effect of human resource management strategies on performance of commercial banks in Kenya

Abstract

Due to increased competition and globalisation recently there has been a lot of emphasis on the link between strategy and firm performance. This study sought to investigate the effect of human resources management strategies on the performance of commercial banks. The study adopted a mixed method approach. Specifically the study adopted the survey method using a population of 46 banks and 2,738 employees. The Nairobi head office of each bank waspurposively sampled. A sample of 349 employees was selected using stratified random sampling. Data was collected using self-administered questionnaires and interviews. Data analysis involved statistical computations for averages, percentages, and correlation and regression analysis. Statistical computer software (SPSS and Ms Excel) were used in data analysis. Analyzed data was presented using tables, charts and graphs. From the study it was found that training and development, recruitment and selection, relations, reward and compensation strategies have a significant positive effect on performance of commercial banks in Kenya. It was also found that when banks use both financial and non financial rewards,employees were motivated and this led to increased commitment which in turn led to increased performance. From the study, it is concluded that there is a positive relationship between strategic human resource management and employee performance among commercial banks in Kenya. Training programs, participative work settings, recruitment and incentive arrangements provide proper motivation and combine to enhance firm performance in terms of market share and profitability. It is recommended that commercial banks should develop and document human resource management strategies that are linked with the overall banks strategy.