Impact of Fringe Benefits on Employee Performance

CHAPTER ONE

INTRODUCTION

1.1 Background Of The Study

The genesis of the cement industry in Nigeria can be traced to the 1950s, with the establishment of the first cement factory in Nigeria in about 11956 at Nkalagu with an installed capacity of 489000 metric tons per annual. With the increasing demand for cement in the economy, there was the growth of the construction industry coupled with the oil boom of the post-war period, which brought about improvements in the standard of living of the masses, there led to an increase in the demands for cement. To achieve Nigeria’s national objectives of self-reliance in the supply of industrial products and of import substitutes with this product locally, public and private sector organizations stepped up their operations geared towards increasing cement production. In view of ever-increasing demand, cement is in the early phase of development in Nigeria, primarily due to the growth of the construction industry. A large quantity of cement was still being imported. The commissioning of about (Nine) cement companies between 1956 and 978 was a deliberate effort by successive governments to sustain the growth in the construction and building industry and conserve hard-earned foreign exchange expanded on massive cement Importation. It was against this background that the delta cement company limited Ughelli was established to take advantage of the unsatisfied demand for cement. Between 1950-1962 the geological survey department of Nigeria conducted a geographical survey in the Aladja division of Delta province; they discovered two marble and limestone deposit in the Ughelli area. These mineral deposits were estimated at 10.23 million tonnes. Detailed chemical analysis showed that the marble and limestone deposit, which extended to a depth of 606m, was suitable for the manufacturing of cement. It appropriately blended with clay and literate.

Further survey shows that suitable clay and literate were equally around these locally. The western region did not make attempts to export these mineral deposits, but shortly after the creation of the mind-west region in 1964, the government became anxious to develop the region, now delta state, which sponsored the Ughelli cement company limited incorporated on the 18th of June 1964 as a private limited liability company with an equity share capacity of 2.2 million. This share was increased to N20 million following the expansion of the capacity of 50,000 tons per annum to 950,000 tons per annum. The company factory is located at km 154 delta Eruemekowtiarun Road, Ughelli, in Ughelli local government area Delta state. Its requested office is at No.6 reservation road press center building G.R.A Delta State. Delta Cement Company Limited is owned in partnership by three investors, and the percentage stock holding of partners are as follows:

1. Delta State Government 7 8-9%

2. Edewor and Co- Limited 20%

3. Onanife Caro and co- 1.1%

The cement plant was installed and ready for operation by 1966 but could not be commissioned because of difficulty in getting electricity installed for the supply of power. As this become clear, the state government directed the ministry of transport and work to assist in providing the factory with its own power generators. This was made available, which later set the commissioning in motion in 1969.

The Nigeria civil war perhaps made it impossible to employ the services of their required expatriate technical personnel to take on the management, which further two years without operation.

Early 1970. Immediately after the civil war messes, Jarpur Udyog, an Indian firm, was the factory management agent. The management agent commenced operation in March 1972.

1.2 Statement Of The Research Problem

Fringe benefits are non-pay benefits received by workers, such as housing, transportation, pensions, subsidized meals and discounts on company products. They are usually provided as a package of items. Their benefits are extra income to the worker and often satisfy the needs and wants not satisfied by salaries or wages. This goes a long way in enhancing employee morale. Most benefits plans do not allow the workers to make choices of their preferred range of benefits. Generally, benefits are offered on a take-it or- leave basis, with the exception of pension schemes, which are mandatory.

Employers of labour introduced fringe benefits on the sincere belief that employees were entitled to share in the prosperity of their organizations. It grew up as a result of the economic situation in the country. In a country where the government cannot cater for its people’s welfare, some organizations assume some of the responsibilities which otherwise should have been the duty of the government, which is the essence of this study.

1.3 Research Questions

The idea of the research work is therefore given the prominence of the problem militating against the effective administration of fringe benefits programmed in manufacturing industries. In order to help to find a solution to the foregoing problems, the following request was asked.

1. Does fringe benefit enhance workers’ performance?

2. Does fringe benefit yield benefit to management?

3. Are fringe benefits properly implemented in the organization?

1.4 Objective of the Study

The purpose of these studies is to:

To highlight the fringe benefit to workers

To explain to management the advantage inherent in fringe benefit

To know if the application of fringe benefit has been put to optimum.

To know the extent to which fringe benefit has to facilitate efficient employee services.

1.5 Statement of Hypotheses

The following hypotheses are drowning in the study:

(1) The application of fringe benefits in the organization’s Company does not benefit employees and employers.

(2) The relationship between employers and employees has been affected negatively by the implementation of fringe benefits.

