Relationship between Strategic Human Resource Management practices and Employee Retention in Commercial Banks in Kenya

Abstract

The relationship between strategic human resource management practices and employee retention in commercial banks in Kenya was the focus of this study. Banks depending on their size may need to exercise greater control over a defined set of variables in order to maximize profits and/or minimize costs. There was the global recession in 2008 which affected the growth rate leading to its decline. There was improved economy growth in the year 2010 due to improved global commodity prices and this lowered the interest rates offered by commercial banks. The purpose of the study was to examine how strategic human resource management practices influences the employee retention in commercial banks in Kenya. The objective of the study was to determine the relationship between strategic recruitment, strategic training, strategic performance management and employee retention in commercial banks in Kenya. A survey design was used to gather the information needed to achieve the objectives. Qualitative and quantitative techniques were used. A census was carried out in forty four commercial banks in Kenya which had operating licenses from the Central bank of Kenya.Open ended and closed ended questionnaires were used to collect the data.Pilot testing of the questionnaires to ascertain their validity and reliability was done in four commercial banks before the actual study after which they were revised and rolled out to the respondents. The data was analyzed using statistical package for social science. Factor analysis was used to retain the indicators which had a factor loading of above 0.4 for further study. The reliability of the data gathered from the field was measured u sing the cronbach‟s Alpha to give an unbiased estimate of the data generalizability. Correlation and regression analysis were used to test the relationship between the variables.Descriptive statistics mainly percentages and frequency distribution were used for data presentation. The study established that by practicing strategic human resource management practices, organizations are able to retain their key talent and remain competitive. The study established that the organizations employed strategic training through developed skills of staff in accordance with job requirements, training to enhance quality and standards of product and services. The organizations offered training to enhance employee participation to higher grade. They used strategic performance management through clear action value plan, target setting, setting of the realistic budgets, forecasting, performance measurements and review and finally compensation based on performance. The use of associations, psychometric tests, websites, targeting specific professionals, employing head hunting strategies, offering incentives, ranking of potential candidates and utilization of internet and other technologies influenced the employee retention. The study recommends that the management of all financial institutions should embrace strategic recruitment with the view of retaining their key talents and thereby cutting the cost of recruitment and the loss of talents which are valuable to the organization competitiveness.The management of the financial institutions should also embrace strategic training with the aim of ensuring that its employees remain in the organization. It also recommends that the management of commercial banks should employ more strategic performance management practices with the view of enhancing employee retention.