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COMPARATIVE ANALYSIS OF INCENTIVES PROVISION IN FOREIGN AND INDIGENOUS FIRM AND IT’S IMPACT ON PRODUCTIVITY

CHAPTER ONE

INTRODUCTION

1.1       Background of the Study

Productivity could be considered as a relationship between output and input also could be expressed as the ratio of output to input. Productivity has been defined from different perspective, Kaming (1997), Robert (1972) and Owolana (1997), approached defining productivity from resources flow perspective, that productivity is the relationship between inflow relative to outflow of resources. Gilson et al., (2004), Rebecca et al., (2000) and Fagbenle et al., (2004), posited that high productivity is a goal that an organization that desire long-term survival should pursue, thus companies in Nigeria are currently applying various incentives schemes to motivate their employee in order to gear them towards high productivity through applying financial or non-financial incentive scheme. In a bid to survive in the global economy companies carries their campaign to rural area through establishing of service outlets, employee of such an organization or company must be highly motivated through application of financial and non-financial incentive to be able to elicit high productivity from such ventures Dieleman et al., (2003).

Futhermore, certain category of employee deserves motivation as regards the nature of their task Dieleman et al., (2003) in Financial and non-financial incentive: identifying factors for job motivation of rural health workers in North Vietnam, what incentives motivate health workers in rural parts of Vietnam? Recorded that, a prerequisite of a well-functioning health system is a well-motivated workforce and that both financial and non-financial incentive scheme could be used. However, general school of thought classified incentives into three broad categories: Financial, semi-financial and nonfinancial incentives. Financial, semi-financial and non-financial incentive schemes that could be used, according to McCaffer and Harris (2005) in Workforce motivation includes: sharing, day-work, piece-work in financial incentives category while the non-financial incentives includes: improved working conditions, salary increase, relationship with superior, good company policy, all these motivates worker unto higher productivity.

 The semi-financial incentives on the other hand, as stated by Kelly 2007, McCaffer (2005), Amusan (2000), Majid et al., (1996), Wahab (1992) and Robert (1972) are categorized as follows: pension scheme, holidays-with-pay, restaurant facilities, telephone bills, expense account, sport facilities, company cars, good basic salaries and career promotion prospects for employee. Reinforcing this line of though Olomolaiye et al., (1988), Ogunlana et al., (1991) and Amusan (2000) presented the perception of operatives on non-financial factors of incentives as having demotivating effect on job satisfaction; the factors such as: little production, poor supervision, unsafe working conditions, lack of participation in decision making, under-utilization of skills, poor communication with management, incompetent crew colleagues, reducing work opportunities, productivity urged with indifference, lack of recognition of good effort and poor treatment by supervisor.

However, success in application of work incentives aimed at generating higher levels of performance and production output will largely depend on establishing a careful balance of the many interrelated motivation factors necessary in achieving workers satisfaction (Walter et al., 1974, Talbot 1976 and Fagbenle et al., 2004). To this end therefore, the study tend to discover intrinsic facts that hamper productivity taking a holistic approach to the subject matter.

Productivity could be considered as a relationship between output and input also could be expressed as the ratio of output to