CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Many companies are into perpetual existence in order to satisfy the needs of individuals and

render services to the society. In a bid to achieve this objective, the major stakeholders in the

organisation such as the management, shareholders and employees must work towards achieving

the set goals and objectives. Therefore, it is expected of management and employees to put in

optimum efforts. Thus, it is important for management to build into it, factors that will induce

people to contribute effectively and efficiently, by meeting their needs in addition to payment of

salaries and wages. One of the ways by which these companies can create a satisfying and

motivating climate, is by providing fringe benefits to the employees.

According to Mathis and Jackson (2003), fringe benefits are forms of indirect compensation

given to an employee or group of employees as a part of organizational membership. Bratton and

Gold (2009) define them as that part of the total reward package provided to employees in

addition to base or performance pay. Fringe benefits focus on maintaining (or improving) the

quality of life for employees and providing a level of protection and financial security for

workers and for their family members. Like basic salary, the major objective for most

organizational fringe compensation programs is to attract, retain and motivate qualified,

competent employees (Bernardin, 2007).

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Mathis and Jackson (2003) continue to state that an employer that provides a more attractive

benefits package often enjoys an advantage over other employers in hiring and retaining

qualified employees when the competing firms offered similar base pay. In fact, such benefits

may create “golden handcuffs,” making employees more reticent to move to other employers.

Some common examples are; retirement or pension plans, medical and dental insurance,

education reimbursement, time off, paid vacation and use of company car.

One of the oldest motivational strategies that have been in vogue in organizations over the

decades is the financial incentives, otherwise known as salaries and wages. For the vast majority

of people, the possibility of higher financial income is meant to spur co-operation and higher

efforts for the achievement of improved productivity (Williams, 1978). Also, Tobes (1977)

stressed that the idea of money as a prime motivation dies hard. He noted that financial incentive

in the society represents the power to save or the power to spend money, buy things that people

value, thus, providing a psychological lift through the acquisition of economic goods.

Fringe benefits are wide range of benefits and services that employees receive as an integral part

of their total compensation package. Essentially, fringe benefits constitute indirect compensation

as they are usually extended as a condition of employment and not directly related to

performance of concerned employee. Fringe benefit is something of value apart from the agreed

regular monetary payment of salaries and wages given to an employee by an employer (French

and Seward, 1977). According to Crane (1979), fringe benefits are forms of supplementary

compensation that can provide mutual advantages to both the employers and employees in terms

of increased productivity and job satisfaction.

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Employee job performance is a relationship between outputs and inputs. It rises when an increase

in output occurs with a less than proportionate increase in inputs, or when the same output is

produced with fewer inputs (ILO, 2005). Employee job performance can also be considered in

monetary terms. If the price received for an output rises with no increase in the cost of inputs,

this is also seen as an increase in Employee job performance. Employee job performance can

also be understood at different levels. Employee job performance of individuals may be reflected

in employment rates, wage rates, stability of employment, job satisfaction or employability

across jobs or industries. Productivity of enterprises, in addition to output per worker, may be

measured in terms of market share and export performance. The benefits to societies from higher

individual and enterprise productivity may be evident in increased competitiveness and

employment or in a shift of employment from low to higher productivity sectors.

1.2 STATEMENT OF THE PROBLEM

According to Nwachukwu (1988), Nigerian people have always come with the impression that

generally, Nigerian workers are lazy, sleepy, reluctant to act, unconcerned and deceitful in their

approach. These workers are said to lack the zeal, the briskness and the momentum of

hardworking people and generally, they dislike hearing anybody talk about efficiency,

dedication, competence, determination and productivity, of which characterize people in a

production oriented society. In production oriented societies, the employers do everything

humanly possible to retain their workforce and also recruit high quality staff. The employers

strive to boost the morale of their employees with a view to eliciting positive attitude towards

work, while the workers respond by fashioning ways of making their organizations successful. In

3
Nigeria, there is inadequate stimulus to attract such responses, so the workers are still performing

below average, moral still down and efficiency still nil.

Workers leave organizations due to the fact that they are not motivated enough. Some are not

willing to leave because they are enjoying some fringe benefit in terms of promotion, which

leads to increase in salaries and wages, bonus and some other incentives. Most Nigerian

organisations have the problem and challenges of retention of their employees. Hence low

performance and productivity becomes the end result and finally work dissatisfaction. The work

load of staff especially in Nigeria is huge that forces them to over stretch their efforts. Also,

considering the financial crisis that has heat the economy, they don’t have that enough fund to

induce motivation, hence the staff are left to work without been motivated and their performance

is low.

Research into employee benefits and organizational commitment is becoming more important

because some researchers have examined the relationship between them (Christoph, 1996) and

also the relationship between employee benefits, motivation and productivity (Hong, et al.,

1995). There is however, still some debate over fringe benefits on whether they facilitate in

employee job performance leading to organizational performance and do benefits impact on an

organization’s ability to attract, retain and motivate employees leading to productivity and

improved organizations‟ performance (Milkovitch and Newman, 2004).

