Effect Of Profit Sharing Scheme On Employee Performance In Nigerian Retail Firms
This study was carried out on profit sharing scheme on employee performance in Nigerian retail firms in Gboko Local Government Area of Benue state. The survey design was adopted and the simple random sampling techniques were employed in this study. The population size comprise of staff of retail firms in Gboko local government area of Benue state. In determining the sample size, the researcher conveniently selected 147 respondents and 141 were validated. Self-constructed and validated questionnaire was used for data collection. The collected and validated questionnaires were analyzed using frequency tables, and mean score tables. While the hypotheses were tested using chi-square statistical tool. The result of the findings reveals that profit sharing scheme is carried out in Nigeria retail firms, profit sharing scheme affects employee performance in Nigerian retail firms,. Furthermore, The benefits of profit sharing in Nigerian retail firms includes: Increased employee loyalty, improve efficiency and productivity, tax benefits. Therefore, it is recommended that salary survey and job evaluation vis-a-vis total rewards received to be commissioned in a bid to ensure there is internal and external equity in the organization and that compensation is driven by the right fundamentals. On the contingent pay, although the study did not go deep into finding out the various forms of contingent pay in the organization, the general feeling of compensation was high.
Table of Content
- 1.1 Background of the Study
- 1.2 Statement of the Problem
- 1.3 Objective of the Study
- 1.4 Research Questions
- 1.5 Research Hypothesis
- 1.6 Significance of the Study
- 1.7 Scope of the Study
- 1.8 Limitation of the Study
- 1.9 Definition of Terms
- 1.10 Organization of the Study
Review of Literature
- 2.1 Conceptual Framework
- 2.2 Theoretical Framework
- 2.3 Empirical Review
- 3.1 Research Design
- 3.2 Population of the Study
- 3.3 Sample Size Determination
- 3.4 Sample Size Selection Technique and Procedure
- 3.5 Research Instrument and Administration
- 3.6 Method of Data Collection
- 3.7 Method of Data Analysis
- 3.8 Validity of the Study
- 3.9 Reliability of the Study
- 3.10 Ethical Consideration
Data Presentation and Analysis
- 4.1 Data Presentation
- 4.2 Analysis of Data
- 4.3 Answering Research Questions
- 4.4 Test of Hypotheses
Summary, Conclusion and Recommendation
- 5.1 Summary
- 5.2 Conclusion
- 5.3 Recommendation
1.1 Background of the Study
There are a variety of employee profit sharing plans designed in an attempt to motivate employees. In the past decades, profit-sharing, in which an individual’s compensation is tied to the overall performance of the firm, has become increasingly popular in most retail companies in Nigeria. as well as in the rest of the world. Profit sharing is understood here to encompass any system which has a direct link between the profits of a company and the compensation of employees. Broadly speaking, profit sharing can be hypothesized to improve.
Company performance through: (1) increasing worker effort; (2) improving the skills of the workforce; and /or (3) enhancing the flow of information within the organization (Kruse 1992) Today, Nigeria is experiencing a tremendous shift to a more sophisticated structure as retail companies continue to gain ascendency. The distribution chain and the organisation of outlets continue to reflect those of a rapidly evolving economy as standards of living improve and as the population continues to snowball. In the past eight years, Nigeria’s population has grown from 150 million, as established by the population census conducted in 2006, to a country with an estimated population of 171 million people by 2013. In the midst of this, the middle class continues to expand even as 51 percent of the country’s population now lives in cities.
The rise of retail companies has been rapid in Nigeria in the last two decades. NBS data shows that between 2001 and 2004, the wholesale and retail sector grew by 10 percent per annum. By 2006, its contribution was 16 percent. In the first halves of 2011, 2012 and 2013, it contributed 15.58 percent, 17.05 percent and 18.44 percent of GDP respectively. NBS data shows that based on the structure and level of development of the economy, the average Nigerian household spends as much as 80 percent of its income on consumables like food and drinks, clothing, transportation, shelter, education, electronics and power supply which is commensurate to the rising population of over 170 million.
1.2 Statement of the Problem
In general it is possible to say that rewarding workforce for performance is a controversial topic. On the one hand, there is a broad consensus that only well-motivated employees can fulfill really ambitious goals. On the other hand, it is true that different people are motivated by different motivational factors (Havlíček, 2011, p. 185-186). Discussion is not only about which kinds of rewards for performance should be used, but also about intensity of utilization of these rewards. This goes especially for tangible rewards for performance and in this regard we can mention highly cited article “Why incentive plans cannot work” by Kohn (1993a), where Kohn expressed very negative attitude toward incentives and consequently was criticized by numerous proponents of perform- ance-based rewards. What is important from the viewpoint of our paper is that Kohn (who is a fierce opponent of incentives) explicitly expressed an opinion that he had no objections against profit-sharing (Kohn, 1993b, p. 49). The question is whether and why profit-sharing (PS) really represents widely accepted (both in practice and theory) method of rewarding performance or whether it has its own flaws.
1.3 Objectives of the Study
The main objective of this study is to examine the effect of profit sharing scheme on employee performance in Nigerian retail firms.
Other aims of this study are:
- To determine the extent profit sharing scheme is carried out in Nigeria retail firms.
