GOAL PROGRAMMING AND ORGANIZATIONAL PERFORMANCE OF OIL AND GAS FIRMS OPERATING IN NIGERIA

GOAL PROGRAMMING AND ORGANIZATIONAL PERFORMANCE OF OIL AND GAS FIRMS OPERATING IN NIGERIA

The aim of this study is to examine the relationship between goal programming and organizational performance of oil and gas firms operating in Nigeria.

GET RELATED PROJECT TOPICS HERE

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

The quest for optimal performance by organizations has led to the increasing search for goal optimization (James, 2003; Cameron, 2012). Globally, a performance crisis seems to ravage public and private service, while there is a need to produce more for less. This problem strikes through both the developing / less developed countries and has raised the desire for efficiency and the need for assessment mechanisms to help enhance the performance of the firms in order to align with stakeholders’ expectations.

The truth is, in the last few decades, organizational performance has been on the front-burner which has attracted the interest of both industries and scholars alike.  In the opinion of Daft (2000); Ricardo and Wade (2011), organizational performance, is the ability of an organization to achieve its goals and objectives by using its resources in the most efficient and effective manner.

According to Stegerean and Gavrean (2010), organizational performance as one of the most important variables in research is an indicator for success; more so, a performing organization is an effective organization and an effective organization is a successful organization. Lewin and Minton (1986) added that organizational performance is very critical to the business environment as it is the tool that records, measures, determines and shows outcomes of subsequent actions in a process.

Researchers have historically made progress in identifying several factors that could drive organisational performance but does little to contribute to the body of knowledge on this important topic. Bass (1990) pointed out that in a competitive and challenging business environment, managers must find creative ways to reinvent their organizations so as to align with the attainment of desired goals.

Goals such as growth, social responsibility, profit maximization, inventory control, public relations, productivity, job satisfaction, service quality delivery, Industrial and labour relations, consumer satisfaction, shareholders’ satisfaction to mention but a few are constantly sought for due to the existing pressures in and outside the organization (Lee & Moore, 1975).

Whetten (1987) identified growth as a relative measure of size over time. Growth is something for which most organizations strive. Smaller organizations want to get big while big organizations want to get bigger. Growth provides an organization a whole lot of benefits; ranging from greater efficiencies derived from economies of scale, increased power, ability to withstand market fluctuations, greater profit, increased prestige by employees, increased survival rate (www.inc.com/encyclopeadia/organisational-growth.html).

Considerably, studies have shown that the integration of individual and group productivity in organizations has the tendencies of increasing the overall organizational productivity which ultimately results in performance (Goodman et al., 1988; Hackman, 1990).

Jitendra and Mini (2013) asserted that happy employees promote their organization’s public image which generally improves organizational performance. Employee job satisfaction enhances productivity which ultimately results in high profit, customer satisfaction/ retention and sales. Organizational performance is enhanced when workers are more satisfied because “happy workers are productive workers” and “a productive organization is a performing organization”. Griffin, Patterson, and West (2001) suggests that line managers’ impact positively on the satisfaction of their employees when they provide support for them. However, organizational performance is not limited to organizational success but it also relates to employee skill levels, quality of strategic planning and the ability of firms to understand the nature/dynamics of the business environment (Carvalho, Riberio, Cirami, & Cintra, 2016).

Chen and Paulraj (2004) opined that organizational success depends largely on the extent to which limited resources are optimized to achieve a competitive advantage. Green, Whitten, and Imman (2006) viewed organizational performance as the ability of an organization’s products to compete with those of her competitors. This implies product or service can only compete favourably if it satisfies its customers.  Businesses are majorly seen competing for customers in the business market which has made customer satisfaction a major deliverable for organizations. The focus on customer satisfaction through service quality delivery is really a major concern in promoting organizational performance (Jayaraman, Chelliah & Mun, 2010).

Several scholars have examined the benefits of performance in organizations as a veritable tool in enhancing profit, productivity, market share, employee retention, customer/shareholder satisfaction, and resource acquisition.   Steers (1975), Kaplan and Norton (1992), Bowersox, Closs, Stank & Keller (2000).

In line with these revelations, recommendations have been made by various scholars on ways to enhance organizational performance in the business world. Solomon and Sandhya (2010), identified a key ingredient to organizational performance which they termed as constant engagement with employees at the cold face. Workforce diversity management in firms and the introduction of innovative ideas have been diagnosed to improve organizational performance (Seyed 2004; Yen 2013).