4
1.3 THE PURPOSE OF THE STUDY

Fringe benefit is an important aspect of management decision making that influences the

employees as well as the management team and output. Hence, this research work is set out to

examine the impact of fringe benefit on employee job performance, a case study of Dangote Plc.

In order to achieve this objective,

The purpose of the study could be itemized below as:

i. To determine the impact of fringe benefit on Dangote Plc employee’s job performance.

ii. To examine the various types of fringe benefits available to employees in Dangote Plc.

iii. To empirically examine the various challenges hindering Dangote Plc from implementing

various fringe benefit packages to their employees.

iv. To examine other types of motivational packages other than fringe benefits that can

impact on job performance.

1.4 RELEVANT RESEARCH QUESTIONS

The following are the research questions are asked in this study:

i. Is there any significant impact of fringe benefit on Dangote Plc employee’s job

performance?

ii. What are the various types of fringe benefits available to Dangote Plc employees?

iii. Are there challenges hindering Dangote Plc from implementing various fringe benefit

packages to their employees?

iv. Are there other types of motivational packages other than fringe benefits that can impact

on job performance?

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1.5 DATA COLLECTION METHOD

Secondary source of data collection method is employed in this study. The secondary sources

comprises of journal articles that are published online both locally and internationally, textbooks

that dwells heavily on the concept of fringe benefits and organisational performance and other

press release that are peculiar to the concept we are examining at hand.

1.6 SCOPE OF THE STUDY

This project will have as its scope a close examination of Dangote Plc. The sampling will be

focusing on selected employees and the management team of Dangote Plc.

1.7 SIGNIFICANCE OF THE STUDY AND JUSTIFICATION FOR

INVESTIGATION

There is some debate over fringe benefits on whether they facilitate job performance and whether

they impact on an organization’s ability to attract, retain and motivate employees. Conventional

wisdom also says that fringe benefits can affect recruitment and retention, but there is little

research to support this conclusion. This statement indicates that there is a gap which has not

been explored and therefore this study was undertaken to seek to establish whether fringe

benefits really do have an effect on employee job performance and make appropriate

recommendations on how to address the problem. Against this backdrop, this research will be

beneficial to the following:

i. Employees will also benefit much from this study. Fringe benefits being one of the

huge components in determination of organization performance, most of the

6
 employees will use the recommendations given to enhance high level of cooperation

in their various job groups.

ii. The study will also help the Government and other employers with information which

will help them come up with policies and legislations on the administration of fringe

benefits. Future researchers will also benefit from this study because it will provide

them with relevant information on the topic.

iii. The study will empirically contribute to existing stock of knowledge. Specifically, the

findings of the study will empirically provide direction as to the effect of fringe

benefit on employee job performance. Thus, the study is expected to contribute to the

well developed body of knowledge regarding the association between employees

receiving fringe benefits and their productivity.

iv. Similarly, the study also hopes to expand the frontiers of knowledge in the area of

conducting its analysis through the use of techniques that have been hitherto

overlooked by previous researchers on the effect of fringe benefit on job performance

by developing a well structured questionnaire patterned towards the research

objectives.

1.8 LIMITATIONS OF THE STUDY

A major limitation that will be faced during the cause of this work will be the problem of

inconsistent and accurate data. Another will be the problem of making assumptions which are

necessary building blocks for any model to derive logical conclusions but may not conform to

reality and also cost.

7
1.9 OPERATIONAL DEFINITION OF TERMS

Fringe Benefits: Fringe benefits are forms of indirect compensation given to an employee

or group of employees as a part of organizational membership (Mathis and

Jackson, 2003).

Job Performance: This relates to the act of doing a job. Job performance is a means to reach

a goal or set of goals within a job, role or organisation. This is the overall

expected value from employee’s behaviour carried out over the course of a

set period of time. Job performance is the amount of goods and services

that a worker produces in a given amount of time. Job performance can be

measured for a firm, a process, an industry, or a country.

Compensation: Workers' compensation is a form of insurance providing wage

replacement and medical benefits to employees injured in the course of

employment in exchange for mandatory relinquishment of the employee's

right to sue his or her employer for the tort of negligence.

Overtime: Overtime is the payment over and above the normal salary and wage rates

where the premium may be one and a quarter to two times.

Annual leave: Annual leave is a period of time off work that an employee is entitled to

after every 12 consecutive months of service with an employer.

Organisations: A social unit of people that is structured and managed to meet a need or to

pursue collective goals. It is also defined as a system of interdependent

human being (Pugh 1971).

8
 REFERENCES

Bernardin, H. J. (2007). Human Resource Management. An Experiential Approach. Tata

McGraw Hill.

Bratton, John and Gold, Jeff, (2009). Human Resource Management Theory and Practice (4th
ed). Palgrave Macmillan. New York.

Christoph, N., & Meyer, J. (1996). The measurement of antecedents of affective, Continuance
and normative commitment to the organization. Journal of Occupational Psychology. 63,
1-18.

Hong, J. C., Yang, S. D., Wang, L. J., Chiou, E. F., Sun, F. Y., & Huang, T. L. (1995). Impact of
employee benefits on work motivation and productivity. The International Journal of
Career Management. 7(6), 10-14.

