THE ROLE OF INCENTIVES AND FRINGE BENEFITS ON EMPLOYEES PRODUCTIVITY

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THE ROLE OF INCENTIVES AND FRINGE BENEFITS ON EMPLOYEES PRODUCTIVITY (A CASE STUDIES OF GREENFIELD METALS LTD AND ALUMINIUM-GOLD ENGINEERING LTD)

ABSTRACT

This research work is to study the role of incentives and fringe benefits on employee’s productivity.  Case studies of Greenfield Metals Ltd and Aluminium-Gold Engineering Company Ltd.

From the course of the study, it was discovered that majority of the employees accepted that:

1.       Incentive and fringe benefit based on performance can lead to increased productivity

2.       Proper use of incentive and fringe benefit as a motivational tool can lead to increased productivity.

3.       If various incentives and fringe benefit are applied, it can activate worker and thereby lead to greater output. While the least number of the employees seem not to know the criteria on which the management is using to administer the incentive and fringe benefit.  It was on that that it was recommended to the management to make a copy of the edicts/condition of service to every employee of the company so as to enable them carry all the employees along, and the employees will equally know their rights and entitlement when they become more committed to their job.  And this definitely increases employee’s productivity

CHAPTER ONE/INTRODUCTION

1.1     BACKGROUND OF THE STUDY

A major determination of the success of an organization is the effective management of the human resource, which is the controller of all other resources available to the organization.  The effective management of man will lead to increase in his productivity, which translates to increase in the productivity of the organization.

In discussing productivity, labour productivity has always been of prime importance because all other factors of production become productive only in association with labour.  The need for the effective management of this prime productivity factor is very crucial in Nigeria today.  This is due to the abundant man power resources facing limited capital in the country.

Man is a very complex being and managing man to increase his productivity involves motivation, hence the purpose of incentive and fringe benefit is to create conditions that will make it possible for the workers to work with increased zeal and group moral satisfaction can be effectively achieved.

Furthermore, labour productivity can be influenced by using Mac Gregors theory X and Herzberg’s postulation.

Hence this paper is to study the response of workers to the role of incentives and fringe benefits on employee productivity using an Engineering Company and Mining Industry as case studies.

Therefore when a group of employees are observed on the job, one may notice the differences in performance.  Some people do an excellent job, while others are marginal in their output.  Some employees come early, put in hard day’s work and stay late, while others are always taking a break and are never around when needed.  In some cases, the best worker may produce two or three times as much as the poorest worker.  How could these differences be explained?  Well, obviously certain trait and abilities are attributed to the productive employee.

The person may be intelligent, aggressive and extroverted.  But, there is more than just ability.  There is something willful about the differences between the employees.  Somehow, the productive employee is described as more motivated or driven than the other person.  Motivation as it is being described here implies a willful act on the part of an individual.  The employee may choose to try hard and to exert a lot of effort or may choose just to get by (Akanni 1987: 242) and thereby bring about increase output.

The purpose of motivation is to create conditions in which people are willing to work with zeal, interest and enthusiasm: with a high sense of responsibility, loyalty, discipline and pride and with confidence in a most cohesive manner so that the goals of an organization are achieved.

HISTORY OF THE COMPANIES

  • GREENFIELD METAL LTD

Greenfield Metal Ltd is a mining industry that deals in all kind of solid minerals.  A young male entrepreneur who studies Geology in one of the University in the United States of America established it in the year 1999.  For his own interest and that of his country he left all the good things and sundries in U.S.A to establish in Nigeria.

The company was first located at Okene Quarry of Western part of the country.  But because of tribalism and ethnic problems, it relocated at Abakalikki in Ebonyi State and the head office is also relocated from Lagos to Port Harcourt.  The company has also acquired three more sites from Isagu Community in Enugu State.

It grows from a staff strength of about thirty five people and sixty contract staff to sixty five (65) permanent staff and one hundred and twenty (120) contract staff, they are casual works for extortion and mining of the solid minerals.

It deals on solid minerals like Zinc Ore, Iron Ore and Silver Ore.  It mines and exports to foreign industries in the United States of America.

Because of the prevailing harsh economic realities, Greenfield Metals Ltd, is still operating manually, but very soon it will go mechanically to enable it meet up with the customer’s request on the number of metric tons to be exporting in a month.  As at now it has gotten international financiers to enable him achieve its goal.

As a company with an increasing number of labour forces, it is quite interesting to study the role of incentives and fringe benefit in the employee productivity.

