EMPLOYEE MOTIVATION AND PERFORMANCE OF SELECTED MOTOR SPARE PARTS DEALERS IN LAGOS STATE, NIGERIA
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CHAPTER ONE
INTRODUCTION
1.1 Background of the study
Global sales of passenger cars are forecast to hit 78.6 million vehicles in 2017. Along with China, the United States is counted among the largest automobile markets worldwide, both in terms of production and sales. About 6.9 million passenger cars were sold to U.S. customers in 2016, and around four million cars were produced here in the same year. The United States became a key automotive market in the early 1900s, when Ford introduced assembly line car production to mass-manufacture its Model T. Today, the Ford Motor Company still ranks among the leading manufacturers of passenger car model currently being the Ford Focus, which was also one of 2016’s best-selling light vehicles worldwide. In terms of revenue, Toyota, Volkswagen, and Daimier topped the list of major automobile makers in 2016, while the automotive supplier industry was dominated by Bosch, Continental, Denso and Magna. Prompted by global initiatives, such as the Paris Agreement, several countries around the globe are enacting stricter emissions controls on new vehicles models. As such, automakers are beginning to expand their business into the electric mobility sector. Germany is expected to lead the way with projected electric car production to reach some 1.3 million units by 2021. Over the next decade, internet connected car technologies and autonomous vehicles are set to stir up yet another revolution in the automotive sector. In 2016, some 40 percent of U.S. respondents stated that they were willing to use fully autonomous vehicles to be safer than conventional cars. The global market for autonomous driving hardware components is expected to grow from 400 million U.S. dollars in 2015 to 40 billion U.S. dollars in 2030.
The global auto industry is always in flux, as new models and designs alter the shape and performance of automobiles. Nonetheless, few periods in automotive history match today’s pace of change. Over the next five to ten years, five trends will dominate, and each will carry with it specific challenges that auto industry executives will have to confront. In this complex environment, auto companies can no longer hope to be everything to everyone. There are simply too many technical options, markets, and social and demographic changes to address. And as the competitive landscape intensifies, being average at many things will not be good enough anymore; companies will need to pick their bets and become great at the things that truly matter for the customers they have chosen to serve. Recovery in global economy, expansion into new markets is driving the industry growth in terms of surge in M & A activities, site relocations, and vertical integration of operations worldwide. The new factors have a significant impact on the sales of major vehicle manufacturers. Both passenger cars and commercial vehicle manufacturers are aiming to strengthen their self-sufficiency across the value chain. Over the near term future, it is expected that significant investments flow into the automobile market, in particular, in the component sector and new production centres. Shifting consumer preferences, climate related policies and advancements in technology are driving the demand for environment friendly, fuel efficient and smart vehicles. In particular, the medium term outlook remains strong for hybrid vehicles. Demand for commercial vehicles is also expected to surge across emerging markets, driven by recovering economic conditions. In particular, growth in construction activity in these markets will drive the demand for heavy trucks, buses and other commercial vehicles. This new report provides comprehensive analysis of automobile markets including Passengers cars, and commercial vehicles across countries worldwide. The ensuing graphs and tables in the report provide market growth in two times series: historic from 2005 to 2017 and forecast from 2018 to 2025. 2018 market conditions in global Automobile sector are analysed through detailed SWOT analysis, evolving trends, industry drivers and restraints. Further, manufacturers, importers and exporters along with their growth strategies are analysed in the research work. Over the five years to 2017, revenue for the Global Car and Automobile Manufacturing industry is expected to rise, bolstered by improving economic conditions, such as rising disposable income. Another driving force behind the industry’s growth has been the favourable economic environment set forth by Central banks around the world. During the five-year period, developed economies such as the United States, Japan, and the European Union provided monetary stimulus to spur economic growth to varying degrees of success.