International Labour Organization (2005). Number of Work Related Accidents and Illnesses
Continues to Increase, ILO and WHO join in call for Prevention Strategies Press Release.

Mathis, Robert L., and John H. Jackson. (2003). Human Resource Management. (11th ed).
Mason, OH: Thomson/South-Western.

Milkovitch, G. and Newman, J. (2004). Compensation (8th edn). New York: McGraw-Hill.

Nwachukwu, C.C, (1998): Human Resources management; Port Harcourt: David Stone
Publishers Ltd. (3rd edition)

Williams A. M., (1978) Economics. A Contemporary Introduction. 4ed. South-western College

Publishing, Cincinnati, Ohio. pp. 111.

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 CHAPTER TWO

LITERATURE REVIEW

2.1 INTRODUCTION

This chapter examines the historical background of the case study, Dangote Nigeria Plc. The

chapter also carefully examines current literatures that are based on the subject matter. The

chapter also went further to examine relevant literatures that are practical in the Nigerian

environment. The chapter then draws out summary of the issues that are germane and discussed

here.

2.2 HISTORICAL BACKGROUND OF DANGOTE PLC

Dangote Nig plc was established in May 1981 as a trading business with an initial focus on

cement, the Group diversified over time into a conglomerate trading cement, sugar, flour, salt

and fish. By the early 1990s the Group had grown into one of the largest trading conglomerates

operating in the country.

In 1999, following the transition to civilian rule and after an inspirational visit to Brazil to study

the emerging manufacturing sector, the Group made a strategic decision to transit from a trading

based business into a fully fledged manufacturing operation. In a country where imports

constitute the vast majority of consumed goods, a clear gap existed for a manufacturing

operation that could meet the 'basic needs' of a vast and fast growing population.

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Dangote plc embarked on an ambitious construction programme, initially focused on the

construction of flour mills, a sugar refinery and a pasta factory. In 2000 the Group acquired the

Benue Cement Company Plc from the Nigerian government and in 2003 commissioned the

Obajana Cement Plant; the largest cement plant in sub-Saharan Africa.

The Group is now one of the largest manufacturing conglomerates in sub-Saharan Africa and is

pursuing further backward integration alongside an expansion programme in existing and new

sectors.

2.3 CONCEPTUAL FRAMEWORK

Independent Variables Intervening Variables Dependent Variables

Organisational Policies
 Employment Policies
 Reward Policies

Employment Security Benefits

Employee Productivity
Health Protection Benefits  Customer Satisfaction
 Quality of work
 Quantity of work
 Lower chances of
Retirement Benefits absenteeism.

Personal Recognition Benefits

Fig 2.1: Conceptual Framework

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The above conceptual framework shows the relationship between the independent variables

(fringe benefits) and the dependent variable (employee productivity). The figure also suggests

an interrelationship between the two groups of variables as identified and explained in the

literature review.

2.4 CURRENT LITERATURE BASED ON EACH OF THE RELEVANT

VARIABLES OF THE MODEL

2.4.1 FRINGE BENEFIT

The term “fringe benefits” was coined by the War Labour Board during the World War II to

describe the various indirect benefits which industry had devised to attract and retain labour

when direct wage increases were prohibited. Fringe benefits encompass a broad range of

benefits; other than wages and salaries that organizations provide for their employees. Among

others, they include worker’s compensation in form of social security and unemployment

insurance, housing (employer-provided or employer-paid), group insurance (health, dental, life

etc.), disability and income protection, retirement benefits, day-care, tuition reimbursement, sick

leave, vacation (paid and not paid), profit sharing, fund for education and other specialized

benefits. They are offered to employees at the discretion of the management. Others include free

or subsidized transportation, salary advance, employee stock–ownership scheme, performance

awards and prizes, provision of lunchroom, payment of company-picnic, among others. The

purpose of fringe benefits is to increase the economic security of staff members and in doing so,

improve workers’ retention.

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The concept of fringe benefit is critical to organizational improved performance and sustenance.

According to Schein (1988), when people are recruited, selected, trained and allocated

responsibilities, management must focus on creating enabling environment that facilitates high

level of performance over a long period of time and also to make it possible for individuals to

meet some of their most important needs through the provision of incentives not expressly stated

in their appointment letters. To this end, organizations must create an atmosphere for achieving

satisfaction among employees as well as establish the best workable solutions for an optimal

reward strategy by building into every aspect of an organization’s climate those things which can

induce people to act in a desired way. This is usually achieved by providing fringe benefits for its

members of staff which could ultimately lead to better individual and organizational

performance.

Financial incentive is looked upon as an instrument for motivation; however, it is believed

among many that fringe benefit is a potent motivation factor. To this end, many scholars such as

Donaldson and Scannel (1979) have contended that man is primarily motivated to achieve

desired goal through financial incentives. On the contrary, Whyte (1959); Brown (1974); Elton

Mayo (1954); and Hertzberg (1968) have argued that financial incentive is less significant to

motivate workers and to engage in their duties judiciously and efficiently. To these scholars,

financial incentive is important to gear people to work hard but does not guarantee continued

improved performance and retention. To support the argument put in place by the critics of

financial incentive; that it is capable of ensuring continued improved performance and retention.

