Is Productivity gap significantly closed due to Employee Retention

Decision in Manufacturing Firm? Sensitivity case of GUINNESS NIGERIA 2007-2014

DWIPS Research & Development Team, July 2015 Study of Organizational Behaviour

Dayo Olorunfemi1

Research & Development consultant

Email: dayojohn2004@gmail.com

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Introduction

In the attempt to understand the motivator of worker behaviour in every given work

environment in factory layout design for either small or large business activities in present

time, employee retention is fundamental. More often than not, retention is triggered by

work experience and skill sets being channeled toward efficient drive for productivity of

output or finished product needed by customers. However, in Douglas McGregors theory

X postulation, managers assume that employees retention and attraction to their job is

primarily driven by reward oriented incentives like monthly salaries and other fringe

benefits. And that in the absence of this continuous rewards and expectations which is

treated as staff cost or overheads in the account & finance department in all organization,

employees outputs in term of processing and production of packaged beverages (alcohol &

non-alcohol drinks made by Guinness Nigeria) will experience slowdown or hitch during

factory and product distribution operations carried out by different category of staff

employed.

The unique and logical question in this study is that:

People ask so much from and give so little to the organizations they work for; this

can make or mar the fortune/ prosperity of organizations and the worker?

Is there a relationship between Organization Behaviour and Employee Productivity?

In order to provide relevant answer towards addressing issue of this kind, an improved

technique for a sustainable engagement of employees at the workplace have being

suggested by Towers Watson 2012 proposition for managers with interest to effectively

handle organization productivity challenges likened to the research question here.

Sustainable Engagement as enabler for Employee Retention

According to Towers Watson (2012) study, sustainable engagement describes the intensity

of employees connection to their organization, based on three core elements that are

fundamental to work environment:

The extent of employees discretionary effort committed to achieving work goals

(being engaged)

An environment that supports productivity in multiple ways (being enabled)

A work experience that promotes well-being (feeling energized)

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Based on the suggested results contained in table 1 above, modern employers

including manager therefore needs to understand the root causes behind changes in

employee behaviours or group performance, at different responsibility level, skill sets and

also work experience requirements for production process. The three key attributes of

sustainable engagement are essentially important to accomplish acceptable behaviour at

group or team level in realignment of the staff turnover coined as supply of and demand for

talents, which can lead to employees retention and productivity improvement for business

growth.

Another critical element of productivity growth is work design, be it among the

category of job specialization, job rotation and job enrichment. This characteristic of work

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design structure are also fundamental driver of employee retention because of it positive

support towards individual carrier advancement. Though, carrier development is a long-

term objectives pursuit for most professional and creative employees, as compared to

monthly salaries income rewards continuum specified as theory X worker expectation in

Douglas McGregors motivation theory.

More importantly, using chart evidence of growth in employees retention technique

in a typical manufacturing firm like that of Guinness Nigeria Plc as supporting findings in

figure 1 above; It appears that more staff were employed in 2011-2014, compared to 2007-

2010 numerical staff strength on average estimate. Put differently, that employees retention

is rising at an increasing rate in Guinness Nigeria and managerial decision making is

targeted at sustainable engagement for operations and technical staff, sales and

distribution, commercial or product export officers, corporate affairs and human resources

as well as marketing staff employed (see evidence in appendix 1) whom are continuously

engaged by Guinness top management.

Although, for instance, the year-on-year number of operations and technical staff is

about 711 persons (see staff strength in appendix 1) on average estimate. This group of

employee are significantly different, compared to small number of marketing staff about 22

persons.

From the foregoing evidence, the structured nature of job classification and roles

found at Guinness Nigeria Plc, it seems that job rotation is however assumed to be less

likely in the short-run decision. Moreover, if new beverage brand opportunities exist for

Guinness product to enter new markets segment, a carrier advancement programme can be

administered to qualified staff in the long-run.

Relational algebra for Productivity metrics, Retention and Engagements

Apart from the removal of barrier to employee retention which is entrenched in the work

design characteristics and workplace environmental factors, there is also the urge for

managers to take note of organizational culture and work experience as focus points and

drivers of sustainable engagements and workers retention technique to remedy symptoms

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of unacceptable behaviour that can have adverse impact on the organization productivity

status in the short run. Moreover, the figure 2 evidence is instrumental to diagnose

expected issue.

Using the group level data contained in financial statement from Guinness Nigeria

plc 2007-2014, the objective of figure 2 process tracing is a potential avenue used to

examined the symbiosis relationship between productivity metrics, retention signals and

sustainable engagement appraisal. These translate to average cost in the left axis and

average output in the right axis, conceived as cost and benefit analysis of organization

performances annually.

In the statistical analysis available in figure 2, the critical findings here are threefold.

First evidence, suggest that overall staff cost on average estimate is about 7.4 billion naira,

and thus lower than 40 billion naira yield on average output quantifiable in value added

(beverage productivity). The significant 33 billion naira surplus gap or difference observed in

cost compared to output contribution per annual information; appear to be what matter

most in this investigation from Guinness management point of view.

Second, only the employee benefits in 2013 and 2014 appear to be 22% to 25%

positive point; this is, the staff salaries as a proportion of value added, outweighs that of

19% average workforce benefits observed in 2010. This implies that about 1 billion (22% -

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25%) naira or less, out of every 4 billion naira earn goes back to employees as reward from

efforts attributed to value added measured in terms of worker productivity metrics in

Guinness Nigeria operation in 2013-2014. Simply put, that employees earn 4times less as

benefits, compared to their level of efforts per annual.