Kumar and Bahl (2014) in their study proposed that inventory management in terms of the right quantity; quality and timing of material, at the most favorable price will boost the performance of the organisations.

Therefore, the increasing hunger for global competitiveness and complexities which have characterized the business environment requires strategic approaches that will considerably sharpen every effort geared towards improving performance in organizations (Hamilton, 2004; Ganaere, 2007).  Today, Firms are frequently confronted with making inter-related decisions, where the main aim is to optimize the overall outcome of the entire decisions taken over time (Verma, 2012).

Szidarousky and Duckstein (1986); Haimes & Li (1989), Rios & Salewicz,1995 and Agrell et al .,1998) for example explained that there are so many problem areas in every organization which are complex and requiring a more flexible /decisive approach; and in dealing with such problems the ability of the manager to make appropriate decisions at the right time is a major factor to be considered in achieving performance in organizations. Decision making is an important managerial exercise and as such every now and then, managers are bombarded with issues that demand to make decisions in order to move their organizations forward (Ezionye, 2002 and Yien et al;2011).

Elkins (1980), added that decision making is a mental activity which is taken in moving an organization from the “existing state” of affairs which represents the prevailing conditions (characterized by challenges) to the “anticipated or desired” state which represents the goal and/or objectives of the organization. It is against this backdrop, therefore, given the several scholarly articles and research works done on ways to enhance organizational performance, the least discussed in the Nigerian workspace or sub-Sahara Africa is from the perspective of goal programming.

Goal programming is a branch of multi-objective optimization tool which in turn is a branch of multi-criteria decision tool (Levary, 1984).  As a scalarization method, goal programming is one of the approaches of dynamic goal programming which handles multiple, normally conflicting objective measures. Each of these measures or targets are given a goal to be achieved. Unwanted deviations from this set of target values are then minimized in an achievement function and the satisfaction of the target is deemed to satisfy the decision-maker(s) underlying philosophy (Lee, Larry &Maloj, 2007). Summarily, goal programming is a powerful technique in operations research that is capable of tackling multiple and incompatible goals of an organization. It is important to note that, the uniqueness of goal programming over other linear programming approaches is that, it can generate a possible range of solutions to planning problems (Wheeler & Russell, 1977). While in linear programming, the objective function is undimensional (that is the manager struggles to achieve a single objective, say cost optimization or profit maximization); in goal programming, the objective function contains the variables which represent the goals. Goal programming is used to perform three types of analysis: (1) determination of the required resources to achieve a desired set of objectives; (2) determination of the degree of attainment of the goals with the available resources; and (3) provision of the best satisfying solution under a varying amount of resources and priorities of the goals.

Various studies have investigated performance in different climes and sectors while adopting different variables. Scholars such as DuranVazquez, Lorenzo-Valdes, and Moreno-Quezada, (2012); Oke, Walumbwa, and Myers, (2012) correlated innovation against organizational performance; Ruey-Jer, Rudolf, and Daekwan (2008), studied  ICT and organizational performance; Kumar and Bahl (2014) inventory management and organizational performance in India; Kimaiyo and Ochiri (2014) studied inventory management on the performance of manufacturing firms in Kenya; Nyangweso (2013); Li, Ragu-Nathan, Ragu-Nathan, and Rao (2006) supply chain management and organizational performance. Tamiz and Jones (1995) explained in their studies the effectiveness of goal programming and its application in accounting, academic resource planning, agriculture, diet planning, water resource planning, library management, and media scheduling.

Although these studies are significant in many ways, they do not come clear in investigating whether the measures used for goal programming will also influence its relationship with organizational performance in the oil and gas sector. Also, the empirical evidence emerging from various studies about the effect of goal programming on performance yielded mixed results that are contradictory. As a result of these contradictory opinions, the quest to really ascertain whether goal programming improves or worsens the organizational performance of oil and gas firms in Nigeria is worthy of further research.

From the foregoing, there appears to be a dearth of studies that investigated the relationship between goal programming and organizational performance in the oil and gas firms operating in Port Harcourt, Rivers State, Nigeria hence the identified gap in the literature.

Therefore, this work attempts to bridge this gap by examining the relationship between goal programming and organizational performance in the oil and gas firms operating in Port Harcourt, Rivers State, Nigeria with perceived organizational support as the moderating variable.

