EXECUTIVE COMPENSATION PACKAGES AND ITS EFFECT ON AUTHORITARIAN MANAGEMENT STYLE
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EXECUTIVE COMPENSATION PACKAGES AND ITS EFFECT ON AUTHORITARIAN MANAGEMENT STYLE
ABSTRACT
The study looks at executive salary packages and authoritarian management styles in fast-moving consumer goods industries. The investigation focused specifically on Cadbury, Nestle, and Dangote Nigeria Plc. The study used a descriptive survey method.
The study’s population consists of all management staff from Cadbury, Nestle, and Dangote Nigeria Plc. The study used a basic random sampling technique to choose its sample. Data for the study were gathered through the use of a standardised questionnaire.
The acquired data were analysed using descriptive statistics (mean and standard deviation), and the hypothesis was verified using regression techniques. All analyses were carried out using SPSS.
The investigation found that executive compensation packages such as long-term incentives and retirement plans have a favourable and significant impact on the authoritarian management style of fast-food enterprises.
It was also discovered that annual incentives, bonuses, and supplemental retirement plans have a negative and significant impact on the authoritarian management style of managerial staff in fast-food enterprises.
It was suggested that fast-food corporations offer long-term incentive plans and retirement plans for their management team since it increases the authoritarian management style.
Chapter one
INTRODUCTION
1.1 Background of the Study
The approach used by organisational managers to direct, guide, and regulate personnel in their service determines the rate of progress in that organisation (Clark, 2010). That is, if business managers appropriately govern, direct, or advise their subordinates by using an appropriate leadership style, employees will be more committed to their jobs. However, in certain organisations, managers are no longer effective or dedicated to their jobs.
Employees, for their part, become complacent about their work tasks, which has a negative impact on the organization’s performance. According to Adamaechi and Romaine (2012), management is critical in any type of group or organisation
and it can make the difference between success and failure in any group or collaborative activity. As a result, in order for an organisation to succeed, its management must be led by qualified individuals.
An effective management style must include persuading people to improve organisational performance and achieve goals. According to Igbo (2012), management style should affect group activities and lead to achievement.
It is an individual’s behaviour when he directs and guides the activities of a group towards a common objective. His success or failure in achieving the organization’s goals is primarily determined by his ability to effectively arrange and use the human and material resources at his disposal.
Scholl (2010) defines management style as a pattern of behaviour used by a company manager to influence group members and make decisions on the mission strategy and operation of group activities. Clark (2010) defined management style as the way and approach to offering direction, executing plans, and inspiring employees.
It is critical that corporate managers have an effective management style that will result in maximum organisational productivity. Ram (2011), Mgbodile (2014), and Melling and Little (2014) provided detailed descriptions of authoritarian, democratic, and laissez-faire management styles.
According to them, an autocratic leader is one who is overbearing in his administration. He serves as the focal point for all activities at the establishment where he works as manager. All authority originates and ends with him, making him the primary determinant of action (Ram, 2011).
He monopolises the decision-making process and makes all decisions on his own. He believes that his ideas and opinions are superior to those of his subordinates, and that involving them in decision-making is a waste of time.
He utilises threats and intimidation to ensure complete obedience and dependence on him. He does not tolerate opposition and considers individuals who have opposing ideas to be enemies of his administration. He clamps down on resistance with ferocity and seeks for universal obedience to his commands.
Workers under an autocratic manager may be perceived as working under pressure and fear most of the time, and they frequently express dissatisfaction with this style of management through various means such as eye service, tardiness to work, decreased work output, sabotage, seeking transfer, or voluntarily resigning from the establishment (Clark, 2010).
The authoritarian manager finds it difficult to obtain genuine love, support, and collaboration from subordinates who perceive his administration as a “one-man show.” According to Yalokwu (2010), the Canadian Association of Student Activity Advisers (2004)
and Umeakuka (2015), an autocratic manager has little or no trust and faith in his or her subordinates; makes decisions alone; gives orders and commands without regard for the subordinates; determines group policy; gives step-by-step instructions and dictates tasks; believes he is always right and does not entertain questions from subordinates.
According to Nwankwo (2011) and Enoch (2009), an autocratic management style is one in which productivity takes precedence over all human considerations and decisions are made solely by the manager.
According to Pagewise (2012), an autocratic style is effective and should be used when new untrained employees do not know which tasks to perform or which procedures to follow; effective supervision can only be provided through detailed orders and instructions;
and employees do not respond to any other management style. The Canadian Association of Student Activity Advisers (2004) agreed that an authoritarian management style is effective and should be employed when time is limited.
