THE APPLICATION OF EFFECTIVE MANAGEMENT MODELS IN SUSTAINING ORGANIZATIONAL PRODUCTIVITY

(A CASE STUDY OF OKOMU OIL PALM COMPANY PLC)

ABSTRACT

This project work seeks to examine the impact as well as the application of management models in sustaining organizational productivity using Okomu Oil Palm Company Plc as a case study. Improving productivity is construed in this paper as putting in place the right structures that are capable of raising output from existing resources in the organization. All over the world, governments and businesses have been concerned about productivity improvement in organizations for a number of reasons. The first is that productivity is a major issue in foreign competition, and if government’s export promotion drive is to yield the desired results, productivity in particular must be optimized. The second reason is that the declining rate of increase in productivity is a major cause of monetary problems and inflation, and governments obviously should be interested in both. The issue of how best to improve productivity had always been at the centerburner in organization theory and practice since the onset of management learning. For decades, management researchers have been obsessed with the kinds of structure that will promote effective employee behaviour and subsequently increase productivity. Is there a one best structure in organizational design in pursuit of increased productivity? In this paper, attempt is made to review and critique a number of the better-known approaches to early management theories that emphasized performance improvement in the organization such as the scientific management theory, the classical management school and the behavioural science school. The conclusion is that there is abundant evidence that the application of these theories to improve organizational efficiency and productivity have not yielded the desired result because of over emphasis on technical optimization at the exclusion of human side of the enterprise. Organizational efficiency and effectiveness can only improve where management has given all necessary incentives, developed the ability of workers to perform and there is already a willingness on the part of workers to perform better.

TABLE OF CONTENTS

Cover Page                                                                                                 i

Title Page                                                                                          ii

Certification Page                                                                                       iii

Dedication                                                                                         iv

Acknowledgment                                                                              v

Table of contents                                                                              vi

Abstract                                                                                            x

CHAPTER ONE

INTRODUCTION

1.1       Background of the Study                                                          1

1.2       Statement of Problem                                                                3

1.3       Objectives of the Study                                                             4

1.4       Statement of Hypothesis                                                           5

1.5       Significance of the Study                                                                    5

1.6       Scope of the Study                                                                    6

1.7       Limitation of the Study                                                             6

1.8       Definition of Terms                                                                             6

1.9       Background Of Okomu Oil Palm Company Plc                           7

CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction                                                                              11

2.2 Meaning of productivity                                                           11

2.3 Increasing productivity through the use of
scientific management model                                                       15

2.4 Increasing productivity through the classical organization
 theory approach to appropriate organizational structure                    18

2.5 Increasing productivity through the use of behavioural model        20

2.6 Improvement of human effectiveness at work is the greatest opportunity for the improvement of performance and results       23

2.7 Equity theory of motivation                                                    35

2.8 Assumptions of the equity theory                                           27

2.9 Adams’ equity theory                                                              28

2.10 How to apply the Adams’ Equity Theory                                      28

CHAPTER THREE

RESEARCH METHODOLOGY

3.1       Introduction                                                                              31

3.2       Research Design                                                                        31

3.3       Population of Study                                                                  32

3.4       Sample Size/Sampling technique                                                        32

3.5       Method of Data Collection                                                                  32

3.6       Data Analysis Techniques                                                                  34

3.7       Validity of instrument                                                            35

3.8       Reliability of instrument                                                        35

CHAPTER FOUR

DATA PRESENTATION, ANALYSIS AND INTERPRETATION

4.1       Introduction                                                                              37

4.2       Data Presentation                                                                      38

4.3       Test of hypotheses                                                                              45

CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION

5.1       Introduction                                                                              50

5.2       Summary of Findings                                                                50

5.3       Conclusion                                                                                52

5.4       Recommendations                                                                     53

References                                                                                       55

Appendix                                                                                          59

Questionnaire                                                                                    60

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

The productivity of an organization is jointly determined by the efficiency with which the organization utilizes several available factors of production which invariably are scarce relative to the demand for them. As it were therefore, one can conceive of an equilibrium condition in productivity terms within given and stated constraints in an organization. Like the price scenario, several factors operate to make it difficult to optimize the use of human and other resources in the organizations such that the equilibrium condition is not achieved easily. Ouchi (1981) clearly pointed this out when he addressed the issue of what he labeled “the organizational dilemma” i.e. the organization’s search for rationality (technological determinism) and the human beings search for happiness (as in the doctrine of Hedonism).

