Chapter 1: Introduction
Background and Rationale
The manufacturing sector of Nigeria will directly support job creation in 2022, with a contribution of almost 9% to the national GDP (Enyindah & Bagshaw, 2022). It embraces several industries, ranging from foods and drinks, clothing, chemicals, and pharmaceutics to light and heavy industries. The sector in Nigeria has always been associated with growth. It is competitive, but at the same time, there are heavy problems that make it economically and sustainability unattractive. Nonexistent or uncoordinated government policies mark the challenges in addition to systemic inadequacies, including the deficiency of well-trained experts (Mahe et al., 2017). Thus, shortages of specialized PCB producers worsen the capacity of the manufacturing sector to expand, retain, and attract industry expertise.
The impact of a remuneration system inefficiency is also another reason the employee’s effectiveness could be devalued in the Nigerian manufacturing sector. Besides morale, which is instrumental for the happiness of the person, there are also job performance, replacement, and exit procedures that are the tools for attraction, occupancy, and motivation of employees. Employees psychologically attach job security as a value for their past, present, and future contributions to the company’s progress. (Ibojo & Asabi, 2014). Although at the level of very competitive business, companies must deal with such involving drafting of compensation service plans, or they may cease to exist in a competitive market. It is particularly relevant in the case of the manufacturing sector, where the employee turnover rate typically grows faster because these industries tend to be growing faster and attract the most skilled employees with wide experience and many innovative ideas; hence, the continuous search for choices to become employed.
In addition, the “no payment structures” factory causes different problems in the Nigerian manufacturing sector. Suppose we look into the errors of unsuitable wage policy, high employee turnover, and lack of effectiveness, which are normally characteristic factors of HR policies of those organizations that include their pay policies inappropriately (Danlami, 2011). However, among these challenges, they all make a significant impact on managing employees as organizational morale can be affected through discouragement, dissatisfaction, and dismemberment of the unit, which further leads to the downfall of the company.
According to Nwafili et al. (2023) demonstrated the connection between compensation control and the performance level of employees within the manufacturing industry. This study highlighted that the most appropriate reward programs are going to present a possibility for employees to be more efficient in their work. Additionally, Aliku et al. (2020) emphasized that compensation management promotes the retention and attraction of employees with required skills because of enhancing performance in manufacturing businesses. It is reflected that the design of compensation highly matters to companies that look forward to a competitive edge and attainment of the target goals.
However, many constraints are responsible for manufacturing organizations not having excellent compensation policies. These challenges comprise limited funds, inadequate workforce, and unfavorable government policies, which are supportive of the manufacturing industries (Tarurhor, 2021). These problems do not allow the organizations to develop or even follow these strategies. Thus, employees might think that being in the company is not worth their time and money. In other words, the research aims to identify the obstacles that stand in the way of the effective implementation of compensation strategies and to offer recommendations aimed at dealing with these obstacles.
This work is relevant to the extent that it provides a conclusive and analytical assessment of the effect of motivational strategies on the productivity of employees in Nigerian manufacturing territories. Besides this, the study will add to the existing literature by focusing on the main determinants of compensation and offering recommendations to organizations on how they can improve their compensation practices. Additionally, this research is important for policymakers who are creating policies to boost the manufacturing sector and for personnel managers who are designing potentially effective compensation systems to improve employee performance.
Problem Statement
The Nigerian manufacturing industry is presently going through lots of hurdles that are affecting its competitive abilities, among others, which include the absence of effective government policies, infrastructural deficiencies, and a lack of skilled labor. These issues, however, add to the difficulty of keeping talent and encouraging and hiring employees, all of which may negatively influence company productivity. Danlami (2011) pointed out that the malfunction of the reward policy in machine construction has led to dissatisfaction among employees, a high staff-churning rate, and reduced efficiency. This work will tackle these problems by seeking to investigate how the issue of compensation strategies interacts with employee performance in the industry under study.
Aims, Objectives, and Research Questions
This study will attempt to explore how employers’ pay policies affect employee achievement in the formal manufacturing industry in Nigeria. To fulfill this purpose, the listed objectives under it should be listed down:
- To examine the different compensation strategies used in the Nigerian manufacturing sector.
- To assess the impact of compensation strategies on employee motivation and satisfaction.
