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CHAPTER ONE

INTRODUCTION

1.1         Background to the study

In every aspect of human society and endeavor, crisis is seen as a natural phenomenon that is, inevitable as long as human relationships are involved. It is a process that begins when one party perceives that another party has negatively affected or is about to negatively affect something that the first party cares about (Robbins, Judge & Vohra, 2012). At home and at work,crisis is very common and in some cases unavoidable (Mughal & Khan, 2013). As a result of people interacting with each other, friction, disagreements or arguments may arise resulting from actual or perceived differences or incompatibilities, thereby escalating to crisis. Thus, crisis in organizations can take many forms such as interpersonal crisis, task crisis and process crisis which give rise to diverse approaches to crisis management (Budd & colvin, 2013).  

Nigerian Government over the years however has set up various techniques that will guide organizations in the management of crisis. Some of these management techniques are available in the provision of Labour/Employment Act, 1971; Workmen’s Compensation Act, 2010, Trade Dispute Amendment Decree, 1988, No 39 and Trade Dispute Act 18, 2004 which provided five steps for legal management of crisis in organizations in the country (Akinwale, 2011). According to Akinwale, 2011, these policies are voluntary settlements of crisis with the use of internal machinery of grievance procedures and also with the use of external machinery comprising of mediator, conciliator, and reference of disputes to industrial arbitration panel, national industrial court and the constitution of a board of enquiry. In the resolution of crisis, the judgment of the national industrial court is final and binding on the employers and employees from the date of the judgment in the country. Longe (2015) identified that the Trade Union Act, 2005 is also used for managing union-management crisis in organizations and has been adopted by some multinational firms in the country.

Nestle Nigeria Plc is a multinational organization involved in the production of vegetable oil and sale of poultry feeds for export. The organization is often faced with the issue of employees‟ welfare. Employee welfare is an important source of motivation to employees and the lack of it has led to employees having grievances against management which has most times resulted into crisis between both parties and the resulting effect has affected not only the performance of the employees but the organization. Managing the organizational crisis became necessary so as to improve its performance.

Crisis management involves doing things to limit the negative aspects of crisis and to increase the positive aspects of crisis with the aim of enhancing learning and group outcomes, including effectiveness or performance in organizational settings (Rahim, 2011). Crisis management is something that managers need to deal with as crisis significantly affects employee morale and turnover, which affects the prosperity of an organization, either constructively or destructively. Therefore, the effectiveness or otherwise of the management of crisis is largely dependent on how well the causes of the crisis have been understood.

When crisis is well managed, it can bring enormous benefits to people and organizations as crisis management is often one of the biggest drivers of change in any organizational set up. If properly handled, it can create stronger bonds, help people to be more innovative, build effective teams, establish strong working relationship and eventually improve individual as well as organizational performance. The key is to openly face an issue and negotiate a win-win outcome from those parties involved (Garcia, 2013).

Robbins, Judge, Millett and Waters-Marsh (2008); Robbins, Judge, and Vohra (2012) identified five major strategies for managing crisis in organizations based on assertiveness and cooperativeness which, according to Adeyemi & Ademilua as cited in Lazarus (2014), are the internal mechanisms used by the various authorities in resolving crisis. Assertiveness means the degree to which one party attempts to satisfy his or her own concerns whilecooperativeness means the degree to which one party attempts to satisfy the other party’s concerns. They include: collaboration, compromise, accommodation, competition/domination and avoidance. In the context of this work, collaboration, compromise and avoidance strategies will be considered. This is because the three crisis management strategies provide a satisfactory balance for both parties involved in crisis in terms of assertiveness and cooperativeness. The accommodation and domination strategies will not be considered in the study because they do not provide satisfactory balance to the parties involved in crisis. This is because it leads to one party benefiting at the expense of the other.

Collaboration strategy refers to assertiveness and cooperativeness as it allows both parties‟ goals to be completely achieved by putting the concerns of both parties into consideration. Mughal and Khan (2013) assumed that collaboration strategy enables people take time to listen to others in order to find the best solution to handle the crisis. Compromise strategy refers to mid-range assertiveness and mid-range cooperativeness as it requires parties to crisis to give up something in order to settle the crisising problem, as such there is no clear winner or loser. This usually happens when employees get a sense of fear to lose any relationship with their colleagues or with their managers. Avoidance strategyrefers to unassertiveness and uncooperativeness and occurs when parties to crisisrecognize that crisis exists and want to withdraw from it or suppress it by trying to ignore it.Each of the above techniques is unique in its own way and will be considered with a view to ascertaining the performance level of the organization.