Algeria’s automotive industry is among the largest on the African continent (together with South Africa, Egypt and Morocco) and can exceed 500,000 units a year. Renault is the largest manufacturer with an estimated 25.5 percent of the national car market. Other car makers represented there include Volkswagen (second largest), Peugeot, Hyundai (fifth largest), Nissan, and Fiat. In 2014 a partnership between Daimler and the Ministry of defence for the manufacture of trucks and armored cars will produce 17,000 Mercedes units annually in accordance with international quality standards applied by Mercedes at its plants around the world, while the rest of the quota will be owned by the German companies specialized in mechanical industries (Man and Ferrostaa). The same standards will be applied in both Tiaret, which will produce 10.000 G-Class SUVs and utility wagons of average size annually, while the production site of engines in Constantine will produce 26,000 water cooled engines by licenses production for the Marks Meto – Deutz – Daimler respectively, to prepare the cars and industrial machinery, agricultural machines, and machines of public works, as the production will be launched in 2014. The National Company of Industrial vehicles (SNVI) in Rouiba, as part of an Algerian-German-Emirati investment project five trucks models to be assembled on the same industrial site namely Actros, Atego, Axor and Unimog in addition to other bus models will reach some 15,000 trucks and 1,500 buses in 2018 and 2019. In October 2015 Iran Khodro group intends to establish a car assembly plant in Algeria located 300km from Algiers, will produce 30,000 cars/year, three options open to the group for that and they will have to choose between relocation of Senegalese assembly line which is the first option, that of Bardo (pick-up), and that of the establishment of a new chain. In December 2015 an agreement signed with an Algerian company and the Iranian auto making group Saipa will produce X100, Tiba I and II, Saina and Pride in the country as of mid-2016.
The beginnings of the Egyptian automotive industry date back to 1960. During the socialist era, the government pledged to transform the country from an agricultural economy to an industrial one, and the first completely Egyptian car was produced. The car soon went out of production, as it was unable to compete with foreign brands, especially following the end of socialism and the move toward a more liberal market. It was not until 1985 that automotive giant, General Motors (GM), set up its first assembly plant in Egypt, revolutionising the industry. In the more than two dozen years since, the Egyptian automotive assembly business has grown from just three plants relying on mostly imported components, to 16 businesses with 26 assembly lines, manufacturing now near 100,000 units annually of passenger cars, light commercial vehicles, trucks, and buses, as well as 300 factories that produce most automotive components (IDA’s Vision for the Automotive Industry Report). Besides GM, giants such as BYD, BMW, Nissan, Hyundai, and Daewoo produce a majority of the models in their product lines in their factories in Egypt. In fact, the BMW assembly line in Egypt is the only factory outside Germany where the BMW 7 Series is produced. But it was not until 2004 that the Egyptian automotive market began to expand exponentially, along with the local production of both assembled cars and components. The total production market in Egypt consisted of only 49,335 vehicles in 2004. This figure rose to 116,683 vehicles in 2010; a 136% increase. However, due to the political changes starting in 2011, production was down over 31% in 2012. In 2013, Egypt was the third largest car-producing market in Africa, after South Africa and Morocco.
The Automotive industry in Kenya is primarily involved in the assembly, retail and distribution of motor vehicles. There are a number of motor vehicle dealers operating in the country, with the most established being: Major Retailers: Toyota East Africa/Toyota Kenya Ltd, Cooper Motor Corporation, General Motors East Africa (GMEA), Simba Colt and DT Dobie. Major Assemblers: Associated Vehicle Assemblers Ltd (AVA), Kenya Vehicle Manufacturers (KVM), General Motors East Africa (GMEA) and Honda Motorcycle Kenya Ltd. Kenya is currently attempting to completely build its own cars. After building its first car in the late ‘80s, the Nyayo Car, Kenya has a shot at the industry with Mobius Motors, which was founded in 2009. A new factory having an auto assembly capability of nearly 400,000 vehicles annually was opened by Renault in February 2012 in Tangier. It will mainly produce cars for the European market. Before 2012, the only other assembly plant in Morocco was the Renault factory in Casablanca. Another factory by PSA Peugeot-Citroen, is expected to start production by 2019, with a starting capacity of 90,000 cars/year and a 200,000 cars/year in the future. The main specificity of this factory is the introduction of car engines production for the first time to the country. BYD signed an agreement on December 9, 2017 to open a factory near the Moroccan city of Tangiers to build battery-powered vehicles. BYD will become the third car manufacturer to build cars in the North African state. South Africa is traditionally the leader in Africa of the automotive industry and now produces more than half a million annually of all types of automobiles. While domestic development of trucks and military vehicles exists, cars built under license of foreign brands are the mainstay.
