Ngui, Thomas Katua - PHD Human Resource Management-2014

EFFECT OF HUMAN RESOURCE MANAGEMENT
STRATEGIES ON THE PERFORMANCE OF COMMERCIAL
BANKS IN KENYA
THOMAS KATUA NGUI
DOCTOR OF PHILOSOPHY
(Human Resource Management)
JOMO KENYATTA UNIVERSITY OF
AGRICULTURE AND TECHNOLOGY
2014
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Effect of human resource management strategies on the performance of
commercial banks in Kenya
Thomas Katua Ngui
A thesis submitted in partial fulfillment for the degree of Doctor of Philosophy
in Human Resource Management in the Jomo Kenyatta University of
Agriculture and Technology
2014
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DECLARATION
This thesis is my original work and has not been presented for a degree in any other University.
Signature: _____________________ Date: _________________________
Thomas Katua Ngui
This thesis has been submitted for examination with our approval as the University supervisors.
Signature: _____________________ Date: _________________________
Prof. Elegwa Mukulu
JKUAT, Kenya
Signature: _____________________ Date: _________________________
Dr. Hazel Gachunga
JKUAT, Kenya
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DEDICATION
This work is dedicated to my parents, wife and children (Fredrick and Grace) for their enduring
love, understanding and support during my studies.
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ACKNOWLEDGEMENT
Special thanks to the Almighty Father in Heaven for giving me the energy and good health to write
this thesis. I also extent my sincere gratitude to my supervisors (Prof. Elegwa Mukulu and Dr.
Hazel Gachunga) for their assistance in coming up with this document. It would not have been
successful without their highly valued contribution. Special thanks to all members of my family:
wife, children, parents, brothers and sisters for their encouragement, prayers and support while I
was writing this thesis. I would like to extend a special message of appreciation to Mr. Mailu for
his assistance in data analysis. I also want to thank my friends and colleagues both at work and in
class.
Since it is not possible to thank everyone individually kindly feel appreciated for any form of
assistance that you gave to me while I was writing this thesis.
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TABLE OF CONTENTS
DECLARATION ………………………………………………………….……..……….…....II
DEDICATION …………………………………………………………………….....….…….III
ACKNOWLEDGEMENT …………………………………….………………..…..…….......IV
TABLE OF CONTENTS ……………………………………………………………………...V
LIST OF TABLES……………………………………………..……………...……………...XII
LIST OF FIGURES…………………………………………..…………...………………..XVII
LIST OF APPENDICES ……………………………………………………………………XIX
LIST ACRONYMS AND ABBREVIATIONS……………………………………………..XX
OPERATIONAL DEFINITION OF KEY TERMS ………………………………………XXI
ABSTRACT ………………………………………………...………….………....………...XXII
CHAPTER ONE
INTRODUCTION……...…………………………………………………..……….………….1
1.1. Background of the study………………………………….………………………………….1
1.1.1. Global perspective of commercial banks …………………………………………………4
1.1.2. Commercial Banks in Kenya………………………………………………………………6
1.2. Statement of the problem……………………………………….………………………….11
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1.3. Objectives of the study…………………………………………..…………………………12
1.3.1 General objective………………………………………………….………………………12
1.3.2 Specific objectives…………………………………………………...……………………13
1.4. Research hypotheses………………………………………………………………………..13
1.5. Significance of the study…………………………………………………..……………….14
1.6. Scope of the study…………………………………………………………...…………….15
1.7. Limitations of the study………………………………………………………...……..……15
CHAPTER TWO
LITERATURE REVIEW……...………………………………………………….……...…..16
2.1. Introduction …………………………………………...……………………….…………..16
2.2. Theoretical review…………………………………………….………………………..…..16
2.2.1. The Resource Based View (RBV)……………. ………..………………………………..17
2.2.2. Ability, Motivation, Opportunity Theory (AMO Theory)……….………………………19
2.2.3. Social Exchange Theory…………………………………………………………………21
2.2.4. The Universalistic Perspective…………………………………………..……………….24
2.2.5. The Matching Model ……………………………………………………….……………27
2.2.6. The Contingency Perspective …………………………..………………………………..28
2.3. Conceptual framework……………………………………………………………………..29

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2.5. Empirical studies……………………………………………………………………...……30
2.5.1. Performance of Commercial Banks…………………………………..……………….…30
2.5.2. Human Resource Strategies………………………………………………………………33
2.5.3. Employee resourcing strategies………………………………………………………….34
2.5.4. Training and development strategies…………………………………………………….37
2.5.5. Employee reward and compensation strategies………………………………………….40
2.5.6. Employee motivation strategies………………………………………………………….43
2.5.7. Employee relations strategies…………………………………………………………...47
2.5.8. Organizational commitment ………………………………………………………….51
2.5.9. HRM strategy and organizational performance………………………………...……..…55
2.6. Critical review of existing literature……………………………………………………..…58
2.7. Summary of literature………………………………………………………………………59
2.8. Research gap………………………………………………………………………………..61