- To determine whether profit sharing scheme affects employee performance in Nigerian retail firms.
- To examine the benefits of profit sharing in Nigerian retail firms.
- To examine the disadvantages of profit sharing in Nigerian retail firms.
1.4 Research Questions
The following research questions will be answered in this study:
- Is profit sharing scheme carried out in Nigeria retail firms?
- Does profit sharing scheme affect employee performance in Nigerian retail firms?
- What are the benefits of profit sharing in Nigerian retail firms?
1.5 Research Hypotheses
The following research hypotheses will validate this study:
H0: Profit sharing scheme does not affect employee performance in Nigerian retail firms.
Ha: Profit sharing scheme affect employee performance in Nigerian retail firms.
1.6 Significance of the Study
The study is of greater importance to both management and employees of selected firms, industry, the government and agencies and the society in large.
- This study will enlighten the management of the organization on motivating factors which enhance employee performance.
- This study will also alert the management on the motivation and its implication on staff performance via productivity.
- This study will reveal how to create opportunities for employees of both private and public sectors to receive their numeration/ incensitive in form of motivation when the recommendation is strictly adhered to.
- This study will also create a guideline for management of both selected firms and other firms to maximize their profits through motivation which may lead to high productivity
- It will also educate both employers and employees on punishment on job negligence as a factors of motivation.
1.7 Scope of the Study
This study focuses on profit sharing scheme on employee performance in Nigerian retail firms. Specifically, this study focuses on determining the extent profit sharing scheme is carried out in Nigeria retail firms, determining whether profit sharing scheme affects employee performance in Nigerian retail firms, examining the benefits of profit sharing in Nigerian retail firms and examining the disadvantages of profit sharing in Nigerian retail firms. The respondents for this study will be obtained from selected retail firms in Gboko local government area of Benue state.
1.8 Limitations of the Study
In the course of carrying out this study, the researcher experienced some constraints, which included time constraints, financial constraints, language barriers, and the attitude of the respondents. However, the researcher were able to manage these just to ensure the success of this study.
Moreover, the case study method utilized in the study posed some challenges to the investigator including the possibility of biases and poor judgment of issues. However, the investigator relied on respect for the general principles of procedures, justice, fairness, objectivity in observation and recording, and weighing of evidence to overcome the challenges.
1.9 Definition of Terms
Employee performance is a measurement of how well or how poorly an employee conducts their required job duties and how promptly they meet their targets or requirement.
Retail is the sale of goods and services to consumers, in contrast to wholesaling, which is sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturers, directly or through a wholesaler, and then sells in smaller quantities to consumers for a profit.
1.10 Organization of the Studies
The study is categorized into five chapters. The first chapter presents the background of the study, statement of the problem, objective of the study, research questions and hypothesis, the significance of the study, scope/limitations of the study, and definition of terms. The chapter two covers the review of literature with emphasis on conceptual framework, theoretical framework, and empirical review. Likewise, the chapter three which is the research methodology, specifically covers the research design, population of the study, sample size determination, sample size, and selection technique and procedure, research instrument and administration, method of data collection, method of data analysis, validity and reliability of the study, and ethical consideration. The second to last chapter being the chapter four presents the data presentation and analysis, while the last chapter(chapter five) contains the summary, conclusion and recommendation.
Summary, Conclusions and Recommendations:
This chapter summarizes on the findings on profit sharing scheme on employee performance in Nigerian retail firms in Gboko Local Government Area of Benue state. The chapter consists of summary of the study, conclusions, and recommendations.
5.2 Summary of the Study
In this study, our focus was on profit sharing scheme on employee performance in Nigerian retail firmsin Gboko Local Government Area of Benue state. The study is was specifically set to determine the extent profit sharing scheme is carried out in Nigeria retail firms, determine whether profit sharing scheme affects employee performance in Nigerian retail firms, and examine the benefits of profit sharing in Nigerian retail firms.
The study adopted the survey research design and randomly enrolled participants in the study. A total of 141 responses were validated from the enrolled participants where all respondent are staff of selected retail firms in Gboko local government area of Benue state.
In the light of the analysis carried out, the following conclusions were drawn.
- Profit sharing scheme is carried out in Nigeria retail firms.
- Profit sharing scheme affects employee performance in Nigerian retail firms.
- The benefits of profit sharing in Nigerian retail firms includes: Increased employee loyalty, improve efficiency and productivity, tax benefits.
The following recommendations were proffered with respect to the findings of the study;
- Since compensation have a positive and significant effect on employee productivity, Top management should review periodically the compensation package of the organization, increase the awareness & the understanding of the package for its employee and put the compensation package manual in accessible place to all employee to improve the transparency & build confidence to its employees.
- Salary survey and job evaluation vis-a-vis total rewards received to be commissioned in a bid to ensure there is internal and external equity in the organization and that compensation is driven by the right fundamentals. On the contingent pay, although the study did not go deep into finding out the various forms of contingent pay in the organization, the general feeling of compensation was high.
- The researcher also recommends that a further study be done even by department to determine the specifics and take necessary actions. In the area of team work, team rewards and whole organization reward it is recommended that further study be done to enhance it.
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