  • ALUMINIUM-GOLD ENGINEERING LTD

A young male entrepreneur, who graduated from Engineering Department of University of Nigeria and has worked with some reputable Engineering company for so many years, established this company in the year 1999.

It grew from the staff strength of thirty-five (35) people to about forty (40) permanent staff and seventy-five (75) contract staff in recent times.  It has been on contract with Nigeria Advertising/Outdoor Service Industries and deals on engineering work like fabrication and installation of Advert billboards, construction of windows and gates, buildings, etc.

Due to the poor standard of economy in the country, the researcher has decided to study how the management of this company meets up with their worker’s demand, especially on the role of incentives and fringe benefit in the employee’s productivity.

1.3     IDENTIFICATION OF PROBLEM

Main Problem

These research studies the role incentives and fringe benefit play in an employee of a company so as to increase yield or output.

Sub problem 1

This study sets out to assess how incentive payment and fringe benefit, based on performance, are geared towards activating workers so as to increase productivity.

Sub problem 11

This study sets out to analyze the use of various incentives and fringe benefits, and how they can activate workers so as to increase productivity.

Sub problem 111

This study sets out to analyze the attitude of workers towards work if the incentive and fringe benefit is based on workes’ individual needs.

AIMS AND OBJECTIVES OF THE STUDY

(Mamoria 1992: 652) shows that motivational techniques are utilized to stimulate employee’s growth.  The chairman of General foods in India once said that one can buy a man’s time, physical presence at a given time, measure number of skilled muscular motions per hour in a day, but his initiative, loyalty and devotion to duty cannot be bought.

Thus, this project attempts to analyze the role of various incentives and fringe benefit in employee productivity with the following objectives.

1.       To establish the relationship between workers motivation and incentives and fringe benefits scheme.

2.       To know various ways incentives and fringe benefits are given out and to know those who receives it.

3.       To know if incentives and fringe benefit schemes should be used or not.

SIGNIFICANCE OF THE STUDY

This work is to encourage the use of incentives and fringe benefit as a motivational factor in a company.

SCOPE AND LIMITATION OF THE STUDY

This study is carried out in Mining Industry at Isiagu in Enugu State with the Head Office at Port Harcourt in Rivers State and Engineering Company at Maryland in Lagos State to show the role incentive and fringe benefit scheme played in increasing employee’s productivity.

Hence its boundaries are defined and the study is limited due to the following factors:

1        COST:       Though the best judgement could be arrived at, if more than two companies were to be used and if all the workers were to be interviewed, but the researcher has decided to work on only two companies and grant interview on only 54% of the workers in the mining industry due to the distance from Enugu to Lagos and Port Harcourt.

2.       TIME:        Given a short period of time, it’s difficult to do the Research in so many companies and interview all the workers in each company.

HYPOTHESIS

RESEARCH HYPOTHESIS 1

Incentive payment and fringe benefit based on performance motivate workers to greater or increased productivity.

RESEARCH HYPOTHESIS 11

Proper use of incentive and fringe benefit as motivational tools can activate workers and lead to increase productivity.

RESEARCH HYPOTHESIS 111

Proper use of incentives and fringe benefit based on workers’ individual needs can change the attitude of workers towards work and increased productivity.

DEFINITION OF TERMS

For the proper understanding of this work, various terms used need to be defined.

  • INCENTIVE:  Can be regarded as something either financial or non-financial, which encourages or incites one to greater productivity.
  • SALARY:  Payment for regular employment on a yearly basis usually paid monthly (Hornby Cowie and Crimson, 1874:751)
  • FRINGE BENEFIT:  These are additional compensation to salaries and wages (Honby et al 1974:346)
  • WAGES:  Payment made or received for work or services, usually paid weekly or daily.
  • MOTIVATION:  Motivation has been variously defined by scholars, but it is a Latin word meaning to move and human motives are internalized goals within individuals (Mamoria 1992:62), some scholars see it as a Inner state that energizes, activates or moves and directs or channels behaviour towards goals, it is a willingness to expand energy to achieve goal or reward.

Motivation is the stimulation of any emotion or desire operating upon one’s will and prompting or driving him to action (Lillis J.C. 1969:7)

Moreover, according to Akpala (1993:4) it is defined as the stimulation of people to action to accomplish desired goals.

  • OPERATIVE:  Ordinary workers below a managerial level.
  • EXECUTIVES:  Workers at managerial level