Is Productivity gap significantly closed due to Employee Retention

Decision in Manufacturing Firm?

Sensitivity case of GUINNESS NIGERIA 2007-2014

Dayo Olorunfemi1
Research & Development consultant
Email: dayojohn2004@gmail.com

DWIPS Research & Development Team, July 2015 Study of Organizational Behaviour

Introduction
In the attempt to understand the motivator of worker behaviour in every given work
environment in factory layout design for either small or large business activities in present
time, employee retention is fundamental. More often than not, retention is triggered by
work experience and skill sets being channeled toward efficient drive for productivity of
output or finished product needed by customers. However, in Douglas McGregors theory
X postulation, managers assume that employees retention and attraction to their job is
primarily driven by reward oriented incentives like monthly salaries and other fringe
benefits. And that in the absence of this continuous rewards and expectations which is
treated as staff cost or overheads in the account & finance department in all organization,
employees outputs in term of processing and production of packaged beverages (alcohol &
non-alcohol drinks made by Guinness Nigeria) will experience slowdown or hitch during
factory and product distribution operations carried out by different category of staff
employed.
The unique and logical question in this study is that:
People ask so much from and give so little to the organizations they work for; this
can make or mar the fortune/ prosperity of organizations and the worker?
Is there a relationship between Organization Behaviour and Employee Productivity?
In order to provide relevant answer towards addressing issue of this kind, an improved
technique for a sustainable engagement of employees at the workplace have being
suggested by Towers Watson 2012 proposition for managers with interest to effectively
handle organization productivity challenges likened to the research question here.
Sustainable Engagement as enabler for Employee Retention
According to Towers Watson (2012) study, sustainable engagement describes the intensity
of employees connection to their organization, based on three core elements that are
fundamental to work environment:
The extent of employees discretionary effort committed to achieving work goals
(being engaged)
An environment that supports productivity in multiple ways (being enabled)
A work experience that promotes well-being (feeling energized)
1

Based on the suggested results contained in table 1 above, modern employers

including manager therefore needs to understand the root causes behind changes in
employee behaviours or group performance, at different responsibility level, skill sets and
also work experience requirements for production process. The three key attributes of
sustainable engagement are essentially important to accomplish acceptable behaviour at
group or team level in realignment of the staff turnover coined as supply of and demand for
talents, which can lead to employees retention and productivity improvement for business
growth.

Another critical element of productivity growth is work design, be it among the

category of job specialization, job rotation and job enrichment. This characteristic of work
2

design structure are also fundamental driver of employee retention because of it positive
support towards individual carrier advancement. Though, carrier development is a longterm objectives pursuit for most professional and creative employees, as compared to
monthly salaries income rewards continuum specified as theory X worker expectation in
Douglas McGregors motivation theory.
More importantly, using chart evidence of growth in employees retention technique
in a typical manufacturing firm like that of Guinness Nigeria Plc as supporting findings in
figure 1 above; It appears that more staff were employed in 2011-2014, compared to 20072010 numerical staff strength on average estimate. Put differently, that employees retention
is rising at an increasing rate in Guinness Nigeria and managerial decision making is
targeted at sustainable engagement for operations and technical staff, sales and
distribution, commercial or product export officers, corporate affairs and human resources
as well as marketing staff employed (see evidence in appendix 1) whom are continuously
engaged by Guinness top management.
Although, for instance, the year-on-year number of operations and technical staff is
about 711 persons (see staff strength in appendix 1) on average estimate. This group of
employee are significantly different, compared to small number of marketing staff about 22
persons.
From the foregoing evidence, the structured nature of job classification and roles
found at Guinness Nigeria Plc, it seems that job rotation is however assumed to be less
likely in the short-run decision. Moreover, if new beverage brand opportunities exist for
Guinness product to enter new markets segment, a carrier advancement programme can be
administered to qualified staff in the long-run.

Relational algebra for Productivity metrics, Retention and Engagements

Apart from the removal of barrier to employee retention which is entrenched in the work
design characteristics and workplace environmental factors, there is also the urge for
managers to take note of organizational culture and work experience as focus points and
drivers of sustainable engagements and workers retention technique to remedy symptoms
3

of unacceptable behaviour that can have adverse impact on the organization productivity
status in the short run. Moreover, the figure 2 evidence is instrumental to diagnose
expected issue.

Using the group level data contained in financial statement from Guinness Nigeria
plc 2007-2014, the objective of figure 2 process tracing is a potential avenue used to
examined the symbiosis relationship between productivity metrics, retention signals and
sustainable engagement appraisal. These translate to average cost in the left axis and
average output in the right axis, conceived as cost and benefit analysis of organization
performances annually.
In the statistical analysis available in figure 2, the critical findings here are threefold.
First evidence, suggest that overall staff cost on average estimate is about 7.4 billion naira,
and thus lower than 40 billion naira yield on average output quantifiable in value added
(beverage productivity). The significant 33 billion naira surplus gap or difference observed in
cost compared to output contribution per annual information; appear to be what matter
most in this investigation from Guinness management point of view.
Second, only the employee benefits in 2013 and 2014 appear to be 22% to 25%
positive point; this is, the staff salaries as a proportion of value added, outweighs that of
19% average workforce benefits observed in 2010. This implies that about 1 billion (22% 4

25%) naira or less, out of every 4 billion naira earn goes back to employees as reward from
efforts attributed to value added measured in terms of worker productivity metrics in
Guinness Nigeria operation in 2013-2014. Simply put, that employees earn 4times less as
benefits, compared to their level of efforts per annual.