1.2 Statement of the Problem

Firms in the 21st century are faced with more challenges than ever before. These challenges are not unique to any specific organization or industry, but affects all organizations, regardless of their size or structure (Radda, Uzodinma, Akanno, Isa, Abdulkadir and Abba (2015). According to Grant (2010), oil and gas firms worldwide have been aggressively trying to build new competencies and capabilities to remain competitive and grow profit. It has also brought with it challenges even as these firms continue to pursue growth opportunities. Oil and gas firms have to continually configure themselves in a manner that enhances their capacity to satisfy the demand of stakeholders.

Organizations set out to achieve various predetermined goals and objectives, which are often driven by the various departments/units which make up the organization. These goals range from growth goals, social responsibility goals, profit maximization goals,  inventory control goals, public relations goals, productivity goals, sales /marketing goals, job satisfaction goals, improved service quality/delivery goals, industrial / labour relations goals and consumer/shareholders’ satisfaction goals to mention but a few. All these goals are geared towards achieving organizations’ overall goal and in the course of achieving these goals as a department or unit simultaneously, various conflicts of interests emanate as these goals are supposed to be integrated and managed effectively.

However, the petroleum industry, which is a major contributor to the economic growth of Nigeria, is confronted with numerous conflicting goals as mentioned earlier which if not properly managed could result in a total collapse of the industry and thereby affecting the country’s foreign exchange earnings. For instance, the production unit might set the goal of achieving 200kbd; the health safety and environment unit might set a goal of no harm to people or the environment, and the social performance unit might set a goal to embark on an awareness exercise to educate the host community which might probably restrict the movement of the oil workers. Apparently the various departments as mentioned are all in a bind to achieve their different goals within the same time frame. This is a clear case of conflicting goals from the three units in the organization in as much as they all have laudable goals but then these goals are conflicting. So the best solution is the establishment of a good compromise between these conflicting goals as generated by the different departments/units in order to achieve the overall organizational goal.

To this end, managers in the oil/gas sectors are bound to embrace the essence of adopting goal programming (GP) which is a business initiative to optimize their resources and processes in order to achieve their individual goals and the overall organizational goal. The search for this compromise solution is the main idea of GP which is focused on achieving the predetermined organizational goals. This technique enables the organization to get improved performance through advancing growth, improved productivity, job satisfaction and service quality (Ohno, 2008). This reveals the need for a critical review of the influence of goal programming on organizational performance in the oil and gas industry.

This study, therefore, proposes to examine the relationship that exists between goal programming as a technique or tool and organizational performance. It is hoped that this study will contribute to the existing body of knowledge and the research community.

1.3 Operational Framework

Source: Adopted from Wheeler & Russell (1977) for goal programming; Mowday, Potter & Steers (1982) and Ricardo (2001); Tsai & Tsai (2010); Oke et al., (2012) for organizational performance.      

The operational framework above, indicates the independent variable (criterion variable) and the dependent variable (predictor variable), as well as the variable, assumed to moderate between both the independent variable and the dependent variable.

The independent variable in this study is goal programming. It is taken as a one-dimensional construct (Anderson, Garbing & Hater, 1987). One-dimensional variable refers to the presence of a latent construct that underlies a set of measures. Hence, goal programming is considered as a one-dimensional construct in this study.

On the other hand, the dependent variable is organisational performance.  Given that this study is focused on oil and gas firms although it’s a profit-making organization, yet the non-financial issues are also of paramount importance. For his reason, the measures of organizational performance adopted are growth, productivity, job satisfaction and service quality (Mowday, Potter & Steers,1982; Ricardo, 2001; Tsai & Tsai, 2010; Oke et al., 2012).

1.4 Aim and Objectives of the Study

The aim of this study is to examine the relationship between goal programming and organizational performance of oil and gas firms operating in Nigeria. Specifically, the objectives are to;

1. Ascertain the relationship between goal programming and growth of oil and gas firms operating in Nigeria
2. Explore the relationship between goal programming and productivity of oil and gas firms operating in Nigeria.
3. Examine the relationship between goal programming and employee job satisfaction of oil and gas firms operating in Nigeria.
4. Examine the relationship between goal programming and service quality delivery of oil and gas firms operating in Nigeria.
5. Ascertain the moderating effect of perceived organizational support on the relationship between goal programming and organizational performance of oil and gas firms operating in Nigeria.

