The Application Of Equity Theory In Sustaining Organizational Performance (A Study Of Guinness Nigeria Plc, Benin City)

The Application Of Equity Theory In Sustaining Organizational Performance (A Study Of Guinness Nigeria Plc, Benin City)

Abstract

This project work seeks to investigate the impact of the application of equity theory in sustaining organizational productivity using Guinness Nigeria Plc as a case study. Improving productivity is construed in this paper as putting in place the right structures that are capable of raising output from existing resources in the organization. All over the world, governments and businesses have been concerned about productivity improvement in organizations for a number of reasons. The first is that productivity is a major issue in foreign competition, and if government’s export promotion drive is to yield the desired results, productivity in particular must be optimized. The second reason is that the declining rate of increase in productivity is a major cause of monetary problems and inflation, and governments obviously should be interested in both.

The issue of how best to improve productivity had always been at the center burner in organization theory and practice since the onset of management learning. For decades, management researchers have been obsessed with the kinds of structure that will promote effective employee motivation and subsequently increase productivity. Data were collected for this study from both primary and secondary sources. The main instrument of data collection was the questionnaire of which 200 copies were sent to the organization under study and 120 of it were duly completed and returned for the study. The data were presented in tables as frequency, distribution in the data analysis; the techniques of simple percentages were used and chi-squire statistical tool was used to test the hypothesis. The research concluded based on the hypothesis tested that the application of equity theory has positive impacts on organizational performance.

Table of Contents

Preliminary Page(s)

• Title
• Declaration
• Approval
• Dedication
• Acknowledgement
• Abstract
• Table of Content

Chapter One

Introduction

• 1.1 Background of the Study
• 1.2 Statement of Problem
• 1.3 Objectives of the Study
• 1.4 Statement of Hypothesis
• 1.5 Significance of the Study
• 1.6 Scope of the Study
• 1.7 Limitation of the Study
• 1.8 Definition of Terms
• 1.9 Background of Guinness Nigeria Plc

Chapter Two

Literature Review

• 2.1 Introduction
• 2.2 Meaning of Productivity
• 2.3 Increasing Productivity Through the Use of Scientific Management Model
• 2.4 Increasing Productivity Through the Classical Organization Theory Approach to Appropriate Organizational Structure
• 2.5 Increasing Productivity Through the Use of Behavioural Model
• 2.6 Improvement of Human Effectiveness at Work is the Greatest Opportunity for the Improvement of Performance and Results
• 2.7 Equity Theory of Motivation
• 2.8 Assumptions of the Equity Theory
• 2.9 Adams’ Equity Theory
• 2.10 How to Apply the Adams’ Equity Theory

Chapter Three

Research Methodology

• 3.1 Introduction
• 3.2 Research Design
• 3.3 Population of Study
• 3.4 Sample Size / Sampling technique
• 3.5 Method of Data Collection
• 3.6 Data Analysis Techniques
• 3.7 Validity of instrument
• 3.8 Reliability of instrument

Chapter Four

Data Presentation, Analysis and Interpretation

• 4.1 Introduction
• 4.2 Data Presentation
• 4.3 Test of Hypotheses

Chapter Five

Summary of Findings, Conclusion and Recommendation

• 5.1 Introduction
• 5.2 Summary of Findings
• 5.3 Conclusion
• 5.4 Recommendations
• References
• Appendix
• Questionnaire

Chapter One

Introduction

1.1 Background of the Study

Traditionally, equity theory has been tested by monitoring the reaction of individuals to experimentally induced situations of inequity by intentionally under- or overpaying them (Landy & Conte, 2010; p. 375). It was expected that underpaid participants would lower the quality or quantity of their output, whereas people who were overpaid would raise the quality or quantity. In general, results supported the underpayment predictions, but not the overpayment ones, which may be due to the fact that inequity due to overpayment is not as stressful as inequity because of underpayment (Landy & Conte, 2010; p. 375). Most criticisms on equity theory concern the artificial laboratory conditions in which the theory has been tested. Yet, an even more pertinent issue is whether the theory as suggested by Adams (1965) really holds. Most studies are unable to answer this question as this requires the theory to be evaluated within each person’s value system.

