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PERFORMANCE MANAGEMENT AND ITS EFFECT ON PRODUCTIVITY OF NIGERIAN BREWERIES PLC, AMA ENUGU STATE.

Project topic for Business Administration department.

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Performance management comprises all activities that guarantee that organizational objectives are constantly being attained in an efficient and effective manner. Normally, performance management focuses on the organizational performance, employees, departments, and to some extent, the processes that are usually employed to build a service or product, as well as other key areas in an organization that would lead to employee productivity (Homayounizadpanah & Baqerrkord, 2012). Baron and Armstrong define performance management as an integrated and strategic approach towards enhancing the employee and organizational productivity by bettering the performance of employees through developing the individuals and teams capabilities (Baron & Armstrong, 2007).  

Performance management is actually a broad term that was initially used in the 1970s to depict a technology-science entrenched in application methods basically intended to assist the institutional managements to manage both results and behavior, which are the two vital aspects of what is commonly identified as performance (Homayounizadpanah & Baqerrkord, 2012). The effect of performance management practices on organizational performance and employee productivity is an important topic in the fields of human resource management and industrial relations. There is an increasing body of work that argues that the use of performance management practices that take into account comprehensive employee recruitment and selection procedures, employee involvement and training, can improve the knowledge, skills and abilities of an organizations employees while at the same time increase their motivation, reduce malingering and enhance the retention of quality employees as well as their productivity.

Bloom, Dorgan, Dowdy and van Reenen (2007) concluded that it is only by having strong and effective management practices in place that multinational companies have been able to replicate the same standards of performance across different regions, cultures and markets. Today, they are reaping the benefits of this effort in terms of higher productivity, better returns on capital and more robust growth. This goes to show that well laid out structures can be replicated and still be effective in different regions hence promoting productivity. Productivity is a measure of the efficiency of a person, machine, factory, system such as in converting inputs into useful inputs (Marsor, 2011). The sources of productivity growth and production volume growth are explained by Jorgenson et al. (2014) as follows: productivity growth is seen as the key economic indicator of innovation. The successful introduction of new products and new or altered processes, organization structures, systems, and business models generates growth of output that exceeds the growth of inputs. This results in growth in productivity or output per unit of input. Income growth can also take place without innovation through replication of established technologies. With only replication and without innovation, output will increase in proportion to inputs (Jorgenson et al., 2014).

Employee productivity is an assessment of the efficiency of a worker or group of workers. Productivity may be evaluated in terms of the output of an employee in a specific period of time. Typically, the productivity of a given worker will be assessed relative to an average for employees doing similar work. Because much of the success of any organization relies upon the productivity of its workforce, employee productivity is an important consideration for businesses. In short, productivity is what comes out of production. Managers of every business organization are charged with the responsibility to motivate their employees to achieve organizational goals. Most organizations wonder how they can sustainable performance among its employees. This means looking at what can be done to encourage the employees to give their best though various reward systems in whatever work they do in the organization (Armstrong, 2001). Productivity sustenance is therefore a concern that many organizations are looking at addressing via various means so that employees can still remain productive in the long term. Performance management therefore needs to be tested in any particular setting taking into consideration how individuals in any particular organization are motivated and the extent to which they are most effective for a particular organization. Thus it is on this basis that the study aims to determine the effect of performance management practices on employee productivity with a focus on Schindler Limited.

Schindler Limited was established in 1874 in Switzerland. The company is a leading global provider of mobility solutions being a world leader in the production of escalators and elevators with more than 100 national companies, 54,000 employees and over 1,000 branches worldwide. Its innovative and environmentally-friendly access and transit- management systems make an important contribution to mobility in urban societies. Schindler Kenya is a limited liability company whose mandate is part of the Schindler group serving the Eastern Africa region. The core business is to manufacture, install, service and modernize elevators, escalators and specializing in the latest technology engineering, as well as mechanical and microprocessor technology products designed and rigorously tested for safety, comfort, efficiency and reliability. Its other offerings range from cost effective solutions for low-rise residential buildings to sophisticated access and transport management concepts for high-rise buildings. Also covered is the maintenance of existing portfolio and specialized modernizations (Schindler Limited, 2015).

As a result of globalization, liberalization and completion, Schindler redefined its vision and mission statements. Schindler vision is “to be the best service provider in the industry for its customers through the continued development of highly innovative and user friendly mobility solutions and to deliver these to the world market in the future”. The mission statement is “leadership through customer service by providing high quality mobility solutions and services at all times”. The management of Schindler embarked on a program to build a new image of an efficient and highly responsive organization based on the premise that the success and public image of the company will depend largely on the quality of service delivered to both internal and external customers. One of the primary tools or change drivers identified as key to the change process was efficient performance management practices (Schindler Limited, 2015).