1.5 Research Questions

In line with the research objectives above, the following research questions will be addressed in the study.

1. What is the relationship between goal programming and the growth of oil and gas firms in Nigeria?
2. What is the relationship between goal programming and the productivity of oil and gas firms in Nigeria?
3. How does goal programming relate to employee job satisfaction of oil and gas firms in Nigeria?
4. What is the relationship between goal programming and service quality delivery of oil and gas firms in Nigeria?
5. How does perceived organizational support moderates the relationship between goal programming and organizational performance of oil and gas firms in Nigeria?

1.6 Research Hypotheses

The following null hypotheses are stated in order to provide tentative answers to the outlined objectives and questions:

H0₁: There is no significant relationship between goal programming and the growth of oil and gas firms in Nigeria.

H0₂: There is no significant relationship between goal programming and productivity of oil and gas firms in Nigeria.

H0₃: There is no significant relationship between goal programming and job satisfaction of oil and gas firms in Nigeria

H0₄: There is no significant relationship between goal programming and service quality of oil and gas firms in Nigeria

H0₅: Perceived organizational support does not significantly moderate the relationship between goal programming and organizational performance of oil and gas firms in Nigeria.

1.7 Significance of the Study

The study expands the knowledge bank by examining the relationship between goal programming and organizational performance of oil and gas firms in Nigeria. Based on this, it serves as a reference point to academia and students. The study has great potential to provide guidelines for building effective decision-making capabilities and resource optimality in the workplace; especially the oil and gas sector to allow the enhancement of organizational performance. The study also contributes to the understanding of the benefits of goal programming in handling multiple/conflicting goals in the organization. Going forward, the findings of this study if adopted will help the assist the managers of the upstream and downstream sectors of the oil and gas firms in Nigeria to effectively manage the various interest groups in the organization.  The information it provides will aid managers to make informed decisions that will best suit the sector and equally minimize cost and maximize profit.

1.8 Scope of the Study

The scope of the study is discussed under the following sub-headings;

Content Scope:

This study is confined to the literature on the independent variable (goal programming) which is taken as a unidimensional construct while the dependent variable (organizational performance) focuses on the non-financial measures and the moderating variable (perceived organizational support). The choice of the dimensionality of the construct on the dependent variable is borne out of the understanding that the stakeholders that interact with and within the organization have varying goals/expectations which are not only financial in nature (Richard, Devinney, Yip & Johnson,2008; Ndregjoni & Elmazi,2012).

Geographical Scope:

The geographical scope of this research is limited to the oil and gas firms   operating in Nigeria

Study Level/Unit of Analysis

The level of analysis is at the individual level hence, the respondents are the employees of the firm being studied.

1.9 Limitation of the Study

Despite the apparent benefits as with most academic work, there are issues that can limit the applicability of the findings, though they do not invalidate this study, but should be guided against. These are:

1. The sample comprised of seven (7) selected oil and gas servicing firms whose head office is located in  Port Harcourt, Rivers State, Nigeria. Other parts of the country were not covered due to the cost of data collection and considering the time available for the research.  This may have excluded very important parts with peculiar credence that are capable of affecting the findings of this study. However, subsequent research efforts could be focused on those areas.
2. The use of self-report to draw data from the middle-level managers may cause respondents’ bias limitations like exaggeration. However, the fact the researcher relied on previously validated instruments to develop the questionnaire, helped to diminish the effect. Moreover, respondents were assured of the anonymity and confidentiality of their responses; which helped to guarantee that responses reflected the true position.
3. The study adopted the cross-sectional survey which may have omitted the changing aspect of the environmental factors which could have contributed to the quality of the study and its findings. Ensuing studies in this area could possibly address the issues.

1.10 Operational Definition of Terms

Organizational Performance: is the total accomplishment by the whole organization in relation to total input and output as well as meeting the target of the organisation’s objectives.

Growth: this is a process of increase in size. Developing or maturing.

Productivity: This is a measure of the efficiency of a person, machine factory, system, etc in converting inputs into useful outputs. Usually computed by dividing the average of output per period by the total cost incurred or resources consumed in that period

 Job satisfaction: This is a positive emotional state resulting from the appraisal of one’s job or job experience.

Service Quality: This is an assessment of how well a delivered product or service conforms to the clients’ expectations.

Goal Programming: Is an extension of linear programming that is concerned with solving multi-objective decision goals in an organization.