CHAPTER THREE
RESEARCH DESIGN AND METHODOLOGY……...……………..………….…………..63
3.1. Introduction…………...……………………………………………………………………63
3.2. Research design………..………………………………...…………………………………63
3.2. Target population………...………….………………….………………………………….64
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3.3. Sample design ……………..……….……...……………………………………………….64
3.4. Data collection instruments…..…….…….……..………………………………………….67
3.5. Data collection procedures……..……….………………………………………………….68
3.6. Pilot test………………………….…….…………….….………………………………….69
3.7. Data analysis procedures…………..……….………………………………………………70
3.8. Validity and Reliability Issues……...……………………….………..……………………71
3.9. Ethical Issues…………………………..…………………………………………………...72
CHAPTER FOUR
DATA ANALYSIS AND PRESENTATION OF FINDINGS …………...………………….74
4.1. Introduction ………………………………………………………………………………..74
4.2. Data Analysis and Presentation of Findings ……………………………………………….75
4.2.1. Response rate …………………………………………………………………………….75
4.2.2. Demographic characteristics ……………………………………………………………77
4.2.3. Gender differences of the participants in the sample ……………………………………84
4.2.4. Age ranges of the participants in the sample …………………………………...………..87
4.2.5. Academic qualification ……………………………………………………….………….90
4.2.6. Number of years worked in the bank ………………………...………………………….91
4.2.7. Number of years in operation ………………………………………...………………….95
4.2.8. Bank Ownership ……………………………………………………………..………… 96
4.2.9. Size of the bank ……………………………………………………………………….…97
4.2.10. Value of assets …………………………………………………………...……………..98
4.2.11. Number of branches ……………………………………………………………………99
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4.2.12. Number of employees …………………………………………..…………………….100
4.2.13. Annual turnover …………………………………………...…………………………..101
4.2.14. Registered capital………………………………………………..…………………….102
4.2.15. Monthly salary ………………………………………………………….……………..103
4.2.16. Existence of Human Resource Policies …………………………………………...…..103
4.3. Qualitative data analysis ………………………………………………………………….104
4.3.1. Factor analysis for employee recruitment and selection strategies ………………….…104
4.3.2. Reliability analysis for recruitment and selection strategies …………………………...105
4.3.3. Reliability analysis for training and development strategies ………………...…………106
4.3.4. Factor analysis on employee relations strategies ………………………………...…….108
4.3.6. Reliability analysis for employee relations strategies ………………………….………109
4.3.7. Factor analysis on reward and compensation strategies …………………………..……111
4.3.8. Reliability analysis for reward and compensation strategies …………………………..111
4.3.9. Factor loading on performance ………………………………………….……………..113
4.3.10. Reliability analysis for performance …………………………………….……………115
4.3.11. Factor Analysis on specific performance indicators ……………………...…………..116
4.4. Descriptive statistics ……………………………………………………………………..119
4.4.1. Employee recruitment and selection strategies …………………………………….…..119
4.4.2. Training and development strategies ………………………………………………..….123
4.4.3. Employee relations strategies ………………………………….……………………….128

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4.4.4. Reward and compensation strategies ……………….………………………………….132
4.4.5. Performance of commercial banks ……………………………………………..………137
4.4.6. Human resources management strategies …………………………………..…………..140
4.5. Research hypotheses test results ………………………………………………………….142
4.6. Discussion of Findings ……………………………………………………...……………176
4.6.1. Employee recruitment and selection strategies …………………………………….…..176
4.6.2. Employee reward and compensation strategies ………………………………..………180
4.6.3. Training and Development strategies…. ………………………………………….……182
4.6.4. Employee Relations strategies ………………………………………………………….185
4.6.5. Human resource management strategies ………………………………………….……187
CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS……...…188
5.1. Introduction ………………………..……………………………………………………..188
5.2. Summary of major Findings………………………………………………………………188
5.2.1. Human resources management strategies…………..…………………………….……..189
5.2.2. Employee recruitment and selection………………...………………………………….190
5.2.3. Training and development strategies…………………….…………………………..….192
5.2.4. Reward and compensation strategies…….……………………………………………..194
5.2.5. Employee relations strategies………………………………...…………………………196
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5.3. Conclusions…………………………………………………….…………………………198
5.4. Recommendations ………………………………………………..………………………210
5.4.1. Policy recommendations ……………………………………………….………………210
5.4.2. Academic recommendations ………………………………………………...…………212
5.5. Suggestions for further research……………………………………..…………………....213
REFERENCES ……………………………...………………………………………….…….215
APPENDICES………………………………………………………………………………...257
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LIST OF TABLES
Table 3.1: Study population ………………………………………………………...……………64
Table 3.2: Sample selection for senior employees ……………………………………………….66
Table 3.3: Sample selection for lower level employees and supervisors …………...……………67
Table 4.1: Descriptive analysis on the demographic characteristics ……………………..…..…..78