The Nigeria automotive sector comprises of manufacturing/assembly of bicycles, motor bikes, cars and spare parts. The country is said to be next Africa’s frontier for the automotive industry, with a potential market for one million new-cars per annum. Up until 2015, Nigeria imported about 400,000 vehicles (100,000 new and 300,000 used) valued at US$4.2 billion. Local production capacity (assembly) is about 300,000 units, but utilization is currently at about 15 percent of installed capacity. Nigeria imports nearly all of the cars on its roads and absorbs huge automobile component parts annually. In 2013, Nigeria spent 500 billion Naira on automobile spare parts and 150 billion Naira on purchase of tyres. According to the Federal Road Safety Corps, about 6.6 million and 10.6 million registered vehicles plied the roads in 2010 and 2016 respectively. According to a 2013 estimate, by the International Organization of Motor Vehicle Manufacturers (OICA), the auto industry directly employs over nine million people which make about 5% of the world’s total manufacturing employment. A study by PWC (The company focuses on audit and assurance, tax and consulting services) in 2015 states that ‘of the 14 million cars on Nigerian roads, over 50% are beyond 12 years old while 26% are beyond 5 years old’. Given this background, the market for automotive spare parts is equal to or larger than the market for new cars. Thus, large scale manufacturing of automobile components in Nigeria will not only result in substantial import substitution but also create economic growth and employment opportunities. Another study by the National Automobile Council of Nigeria (NACN, 2014) estimates that, imports were to be substituted by domestic production, it will not only result in potential value added of over N100 billion per annum, but will also create over 70,000 direct and 700,000 indirect new jobs in the economy (MSMEs) input suppliers for manufacturing auto parts etc.)
1.2 Statement of the problem.
In the modern competitive business environment, work organizations are confronted with ever-growing challenges regarding employee’s commitment, engagement, recruitment and retention of their employees. Multiple studies in different countries and across industries show that employees who are passionate about their jobs and the organization in which they work are in the minority (Nuru, 2017). Employee motivation plays a critical role in energizing employees to commit their time and efforts to the organization. However, it is unclear whether this translates into job satisfaction. (George 2014) Now a day’s employee motivation is necessary because employees switched over to the other organizations when they were not motivated, positively appraised and due to lack of motivation, their performance is directly affected (Nizam, 2015). Most employees need motivation to feel good about their jobs and perform optimally. Some employees are motivated by money while others find recognition and rewards personally more motivating. (Gant, 2014) The performance of organizations and employee motivation has the focus of intensive research effort in recent times. How well an organization motivates workers (intrinsic and extrinsic) in order to achieve their mission and vision is of paramount (Muogbo, 2013).
Marr (2015), it is every manager’s least favorite part of the job: someone on your team isn’t performing up to expectations, and it’s time to do something about it. But before you decide how to address a performance problem, it is important to diagnose the root cause. Workers leave organization due to the fact that they are not motivated enough. Some are not willing to leave because they are enjoying some benefit in terms of promotion, which leads to increase in salaries and wages, bonus and some other incentives. (Maduka 2014) Labor unrest in the form of strike actions in both public and private corporate organizations underscore the importance employees attach to the issue of salary. As a result, the human resource functions of many corporate.