It is vital to highlight that both managers and subordinates are working towards the objective of achieving organisational profitability in order to secure their pay and benefits. The study suggests that authoritarian management style should be considered, particularly when an executive remuneration package policy is in place in the organisation.
Executive compensation packages differ significantly from standard pay packages for hourly labour, salaried managers, and professionals in that executive pay is mainly geared towards rewards for actual results.
As a result, if a company underperforms, CEOs often receive a lower percentage of their prospective income. In contrast, if a company accomplishes its annual objectives and the stock price rises over time, the executives will receive a significantly greater dividend.
There is no question that any manager who receives little compensation will undoubtedly compel his or her subordinates to do severe work with little regard for their welfare. The executive compensation package is designed to reward firm performance and connect executive pay with shareholder value.
As a result, unlike most other employees, the bulk of CEO pay is at risk, which means that executives may never get it. However, if executives and the company do well, they and the company’s shareholders stand to benefit significantly from superior performance.
Based on all of these factors, the study concluded that it was worthwhile to investigate CEO compensation packages and their impact on authoritarian management style in a selected fast-consuming good company in Nigeria.
1.2 Statement of the Problem
According to the Canadian Association of Student Activity Advisers (2004), an authoritarian management style should not be employed when the purpose is to establish a strong sense of teamwork, there is some level of competence or knowledge among members, and the group wants some spontaneity in its work.
According to the study, an autocratic management style is defined by the manager’s strong preference for centralised decision-making power and a reluctance to share position, power, and authority with others. Tasks are assigned without consultation, and the management assumes acceptance without question.
In this situation, command, control, terror, and micromanagers saturate the environment. Although this could be influenced by organisational policy regarding executive compensation packages, a situation in which annual incentives and bonuses, long-term incentive plans, retirement plans, and supplemental executive retirement plans all have a significant impact on the organization’s financial performance.
As a result, managers must rely on their ability to implement a competent management style that ensures high productivity in order to safeguard their future. Most multinational corporations, particularly those that produce fast-moving consumer goods, use CEO remuneration packages with authoritarian management styles.
However, the researcher recognised the importance of investigating CEO remuneration packages and their impact on authoritarian management styles in fast-moving consumer goods companies, as no academic research has been undertaken on this topic anywhere in the world.
1.3 GOALS OF THE STUDY
The broad aims of this study are to analyse executive compensation packages and their effect on authoritarian management style in fast-consuming products companies, with the following specific objectives:
To investigate the structure of executive remuneration packages used by fast-moving consumer goods companies in Nigeria.
To investigate the implications of executive compensation packages adopted by fast-moving consumer goods companies in Nigeria.
To study the effect of executive salary packages on authoritarian management style in fast consumer goods companies in Nigeria.
1.4 Research questions.
What is the structure of executive remuneration packages used by fast-moving consumer goods companies in Nigeria?
What are the effects of CEO remuneration packages adopted by Nigerian fast-moving consumer goods companies?
What effect do executive compensation packages have on authoritarian management styles in Nigerian fast-moving consumer goods companies?
1.5 Hypothesis.
HO: Executive salary packages show no substantial effect on authoritarian management style in Nigerian fast-moving consumer goods industries.
1.6 Scope of the Study
The study focuses on executive compensation package variables such as annual incentives and bonuses (AIB), long-term incentives plan (LTIP), retirement plans (RP), supplementary executive retirement plan (SERP), and authoritarian variables such as command and control (CC), fear (F), micromanagers (MM), and rule-driven (RD).
The investigation is being conducted in Lagos at Nestle Nigeria Plc, Cadbury Nigeria PLC, and Dangote. The study’s unit of analysis is the employees of Nestle Nigeria Plc, Cadbury Nigeria PLC, and Dangote Company in Lagos who hold junior, middle, senior, and management roles.
1.7 Significance of the Study
The following are the implications of this study:
The study’s conclusions will serve as policy guidelines for the government, policymakers, business administrators, shareholders, and the general public about executive salary packages and their impact on authoritarian management style.
It will also educate on the structure of compensation systems used in many organisations, taking into account the success of authoritarian management styles.
This study will contribute to the corpus of knowledge on executive remuneration packages and their impact on authoritarian management styles in organisations, thereby establishing the empirical literature for future research in the field.
1.8 Definition of Terms
A compensation package is the combination of wages and fringe benefits that an employer offers to an employee. When considering competing employment offers, a job seeker should consider the complete package rather than just the compensation.
Authoritarian management style: This is when a leader dictates policies and procedures, decides what goals are to be reached, and directs and controls all actions without any meaningful input from subordinates.
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