Table 4.2: ANOVA results showing the effect of demographic characteristics on performance of
commercial banks in Kenya ……………………………………………………………………….78
Table 4.3: Model summary showing demographic characteristics of respondents ……………....79
Table 4.4: Coefficient results showing the relationship between the demographic characteristics
and performance …………………………………………………………………………….……..80
Table 4.5: Correlations coefficient on demographic characteristics and performance of commercial
banks in Kenya …………………………………………………………………………………….83
Table 4.6: Cross tabulation showing gender and performance of commercial banks ……….…..85
Table 4.7: Chi square test showing the effect of gender on performance of commercial banks ...86
Table 4.8: Cross tabulation showing age and performance of commercial banks ……….………88
Table 4.9: Chi square test showing the effect of age on performance of commercial banks…….88
Table 4.10: Cross tabulation showing number of years worked and performance of commercial
banks ……………………………………………………………………………..………………..93
Table 4.11: Chi square test showing the effect of number of years worked on performance of
commercial banks …………………………………………..……………………………………..94
Table 4.12: Annual turnover ……………………………..…………………….……………….102

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Table 4.13: Registered capital ……………………………..……………...…………………….102
Table 4.14: Factor analysis for employee recruitment and selection strategies ……………….105
Table 4.15: Reliability analysis for recruitment and selection strategies ……………...……….106
Table 4.16: Factor Analysis showing Training and development strategies …………..……….108
Table 4.17: Reliability analysis for training and development strategies …………...…………109
Table 4.18: Component matrix showing Factor loading on employee relations strategies……..110
Table 4.19: Reliability analysis for employee relations strategies ……………………………..111
Table 4.20: Component matrix showing Factor loading on reward and compensation strategies
…………………………………………………………………………………………………….112
Table 4.21: Reliability analysis for reward and compensation strategies ………………….…..113
Table 4.22: Component matrix showing Factor loading on performance ………...……………115
Table 4.23: Reliability analysis for performance ………………………………………………116
Table 4.24: KMO and Bartlett's Test …………………………………………………..……….116
Table 4.25: Commonalities on specific performance indicators ………………….…………….117
Table 4.26: Total variance of performance explained ………………………………...………..118
Table 4.27: Component matrix on specific performance indicators …………….……………..118
Table 4.28: Descriptive statistics on employee recruitment and selection strategies …………..123
Table 4.29: Descriptive statistics on training and development strategies ………………….….127
Table 4.30: Descriptive statistics on employee relations strategies ………………………...…..131
Table 4.31: Descriptive statistics on employee reward and compensation strategies ……....….136
Table 4.32: Descriptive statistics on performance …………………………………………...…139
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Table 4.33: Descriptive statistics on human resources management strategies ……...…………142
Table 4.34: Correlations coefficient showing the relationship between employee recruitment and
selection strategies and performance ……………………………………………….……………144
Table 4.35: Model summary showing employee recruitment and selection strategies ……..….145
Table 4.36: ANOVA results showing the effect of employee resourcing strategies on performance
…………………………………………………………………………………………………….145
Table 4.37: Coefficient results showing the relationship between employee recruitment and
selection strategies and performance ………………………………………………………….…146
Table 4.38: Chi square test showing the effect of gender on employee perceptions about the
effect recruitment and selection strategies on performance ……………………...………………147
Table 4.39: Chi square test showing the effect of age on employee perceptions about the effect
recruitment and selection strategies on performance ……………………………………….……148
Table 4.40: Chi square test showing the effect of number of years worked on employee
perceptions about the effect employee recruitment and selection strategies on performance…....149
Table 4.41: Correlations coefficient showing the relationship between training and development
strategies and performance ……………………………………………………………………....151
Table 4.42: Model summary showing training and development strategies ……………………152
Table 4.43: ANOVA results showing the effect of training and development strategies on
performance …………………………………………………………………...…………………152
Table 4.44: Coefficient results showing the relationship between training and development
strategies and performance ………………………………………………………………………153
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Table 4.45: Chi square test showing the effect of gender on employee perceptions about the
effect training and development strategies on performance ……………………………………..154
training and development strategies on performance ……………………………………………155
perceptions about the effect training and development strategies on performance ………..…….156