Technology and labour are therefore the major factors/variables in the productivity equation, with the one or the other being emphasized at different points of the trade cycle. Like many economists would posit, during economic recession, emphasis is usually placed on the relationship between productivity and unemployment. According to McClelland and Winter (1969) during periods of rising prices, interest usually shifts to the problem of rising costs and the relationship between productivity and wages. As a result, many early attempts at increasing productivity emphasized technical optimization (as in scientific management) or social system optimization (as in human relations school).

All over the world, governments and businesses have long been very concerned about productivity improvement for a number of reasons. The first is that productivity is a major issue in foreign competition, and if any government’s export promotion drive is to yield the desired results, labour productivity in particular must be optimized. The second reason is that the declining rate of increase in productivity is a major cause of monetary problems and inflation, and government obviously should be interested in both. In this paper, we shall attempt a review and critique of a number of the better-known approaches to early management theories such as the scientific management, the classical organization, and the behavioural schools that emphasized performance improvement in the organization with a view to charting a new course in solving the problem of managing entrepreneurial organizations for optimal performance in this age of increasing competition.

When Alfred Marshal (1890) showed that price is determined by demand and supply operating, simultaneously, little did we know that the concept can apply to productivity improvement in the organization? According to Marshal (1890) when demand equals supply there exists an equilibrium price. However several factors are said to act on both demand and supply in such a way that the equilibrium price does not necessarily rein all the time demand has equaled supply.

1.2 STATEMENT OF PROBLEM

Productivity is a major issue in foreign competition, and if government’s export promotion drive is to yield the desired results, productivity in particular must be optimized. The declining rate of increase in productivity is major cause of monetary problems and inflation, and governments obviously should be interested in both. The issue of how best to improve productivity had always been at the center burner in organization theory and practice since the onset of management learning. For decades, management researchers have been obsessed with the kinds of structure that will promote effective employee behaviour and subsequently increase productivity. Is there a one best structure in organizational design in pursuit of increased productivity? There is abundant evidence that the application of these theories to improve organizational efficiency and productivity have not yielded the desired result because of over emphasis on technical optimization at the exclusion of human side of the enterprise.

Managers suffered frustration, because people did not always follow predicted or expected patterns of behaviour. Thus there was increased interest in helping managers deal more effectively with the “people side” of their organizations. 

The effective motivation of workers is a problem in most organizations regardless of the theory applies to dealing with such motivation; this is probably because there is no implementation of the necessary procedure or techniques of motivation.

1.3 OBJECTIVES OF THE STUDY

1.     To examine the impact of the application of management models on organizational productivity

2.     To examine the relationship between management models and organizational productivity.

3.     To investigate the issues in the application of management models in sustaining organizational productivity.

4.     To examine the process of application of management models in the organization under study.

5.     To investigate how to improve productivity through the application of management models in organizations.

1.4 RESEARCH QUESTIONS

1.     Are there positive impacts of the application of management models on organizational productivity?

2.     What are the relationship between management models and organizational productivity?

3.     What are the issues in the application of management models in sustaining organizational productivity?

4.     What are the processes of application of management models in the organization under study?

5.     What are the best methods of applying management models in sustaining organizations productivity?

 1.5 RESEARCH HYPOTHESES

The following research hypotheses formulated will be empirically tested and result gotten will serve as a spring hoard for recommendations.

HYPOTHESIS I

Ho: The application of effective management models has no positive impact on           organizational productivity.

Hi: The application of management models has positive impacts on         organizational productivity.

HYPOTHESIS II

Ho: There is no significant relationship between management models and organizational productivity.

Hi: There is a significant relationship between management models and organizational productivity.

1.5 SIGNIFICANCE OF THE STUDY

At the end of this study, most organizations will understand that basic principles and process of application of management models and how it affect productivity and performance in organization. It will also serve as a guide for further researches.

1.6 SCOPE OF THE STUDY

The research is mainly based on the application of management models and how it affects organizational performance and productivity. This is done using Okomu Oil Palm Company Plc as a case study. This means that the area in which data were collected for the study is limited to Okomu Oil Palm Company Plc.

