Public enterprises in Nigeria have remained stagnant and underperforming because of setbacks and decay in management. This has resulted in public enterprises being branded ‘‘ineffective and inefficient’’. Performance management, which is a relatively new concept in human resource management, focuses on maximizing team and individual performance to achieve a motivated workforce resulting in higher goal attainment in a quest to enhance organizational competitiveness. This paper gives a perspective of public enterprises in Nigeria and espouses the challenges of performance management in these enterprises. It also presents performance management as a tool that can enhance the performance of public enterprises in Nigeria.
Since the 1930s and particularly after World War II, numerous State Owned Enterprises, also called Public Enterprises (PEs) were created in both developing and developed countries to address market deficits and capital shortfalls, promote economic development, reduce mass unemployment, and/or ensure national control over the overall direction of the economy especially in developing countries. By providing capital and technology to strategic areas where the private sector either shied away from or lack the capacity to invest (such as heavy industries, infrastructure, etc.) most government resorted to Public enterprises to increase capital formation, produce essential goods at lower costs, create employment and generally contribute to the economic development of the nation state. This trend continued until the early eighties. (The World Bank, 2000) However, rising corruption, management inefficiency, overstaffing (without regard to their economic viability, government treated PEs as easy conduit for job creation and a convenient vehicle for patronage distribution), inflation and rising current account deficit exposed “serious government failures” and the limit of PEs as major players in economic development. Public enterprises exist to provide some essential services to the people in an affordable cost and to venture into areas that require huge capital outlay and technological expertise, which the government alone can provide. In Nigeria today, these functions meant for PEs are not being met because of poor management. Although there is a plethora of studies on the reasons why business failed (Esu, 2003, Abram, 1981), this paper argues that most public sector businesses failed because of ineffective and inefficient performance management system. The Wall Street Journal (2003) quoted Michael Klein, the World Bank vice president for private sector development as saying that, “Now it doesn’t matter so much whether infrastructure is in public or private hands” . This statement buttresses the fact that what matters in business is not the ownership status but the quality of management. It is on this premise that I argue that the challenges of performance management in public enterprises stem from poor performance management system. It is inarguable that good and efficient performance management enhances and ensures higher attainment of goals. Therefore, whenever this is not the case, there is something fundamentally wrong with the system setup. Moreover, performance management systems, which typically include performance appraisal and employee development, are the ‘Achilles heel’ of human resource management. They suffer flaws in many organizations with employees and managers regularly bemoaning their ineffectiveness. (Pulakos) PUBLIC ENTERPRISES IN NIGERIA In most countries of the world, particularly the developing ones, the decades following World War II (particularly, the 1960s and 70s), witnessed a massive intervention of the government in national economics (Ezeani,...
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