IMPACT OF EMPLOYEE COMPENSATION ON ENTREPRENEURIAL PRODUCTIVITY
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IMPACT OF EMPLOYEE COMPENSATION ON ENTREPRENEURIAL PRODUCTIVITY
Chapter one
INTRODUCTION
1.1. Background of Study
Concerns about economic development became widespread following World War II. There was a growing worry about economic development, which fueled interest in entrepreneurship, with a primary focus on identifying practical ways to increase the supply of entrepreneurs, i.e. those with the skill and aptitude to start, nurture, and build industrial firms.
This led in a belief in education and training to instill and develop entrepreneurial skills in people so that they might start their own businesses. Subsequently, programmes aimed towards this end were developed.
The nineteenth century was a rich period for entrepreneurship, since technological developments throughout the industrial revolution created momentum for more inventions and innovations.
Much of the literature on entrepreneurship comes from the United States and Europe, and is consequently based on Western values and traditions. The study of entrepreneurship is expanding as a topic of inquiry and is one of the most appealing areas of research in management.
Entrepreneurship (small business enterprise) has a big impact on the international economy. Small company firms make up the vast majority of businesses in all economies around the world (Hill and McGowan, 1999; Timmons, 1994; Storey, 1994; Culkin and Smith, 2000). Some of the world’s multinational firms, which have influenced many global economies, began as tiny company ventures.
In Nigeria, entrepreneurship (small business enterprises) makes for a significant portion of overall industrial employment, production, and value-added in Nigerian businesses. Okongwu (2001) explained that small businesses generate Nigeria’s industrial wealth while also playing an important role in the country’s economic
technological, social, and political growth and development, despite the presence of multinational and other large firms in Nigeria such as Shell, Mobil, NNPC, NITEL, NPA, NPHC, Lever Brothers, Nestle Foods, and others.
Small business entrepreneurship creates jobs not only for the entrepreneurs, but also for the rest of the Nigerian economy. The result of job creation is a reduction in reliance on government to provide jobs for everyone, a reduction in government expenditure
an improvement in Nigerians’ standard of living, a reduction in social ills in society, a balanced budget for the economy, and, invariably, an increase in Gross Domestic Product (GDP).
Entrepreneurs contribute significantly to economic development by efficient and effective entrepreneurial techniques and tactics, such as manufacturing and presenting new goods, services, and ideas to the market or developing new production processes or technologies. Entrepreneurial business organisations and people drive today’s global economies.
The conceptualization, development, manufacture, and commercialization of new goods, services, and ideas has the potential to revitalise existing industries or establish wholly new ones.
Entrepreneurial businesses and individuals are the change agents who propel modern societies forward and spark beneficial innovations through continuous improvement, creative destruction of old offerings and processes, and creative transformation of systems and cultures (Kropp and Zolin 2005).
As a result, in order for Nigeria to be considered in the global economic community, there is an urgent need to foster entrepreneurship in the country’s small business enterprises.
It should be a managerial and governmental policy to recognise that entrepreneurship is required in the Nigerian economy to create jobs, reduce unemployment, crime rates, government spending, poverty, social unrest, create wealth, increase economic productivity, provide convenient services, and raise Nigeria’s standard of living.
For the Nigerian economy to be strong and stable in the relevant sectors, entrepreneurship in small business enterprises must be encouraged and practiced through the implementation of relevant policies, efficient and effective management practices, and the provision of an enabling environment in Nigeria.
Entrepreneurial success or productivity is intimately connected to employee performance and compensation. The capacity to remunerate employees is widely regarded as a crucial management tool for increasing entrepreneurial efficiency. Adequate employee remuneration motivates employees to do their best, which leads to higher production.
Employee pay is described as “the reward or compensation paid to employees for their work performance.” It is a strategy for boosting morale, enhancing motivation, and fostering team cohesion.
There are two types of employee remuneration: piece rate and time rate. The former is compensation based on unit productivity, whereas the latter is the amount of time that person devotes to a job, such as completing a project ahead of schedule.
1.2 Statement of Problems
Employees in the majority of private organisations in Nigeria are underpaid, resulting in low entrepreneurial output.
Management appears to disregard variables that provide a favourable atmosphere for compensation, such as a nice working environment, proper and adequate remuneration, promotion, training, and personnel development.
According to research, in the private sector, employee compensation and motivation receive little to no attention. There is a greater emphasis on increasing productivity.
In today’s competitive world, management must consistently mimic strategies that attract and maintain a highly trained and skilled team. Employees who are dissatisfied with their jobs may be forced to work owing to unemployment or uncertainty, but this is detrimental to the organization’s long-term development.
Inadequate employee remuneration causes unhappiness, which leads to low entrepreneurial productivity. Other manifestations of dissatisfaction include internal tensions, poor interpersonal relationships, low trust, stress that leads to workplace conflict, and violence.
It is well acknowledged that today’s employees are more concerned than their ancestors with the quality of their working lives and the psychological rewards that come with it.
It seems improbable that many of them would continue to work if they were not compensated. This highlights the importance of remuneration inside an organisation.
1.3. OBJECTIVE OF STUDY
Money is the most apparent kind of reward for work. It’s not unexpected that employees place a high value on their salary. The primary goal of this study is to determine the effect of employee compensation on entrepreneurial output.
Other objectives of the study include the following:
i. To stress the importance of sufficient remuneration, particularly in the private sector.
ii. Determine the impact of inadequate pay on entrepreneurial output.
iii. Determine the relationship between salary and employee performance.
iii. Evaluate and acknowledge staff performance issues in terms of remuneration and training/development.
v. To address the growing issue of employment unhappiness, which is a primary cause of low entrepreneurial productivity.
vi. To emphasise the importance of employee promotion in connection to entrepreneurial productivity.
vii To identify and address the reasons of high labour turnover.
viii. To emphasise the importance of compensation in attracting and maintaining the right type of employee.
ix. To emphasise the importance of full employee participation in achieving organisational goals.
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