In a highly competitive, global environment, organizations are constantly under pressure to retain their workforce (Deci, 2013). Highly skilled, reliable and experienced employees are more likely to have high productivity. However, according to Certo (2006), good performance is not as a result of motivation only, but also includes ability i.e. skills, equipment, supplies and time. Some organizations have been known to experience a high staff turnover despite offering above average salaries (Aguinis, 2012). This tells us that the money is not the only way motivate employees. Additionally, different people are motivated by different factors. It is important for managers and supervisors to understand what motivates individual’s employees, and not assume a one-size-fits-all approach (George & Jones, 2013). Most people are motivated by money at least for their basic needs and wants (DeNisi & Griffins, 2008). Employee motivation through compensation can be in several forms including salary raises, performance bonuses, commissions, profit sharing and other extra benefits such as vacations, cars, and other tangible items that are used as rewards (Campbell, 2007). These compensation systems can be categorized as direct financial payment and indirect financial payments (Dessler, 2004)
Performance management is important for an organization, as it helps organizations ensuring employees are working hard to contribute to achieving the organization mission and objectives. Performance management sets expectations for employee performance and motivates employees to work hard in ways that is expected by the organization. Moreover, performance system provides a completed and professional management process for organizations and employees. Employee performance could be expected, assessed and encouraged.
Macky and Johnson (2000) pressed that the importance of performance management system is on continuously improving organizational performance, and this is achieved by improved individual employee performance.
1.3 Objective of the study
The main objective of the study is to examine the interaction between employee motivation and how different key variables assist an organization (Spare Parts Dealers) to rise and ascend as an economic. The intentions of this study are:
(i) To determine the relationship between salary and employee productivity.
(ii) To access the effect of promotion on employee development.
(iii) To evaluate the relationship between work environment and employee service quality.
(iv) To identify the relationship between self- enhancement and employee service delivery.
1.4 Research questions
The question of interest in the study are:
(i) What is the relationship between salary and employee Productivity?
(ii) What is the effect of promotion on employee development?
(iii) What is the relationship between work environments and employee service quality?
(iv) What is the relationship between self-enhancement and employee service delivery?
1.5 Research hypothesis
Based on the objectives, the following hypothesis were formed in order to make valid conclusion on the subject matter. The hypotheses are expressed in their null form:
(i) There is no significant relationship between salary and employee productivity.
(ii) There is no effect of promotion on employee development.
(iii) There is no significant relationship between work environments and employee service quality.
(iv) There is no effect of self-enhancement on employee service delivery.
1.6 Operationalization of the variables
Y = f(X)
X = Independent variable (Employee motivation)
Y = Dependent variable (Employee Performance)
Where X = x1, x2, x3, x4 and Y = y1, y2, y3, y4.
x1 = Salary, x2 = Promotion, x3 = Work Environment, x4 = Self-Enhancement.
y1 = Employee Productivity, y2 = Employee Development, y3 = Employee Service Quality, y4 = Employee Service Delivery.
Correlation Equation:
y1 = f(x1)……………… (i)
y2 = f(x2)……………… (ii)
y3 =f(x3)………………. (iii)
y4 = f(x4)………………. (iv)
Regresionally, we have
y1 = α0 + β1x1 + μ……………. (1)
y2 = α0 + β2x2 + μ…………. (2)
y3 = α0 + β3x3 + μ…………. (3)
y4 = α0 + β4x4 + μ…………. (4)
α = Constant of the equation
β = The Coefficient of the independent variable
µ = Error term
x = Independent variables
y = Dependent variables
1.7 Scope of study
The study is streamlined to employee motivation variables such as sales, promotion, work environment, self-enchantment and employee performance variables namely employee productivity, employee development, employee service quality, employee service delivery. Focus majorly on Motor Spare Parts Dealers and Marketing companies in Lagos State, and the study will be carried out in the Ojo, Lagos Island, Mushin axis in Lagos.