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According to a study carried out by the US Chamber of Commerce in (2006), fringe benefits in

the US were not a significant part of most employees' compensation packages until the mid-

twentieth century. For example, in 1929, benefits comprised only about 3 percent of total payroll

costs for companies. However, employee benefits in the U.S. now comprise approximately 42

percent of total payroll costs. Several things account for the tremendous increase in the

importance of employee benefits in the U.S. In the 1930s, the Wagner Act significantly

increased the ability of labor unions to organize workers and bargain for better wages, benefits,

and working conditions. Labor unions from the 1930s to 1950s took advantage of the favorable

legal climate and negotiated for new employee benefits that have since become common in both

unionized and non-union companies.

2.4.2 TYPES OF FRINGE BENEFITS

According to Beach (1972) employee benefits and services may be classified into four; each

category is in turn divided into principal kinds of benefits and services commonly found in work

organization. They are Employee security (financial protection against risk), Pay for time not

worked for, Social and recreational Programmes and Bonuses and Awards (not related directly to

employee output).

1. Employee security (financial protection against risk)

Examples of fringe benefits under this category are legally required employer contributions: old

age, supervisor, disability, and health insurance, unemployment insurance, workers

compensation, state disability, railroad unemployment. Also, other examples under this type of

fringe benefits are pensions, Life Insurance, Hospitalization, Medical and Surgical, Paid sick

leave, Supplemental unemployment, Accident Insurance and Contribution to saving plans.

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 2. Pay for Time Not Worked For

Examples of this type of benefit are Holiday pay, Vacation pay, paid leave for personal business,

Military service and voting time pay.

3. Social and recreational programmes

Examples of this kind of programmes are parties, pennies, athletics facilities, clubs and dances

were financed wholly or partly by the employer. Special aids and services such as saving plans,

credit unions, loan funds, and scholarship for employees and families, company purchasing

service, medical sickness for minor sickness, subsidy for food service, discount on purchase of

company, discount on purchase of company products, employee newspaper etc.

4. Bonuses and Awards (not related directly to employee output)

Examples of such benefits are Profit sharing bonus, Christmas bonus and Anniversary Awards.

Many people believe that increasing fringe benefits, or benefits that are not mandated,

established loyalty and boosts production among employees. Some argue that these beliefs are

incorrect, but many others support them. It would be difficult to examine the effects of all

possible fringe, but looking at a few can give employers a sense of how employee productivity

might be increased by offering fringe benefits.

Some countries offer free healthcare, but in other countries, people need to buy insurance.

Offering health insurances is a fringe benefit, and the quality of it could be directly tied to

employee productivity. In general, sick employees are not productive employees, and any

insurance offered to workers should be affordable and offer reasonable amounts of coverage.

Coverage should extend to family, as worker productivity may also be affected if family

15
members get ill. When employees have affordable healthcare for themselves or family when

needed, workers productivity can increase due to better physical health and as a result of

company loyalty for receiving this benefit.

Another health-related fringe tied to greater employee productivity is access to health club

membership or to onsite workout facilities. This and other wellness benefits can have a positive

effect. There can be direct correlation between physical health and ability to work harder. Access

to health clubs, nutritionist, weight loss programs and the like may all lead to healthier

employees with more energy to work.

2.4.3 TECHNIQUES OF MEASURING JOB PERFORMANCE

Organizations apply different techniques of measuring job performance and some of which are

discussed below:

1. Balance Score Card (BSC)

A balance score card can be considered “balanced” if it contains financial and non-financial

measures, driver and outcome measures, tangible and intangible measure and internal and

external constituents. Niven (2003) describes a balance score card as a carefully selected set of

quantifiable measures derived from an organisation’s strategy. Strategy is an integral element of

a BSC framework which suggests that the foundation of measuring organisational performance

should be derived from its vision and strategy. Therefore, any measurements chosen within the

four perspectives (financial, customer, internal processes, and learning and growth) should be

able to explain the level or extent of achievement of the strategy.

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In linking strategy to balanced scorecard, it is important to translate strategy into measurable

achievement so that it can help to guide the organisation in explaining those typically mouthful

words into simple and achievable adverbs and nouns (Kaplan and Norton, 1996). Despite some

underlying differences between the private and the government sector, government organisations

are increasingly recognizing the balance score card as an important performance measurement

and management tool. They are also looking for appropriate performance measurement systems

to ensure employees are rewarded for good performance. Effective performance management

requires fact-based decision making and one of the first requirements is relevant and reliable

data.

There are some obvious weaknesses of the current version of the BSC when it is applied in the

government sector especially with regard to its design and structure. The differing objectives of

the government sector indicate some problems of the application of the current version of the

BSC in government organisations. Government organisations often place their customers or

constituents (not the financials) at the top of their strategy maps.

2. European Foundation for Quality Management (EFQM)

The EFQM Excellence Model was generated in 1991 and introduced in the European Foundation

for Quality Management (EFQM) with the support of the European Organization for Quality and

the European Commission. The EFQM Excellence Model is a non-prescriptive system, proposed

to help organizations to assess their progress to excellence and continuous improvement, and is

based on their eight fundamental concepts of excellence: results orientation; people development

and involvement; customer focus; continuous learning, innovation and improvement; leadership

17
and constancy of purpose; partnership development; management by process and facts; and

public responsibility.