(3) The application of fringe benefits in organizations has created a bad relationship between workers and employers.

1.6 Scope of the Study

The impact of fringe benefits on work performance intends to cover all the departments in Delta cement company Ughelli and how the management manages the work and its workers. It will cover the condition of services of the worker that enable management to give some incentive plans or schemes, or the extent of use of incentive plans, the determination of incentive trends to fringe benefits and why fringe benefits have expanded. For effective work, the research has chosen Delta cement company Ughelli as a case study, and above all, recommendations will be based on the findings of the study.

1.7 Significance of the Study

The findings of this research work are hoped to be of great benefit both theoretically and practically to management all organizations management and society at large.

Therefore the importance of the study lies in the fact that:

It will create awareness on the part of the management as well as the general public that fringe benefit factors are a general factor in the attitude of employees to work.

It will provide useful information and ideas to the leaders on effective ways to lead.

It is hoped that the result of this research work if implemented, will connect some of the defects inherent in the system so that all will work for the achievement of organizational goals.

It will provide useful ideas and information on the impact of fringe benefits on workers’ performance.

1.8 Limitations of the Study

In carrying out this project work on the management of fringe benefits with delta cement company Ughelli as a case study, efforts were made to arrive at logical conclusions. But the work is subject to certain limitations.

In the first place, the study was done under time constraints. It was difficult for me to combine classwork and fieldwork. This has minimized the extent to which this research work would have been done to a more meaningful conclusion; since the case study restricts the work to Ughelli cement company Ughelli, it will not be representative of all the manufacturing companies in Nigeria.

In the second place, there were many financial limitations due to the high cost of transport fair to Ughelli to collect data cost of materials to bring this work to a good standard.

Finally, some officials refused to give out information’s saying that the disclosure of such information was to expose the company’s secret and that they may lose their job by disclosing this information. Most of the senior staff were always very busy with their work, thereby postponing scheduled tied interview appointments because of the pressure of work. This led to visiting the company several times to administer questionnaires and personal interviews.

1.9 Operational Definitions of Terms

Incentives: These are inducements given to an organisation’s members to carry out organizational objectives. The amount of inducement workers can measure incentives get from the organization and the extent to which such inducement enhances their performance. Also, it describes wage payment plans that tie wages directly or indirectly to productivity.

Management: This is the process of planning, organizing, directing, coordinating and controlling men and material for the purpose of optimum achievement of organizational objectives. In this study, management refers to the group of people that is the executive organ of the company responsible for the people’s optimum achievement of organizational objectives.

Moral: Moral is defined as the capacity or workgroup to pull together persistently and consistently in pursuit of commonly defined objectives and purposes. Moral will also be referred to as the trust or confidence that the individual has in himself. It is in this ability to carry out organizational functions assigned to him and the reactions with which he will be able to meet the future challenge in carrying out organizational goals.

Motivation: Motivation is the function which precipitates an employee to action. Motivation, as will be used in this study, refers to those factors that arouse employees to action. It could be measured by identifying the various needs of individual workers and how much needs influence the behaviour of the workers in the organization.

Fringe Benefit: Fringe benefits are a substantial portion of many companies’ total labour costs. There are two main types of fringe benefits direct and indirect benefits may comprise profit-sharing co-partnership sick pay, and pension scheme payments are generally made in cash. Indirect benefits are aimed at improving morale and increasing the stability of employment.

Employee Incentive: This system of paying employees under the individual’s earnings is directly, automatically and promptly related to his output by a predetermined formula relating his actual performance to a specific standard performance.

Performance: This is the result of the employee’s effort in achieving the organizational objective. In other words, employee performance is the aggregate result of the effort in achieving the goals of the organization. It can be measured by accessing the overall results of the organizational goals.

Workers’ Productivity: Workers’ productivity is the measure of how well resources are brought together in the organization and utilized for accomplishing a set of results.

Organization: An organization is the coordination of the activities of a number of people for the achievement of common goals through the division of labour and functions and also through the hierarchy of authority.

Reward: This is the benefit the employee gets from his contribution towards achieving organizational goals.

Tangible Incentive: Tangible incentives are inducements that are material, either monetary or non-monetary.

Promotion: This refers to the advancement of the individual employee from one grade to another promotional method of an organization, which the following criteria can measure. The frequency in which people are promoted. The yardstick is used in the promotion of people. The reaction of the workers to the organization’s method of promotion.

Value: This is the importance a worker attaches to the different aspects of the welfare scheme on a scale of preference.

Immediate Needs: These are the needs that have to do with the immediate requirement of the workers.

Future Needs: These are the needs that have to do with the future requirement of workers.