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IMPACT OF EMPLOYEE COMPENSATION ON ENTERPRENEURIAL PRODUCTIVITY
1.1. BACKGROUND OF STUDY
After the Second World War, concern for economic development became all-pervasive. There was a growing concern for economic development and this strengthened interest in entrepreneurship with primary focus on exploring practical measures to augment the supply of entrepreneurs, i.e. persons with competence and aptitude to initiate, nurture and expand industrial enterprises. This resulted in the belief in education and training to inculcate and develop entrepreneurial capabilities in people so that they could set up their own enterprises. Subsequently programmes directed towards this goal were conceptualized. The nineteen century was a fertile time for entrepreneurial activity, as technological advances during the industrial revolution provided the impetus for continued inventions and innovations. Much of the literature in the field of entrepreneurship is from the USA and Europe, and thus is based upon western values and cultures. The study of entrepreneurship continues to grow as a field of enquiry and remains one of the most attractive areas of research in the management field.
Entrepreneurship (small business enterprise) plays a significant role in world economy. Specifically, small business firm constitute majority of the types of businesses in all economies of the world (Hill and McGowan, 1999, Timmons, 1994; Storey, 1994, Culkin and Smith, 2000). Some of the world's multi-national corporations, which have influenced many world economics, started as small business enterprise. In Nigeria entrepreneurship, (small business enterprise) accounts for substantial part of the total industrial employment, production, and value-added in Nigerian business concerns. Okongwu (2001) explained that small business enterprises generate the industrial wealth of Nigeria in addition to being a major agent in the economic, technological, social and political growth and development of Nigeria, not minding the presence of multinational and other large firms in Nigeria such as Shell, Mobil, NNPC, NITEL, NPA, NPHC, Lever Brothers, Nestle Foods and others. Through small business entrepreneurship, jobs are created not just for the entrepreneurs themselves but also for other people in the Nigerian economy. The aftermath of creation of jobs is reduction in dependence on government to provide everybody with jobs, reduce government expenditure, improve standard of living of Nigerians, reduce social ills in the society, create balanced budget for the economy and invariable leads to higher Gross Domestic Product (GDP).
Entrepreneurs, through efficient and effective entrepreneurship practices and strategies contribute substantially towards economic development by producing and introducing new goods, services and ideas into the market or through new production methods or technologies. Entrepreneurial business organization or individuals are propellers of contemporary world economies. The conceptualization, development, production and commercialization of new goods and services and ideas can revitalize ancient industries or create entirely new ones. Entrepreneurial business companies and individuals are the change agents that accelerate modern societies forward and engender beneficial innovations via continuous improvement, creative destruction of old offerings and process and creative transformation of systems and cultures (Kropp and Zolin 2005). :
Therefore, for Nigeria to be reckoned with in the community of nations economically, there is the important and urgent need to encourage entrepreneurship in small business enterprise in the country. It should be a managerial and governmental policy to note always that entrepreneurship is needed in the Nigerian economy to create jobs, reduce unemployment rate, crime rates, government's expenditure, poverty, social unrest, create wealth, raise productivity level of the economy, provide certain services conveniently and raise the standard of living of Nigeria. For the Nigerian economy to be strong and stable in the relevant sectors, there is the need to emphasize and practice entrepreneurship in small business enterprises through the enactment of relevant policies, efficient and effective management practices, and provision of the enabling environment in Nigeria. Success or productivity of entrepreneurship is closely related to employee and employee remuneration. The ability to remunerate employee is generally considered an essential management tool in achieving entrepreneurial productivity. Adequate employee remuneration motivate employee towards putting in their best which in turn leads to increased productivity. Employee remuneration is defined as, "the reward or compensation given to the employees for their work performances. It is a method of promoting morale, increasing motivation and foster team cohesion. there two main types of employee remuneration namely Piece Rate method and Time Rate method. the former is compensation based on unit productivity, while the latter is the time an employee spends on a job, such as finishing a project before a deadline.
1.2 STATEMENT OF PROBLEMS
Employees in most private organizations in Nigeria are not well remunerated in the work place and this has been brought about low entrepreneurial productivity. Management seems to ignore the factors that create conducive environment for compensation such as good working environment, appropriate and adequate remuneration, promotion, training and manpower development. Research has shown that in private sectors, little or no attention is paid on employee remuneration and motivation. More emphasis is placed on more productivity and increased productivity. In today's competitive world, management needs to continuously emulate practices that will attract and retain a highly qualified and skilled workforce. Dissatisfied employees may be forced to work due to unemployment or insecurity, but this is not in the interests of the long-term success of the organization. Inadequate employee remuneration brings about dissatisfaction which in turn brings about low entrepreneurial productivity. Dissatisfaction may be expressed in other forms like internal conflicts, poor interpersonal relations, low trust, stress leading to workplace conflict, and violence. It is generally recognized that employees currently in the work force are more concerned than their predecessors with the quality of their working life and with the associated psychological reward. It is doubtful however, whether many of them would continue working if it were not for remuneration. This further brings to lime light the relevance of remuneration in an organization.
1.3. OBJECTIVE OF STUDY
The most visible reward for work is monetary. Not surprising therefore, that employees place great emphasis on matters relating to their remuneration. The main objective of the research study is to identify the impact of employee compensation on entrepreneurial productivity. Other objective of the study include the follow:
i. To highlight the need for adequate remuneration especially in the private sector.
ii. To enumerate the effect of inadequate remuneration on entrepreneurial productivity
iii. To examine the correlation between remuneration and employee performance.
iv. To evaluate the problems inhibiting the performance of employees and acknowledge them in terms of improving employee remuneration and training/development.
v. To address the increasing issue of job dissatisfaction which account for major reasons for low entrepreneurial productivity.
vi. To highlight the need for employee promotion in relation to entrepreneurial productivity .
vii To bring to bare, the causes of high labour turnover and seek ways to address it.
viii. To highlight the role of compensation in attracting and retaining right caliber of employee.
ix. To further emphasize on the need for employee utmost participation in achievement of organizational goal.
1.4 RESEARCH QUESTION
To address the research problem empirically, it is necessary to build a conceptual and prepositional foundation that will help to appreciate the relative importance and possible inter-relationship between employees’ compensation and entrepreneurial productivity.