These concepts are expressed and specified in nine criteria that are divided into five key

implementation factors or enablers and four results in order to measure excellence (Calvo-Mora

et al., 2005). Among the five enabling activities the model included: leadership, people, policy &

strategy, partnership & resources and processes. The enablers drive the four sets of results:

people, customer, society and key performance results. Each criterion consists of sub-criterions

(totally thirty-two) that are supplemented by a list of typical areas which should be addressed.

The core of the EFQM model is the RADAR methodology which is cyclical and continuous. The

methodology consists of five steps: determine required results, plan and develop approaches,

deploy approaches, asses and review achieved results. Thus designed model is used as a self-

assessment tool, which enables a comprehensive, systematic and regular review of an

organization’s activities and results.

The Model is currently used by thousands of organizations mainly throughout Europe, such as

firms, health institutions, schools, public safety services and local government institutions,

among others. It provides organizations with common management terminology and tools, thus

facilitating the sharing of best practices among organizations of different sectors (Ray, 2003).

3. The Performance Measurement Matrix

The performance measurement matrix was first-time presented in 1989 by Keegan et al. and is

able to integrate different dimensions of performance, and employs generic terms such as

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internal, external, cost, and non-cost. The strength of the performance measurement matrix lies

in the way it seeks to integrate different classes of business performance financial and non-

financial, internal and external. (Neely et al., 2000) Second in order Fitzgerald et al. (1991)

developed modified system of the performance measurement matrix called Results and

Determinant. The Fitzgeralds alternative tries to overcome the criticism of matrix that is not as

well packaged as the balanced scorecard and does not make explicit the links between the

different dimensions of business performance, which is arguably one of the greatest strengths of

Kaplan and Norton's balanced scorecard (Neely et al., 2000).

The performance measurement matrix from Fitzgerald is based on the key assumption that there

are two basic types of performance measure in any organization, those that relate to results

(competitiveness, financial performance), and those that focus on the determinants of the results

(quality, flexibility, resource utilization and innovation). The explanation of this distinction is

that it highlights the fact that the results obtained are a function of past business performance

with regard to specific determinants, i.e. results are lagging indicators, whereas determinants are

leading indicators (Neely et al., 2000).

4. The SMART Performance Pyramid

Another system is the SMART Performance Pyramid, i.e. the SMART system, which was

proposed by Cross and Lynch (1992). The primary aim of the performance pyramid is to connect

through organization’s strategy with its operations by translating objectives from the top down

(based on customer priorities) and measures from the bottom up (Tangen, 2004). The

Performance Pyramid contains four levels of objectives that affect the organization’s external

19
effectiveness and simultaneously its internal efficiency. At the first level of pyramid is defined

an overall corporate vision, which is then divided into individual business unit objectives.

At the second-level of pyramid are set short-term targets (e.g. of cash flow and profitability) and

long-term goals of growth and market position (e.g. market, financial). The third level contains

day-to-day operational measures (e.g. customer satisfaction, flexibility, productivity). Last level

includes four key indicators of performance measures: quality, delivery, cycle’ time, waste.

5. The Performance Prism

The Performance Prism (PP) is one of the younger conceptual systems and is considered as a

second-generation PM system. This system was developed by a team of experienced researchers

and consultants in PM area Neely, Adams, and Kennerley (2001). They described a

comprehensive measurement system that addresses the key business issues to which a wide

variety of organisations, profit and not- for-profit, will be able to relate (Neely, Adams, Crowe,

2001).

Performance prism builds on the strengths of existing measurement system on shareholder value

and brings innovation based on free premises. In the first place, the organizations should think

about the wants and needs of all of their key stakeholders as well as how to deliver value to each

of them. Secondly, organizations have to harmonize and integrate strategies, processes, and

capabilities in order to deliver real value to its stakeholders.

Thirdly, the relationship between organizations and their stakeholders is reciprocal –

stakeholders expect the fulfillment of their wants and needs on the other hand they have to

20
contribute to organizations (Wu, 2009). Therefore the Performance Prism consists offive

interrelated facets, i.e. Stakeholder satisfaction, Strategies, Processes, Capabilities and

Stakeholder contributions.

Another interesting point of PP is that it is not a prescriptive measurement system. According to

PP the performance measurement should not be derived from the strategy: instead, “strategies

should be put in place to ensure the wants and needs of the stakeholders are satisfied” (Neely et

al. 2001). It is tool that helps management teams to think about vital questions and strategies to

address them.

2.5 THEORETICAL FRAMEWORK

The theories that are germane in this study are the theories of motivation. The theories explaining

motivation are equally theories explaining fringe benefits. The theories are discussed below:

2.5.1 EXPECTANCY THEORY

Expectancy Theory argues that humans act according to their conscious expectations that a

particular behavior will lead to specific desirable goals. Victor H. Vroom, developed the

expectancy theory in 1964, producing a systematic explanatory theory of workplace motivation.

