THE IMPACT OF PERFORMANCE MANAGEMENT OF THE PROFITABILITY OF MANUFACTURING FIRMS IN NIGERIA

ABSTRACT 

The study examined the impact of performance management on the profitability of manufacturing firms in Nigeria. The level of employee productivity in Nigerian organizations has been on the decline over the years and this could be ascribed to poor performance management strategies put in place by these manufacturing firms. It is in light of this, that this study aims to examine the effect of performance management on employee productivity among Nigerian manufacturing firms. Descriptive survey research design was adopted for the study. The population was 6026 comprising of the entire staff of five selected manufacturing companies in Lagos State. Taro Yamane formula was used to derive the sample size of 490. A structured questionnaire was administered resulting in a response rate of 97.5%. The instrument was validated and the Cronbach’s Alpha used for the Pre-test Reliability Analysis of the major constructs ranged between 0.778 and 0.879. The data gathered was analyzed with the aid of Statistical Package for Social Sciences (SPSS) version 21.0 software involving frequency distributions, linear and multiple regressions. Findings showed that indeed the four context of performance management had a significant effect on employee productivity. Detailed simple linear regression analysis showed that performance appraisal (F = 39.60, R Square = 0.077, P < 0.05) at 7.7%; performance feedback (F = 142.726, R Square = 0.231, P < 0.05) at 23.1%; employee training (F = 7.803, R Square = 0.016, P < 0.05) at 1.6% and compensation (F = 297.643, R Square = 0.385, P < 0.05) at 38.5% had a significant effect with employee productivity, however, performance feedback and compensation had the strongest relationship on employee productivity; multiple regression analysis also showed performance management (F = 79.482, R Square = 0.402, P < 0.05) at 40.2% had significant effect on employee productivity. The study concluded that Performance Management when well implemented improves employee productivity especially when more emphasis is placed on positive feedback and compensation which was proven to have a higher influence on productivity of employees. It was recommended, among others, that manufacturing firms should encourage their members of staff by giving them regular positive feedback and compensate them fairly to improve productivity.

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