- To analyze the relationship between compensation strategies and employee performance in the manufacturing sector.
- To identify the challenges faced by organizations in implementing effective compensation strategies.
- To provide recommendations for organizations to improve their compensation strategies and ultimately enhance employee performance.
The research questions that will guide this study are:
- What are the different compensation strategies used in the Nigerian manufacturing sector?
- How do compensation strategies affect employee motivation and satisfaction in the manufacturing sector?
- Is there a relationship between compensation strategies and employee performance in the Nigerian manufacturing sector?
- What are the challenges faced by organizations in implementing effective compensation strategies in the manufacturing sector?
Scope and Limitations
The aim of the study under focus is the exploration of the manufacturing sector in Nigeria, especially in the manufacturing sector. The research will consider the employees in all departments and ranks, such as managers, supervisors, and production workers. The approach has some flaws, including a lack of reliable data and the time restrictions it imposes. The nature of this research will be based only on the published materials, thus disregarding the unpublished and grey literature.
Methodological Approach
The study will be a systematic review that analyzes the literature on compensation strategies and employee performance in Nigeria’s current situation in the manufacturing sector. Such an approach aims to read, evaluate, and grade relevant papers, prepare a summary that presents the results of the papers, and draw conclusions based on the available evidence (Jean et al., 2017). It is a systematic disposition that enables us to make a fair judgment without any partiality.
Dissertation Structure
The structure of this dissertation is five-chaptered. The first chapter is the introduction, which generally provides the study’s background, problem statement, objectives, aims, research questions, scope, limitations, and methodology. The second chapter is the literature review chapter, which involves an in-depth analysis of the existing articles on employee performance and compensation strategies in Nigeria’s manufacturing sector. Chapter 3 will cover the methodology as well as data collection and analysis methods. Chapter 4 will show the results and findings of the study, while the last chapter will put forward the discussions, conclusions, and recommendations based on the study results.
Significance of Study
This research work will offer a new avenue to the existing stock of knowledge through the provision of a detailed analysis of the impact of compensation strategies on employees’ performance in Nigeria’s manufacturing sector. The result of this research will provide very instrumental grounds for an organization in the sector to develop effective compensation policies that will be able to fire up worker’s motivation, elation, and, in the end, performance. Furthermore, the practical value of this given study lies in policy-making and human resource professionals who are in charge of developing strategies for organizations to overcome obstacles facing companies in implementing compensation and reward strategies.
Summary
This researcher intends to evaluate the influence of retribution approaches on employees’ performance in the Nigerian manufacturing sector. It is influenced by the complexities of the sector, which struggles with a staffing shortage, employee retention, and low staff morale. The structured approach will be used to examine the accomplished literature on the issue, and the findings can be useful in practice for organizations, policymakers, and people who deal with human resource issues in the manufacturing industry.
References
Aliku, I. H., Morka, T. O., & IGEMOHIA, F. (2020). Compensation management and employee performance: Manufacturing industry in focus. PalArch’s Journal of Archaeology of Egypt/Egyptology, 17(7), 8792-8810.
Danlami, A. S. (2011). Strategic human resource management and organizational performance in the Nigerian manufacturing sector: An empirical investigation. International Journal of Business and Management, 6(9), 46.
Ibojo, B. O., & Asabi, O. M. (2014). Compensation management and employee performance in the manufacturing sector, a case study of a reputable organization in the food and beverage industry.
Jean, K. N., Ngui, T. K., & Robert, A. (2017). Effect of compensation strategies on employee performance: A Case Study of Mombasa Cement Limited. International Journal of Innovative Social Sciences & Humanities Research, 5(3), 25-42.
Nwafili, A. K., Odita, A. A., & Kifordu, A. A. (2023). Enhancing employee performance through compensation management in the manufacturing industry. Journal of Global Economics and Business, 4(15), 96-116.
Enyindah, M. A., & Bagshaw, K. B. (2022). Compensation policy and employee productivity of manufacturing companies in Rivers State, Nigeria. International Academic Journal of Management & Marketing Annals, 8(1), 45-57.
Tarurhor, E. M. (2021). Mediation of government policies on compensation strategy and employee performance: A structural equation model approach. Abac Journal, 41(2), 243-258.
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