Theory asserts that the motivation to behave in a particular way is determined by an individual’s

expectation that behaviour will lead to a particular outcome, multiplied by the preference or

valence that person has for that outcome (Ozgurzan W, 2015).

Three components of Expectancy theory are:

i. Expectancy : E -> P. The belief of the person that her/his effort (E) will result in

attainment of desired performance (P) goals.

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 ii. Instrumentality : P -> R. The belief of the person that she/he will receive a reward

(R) if the performance (P) expectation is met.

Valence: The value of the reward according to the person. (e.g. Is the reward attractive to the

person?)

2.5.2 ABRAHAM MASLOW’S HIERARCHY OF NEEDS

When motivation theory is being considered the first theory that is being recalled is Maslow’s

hierarchy of needs which he has introduced in his 1943 article named as “A Theory of Human

Motivation”. According to this theory, individual strives to seek a higher need when lower needs

are fulfilled. Once a lower-level need is satisfied, it no longer serves as a source of motivation.

Levels of the Need

First Level: In the first level, physiological needs exist which include the most basic needs for

humans to survive, such as air, water and food.

Second Level: In the second level, safety needs exist which include personal security, health,

well-being and safety against accidents remain.

Third Level: In the third level, belonging needs exit. This is where people need to feel a sense

of belonging and acceptance. It is about relationships, families and friendship.

Organizations fulfill this need for people.

Fourth Level: In the fourth level, self-esteem needs remain. This is where people looks to be

respected and to have self-respect. Achievement needs, respect of others are in

this level.

Fifth Level: In the top-level, self-actualization needs exist. This level of need pertains to

realizing the person’s full potential.

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Specific examples of these types are given below, in both the work and home context. (Some of

the instances, like education are actually satisfiers of the need.)

Need Home Job

self- Education, Religion, Hobbies,

Training, Advancement, Growth,
actualization Personal Growth Creativity
Esteem Approval of family, Friends,
Recognition, High status,
Community Responsibilities
Belongingness Family, Friends, Clubs Teams, Departments, Co-Workers,
Clients, Supervisors, Subordinates.
Safety Freedom from War, Poison, Work Safety, Job Security, Health
Violence Insurance
Physiological Physiological Food, Water, Heat, Air, Basic Salary
Sex

According to Maslow, lower needs take priority. They must be fulfilled before the others are

activated. There is some basic common sense here; it's pointless to worry about whether a given

color looks good on you when you are dying of starvation, or being threatened with your life.

There are some basic things that take precedence over all else.

2.5.3 NEEDS THEORY

According to Jones and George (2006), needs-based motivation theory is based on the

understanding that motivation stems from an individual's desire to fulfill or achieve a need.

Human beings are motivated by unsatisfied needs, and certain lower needs must be satisfied

before higher needs can be satisfied. In general terms, motivation can be defined as the desire to

achieve a goal, combined with the energy, determination and opportunity to achieve it. The

basic premise of the need theory is that people are motivated to obtain outcomes at work that will

satisfy their needs. It complements the expectancy theory by exploring the depth at which

outcomes motivate people to contribute valuable inputs to a job and perform at high levels. A

23
manager must determine what needs the person is trying to satisfy at work and ensure that the

person receives outcomes that help to satisfy those needs when the person performs at a high

level and helps the organization achieve its goals. This research will concentrate on the basis of

this theory.

The most basic human needs, represented by food, water, shelter and safety, are considered

essential for human existence. Higher-order needs are those associated with social activities,

esteem building, and self-actualization or constant self-improvement. Elaborating further on this

theory, Whittington and Evans (2005) stated that "each of these needs operates at all times,

although one deficient set dominates the individual at any one time and circumstance". The

motivation experienced by humans to fulfill these needs is either derived from internal or

external factors. People who experience internal motivation are influenced by factors that cause a

sense of accomplishment and pleasure, while externally motivated people are commonly

influenced by factors controlled by others, such as money and praise (Deci, 1985). Maslow's

hierarchy of need theory is commonly displayed in a pyramid fashion, with the basic needs at the

bottom and the higher needs at the top. The needs were depicted in this way to show the

significance of each need on the others, with the most important and broadest category being the

physiological needs at the base (Redmond, 2010).

2.5.4 ALDERFER’S ERG THEORY

In 1969, Clayton P. Alderfer, simplified Maslow’s theory by categorizing hierarchy of needs into

three categories (Ozgurzan W, 2015):

 Physiological and Safety needs are merged in Existence Needs

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  Belonging needs is named as Relatedness Needs,

 Self-esteem and Self-actualization needs are merged in Growth Needs

This approach proposes that unsatisfied needs motivate behavior, and that as lower level needs

are satisfied, they become less important. Higher level needs, though, become more important as

they are satisfied, and if these needs are not met, a person may move down the hierarchy, which

Alderfer calls the frustration-regression principle. What he means by this term is that an already

satisfied lower level need can become reactivated and influence behavior when a higher level

need cannot be satisfied. As a result, managers should provide opportunities for workers to

capitalize on the importance of higher level needs.

