DEVELOPING A PERFORMANCE MANAGEMENT SYSTEM PIONEER NIGERIA LIMITED
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DEVELOPING A PERFORMANCE MANAGEMENT SYSTEM PIONEER NIGERIA LIMITED
Chapter one
INTRODUCTION
1.1 Background of the Study
This chapter gave an internal examination of Pioneer Nigeria Limited, including the company’s difficulties and potential courses of action to address them. It also detailed the study’s purpose, theoretical framework, research objectives, and questions. The chapter concluded by highlighting the scope and limitations of the research activity.
Pioneer Nigeria Limited (PNL) is a small limited liability company established in 1985 under the Companies Act 1968, which is now known as the Companies and Allied Matters Act 1990, as a distributor of foreign products such as Bird’s Custard Powder, Cow and Gate Baby Milk, and Kleenex Tissue Paper for Brian Munro Limited in the United Kingdom.
PNL switched to manufacturing in 1988, refining edible vegetable oil after being registered as a business under the Nigerian Factories Act 1987.Its production operations began fully in 1988, with a crew of seven personnel operating a chemical refining plant system.
PNL’s products at the time included small-scale production of soya bean, groundnut, and palm kernel oil, as well as contract refining for other parties.
The company currently produces Palm Kernel vegetable oil from local raw materials, which are primarily utilised by corporate groups to produce their products, primarily biscuits and cheese balls, and are sold in local markets and outlets throughout the country for home consumption. It also provides distilled fatty acid, a byproduct of the palm kernel that soap producers rely on as a major raw material.
The company has the potential to manufacture 1,500 tonnes per month and 18,000 tonnes per year at an average sales price of N245,000 naira per tonne, generating an annual income of N4,410 billion naira.
However, the company’s actual performance is an average of 800 tonnes per month and 9,600 tonnes per year at an average selling price of N245,000 naira per tonne, resulting in an annual income of N2,352 billion naira, with an adverse variance of N2,058 billion, which could rise if these challenges are not addressed.
The Researcher is the Executive Director in charge of the company’s administration and marketing activities, and in general oversees all aspects of running the business, such as purchasing and stocking all raw materials, as well as all administrative, marketing, and planning functions, with the exception of operational production functions, which are handled by semi-skilled artisans.
The company has stood the test of time as a pioneer in Nigeria’s vegetable oil industry. With outstanding commercial relationships with its suppliers and more bargaining power than its competitors, PNL has carved out a position for itself by manufacturing high-quality vegetable oil that has become the preferred choice of its consumers over time.
Despite a rise in the company’s turnover over the last decade from an annual turnover of N1 million to a current turnover of over N2 billion, the company is not yet working at full capacity.
The researcher’s company hires semi-skilled male artisans based on the demanding working hours (continuous batch refining method) and conditions, as well as the types of low-skilled competencies necessary, such as plant operators, electricians, welders, boiler operators, maintenance operators, and so on.
They work a 10/12 hour shift schedule. These personnel are typically disgruntled and come from the lower strata of society, with a low socioeconomic status, bad familial conditions, and insufficient education.
The autocratic leadership style, along with the lack of structural procedures (especially in terms of financial decisions), is harming the company’s strategic planning. Management is likewise concerned with the random allocation of human, financial, and fixed asset resources. The corporation employs inexperienced finance staff who lack focus and direction in making financing, investment, and operating decisions for the company.
As a result, objectives and goals are not clearly defined, and performance cannot be measured. PNL has also encountered certain other external issues, such as fierce rivalry and threats from new entries into the market, which have reduced the company’s revenue.
Unexpected events around PNL, such as inflation, economic/political instability, and changes in government policies, regulations, and technology innovation, all contributed to the company’s troubles.
In addition to the foregoing, a single customer who accounts for around 75% of the company’s revenue is of significant worry to management because the customer generates the majority of the revenue, and as a result, PNL is somewhat vulnerable.
To summarise, the danger of near alternatives such as soya bean, palm oil, sunflower, olive oil, and others, as well as fierce industry competition, have had an impact on the company’s returns and profitability. All of this has resulted in the organisation failing to meet its objectives, strategic mission, and vision.
Management’s questions include how to identify the root cause of the decline and how to orient employees to perform optimally by managing them in the best possible way to increase productivity and fulfil the company’s goals and objectives, which will effect profitability and growth (Price, 2007).
To cover the current gap in the firm’s human resource management and propel the organisation forward, it is critical to build an effective and efficient Performance Management System.
1.2 STATEMENT OF THE PROBLEM.
The company is dealing with angry personnel, absenteeism, and staff retention challenges, all of which lead to poor performance and an inability to reach PNL’s objectives and goals.
The leadership style, combined with haphazard human, financial, and fixed asset resource allocation, as well as the lack of a reward system to inspire staff, are all part of the issues.
There is also the issue of competitive rivalry and threats from new market entries and replacements, as well as unforeseeable factors such as inflation, economic/political instability, changes in government laws and regulations, and technological innovation. As a result of all of these issues, staff productivity and performance have been falling.
Management’s difficulty is how to handle these concerns while maintaining an efficient and successful workforce. Management must implement a performance management system to handle issues and accomplish the company’s productivity, profitability, and growth goals.
1.3 PURPOSE OF THE STUDY
The primary goal of this research is to create a performance management system at Pioneer Nigeria Limited that will boost productivity, profitability, and help the company become more result-oriented.
1.4 PURPOSE OF STUDY
The purpose of the study led to the following research objectives:
1. Determine the impact of performance management on the company’s revenue and profit.
2. Determine how organisational structure and culture influence employee performance.
3. Determine the causes of low employee performance at the researcher’s organisation.
4. Assess the impact of employee retention and turnover on performance.
5. Adapt a performance model or theory to close the performance difference.
1.5 RESEARCH QUESTIONS.
Based on the study’s objectives, the following research questions were raised:
1. How will performance management effect the company’s revenue and profits?
2. How does the current organisational structure and culture affect employee performance?
3. What are the reasons for low employee performance at the researcher’s company?
4. What is the impact of employee retention and turnover on performance?
5. What appropriate performance model or theory can be applied to close the performance gap?
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