Table 4.48: Correlations coefficient showing the relationship between reward and compensation
strategies and performance …………………………………………………………………..…..158
Table 4.49: Model summary showing reward and compensation strategies ………….………..159
Table 4.50. ANOVA results showing the effect of employee reward and compensation strategies
on performance ………………………………………………………………………………….159
Table 4.51: Coefficient results showing the relationship between reward and compensation
strategies and performance ………………………………………………………………………160
Table 4.52: Chi square test showing the effect of gender on employee perceptions about the effect
reward and compensation strategies on performance ………………………………………...….161
reward and compensation strategies on performance ……………………………………..……..162
perceptions about the effect reward and compensation strategies on performance ……………...163
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Table 4.55: Correlations coefficient showing the relationship between employee relations
strategies and performance …………………………………………………………………..…..165
Table 4.56: Model summary showing employee relations strategies ………………………..…166
Table 4.57: ANOVA results showing the effect of employee relations strategies on performance
……………………………………………………………………………………………………167
Table 4.58: Coefficient results showing the relationship between employee relations strategies
and performance ………………………………………………………………………………….168
employee relations strategies on performance …………………….……………………………..169
employee relations strategies on performance ………………………………..………………….170
perceptions about the effect employee relations strategies on performance ………….………….170
Table 4.62: Model summary showing all combined human resources management strategies..171
Table 4.63: ANOVA results showing all human resources management strategies……………172
Table 4.64: Coefficient results showing the relationship between the combined human resource
management strategies and performance ………………………………………………………...172
human resources management strategies on performance ……………………………….………174
human resource management strategies on performance ………………………………..………175

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perceptions about the effect human resource management strategies on performance…………..176
LIST OF FIGURES
Figure 2.1: Relationship between resource endowment, strategies and sustained competitive
advantage ……………..….……………………………………………………………………. 20
Figure 2.2: Conceptual framework ………………………………..………………………. 31
Figure 2.3: Link between human resource strategies and organizational performance ….….. 58
Figure 4.1: Response rate ………………..………………….………………………………... 76
Figure 4.2: Age …………….………...……………………………………………………..… 90
Figure 4.3: Academic qualification ………………………..………………………….……… 91
Figure 4.4: Number of years worked in the bank ………………..…………………………… 95
Figure 4.5: Number of years in operation ……………………..…………………………....... 96
Figure 4.6: Bank ownership ……………………..………………………………………..….. 97
Figure 4.7: Size of the bank …………….………………………………………………….… 98
Figure 4.8: Value of assets …………..……………………………………………………..… 99
Figure 4.9: Number of branches ………………..…………………………………………… 100
Figure 4.10: Number of employees ………………..………………………………….……...101
Figure 4.11: Monthly salary ………………………………………………………….……....103
Figure 4.12: Scatter Plot and Regression Line showing the relationship between employee
resourcing strategies and performance ………………………………………………………..143
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Figure 4.13: Scatter Plot and Regression Line showing the relationship between training and
development strategies and performance …………………………………………………….150
Figure 4.14: Scatter Plot and Regression Line showing the relationship between reward and
compensation strategies and performance …………………………………………………….157
Figure 4.15: Scatter Plot and Regression Line showing the relationship between employee
relations strategies and performance ………………………………………………….……164
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LIST OF APPENDICES
Appendix 1: Questionnaires ……………………………………………………………………257
Appendix 2: Interview guide ………..…………………………………………………………269
Appendix 3: List of commercial banks ……………………………………..…………………272
Appendix 4: Work plan ……………………………………………………………….……….275
Appendix 5: Budget…………………………………………………………………………….276
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ABBREVIATIONS/ ACRONYMS
AMO Ability, Motivation, Opportunity theory
CBK Central Bank of Kenya
CEO Chief Executive Officer
ESOPs Employee Stock Ownership Plans
HPWS High Performance Work Systems
HRM Human Resources Management
US United States of America
UK United Kingdom
RBV Resource Based View theory
SHRM Strategic Human Resources Management
SPSS Statistical Package for Social Sciences
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OPERATIONAL DEFINITION OF KEY TERMS
Human resource management
Refers to a distinctive approach to employment management which seeks to obtain competitive
advantage through the deployment of a highly committed and skilled workforce, using an array
of techniques (Storey, 1995).