Employees have been doing more with less and for less for over half a decade, and
that reality doesnt seem likely to change anytime soon. (Watson, 2012, p.3)
Thirdly, a continuous shrinkage in productivity occurred with peak period observed in
2011 and downward outcome yield since 2012 to 2014 operation in Guinness Nigeria plc.
Thus, exposing necessary opportunities for interactions and communication between
employee and senior management on redefinition of strategy to leapfrog and possibly
correct the deficiencies around group behaviours, beverage product processing, and
distribution, without neglecting marketing staff response within existing market and niche
area.

Leadership Model for Sustainable Engagement Impact

In summary, there is urgent call for managers to implement effective and concise leadership
style as strategy to drive sustainable engagement in relation to employees interest or
wellbeing. Such leadership function is presently been administered and consistent with
procedures obtained in Guinness Nigeria Plc, following the evidences released and
contained in Guinness financial report (2014). At Guinness, occupational health and
employee safety has equal importance with all other business activities and programs. To
prevent a crisis situation where thing can fall apart in future operations due to health
hazard risk; In 2007, Diageo which is the parent company of Guinness, launched her Zero
Harm Strategy to ensure that every one working or visiting her production factory goes
home safely on every day and everywhere. This is in line with the Diageo purpose of
celebrating employee life every day at various branches of operation, both onshore and
offshore. In the objective and mission statement of Guinness Nigeria Plc:

Our aim as a Company is to create a proactive safety culture in which all our employees
believe that all injuries and occupational illnesses are foreseeable and preventable and we act
in a manner that demonstrates their personal commitment to this aim.
Finally, in the judgments and assertion made by Guinness management level, valuing each
other is one of Guinness group values and this starts with every employee being passionate
about keeping each other safe; obsessively committed to preventing every single injury and
recognizing the benefits of safe behavior and celebrating safety success. Furthermore, all
employees of the Company are provided free medical care in designated hospitals.

Conclusion
In this study, the leadership approach adapted by Guinness Nigeria, which is centered on
ways and means for sustainable employee engagements, tends to be an optimal and
proactive mechanism and also a technique used for managing the dark side of stress
inherent in all organization work design and workplace environment. To avoid issue of
insufficient skill sets which triggers shrinkage in productivity on one hand and high staff
turnover or low employee retention rate on the other hand, organization behavioural
pattern captured in cost/benefit analysis in figure 2 is essential for business continuity and
growth. Aside the potential for productivity and growth factor, the changes in work
experience to match executable workload and task complexity must be fully understood
and acknowledged by supervisors and human resources planners in the workplace. As
important as that of agents (employees) interest towards long term retention and Nigeria
workers behaviour concerning job security assessment basis, the principal (employers)
should not in any way compromise quality or improvement in productivity at any given level
of wage cost and hiring process design within it human resource unit. It is also rational to
categorically point out that, without closing adverse human behavioural gap, the dynamics
of group behaviour like retention opportunism and key engagement priority compared to
short-term wage income incentive which happen to be a drawback of theory X; can cause
possible diminishing returns in productivity of workers in manufacturing environment.

Reference:
Watson, T. (2012) Engagement at Risk: Driving Strong Performance in a Volatile Global
Environment, Global Workforce Study.
Guinness (2007-2008) Annual Report and Financial Statement: Guinness Nigeria Plc
Guinness (2009) Annual Report and Financial Statement: Guinness Nigeria Plc
Guinness (2010) Annual Report and Financial Statement: Guinness Nigeria Plc
Guinness (2011) Annual Report and Financial Statement: Guinness Nigeria Plc
Guinness (2012) Annual Report and Financial Statement: Guinness Nigeria Plc
Guinness (2013-2014) Annual Report and Financial Statement: Guinness Nigeria Plc

Appendix 1
Table 2: Sample Data and Variables measurement
N'000

N'000
N'000
N'000
N'000
N'000
N'000
N'000
Average
2007
2008
2009
2010
2011
2012
2013
2014
32093624 33348049 40820836 42777547 48790408 46641358 40048497 36512939 40129157

Value added in beverage production

Staff cost:
Salaries, wages & Fringe Benefits
Pension fund contribution
Current year gratuity charge (write back)
defined contribution charge
long service award (write back)/charge
overall cost attributed to distribution of value added
Emplyees Salaries & Benefits per Value Added
Staff Strength per annual
Operations and Technical staff
Sales and Distribution
Commercial
Corporate Affairs and Human Resources
Marketing staff
Average number of employed

2007
2008
2009
2010
2011
2012
2013
2014
3800710 4231888 5274008 6037317 6423755 7559989 7730644 8427251
200226 236144 282727 309072 384487 447600
88821
75809
822441 796229 1324299 886261 -377521 176865
211353 328054 176787 368180 848001 986455
17273 206310 225363 360803 510129 -310419 232337
37893
4840650 5470571 7317750 7921507 7117637 8242215 8899803 9527408 7417193
16%
15%
18%
19%
15%
18%
22%
26%
2007
612
306
62
76
22
1078

2008
710
293
78
64
21
1166

2009
700
304
84
60
22
1170

2010
646
346
63
58
20
1133

2011
687
388
88
51
23
1237

2012
814
419
97
54
22
1406

2013
747
466
72
60
23
1368

2014 Average
769 710.625
477 374.875
104
81
58
60.125
25
22.25
1433 1248.875

Source: Data Extract from Financial reports and account in Guinness Nigeria 2007-2014