Organizational performance is seen as the result of an activity which has been achieved by an organization related to its authority and responsibility in achieving the goal legally, not against the law, and conformingto the morale and ethics of the organization (Almajali, Alamro & AlSoub, 2012). Organizational performance can either be measured financially (earnings per share, return on equity, return on asset) or non-financially (market share, customer satisfaction, employee morale). The appropriate measure selected to assess organizational performance (financial or non-financial) is considered to depend on the type of organization to be evaluated, and the objectives to be achieved through that evaluation. However, improved organizational performance is dependent on the appropriate crisis management strategy (s) such as, collaboration strategy, compromise strategy and avoidance strategy adopted by the organization in managing crisis. Applying the appropriate strategy will improve employees‟ performance resulting to an improved organizational performance. On the other hand, the inability of the organization to apply the appropriate crisis management strategy(s) will lead to a decline in employees‟ performance which in turn will result in a decline in organizational performance.

 

1.2         Statement of the Research Problem

Managers spend approximately twenty percent of their time dealing with crisis situations due to the growing complexity of organizations, use of teams and group decision making, and globalization (Mullins, 2005). This proved the fact that crisis cannot be totally eliminated within an organization because wherever you find human beings interacting at whatever levels, there is bound to be crisis. What is however important is the way crisis are managed to forestall future occurrence.

The existence of crisis is an issue of concern in Nestle Nigeria Plc.The organization is confronted with the issue of negotiation of staff bonuses, usually at the end of the year. The lingering issue results into crisis between management and employees of the organization which manifested in form of employees nursing grievances against management, change of attitude or behaviuor, decrease in effort towards work, physical confrontation between both parties and stoppage of production activities as employees refuse to work. This affected the effectiveness and performance of the individual employees and the organization as a whole. Attempt by management to resolve the crisis has only led to crisis suppression. This is because management made use of domination strategy which is of benefit to them at the expense of the employees. As a result, there is a need for Nestle Nigeria Plc to devise an effective means of resolving the organizational crisis.

Several studies have been carried out on crisis management; however, most of these studies are qualitative in nature (Fatile & Adejuwon, 2011; Garcia, 2013; Kazimoto, 2013; Nwosu & Makinde, 2014; Ebhote & Monday, 2015). They cannot be generalised in all aspects of organizations, because crisis management has to do with human intentions. While some empirical studies in this area were carried out using some or all the major crisis management strategies on other dependent variables such as job stress, organizational effectiveness and turnover intention (El Dahshan & Keshk, 2014; Kanani & Farahani, 2014; Lazarus, 2014; Sima,

Gbolamabbas, & Saeed, 2012); others were on organizational performance (Ongori,

2009;Hotepo, Asokere, Abdulazeez, &Ajemunigbohun, 2010; Obasan, 2011; Mughal & Khan,

2013; Ajike, Akinlabi, Magaji & Sonubi, 2015; Awan & Saeed, 2015 and Longe, 2015). Studies conducted by Ongori (2009), Hotepo, et al. (2010), Obasan, (2011) and Mughal and Khan (2013)only identified the crisis management strategies used by the organizations understudied but the studies did not measure the effect of the strategies on organizational performance.

Ajike et al.(2015) made use of simple linear regression which does not give room for outlining the proxies of the crisis management strategies such as collaboration, compromise and avoidance strategies employed for the study.Awan and Saeed (2015) identified compromise and avoidance strategies as techniques for managing organizational crisis but the significant effect of these strategies on organizational performance was not conducted. Also,Longe (2015) employed some of the major crisis management strategies such as compromise and avoidance strategies (compromise, accommodation, competition, and avoidance) on organizational performance, but the study did not measure collaboration strategy on organizational performance. However, a detailed study using the crisis management strategies such as collaboration, compromise and avoidance strategies on organizational performance is yet to be achieved, thus the extent of this effect has not also been ascertained.This study contributes towards filling this gap.

Since crisis is inevitable in an organization, its management will determine whether it will generate positive or negative effect on organizational performance (Uchendu, Anijaobi & Odigwe, 2013). Therefore, this study seeks to examine the effect of crisis management using collaboration strategy, compromise strategy and avoidance strategy on the performance of Nestle Nigeria Plc.

 

 

1.3         Research Questions.

The specific research questions to be addressed in this study include:

1. To what extent does collaboration strategy affect the performance of Nestle Nigeria Plc?
2. To what extent does compromise strategy affect the performance of Nestle Nigeria Plc?

• To what extent does avoidance strategy affect the performance of Nestle Nigeria Plc?

 

1.4        Objectives of the Study.        

The main objective of this study is to examine the crisis management strategy and organization performance of Nestle Nigeria Plc. The specific objectives are to:

1. Examine the effect of collaboration strategy on the performance of Nestle Nigeria Plc.
2. Ascertain the effect of compromise strategy on the performance of Nestle Nigeria Plc.

• Determine the effect of avoidance strategy on the performance of Nestle Nigeria Plc.

 

1.5        Statement of Hypotheses.

In line with the research objectives of the study, the following hypotheses are formulated.

H₀₁: Collaboration strategy has no significant effect on the performance of Nestle Nigeria Plc.

H₀₂: Compromise strategy has no significant effect on the performance of Nestle Nigeria Plc.

H₀₃: Avoidance strategy has no significant effect on the performance of Nestle Nigeria Plc.