The reason for selecting Motor spare parts sub sector, is because there have been very limited study in this area and the business play important role in ensuring the stability of the transport sub-sector and the manufacturing sector too. In 2013, Nigeria spent 500 billion Naira on automobile spare parts and 150 billion Naira on purchase of tyres. According to the Federal Road Safety Corps, about 6.6 million and 10.6 million registered vehicles plied the roads in 2010 and 2016 respectively. However, a recent PWC publication revels that over 14 million cars now ply Nigeria’s road. There would always be a replacement of motor spare part in Lagos because of the fact that Lagos is Nigeria’s economic and commercial hub. Any study in Lagos state and its adoption would become the pace setter for other organizations to copy and improve their processes for better performance and profitability.
The population of motor spare parts manufacturing companies in the country is 2,567,737. And this manufacturing companies started at 1950 when they first made Peugeot and Toyota.
The unit of analysis of the study is the employees of Nelson auto spare parts- Ojo, Hyundai Motor spare parts- Lagos Island, and God’s glory spare parts- Mushin, Lagos State at junior, middle-level, senior and management level positions. Based on the information obtained from the Administrative Department, Nelson auto spare parts- Ojo has about 112 employees, Hyundai Motor spare parts- Lagos Island has about 328 employees, and God’s glory spare parts- Mushin has about 521 employees. The total population of the study is 961 employees at junior, middle, senior and management positions. By applying the purposive sampling technique, the most appropriate sample size given the study population is 200 employees.
1.8 Significance of the study
This study will be of benefit to many and different groups of people and individuals. In their Management Practice. Motor Spare part business require a lot of care, so the study would open up to them the need to motivate their workers in order to expect full commitment and hard work from each and every one of them.
The motor Spare part industry would also benefit from this study. This is because the committed and competent workforce belongs among key factors affecting company success. Employee performance depends on knowledge, work conditions and their motivation to work. The employee motivation depends on stimuli, which are present in the individual’s environment or used by other people in order to reach desired change in individual’s behaviour. The way of motivation became especially important in industrial companies to recent years, because of economic decline. The following article brings an overview of the pilot study carried out on a group of industrial enterprise and deals with assessment of the impact of specific factors on employee motivation to work.
The government would also benefit from this study as more people are motivated to work with commitment, the enterprises would make more profit and return sizeable tax.
Motivation of government employees should begin with a complete package or provision of enhanced working environment contained in the government staff regulations and condition of service. Apart from the official provisions, governments should also take into consideration the desperate needs and peculiarities of the employees with a view to achieving twin objectives simultaneously, viz: sensitizing the employees to put in their optimal output or productivity as well as making the people practically benefits from the services provided by the government.
The Society at large would also benefit from this study for several reasons. There are several reasons why employee motivation is important. Mainly because it allows management to meet the company’s goals. Without a motivated workplace, companies could be in a very risky position. Motivated employees can lead to increased productivity and allow an organization to achieve higher levels of output. Imagine having an employee who is not motivated at work. They will probably use the time at their desk surfing the internet for personal pleasure or even looking for another job. This is a waste of your time and resources. Employee motivation is highly important for every company due to the benefits that it brings to the company. Benefits include:
Increased employee committed is because when employees are motivated to work, they will generally put their best efforts in the tasks that are assigned to them. Improved employee satisfaction is important for every company because this can lead towards a positive growth for the company. Also ongoing employee development, can be facilitated when a worker reaching his/her personal goals, and can facilitate the self-development of an individual. Once that worker meets some initial goals, they realize the clear link between effort and results, which will further motivate them to continue at a high level.
Improved employee efficiency level is not only based on their abilities or qualifications. For the company to get the very best results, an employee needs to have a good balance between the ability to perform the task given and willingness to want to perform the task. This balance can lead to an increase of productivity and an improvement in efficiency. (Heryati R)
1.9 Definition of operational terms
Employee:
An individual who works part-time or full-time under a contract of employment, whether oral or written, express or implied, and has recognized rights and duties. Also called worker or staff, employee is the most important asset of th business organization because he/she runs the errands and converses with customers to achieve organization’s goals and objectives.