Employees have been doing more with less and for less for over half a decade, and

that reality doesnt seem likely to change anytime soon. (Watson, 2012, p.3)

Thirdly, a continuous shrinkage in productivity occurred with peak period observed in

2011 and downward outcome yield since 2012 to 2014 operation in Guinness Nigeria plc.

Thus, exposing necessary opportunities for interactions and communication between

employee and senior management on redefinition of strategy to leapfrog and possibly

correct the deficiencies around group behaviours, beverage product processing, and

distribution, without neglecting marketing staff response within existing market and niche

area.

Leadership Model for Sustainable Engagement Impact

In summary, there is urgent call for managers to implement effective and concise leadership

style as strategy to drive sustainable engagement in relation to employees interest or

wellbeing. Such leadership function is presently been administered and consistent with

procedures obtained in Guinness Nigeria Plc, following the evidences released and

contained in Guinness financial report (2014). At Guinness, occupational health and

employee safety has equal importance with all other business activities and programs. To

prevent a crisis situation where thing can fall apart in future operations due to health

hazard risk; In 2007, Diageo which is the parent company of Guinness, launched her Zero

Harm Strategy to ensure that every one working or visiting her production factory goes

home safely on every day and everywhere. This is in line with the Diageo purpose of

celebrating employee life every day at various branches of operation, both onshore and

offshore. In the objective and mission statement of Guinness Nigeria Plc:

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Our aim as a Company is to create a proactive safety culture in which all our employees

believe that all injuries and occupational illnesses are foreseeable and preventable and we act

in a manner that demonstrates their personal commitment to this aim.

Finally, in the judgments and assertion made by Guinness management level, valuing each

other is one of Guinness group values and this starts with every employee being passionate

about keeping each other safe; obsessively committed to preventing every single injury and

recognizing the benefits of safe behavior and celebrating safety success. Furthermore, all

employees of the Company are provided free medical care in designated hospitals.

Conclusion

In this study, the leadership approach adapted by Guinness Nigeria, which is centered on

ways and means for sustainable employee engagements, tends to be an optimal and

proactive mechanism and also a technique used for managing the dark side of stress

inherent in all organization work design and workplace environment. To avoid issue of

insufficient skill sets which triggers shrinkage in productivity on one hand and high staff

turnover or low employee retention rate on the other hand, organization behavioural

pattern captured in cost/benefit analysis in figure 2 is essential for business continuity and

growth. Aside the potential for productivity and growth factor, the changes in work

experience to match executable workload and task complexity must be fully understood

and acknowledged by supervisors and human resources planners in the workplace. As

important as that of agents (employees) interest towards long term retention and Nigeria

workers behaviour concerning job security assessment basis, the principal (employers)

should not in any way compromise quality or improvement in productivity at any given level

of wage cost and hiring process design within it human resource unit. It is also rational to

categorically point out that, without closing adverse human behavioural gap, the dynamics

of group behaviour like retention opportunism and key engagement priority compared to

short-term wage income incentive which happen to be a drawback of theory X; can cause

possible diminishing returns in productivity of workers in manufacturing environment.

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Reference:

Watson, T. (2012) Engagement at Risk: Driving Strong Performance in a Volatile Global

Environment, Global Workforce Study.

Guinness (2007-2008) Annual Report and Financial Statement: Guinness Nigeria Plc

Guinness (2009) Annual Report and Financial Statement: Guinness Nigeria Plc

Guinness (2010) Annual Report and Financial Statement: Guinness Nigeria Plc

Guinness (2011) Annual Report and Financial Statement: Guinness Nigeria Plc

Guinness (2012) Annual Report and Financial Statement: Guinness Nigeria Plc

Guinness (2013-2014) Annual Report and Financial Statement: Guinness Nigeria Plc

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Appendix 1

Table 2: Sample Data and Variables measurement

N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 Average

2007 2008 2009 2010 2011 2012 2013 2014

Value added in beverage production 32093624 33348049 40820836 42777547 48790408 46641358 40048497 36512939 40129157

Staff cost: 2007 2008 2009 2010 2011 2012 2013 2014

Salaries, wages & Fringe Benefits 3800710 4231888 5274008 6037317 6423755 7559989 7730644 8427251

Pension fund contribution 200226 236144 282727 309072 384487 447600 88821 75809

Current year gratuity charge (write back) 822441 796229 1324299 886261 -377521 176865

defined contribution charge 211353 328054 176787 368180 848001 986455

long service award (write back)/charge 17273 206310 225363 360803 510129 -310419 232337 37893

overall cost attributed to distribution of value added 4840650 5470571 7317750 7921507 7117637 8242215 8899803 9527408 7417193

Emplyees Salaries & Benefits per Value Added 16% 15% 18% 19% 15% 18% 22% 26%

Staff Strength per annual 2007 2008 2009 2010 2011 2012 2013 2014 Average

Operations and Technical staff 612 710 700 646 687 814 747 769 710.625

Sales and Distribution 306 293 304 346 388 419 466 477 374.875

Commercial 62 78 84 63 88 97 72 104 81

Corporate Affairs and Human Resources 76 64 60 58 51 54 60 58 60.125

Marketing staff 22 21 22 20 23 22 23 25 22.25

Average number of employed 1078 1166 1170 1133 1237 1406 1368 1433 1248.875

Source: Data Extract from Financial reports and account in Guinness Nigeria 2007-2014