In this response, the Schindler management established an institutional strengthening function within the human resource function to redefine the performance management practices of the employees so as to enhance their productivity. A performance management policy was introduced in 2011 based on the philosophy that employees are the most valuable asset and the attainment of corporate objectives depends on how efficiently and effectively the staff carry out their responsibilities. It was the responsibility of management, all employees and unions concerned to sustain jobs and to ensure continued profitability of the company. The performance management plan had five components: setting objectives, sharing objectives, implementing objectives, view and track objectives progress, manage appraisals and review performance contracts .The purpose of appraisal at Schindler is for annual performance review done once every financial year (Schindler Limited, 2015).

1.2 Statement of Problem

There are findings that suggest performance management practices do have the same benefits to different companies that conduct performance reviews every year (Singh, Kochar & Yukse, 2010). There are findings that suggest performance appraisal can be more effective on employee productivity if carried out twice a year, others emphasize that the best practice requires the evaluation of performance to take place on a regular basis (Moulder, 2011; Gupta & Upadhyay, 2012). A number of studies have suggested quarterly performance updates (Cook & Crossman, 2014; Singh, Kochar & Yukse, 2010). From various mixed results, the current study aims to investigate whether continuous performance appraisal review can identify poor performance or identify existing issues and corrective measures to be designed to improve employee productivity.

There are a number of issues facing the effective and efficient use of the reward system in boosting employee productivity. From a number of studies conducted by Erdogan (2012); Fletcher (2011); Broady-Preston and Steel (2012), they have established that linking rewards with performance leads to commitment employees in the appraisal system. Mone and London (2010) study found that that unfair evaluation of employee performance makes them feel insecure or discouraged leading to the development of poor relationship between the employer and employee. Caruth & Humphreys (2008) recommends that performance feedback should be fair, timely and specific in highlighting the employees progress in carry out their responsibilities (Gupta & Upadhyay, 2012) and the feedback should be often (Lee, 2005). It is against this backdrop that this study tends to examine performance management and its effect on productivity with particular reference to Nigeria Brewery Plc Ama.

1.3 Objectives of the Study

The general objective of the study was to evaluate performance management and its effect on productivity with particular reference to Nigeria Breweries Plc Ama.

Specifically, the study sought to;

investigate the influence of performance appraisals on profitability of Nigeria Brewery Plc Ama.

determine the influence of reward systems on organizational efficiency of Nigeria Brewery Plc Ama.

ascertain the effect of performance feedback on organizational effectiveness of Nigeria Brewery Plc Ama.

1.4 Research Questions

Based on the objectives, the researcher asked the following questions

What are the effects of performance appraisals on profitability of Nigeria Brewery Plc Ama?

To what extent does reward system affect organizational efficiency in Nigeria Brewery Plc Ama?

How does performance feedback affect organizational effectiveness in Nigeria Brewery Plc Ama?

1.5 Statement of Hypotheses

The researcher developed the following null and alternative hypotheses to guide the study;

Ho:      Performance appraisals do not have significant effect on profitability of Nigeria Brewery Plc Ama.

H1:       Performance appraisals have significant effect on profitability of Nigeria Brewery Plc Ama.

Ho:      Reward systems do not have significant effect on organizational efficiency Nigeria Brewery Plc Ama.

H1:       Reward systems have significant effect on organizational efficiency Nigeria Brewery Plc Ama.

Ho:      Performance feedback does not have significant effect on organizational effectiveness in Nigeria Brewery Plc Ama.

H1:       Performance feedback has significant effect on organizational effectiveness in Nigeria Brewery Plc Ama.

1.6       Significance of the Study

So many people will benefit from this study. Among them are the management of organizations, the researcher, the universities and the general public. The management of various organizations will benefit from this study because they will understand the relationship between performance management and organizational productivity. The researcher will benefit from this study as it is a partial requirement for the award of Bachelor of Science (B.Sc) Degree in Business Administration. The universities will benefit as the research work increases their data bank. The general public will benefit as the study will help in job creation and therefore reduce crime rate in the society.

1.7       Scope of the Study

This study focused on performance management and its effect on productivity. The organizational coverage is Nigeria Brewery Plc Ama. The research study was carried out between 2010-2019.

1.8       Limitations of the Study

The researcher encountered some impediments in the course of carrying out this research work. Among them were uncooperative attitude of respondents and lukewarm attitude in getting’s materials.

 Uncooperative Attitudes of Respondents: The respondents of Nigeria Brewery Plc Ama were reluctant in giving out information, but when they confirmed that the research was purely for academic purpose they gave out useful information necessary for the research work.

Lukewarm attitude in getting materials:

 The researcher was initially reluctant in getting materials for this study but with the assistance of the university ubrarian and through the internal the researcher was able to get the necessary material needed for the study.

1.9       Definition of Terms

The following terms were defined to help clarify the work.

  • Performance: The accomplishment of a given task measured against preset known standards of accuracy, completeness, cost and speed.
  • Performance Management: This is a systematic approach to the management of people using performance goals measurement feedback and recognition as a means of motivation to realize their maximum potential.
  • Organizational Productivity: Organizational productivity is about improving the efficiency and effectiveness of public and private sector organizations.




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