2.5.5 HERZBERG’S TWO FACTOR THEORY

Frederick Herzberg introduced his Two Factor Theory in 1959. He suggested that there are two

kinds of factors affect motivation, and they do it in different ways; Hygiene factors and

motivators.

i. Hygiene factors

A series of hygiene factors create dissatisfaction if individuals perceive them as inadequate or

inequitable, yet individuals will not be significantly motivated if these factors are viewed as

adequate or good. Hygiene factors are extrinsic and include factors such as salary or

remuneration, job security and working conditions (Ozgurzan W, 2015).

These are factors whose absence motivates, but whose presence has no perceived effect. They

are things that when you take them away, people become dissatisfied and act to get them back. A

very good example is heroin to a heroin addict. Long term addicts do not shoot up to get high;

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they shoot up to stop being sick to get normal. Other examples include decent working

conditions, security, pay, benefits (like health insurance), company policies, interpersonal

relationships. In general, these are extrinsic items low in the Maslow/Alderfer hierarchy.

ii. Motivators

They are intrinsic factors such as sense of achievement, recognition, responsibility, and personal

growth. These are factors whose presence motivates. Their absence does not cause any particular

dissatisfaction, it just fails to motivate. Examples are all the things at the top of the Maslow

hierarchy, and the intrinsic motivators.

The hygiene factors determine dissatisfaction, and motivators determine satisfaction. Herzberg’s

theory conforms with satisfaction theories which assert that “a satisfied employee tends to work

in the same organization but this satisfaction does not always result in better performance”. In

other words, satisfaction does not correlate with productivity.

2.5.6 INCENTIVE THEORY

Incentive theory suggests that employee will increase her/his effort to obtain a desired reward.

This is based on the general principle of reinforcement. The desired outcome is usually “money”.

This theory is coherent with the early economic theories where man is supposed to be rational

and forecasts are based on the principle of “economic man”.

2.5.7 GOAL THEORY

Edwin Locke proposed Goal Theory in 1968, which proposes that motivation and performance

will be high if individuals are set specific goals which are challenging, but accepted , and where

feedback is given on performance .

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The two most important findings of this theory are:

 Setting specific goals (e.g. I want to earn a million before I am 30) generates higher

levels of performance than setting general goals (e.g. I want to earn a lot of money).

 The goals that are hard to achieve are linearly and positively connected to performance.

The harder the goal, the more a person will work to reach it.

2.5.8 ADAMS’ EQUITY THEORY

Developed by John Stacey Adams in 1963, Equity Theory suggests that if the individual

perceives that the rewards received are equitable, that is, fair or just in comparison with those

received by others in similar positions in or outside the organization, then the individual feels

satisfied. Adams asserted that employees seek to maintain equity between the inputs that they

bring to a job and the outcomes that they receive from it against the perceived inputs and

outcomes of others (Ozgurzan W, 2015).

Example is suppose employee A gets a 20% raise and employee B gets a 10% raise. Will both be

motivated as a result? Will A be twice as motivated? Will be B be negatively motivated? Equity

theory says that it is not the actual reward that motivates, but the perception, and the perception

is based not on the reward in isolation, but in comparison with the efforts that went into getting

it, and the rewards and efforts of others. If everyone got a 5% raise, B is likely to feel quite

pleased with her raise, even if she worked harder than everyone else. But if A got an even higher

raise, B perceives that she worked just as hard as A, she will be unhappy.

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In other words, people's motivation results from a ratio of ratios: a person compares the ratio of

reward to effort with the comparable ratio of reward to effort that they think others are getting.

Of course, in terms of actually predicting how a person will react to a given motivator, this will

get pretty complicated:

 People do not have complete information about how others are rewarded. So they are

going on perceptions, rumors, inference.

 Some people are more sensitive to equity issues than others

 Some people are willing to ignore short-term inequities as long as they expect things to

work out in the long-term.

2.6 RELATED LITERATURE PRACTICAL IN THE NIGERIAN ENVIRONMENT

Akerele (2001) observes that poor remuneration is related to profits made by an organization.

Wage differential between high and low income earners was related to the low morale, lack of

commitment and low productivity.

Nwachukwu (2004) blamed the productivity of Nigerian workers on several factors, among them

is employers’ failure to provide adequate compensation for hard work and indiscipline of the

privileged class that arrogantly displays their wealth, which is very demoralizing to working

class and consequently reduced their productivity. Judging from all these empirical studies and

findings, one may generally conclude that a good remuneration package, which ties financial

rewards to individual performance, can be expected to result in higher productivity.

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Olumide (2015) explored the relationship between administration of fringe benefits and

employees’ commitment to the service of Lagos State Government, Nigeria. A total 285 copies

of questionnaire were administered on various categories of workers in the state public service

through systematic sampling technique, out of which 272 were recovered. Pearson Product

Moment Correlation Coefficient (r) statistical technique revealed that provision of transportation

scheme (r=0.974; p=0.05), provision of medical services (r= 0.982; p=0.05) and official quarters

(r= 0.431; =0.05) were the correlates of workers’ commitment to service. The findings therefore

add new knowledge that can be used to improve organizational practices for the retention of

valuable staff members in the Nigerian Civil Service.

