, their employees are been under-remunerated whereas some organizations
do not have good compensation administration programs which can be in form that
the employee promotion does not come in time, or pay packages are not
commensurate to the work they have done for the organization (Fein, 2010).
When performance appraisal is conducted, employees are always
discontent with the report (Sudarsan 2009). Studies have observed that the
reasons for this displeasure is that they see performance appraisal as a waste
of time and believe it is filled with
favoritism and inaccuracy, resulting in compromised assessment of employees’
accomplishments and capabilities (Cleveland & Williams, 1989; Cook &
Crossman, 2004; Jawahar, 2007). Mone and London (2010) states that there is
usually unfair evaluation of employee performance which makes them feel
insecure or discouraged leading to the development of poor relationship between
the employer and employee and thereby affects employee’s productivity. Line managers have frequently rejected performance
appraisal as being time consuming and irrelevant. Employees have disliked the
shallow nature with which appraisals have been conducted by managers who lack
the skills required. According to Armstrong and Murlis (2005) also assert that
performance appraisal too often degenerates into ‘a dishonest annual ritual,
which nonetheless is inevitable and when tend to be biased will have a negative
effect on employees and their level of productivity.
Therefore, in the light of
these issues, could it then be said that the adoption of performance management
can actually improve employee productivity of manufacturing industries in
Nigeria?
1.3 Objective of the Study
The main objective of
the study is to examine the effects of performance management on employee productivity
of selected manufacturing firms in Lagos State Nigeria. Other specific
objectives are to:
1. determine
the effect of performance appraisal on employee productivity of selected
manufacturing firms in Lagos State;
2. evaluate
the effect of feedback on employee productivity of selected manufacturing firms
in Lagos State;
3. investigate
the effect of training on employee productivity of selected manufacturing firms
in Lagos State and
4. ascertain
the effect of compensation on employee productivity of selected manufacturing
firms in Lagos State.
1.4
Research Questions
The proposed study
would answer the following research questions:
1. To
what extent does performance appraisal affect employee productivity of selected
manufacturing firms in Lagos State?
2. What
way does feedback affects employee productivity of selected manufacturing firms
in Lagos State?
3. How
does training affect employee productivity of selected manufacturing firms in
Lagos State?
4. What
is the effect of compensation on employee productivity of selected
manufacturing firms in Lagos State?
1.5 Hypotheses
The hypotheses for the
proposed study tested at 0.05 level of significance are as follows:
H01: Performance Appraisal has no significant effect on employee
productivity of selected manufacturing firms in Lagos State.
H02: Feedback has no significant effect on employee productivity of
selected manufacturing firms in Lagos State.
H03: Training has no significant effect on and employee productivity of
selected manufacturing firms in Lagos State.
H04: Compensation has no significant effect on employee productivity of
selected manufacturing firms in Lagos State.
1.6
Operationalization of Variables
The variables of this
study are operationalized in order to show the functional relationships between
them as follows:
X=
Independent Variable
Y= Dependent Variable
Where X = Performance management
Y= Employee
productivity
X
= (x1, x2, x3, x4)
Where: x₁ = Training
(T)
x₂ = Feedback (F)
x₃ =
Compensation (C)
x₄ = Performance
Appraisal (PA)
Y= f(x1, x2, x3, x4)
Y
= α0 + β1x1
+ μ …………………………………………..
Equation 1
Y
= α0 + β₂x₂ + μ
………………………………………….. Equation 2
Y
= α0 + β₃x₃ + μ
………………………………………….. Equation 3
Y
= α0 + β₄x₄ + μ
………………………………………….. Equation 4
Y=
α0+ β1x1+
β₂x₂+ β₃x₃+ β₄x₄+ μ
1.7 Scope of the Study
This study focused on
the effects of performance management on employee productivity of selected
manufacturing firms in Lagos State. Identified variables of performance
management was examined hence, because of the wide scope of manufacturing
industry in Lagos State; the researcher therefore limited the research to the
following sector group of manufacturing companies listed in the Nigeria Stock
Exchange, namely Cadbury Nigeria Plc, Dangote Sugar Refinery Plc, PZ Cuzzons
Nigeria Plc, Unilever Nigeria Plc, Honeywell Flour Mills Plc. The reason for
this choice is due to the fact that they have large number of employees; they
have survived the so called harsh operating environment in Nigeria and have
continued to dominate the Nigerian manufacturing industry.
The target respondent
consists of the total number of staff operating within the firm. The total
estimated figure for the population is given at (6,026) personnel as at
September 2015 by the Nigeria Stock Exchange List (2016). Information regards
this population number was sourced from the human resource department (HRD) of
the firms. Using Yamane (1967) formula for the sample size determination, the
study is able to arrive at a sample size of 490 respondents including a
provision of 30% non response rate. Sampling method to be used in this study is the stratified sampling
technique simply because of the stratification variables included in the scope
of the study. The study is based on manufacturing corporations that are listed
and operating on the Nigerian Stock Exchange as at June 2016. Lastly the study
would be carried out using descriptive survey design.
The general
understanding of this study would serve as a useful guide to management, human
resource practitioners, executive corporate managers and administrators most
especially in the manufacturing industries to understand how performance
management can enable organization in sensing any possible changes in the level
of productivity; thereby figure out strategies for identifying, encouraging,
measuring, evaluating, improving and rewarding employees ‘performance at work.
The findings of this study would also be helpful to
the manufacturing industries when setting policies on their specific
performance management system in order to adopt PM practices that are
consistent with the requirements of these policies and that best fit the nature
of the work performed and the mission of the organization.
This study would also enable the government create
better policies and regulations with regard to the research variables in a way
that can create an enabling environment for companies to survive.
Finally, the study
would be of immense benefits to the society by contributing to the body of
knowledge and stimulate more researchers’ interest in this field of study.
The proposed
operational definitions of terms for this study are:
Performance
appraisal: This is the process of assessment
carried out by a superior employer or supervisor to evaluate and judge the work
performance of an employee.
Feedback:
This is a helpful information or criticism that is given to an employee in
respect to work done (input) to improve performance (output).
Training: This is identified as the organized activity
aimed at imparting information and instruction to improve the employee’s
performance based on feedback report given as at the time.
Compensation: It is the monetary or non-monetary
rewards given to employee based on result of training activities and respective
improvement in performance of said employee.
Performance Management: This is the
performance appraisal, feedback, training and compensation process and
techniques used by an organization to achieve work objectives or goals.
Employee Productivity: It is the degree
at which work done brings about increase in performance of employee to achieve
set goals.
================================================================
Item Type: Postgraduate Material | Attribute: 117 pages | Chapters: 1-5
Format: MS Word | Price: N3,000 | Delivery: Within 30Mins.
================================================================
No comments:
Post a Comment