The productivity of an organization is jointly determined by the efficiency with which the organization utilizes several available factors of production which invariably are scarce relative to the demand for them. As it were therefore, one can conceive of an equilibrium condition in productivity terms within given and stated constraints in an organization. Like the price scenario, several factors operate to make it difficult to optimize the use of human and other resources in the organizations such that the equilibrium condition is not achieved easily. Ouchi (1981) clearly pointed this out when he addressed the issue of what he labeled “the organizational dilemma” i.e. the organization’s search for rationality (technological determinism) and the human beings search for happiness (as in the doctrine of Hedonism).

Technology and labour are therefore the major factors/variables in the productivity equation, with the one or the other being emphasized at different points of the trade cycle. Like many economists would posit, during economic recession, emphasis is usually placed on the relationship between productivity and unemployment. According to McClelland and Winter (1969) during periods of rising prices, interest usually shifts to the problem of rising costs and the relationship between productivity and wages. As a result, many early attempts at increasing productivity emphasized technical optimization (as in scientific management) or social system optimization (as in human relations school).

All over the world, governments and businesses have long been very concerned about productivity improvement for a number of reasons. The first is that productivity is a major issue in foreign competition, and if any government’s export promotion drive is to yield the desired results, labour productivity in particular must be optimized. The second reason is that the declining rate of increase in productivity is a major cause of monetary problems and inflation, and government obviously should be interested in both. In this paper, we shall attempt a review and critique of a number of the better-known approaches to early management theories such as the scientific management, the classical organization, and the behavioural schools that emphasized performance improvement in the organization with a view to charting a new course in solving the problem of managing entrepreneurial organizations for optimal performance in this age of increasing competition.

1.2 Statement of Problem

Productivity is a major issue in foreign competition, and if government’s export promotion drive is to yield the desired results, productivity in particular must be optimized. The declining rate of increase in productivity is major cause of monetary problems and inflation, and governments obviously should be interested in both. The issue of how best to improve productivity had always been at the center burner in organization theory and practice since the onset of management learning. For decades, management researchers have been obsessed with the kinds of structure that will promote effective employee behaviour and subsequently increase productivity. Is there a one best structure in organizational design in pursuit of increased productivity? There is abundant evidence that the application of theories to improve organizational efficiency and productivity have not yielded the desired result because of over emphasis on technical optimization at the exclusion of human side of the enterprise.

Managers suffered frustration, because people did not always follow predicted or expected patterns of behaviour. Thus there was increased interest in helping managers deal more effectively with the “people side” of their organizations.

The effective motivation of workers is a problem in most organizations regardless of the theory applies to dealing with such motivation; this is probably because there is no implementation of the necessary procedure or techniques of motivation.

1.3 Objectives of the Study

The following are the objective of this research work:

1. To investigate the impact of the application of equity theory on organizational performance.
2. To examine the relationship between the application of equity theory and organizational productivity.
3. To examine the effect of the equity theory on the relationship between employers and employees.

1.4 Research Question

1. What are the impacts of the application of equity theory on organizational performance?
2. Is there any significant relationship between the application of equity theory and organizational productivity?
3. What are the effect of the equity theory on the relationship between employers and employees?

1.5 Statement of Hypothesis

The following research hypotheses formulated will be empirically tested and result gotten will serve as a spring hoard for recommendations. For the purpose of this study, two hypotheses will be formulated and tested.

Hypothesis I

• Ho: The application of equity theory has no positive impact on organizational performance.
• Hi: The application of equity theory has positive impacts on organizational performance.

Hypothesis II

• Ho: There is no significant relationship between equity theory and organizational productivity.
• Hi: There is a significant relationship between equity theory and organizational productivity.

1.6 Significance of the Study

At the end of this study, most organizations will understand that basic principles and process of application of management models and how it affect productivity and performance in organization. It will also serve as a guide for further researches.

1.7 Scope of the Study

The research is mainly based on the application of equity theory and how it affects organizational performance and productivity. This is done using Guinness Nigeria Plc, Benin City as a case study.