Motivation:
These refers to the Internal and external factors that stimulate and increase the energy of the employee to be continually interested and committed to their job, role or subject, in order to continue to attain a goal or to achieve something.
Employee Motivation:
Employee motivation is the level of energy, commitment, and creativity that an employee bring into doing his jobs and the zeal it completing his daily tasks to achieve the organization’s objectives.
Employee Performance:
The job related activities expected of a worker and how well those activities were executed.
Self-Enhancement:
This is a type of motivation that works to make people feel good about themselves and to maintain self-esteem. This motive becomes especially prominent in situations of threat, failure, or blows, to one’s self-esteem.
Work Environment:
This is a location where a task is completed. When pertaining to place of employment, the work environment involves the physical geographical location as well as the immediate surroundings of the workplace, such as a construction site or office building., the seating arrangement, office space, the temperature( hot or cold) of the place of work
Salary:
A Salary is a form of payment from an employer to an employee, which may be specified in an employment contract. .Here salary includes monthly pay, benefits, meal allowance, leave allowance and other monetary assistance which the employer/owner manager gives to the employees on regular basis
Promotion:
This refers to the advancement of an employee’s rank or position in a hierarchical structure. That is the official provision which an employer makes to ensure that the employee grows in and with the company.
1.10 Historical Background
The automotive industry in Nigeria dates back to the 1950s and consists of the production of passenger cars and commercial trucks. Early production was led by United Africa Company’s Federated Motors Industries assembly line of Bedford TJ trucks and SCOA’s production of Peugeot 404 pickup trucks. Significant development began in the 1970s, during a period of oil boom, the Federal Government of Nigeria signed joint venture partnerships with foreign car manufacturers to assemble vehicles and provide technical assistance towards higher level within the local industry. These foreign brands dominated the industry from the middle of the 1970s to the end of the 1980s, the passenger vehicles brands were Peugeot Nigeria Ltd and Volkswagen. The commercial vehicles manufacturers, Steyr competed with Bedford truck for dominance. The companies simply assembled kits and completely knocked down parts imported from abroad. In the marketplace, demand was largely dictated by the government’s budgetary concerns. Towards the end of the 1980s, a downturn in the economy, mixed with government’s policy and the higher cost of locally manufactured cars compared to imported counterparts negatively affected the industry. By 2000, used foreign cars dominated car sales in the country, also the rise in imports of affordable used cars negatively impacted the development of a higher level industry. Recently, a local brand, Innoson has opened an assembly plant in the country. Some of the plants had been privatized, VON was sold to Stallion Group and Leyland was sold to Busan. Production has been scaled down from the heights of the 1980s. (Automotive Industry, Wikipedia)
Before the Nigerian Civil War, automobile production was in the form of assemblage of partially knocked down bits. Federated Motor Industries, a branch of UAC produced Bedford TJ trucks and SCOA’s assembled Peugeot 404 pickup trucks. The cab, chassis, axles and wheels were imported separately to reduce the total landing cost of importation. In 1969, hoping to promote technology transfer, industrialization and reap gains from backward integration, the Nigerian government published a request for proposal for automotive assembly plants. About 20 car manufacturers responded but ultimately selection was influenced by the demand of the brands in Nigeria. To set up passenger vehicles assembly plants, the country negotiated with Peugeot of France and Volkswagen AG of Germany, the government also had in mind a medium term outlook of the provision of technical assistance to develop local content inputs with the intention that by 1990, the vehicles manufactured will have 100% input sourced locally. Negotiations also were initiated with Steyr of Austria, Leyland of Great Britain. Daimler –Benz of Germany and Fiat of Italy. The government initiated moves to protect the local industry by increasing customs duties on fully built cars and trucks shipped into the country. (Automotive Industry, Wikipedia)
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