Firm performance
Performance refers to profitability, growth and employee turnover(Bohlander & Snell, 2007).
Business strategy
Business strategy is defined as the fundamental pattern of present and planned resource
deployment and environmental interactions that indicates how the organization will achieve its
objectives ((Noe, 2008).
Employees
Employees refer to a pool of human resources under the firm’s control in a direct employment
relationship (Armstrong, 2008). For the purpose of this study, employees (workers) refer to non-
managerial employees who are below the management levels of the organization.
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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 was
purposively 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.
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CHAPTER ONE
INTRODUCTION
1.1. Background of the study
The environments in which organizations operate today are divergent (Aldaibat & Irtaimeh, 2012).
Achieving competitive advantage and improving organizational performance relative to
competitors are the main goals that business firms should always strive to attain (Rawashdeh & Al-
Adwan, 2012). The banking sector globally has been facing unprecedented challenges with the
wave of privatization and globalization (Aldaibat & Irtaimeh, 2012). To survive and thrive in a
globally competitive marketplace, organizations must adopt a broad strategy that gives them a
sustainable competitive advantage. One of the major issues that have gained attention in the recent
banking sector reforms in Kenya is the human resources management. This has been due to the
recent developments where people have been considered as a very important source of sustained
competitive advantage.
The increasing significance of people to organizational success has been observed to have
corresponded with the rise of Strategic Human Resource Management (SHRM) as a field of study
on a global scale (Hartel et al (2007). Since its emergence, strategic human resource management
(SHRM) has been the focus of debate over whether it exists in reality or is merely rhetoric
(Khatoon, Amin & Hossain, 2013). Research has shown that human resource management
practices have the ability to create firms that are more intelligent, flexible, and competent than
their rivals through the application of policies and practices that concentrate on recruiting,
selecting, training skilled employees and directing their best efforts to cooperate within the
resource bundle of the organization (Rawashdeh & Al-Adwan, 2012).

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People are a firm’s most valuable resource (Cook, 2000). Banks globally are under intense
pressure to perform in today’s volatile market place. In the last two decades researches have shown
that strategic human resource management (HRM) is one of the most important determinants of
organizational performance (Taylor & Francis, 2008). The recent trend of globalized competitive
business era focuses on formulation and execution of strategic human resource management
(SHRM) practices and its significant effect on the financial performance of the organization
(Khatoon, Amin & Hossain, 2013). Steep competition, globalization, growing customer demand
and exposure to higher credit risks are forcing the banks to find new ways of providing better
customer service so as to improve profitability and guarantee their survival (Aldaibat & Irtaimeh,
2012).
The implementation of corporate and functional strategies depends on the companies’ resources
and particularly on people (Aldaibat & Irtaimeh, 2012). The strategic management of human
resources is one of the ways banks are using to increase their competitiveness in the new
organizational landscapes, since managing in a global marketplace, introducing new technology,
developing organizational knowledge, improving customer service or product quality, requires
considering the “human equation” (Aldaibat & Irtaimeh, 2012; Pfeffer, 1998). There is ongoing
debate on how HRM strategies affect the performance of banks. Researchers have built evidence
that links HRM practices with corporate performance (Adegoroye & Moruf, 2012). Current
researches have shown that human resources management (HRM) practices are important for
enhanced corporate performance (Rawashdeh & Al-Adwan, 2012; Adegoroye & Moruf, 2012).
The human resource strategy focuses on how the company should manage its staff to assist the
organization in the achievement of corporate objectives (Walker, 1992).