Okpala (1990) believe that the greatest and most efficient production occurs when management

gives the worker a definite task to perform in a definite time and in a definite manner, selects the

right worker for a particular task and trains him for that and motivate the workers to a higher

level of performance by incentive methods of payment.

2.7 SUMMARY OF THE CHAPTER

This chapter has been able to clearly state the conceptual framework of the model at hand. From

the study, it can be seen that there are different types of fringe benefits and also a vast theories

have tried to explain fringe benefit and employee performance and productivity.

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 REFERENCES

Akerele, A. (2001): Role of Labor in Productivity; Nigeria Journal of Industrial Relation, 5: 50-
58
Beach, D.S (1972), Personnel Management of People at Work. New York:
Macmillian.

Brown O (1974), „European unemployment: the evolution of facts and ideas‟, Economic Policy,
21, 5-59.

Cohen, L. and Manion (1980), Research Methods in Education. London: Groom helm.

Cole, G. A (2002). Personnel & Human Resource Management (5th edn). Letts Educational:
London

Deci E L, Ryan M (1985): What and ‘Why of Goal Pursuits: Human Needs and the self
determination of behaviour; Psychological inquiry, vol. 11.

Herzberg F (1987). One more time: How do you motivate your employees? Harvard Business
Review.www.epnet.com. pp.6-16.

Olumide, A., (2015). Fringe Benefits Administration and Employees’ Commitment in the Lagos
State Civil Service, Nigeria. Public Policy and Administration Research, ISSN 2224-
5731(Paper) ISSN 2225-0972(Online) Vol.5, No.7,

Maslow, A. H., (1954). Motivation and personality, Harper and Row, New York.

Nwachukwu, C.C. (2004), Management: Theory and Practice. Onitsha: African Fep Publishers.

Robbins S. and David A. D.C, (2004): Fundamentals of Management, Pearson Prentice Hall,

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 CHAPTER THREE

SUMMARY, CONCLUSION AND RECOMMENDATIONS

3.0 INTRODUCTION

This chapter focuses attention on summarizing our findings in a synopsis order from the

information we gathered and analysed in the previous chapter, their implications to our

objectives in concern. We also further draw out meaningful conclusions based on our results that

could help policy makers in making useful decisions and then provide recommendations to them.

This is imperative owing to the fact that the major aim of research is to establish a problem,

identify gaps and use necessary tools to examine the cause and consequences.

3.1 SUMMARY OF FINDINGS

The reason behind this study was to examine the impact of fringe benefit on employee job

performance, a case study of Dangote Plc. The study went further to determine the impact of

fringe benefit on Dangote Plc employee’s job performance, examine the various types of fringe

benefits available to employees in Dangote Plc, examine the various challenges hindering

Dangote Plc from implementing various fringe benefit packages to their employees and examine

other types of motivational packages other than fringe benefits that can impact on job

performance. The following findings were revealed in the course of the research work.

i. Fringe benefit has a significant impact on employees’ job performance. It was

discovered that fringe benefits will improve their productive capacity.

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 ii. It was discovered that there are different types of fringe benefits such as retirement

benefit, health insurance benefits, education and housing allowance, maternity leave,

annual leave, overtime and employment security benefit.

iii. It was discovered that a major limitation of the applicability of fringe benefit in an

organisation is shortage of finance. During recession, shortage of revenue posses a

threat to the sustainability of existing fringe benefits.

3.2 CONCLUSION DRAWN FROM THE FINDINGS

From this research work, fringe benefits will improve organisational performance and this leads

to increase in retention rate.

It can be concluded that the way and manner fringe benefit is handled in Dangote plc has

favoured the organisation and staff. Therefore, fringe benefits should continue to be taken

seriously in all ramifications since it leads to the achievement of the company set objectives.

This study had been designed to achieve the research objectives. By employing a valid and

reliable methodology, this study has significantly contributed to the methodological knowledge

in this area. The findings from this research also provide a useful guideline to organizations,

especially manufacturing companies, to make decisions in light of fringe benefits. Apart from

these contributions, this research’s outcome has also provided useful guidance for future

research.

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3.3 RECOMMENDATIONS BASED ON THE CONCLUSIONS

Based on the findings and conclusions, the researcher made the following recommendations:

i. There should be periodic upward review of worker’s wages/salaries and other fringe

benefits through collective bargaining process. The economic realities of the time

should be considered during the process.

ii. The issue of paying regular salaries to workers should be considered as a priority by

manufacturing companies. A worker depends on his/her monthly salary for the

upkeep of his family. So of it doesn’t come at the end of the month, they are

devastated.

iii. Management must ensure that fringe benefits are geared towards the needs of workers

and that reward schemes generally are clearly and visibly linked to performance.

3.4 SUGGESTIONS FOR FURTHER STUDIES

From the study, it is obvious that fringe benefits will improve organisational performance.

Therefore, further studies should be carried out on the following topics:

i. Financing Fringe Benefit: Sustainable Options for Nigerian Manufacturing

Companies.

ii. Investigation on other kinds of motivational packages.

iii. Economic recession, fringe benefits and Organisational Sustainability.

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