1.7 LIMITATION OF THE STUDY

One of the major problems encountered by the researcher is the insufficient time to embark on a more elaborate research on the topic. Another problem is the monetary problem. There was no sufficient money to make the purchasing of all necessary materials for the research work. There was also the problem of meeting some personalities to get information from them. Because of that, the researcher found it difficult to collect all the necessary information. However, the researcher made do with the resources available for her research work.

1.8 DEFINITION OF TERMS

i.                   Management Model: A Management Model is simply the set of choices made by executives about how the work of management gets done - about how they define objectives, motivate effort, coordinate activities, and allocate resources.

ii.                 Productivity: Productivity is an average measure of the efficiency of production. It can be expressed as the ratio of output to inputs used in the production process, i.e. output per unit of input. When all outputs and inputs are included in the productivity measure it is called total productivity. Outputs and inputs are defined in the total productivity measure as their economic values. Productivity measures that use one or more inputs or factors, but not all factors, are called partial productivities.  

iii.              Organizational Productivity: The capacity of an organization, institution, or business to produce desired results with a minimum expenditure of energy, time, money, personnel, materiel, etc.

1.9 BACKGROUND OF OKOMU OIL PALM COMPANY PLC

The Okomu Oil Palm Company Plc is a manufacturing company that is located at Okomu Oil Palm Estate, Okomu-Udo, Ovia South-West L.G.A., Benin City, Edo State, Nigeria.

The Okomu Oil Palm Company Plc engages in the development and management of oil palm and rubber plantations, as well as processing of palm oil, kernel, and rubber in Nigeria. It offers palm oil, palm kernel oil, palm kernel cake, banga and rubber cup lumps, and rubber slabs. The company sells its products directly to individual customers and industrial users.

The Okomu Oil Palm Company was established in 1976 as a Federal Government pilot project aimed at rehabilitating oil palm production in Nigeria. At inception, the pilot project covered a surveyed area of 15,580 hectares out of which 12,500 hectares could be planted with oil palm. It was incorporated on December 3, 1979 as a limited liability company.

By December 31, 1989, 5,055 hectares of the estate had been planted. The company also began infrastructural developments on the estate at that period. The facilities included office blocks, workshops/stores, staff quarters, a petrol station, a powerhouse and a primary school for children of the company's staff members.    

In 1990, the Technical Committee on Privatization and Commercialization (TCPC) privatized The Okomu Oil Palm Company on behalf of the Federal Government of Nigeria. It has since grown to become Nigeria's leading oil palm company with 8,800 Ha of mature palm, a young extension of 4,000 Ha of rubber, and a palm oil mill of 30 tons per hour capacity. 

The privatization of the Okomu Oil Palm Company Plc has been a great success and a huge encouragement for the Nigerian agricultural sector for the future, with profound positive consequences of stable socio-economical growth for the region where it is implanted. The success of the company was further demonstrated by the strong increase of its net income which allowed doubling of its dividend. 

This company has consistently posted profits in the last 10 years, a period during which most other agricultural initiatives in the country had either folded up or were performing sub-optimally. 

What is most inspiring is not just the growth and profitability of the company but the fact that The Okomu Oil Palm Company Plc is ranked 10th among listed companies with the largest turnovers quoted on the Nigerian Stock Exchange (NSE). It is the only agric-business in the NSE's top 16 companies with the largest turnovers. According to the June - July issue of the  Bottomline  magazine, The Okomu Oil Palm Company Plc is the ninth company with the highest profits before tax among companies quoted on the NSE, and the only agro-business on the Exchange's top 16. 

Today, what is now known as The Okomu Oil Palm Company Plc has transformed into an economic success, earning presidential commendation and recording over 300 percent rise in profit after- tax (PAT) from the preceding year. 

The excellent quality of oil produced by Okomu guarantees good selling price on the local market, which absorbs the whole production. 

Just as its expanding in size, its corporate environment is also expanding. Currently, the company employs over 800 permanent and several independent sub-contractors. All these have added up to place it on top in the growing oil palm business and to position it as an emerging leader in rubber production. 

With all these facts. The Okomu Oil Palm Company Plc has lived true to its slogan: "With nothing we can do nothing, but with little, we can achieve plenty".

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