1.8 Limitation of the Study

One of the major problems encountered by the researcher is the monetary problem. There was no sufficient money to make the purchasing of all necessary materials for the research work. There was also the problem of meeting some personalities to get information from them. Because of that, the researcher found it difficult to collect all the necessary information. However, the researcher made do with the resources available for her research work.

1.9 Definition of Terms

i. Productivity:

Productivity is an average measure of the efficiency of production. It can be expressed as the ratio of output to inputs used in the production process, i.e. output per unit of input. When all outputs and inputs are included in the productivity measure it is called total productivity. Outputs and inputs are defined in the total productivity measure as their economic values.

ii. Motivation:

This is an inner state of minds satisfaction which energizes or encourages someone’s behavior towards the attainment of the objectives.

iii. Incentives:

These are provisions which encourage one to do the best.

iv. Productivity:

This can he defined as efficiency with which work is done, the amount of work done in a certain work.

Chapter Five

Summary of Findings, Conclusion and Recommendations

5.1 Introduction

In this chapter, the summary of findings, conclusion and recommendation of the study is highlighted.
However, before dwelling on these highlights, the need to restate the purpose of this study becomes very important. This work was carried out in a bid to investigate the application of equity theory in sustaining organizational productivity.

5.2 Summary of Findings

1. The findings of this research show that the effective application of equity theory has numerous advantages on sustaining organizational productivity. The first hypothesis that was tested shows that the application of equity theory has positive impacts on organizational performance. The organization under study (Guinness Nigeria Plc, Benin City) revealed that the application of equity theory and other scientific management theory have helped in achieving its organizational goals and objectives. Improving productivity is construed in this paper as putting in place the right structures that are capable of raising output from existing resources in the organization.
2. The second hypothesis shows that there is a strong significant relationship between equity theory and organizational productivity. All over the world, governments and businesses have been concerned about productivity improvement in organizations for a number of reasons. The first is that productivity is a major issue in foreign competition, and if government’s export promotion drive is to yield the desired results, productivity in particular must be optimized. The second reason is that the declining rate of increase in productivity is a major cause of monetary problems and inflation, and governments obviously should be interested in both.
3. The findings revealed that the issue of how best to improve productivity had always been at the center burner in organization theory and practice since the onset of management learning.
4. For decades, management researchers have been obsessed with the kinds of structure that will promote effective employee motivation and subsequently increase productivity. This findings show that the application of equity theory of motivation has a strong impact on job satisfaction and organizational productivity. there a one best structure in organizational design in pursuit of increased productivity? In this paper, attempt is made to review and critique a number of the better-known approaches to early management theories of motivation that emphasized performance improvement in the organization such as the equity theory, the classical management school and the behavioural science school.

5.3 Conclusion

In this research, the researcher has tried to do an overview and critique of some early organizational performance improvement theories. There is abundant evidence that the application of these theories to improve organizational efficiency and productivity has not in all ramifications yielded all the desired result because of over emphasis on technical optimization at the exclusion of human side of the enterprise. A fundamental error made by many of the proponents of the early productivity improvement theories such as the equity theory is that they emphasized the word ‘resource’ in human resources, and treated the human being as an appendage of the machine. They assumed that as a resource, man can be utilized as a machine, forgetting that as a person (i.e. human) can only be utilize himself/herself.

Indeed the human being unlike any other resource has absolute control over whether he or she works at all. Management’s high-handedness often seems to forget this but marginalizing people, fitting them to machines or coercing them do not always get the work done. Organizational efficiency and effectiveness can only improve where management has given all necessary incentives, motivation, developed the ability of workers to perform and there is already a willingness on the part of workers to perform better.

5.4 Recommendations

To enhance productivity therefore, the human resource with ability must always be motivated to perform and for organizations to achieve this, the following are suggested.

1. Provision of motivational incentives that meet the needs of the worker
2. Establishing high standards of performance (preferably determined by superior and subordinate together through management by objectives – MBO).
3. Providing the worker with the information he or she needs to control him/herself (Path-Goal Theory of Leadership).
4. Providing the worker with the opportunity for participation in management decision making that will give him or her managerial vision.

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