Evaluation Of Incentive Schemes On Labour Production In Nigeria Construction Industry

Project and Seminar Material for Building Technology BT

Evaluation Of Incentive Schemes On Labour Production In Nigeria Construction Industry


This study was based on the evaluation of incentive schemes on labour production in nigeria construction industry, that is, both financial and non-financial incentives, as applicable on construction sites. It was carried out to find out the type of incentives in operation in construction firms, whether only financial and non-financial or combination of both is in operation including those available in the contracting firms with their variability from one firm to the other, considering indigenous and foreign contracting firms. The population was a random sampling of professionals chosen for the research, the data analysis was based on data collected with aid of structured questionnaire distributed to 200 workers on 2 sites in the building team,. The data were analyzed with the aid of chi-square distribution test, and rank correlation coefficient methods. The study concluded with the financial incentives like cash awards, transport allowance, overtime with pay, accident insurance, hospital allowance being preferred by the workers to others and that management should give further encouragement to their provision in order to enhance productivity.

Chapter One


1.1 Background

Performance has been an essential contributor to corporate success. This is as a result of its direct translation into cost savings and profitability. Performance has also been a key to long-term growth and sustainable improvement and when associated with economic growth and development generates non-inflationary increases in wages and salaries (Mojahed, 2005). The construction industry generally plays a vital role in a national economy due to the usage of its products such as roads, buildings and dams for the production of goods and services. In spite of the immense size and significance of the construction industry to the economies of most nations, its productivity is one of the controversial and least understood factors (Haskell, 2004).

In the construction industry, site workers account for 40% of direct capital cost of large construction projects and there is the need to maximise the productivity of human resources (Thomas et al., 2004). More so 30% to 50% of workers time is spent directly on the work and, hence, there is the need for proper utilisation.

In Nigeria’s construction industry for instance, companies are currently applying various non-financial incentive schemes aimed at improving operatives’ productivity (Olabosipo, 2004). Considering the fact that the construction industry in Nigeria is quite similar to that of Nigeria, it can be concluded that the introduction of a non-financial incentive will contribute to worker incentive in Nigeria ian construction industry. This will, in effect, enhance workers output and the overall performance within the construction industry and further contribute to the national economy.

1.2 Problem Statement

Lack of workers’ incentive on construction sites has been identified and this has contributed the low employees’ work performance (Thomas et al., 2004). This has been a result of the difficulties in emphasising the positive side of worker incentive. Several attempts have been made by management over the years to enhance workers’ incentive in order to achieve the desired performance from the employees which may be more psychological. According to Shun (2004), management is often frustrated by lack of incentive generated by the end of the year bonuses. There is therefore the need for craftsmen and other subordinates to be motivated by providing them with the right conditions and opportunity. A correlation exists between worker incentive and performance therefore; there is the need for workers to always feel motivated in order to increase performance. Thomas et al., (2004) posits that an unsatisfactory work environment can have an adverse effect on worker incentive that tends to make minimal effort towards work there by lowering performance.

Non empirical evidence shows that non-financial incentive is understood by the craftsmen to be a motivator to improve performance and productivity in the Nigeria ian construction industry. This study seeks to identify certain incentive strategic practices that may contribute in improving construction workers performance in Abuja Municipal assembly in the Greater Abuja region, Nigeria .

1.3 Aim of the Study

The aim of the study is to investigate into the main incentive practices in use by construction firm in Nigeria as a means to identify those which result in the improvement on the performance of construction workers.

1.4 Specific Objectives

  1. To determine availability of financial and non financial incentives in foreign contracting firms.
  2. To determine availability of financial and non financial incentives in indigenous contracting firms.
  3. To determine preferences of workers for financial or non-financial incentives.
  4. To provide a ranking of incentives in both foreign and indigenous contracting firms.

1.5 Research Questions

In order to have response for the above objectives of the study, below are the research questions;

  1. What is the level of availability of financial and non financial incentives in foreign contracting firms?
  2. What is the level of availability of financial and non financial incentives in indigenous contracting firms?
  3. What are the preferences of workers for financial or non-financial incentives?
  4. What is the ranking of incentives in both foreign and indigenous contracting firms?

1.6 Scope of the Study

The study focused on construction companies with classification D1 and D2. According to the classification guidelines of the Ministry of Works and Housing, these companies usually undertake large volumes of works and employ at least 45 workers. Hence, large number of workers can be sampled for the study. The study was conducted only in Abuja Municipality in Nigeria , due to time and financial resource constraint on the part of the researcher. This Municipal Assembly was chosen due to the rapid infrastructural development in the area. Fourteen (14) local building construction firms in this Municipality were covered.

1.7 Limitations to Study

The study does not cover the entire country of Nigeria hence, should be considered as an exploratory study.

However, it gives illumination of the factors, which can affect job performance in the construction firms in Nigeria .

The findings of the study can be used to enhance management decisions in the country.

1.8 Significance of the Study

The study will examine improving construction workers performance through strategic incentive practices in building construction companies in Nigeria . The study may identify factors which can affect worker incentive and job performance in building construction companies. These may be used to support management strategies on the industry. Also the study can be the basis for further research.

Chapter Five

Conclusions and Recommendations

5.1 Conclusions

The focus of this research work has been the determination of importance of incentives, the financial and non-financial incentives to the workers in the construction industry, comparing foreign and indigenous contracting firms. These forms of incentives among others were noted for having greater influence on level of site workers productivity. It is therefore believed that if these could be well catered for, then the required labor productivity improvement wil1 be ensured.

It was discovered through the analysis of the results that the level of incentive provision in indigenous contracting firm is low compared to their foreign counterparts. This is evident in the availability of incentives like luncheon voucher, piece rates, overtime with pay, sport facilities, non-involvement in decision making, educational training in foreign contracting firms which were absent in the indigenous contracting firms.

This portrays the fact that indigenous contracting firm’s growth is nothing to write home about~ so also, where incentives are provided in indigenous firms; they are usually not adequately provided, thus defeating the real essence of its provision. It has also been discovered that indigenous contracting firms does not put provision of adequate social security into consideration and that it is only provided on request by the client or as part of work preliminaries. This is not good enough as sense of adequate security tends to make workers venture into work crisis.
Interview conducted revealed that majority of workers on construction sites are those Whose major occupation is not construction work, but found themselves there as a result of depressed economy, it could be inferred from this fact that such category of people could lack adequate technical competence, and this at the long run affect productivity

5.2 Recommendations

From this study, it is recommended that,

  1. Management and immediate supervisors should ensure that good teamwork is established through collaboration, both on and off site by assigning task to groups of workforces with qualified and competent team leaders.
  2. Workers have hidden incentive and liking capabilities, capacity to take on responsibility, and readiness to work to achieve organizational goals. Therefore management’s job is to foster these tendencies and help workers develop these characteristics in themselves. Appreciation and recognition give workers a form of non-financial incentive , which can encourage their desire to put up maximum effort in their operations.
  3. Information availability and communication should be open to all. There should be free flow of information from the management to the workers and vice versa.
  4. There should be timely payment of employees’ wages to enable them meet their financial obligations. This can reduce dissatisfaction.
  5. Management should structure organizations and methods of operation to allow people to set their own goals and direct their own efforts toward organizational objectives. This will improve the creativity and freedom for own judgment in on-the- job execution of task.
  6. Management should sort out the job environment to allow people achieve their higher-order individual goals.

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