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Efforts have been made by human resources management theorists to try to establish a causal link
between human resource management and performance (Cook, 2000). However, little has been
reported on the effect of HRM and corporate performance in the banking industry. Cook (2000)
argues that there is a symbiotic relationship between human resources strategy and performance.
Other scholars such as Armstrong (2010) argue that human resources management practices can
improve productivity by: (1) increasing employee skills and abilities (2) promoting positive
attitudes and increasing motivation and 3) providing employees with expanded responsibilities so
that they can make full use of their skills and abilities. While there is a growing body of theory and
empirical research demonstrating positive relationships between HRM policies, collective
employee attributes, and firm outcomes, additional studies in this area are needed (Harter, Schmidt
& Hayes, 2002; Purcell & Kinnie, 2007). There is need for a theoretical link on exactly how
human resources management and performance are related.
The aim of human resource strategy is to devise ways of managing people in order to assist in
achievement of organizational objectives. The emerging field of HRM on performance suffers
from lack of unity in theory and inconsistency in research methodology hence has led to many
opposing findings and rich competing theoretical perspectives especially among the different
sectors of the economy. According to Cook (2000) and Som (2008), most of the work on HRM
and performance has been undertaken in the manufacturing sector mainly in the US and recently in
the last decade in UK and as such may not be suitable to explain the relationship in a developing
economy (Adegoroye & Moruf, 2012). Thus it is very difficult to generalize findings from one
sector to other sectors. Furthermore, there is a great need for additional evidence to support the
HRM-performance relationship and show exactly how the different strategies affect each other.
The present study is therefore, an attempt to fill part of this gap using the Kenyan Banking sector.
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The study targets 46 commercial banks in Kenya, which were in operation during the period of the
research. The commercial banks were categorized into Large‐size, Medium‐size and Small‐size
banks based on the total net assets as per CBK's classification.
1.1.1. Global perspective of Commercial banks
Banking has entered a new era (Canadian Banks, 2013). In this new normal, banks around the
world face massive regulatory reform, constant change and ever-present uncertainty. They find
themselves charting a path forward through an environment of limited economic growth and
shifting consumer behaviours, demands and demographics (Canadian Banks, 2013; Central Bank,
2010; Nyamongo & Temesgen, 2013). Conflicting expectations for shareholders, consumers,
regulators (often across various jurisdictions) and central banks add additional layers of
complexity to the decision making process (CBK, 2010; Nyamongo & Temesgen, 2013). The
Canadian banking industry is held in high regard by its global counterparts, due to its stability
during the recent financial crisis (Canadian Banks, 2013). Canada’s banks, which earned
worldwide admiration for their performance during and after the 2008 financial crisis, are however
not immune to these forces. The Canadian banks are well positioned within the global financial
services community with their strong capital levels and track record through the financial crisis
(Canadian Banks, 2013). There has also been a strong growth in the sector with overall profits for
Canada’s Big Six banks exceeding CA$30 billion for the first time in history. But new economic,
regulatory and competitive challenges have affected the industry and many global banks have
improved their position and profitability over the past few years (Canadian Banks, 2013).
Banks globally are under pressure to simultaneously improve the customer experience, meet
compounding regulatory requirements and reduce operating costs (Nyamongo & Temesgen, 2013;
4
Adegoroye & Moruf, 2012). While every industry faces its own unique challenges, the banking
sector certainly has a lot on its plate including costly regulations and savvy customers who are
seeking an Amazon-like experience. Bankers must strengthen the customer experience and also
respond to shareholder calls for operational efficiency to drive financial performance – all under
the umbrella of ever-pervasive regulation (Adegoroye & Moruf, 2012). Progressive organizations
are deeply examining client needs and plotting the customer journey to uncover inherent or
potential risks, including compliance issues. They are then designing effective business controls
with the impact to the customer at the forefront. By bringing compliance and customer objectives
together “under one roof,” it is also possible to achieve greater efficiency, eliminate process
redundancies and ultimately, lower costs (Adegoroye & Moruf, 2012).
A pragmatic jumping off point for this type of convergence is to focus on one product area at a
time and to identify a small number of key customer processes or journeys. By using multiple data
sources and direct customer feedback, a bank can hone in on what customers most value, redesign
the best process and introduce controls to efficiently support the customer experience and
compliance requirements (Aldaibat & Irtaimeh, 2012). By fine tuning their ability to apply
principles of Customer-Centric Compliance, banks can create or even revamp products and
processes that converge to satisfy customer, cost and compliance priorities (Canadian Banks,
2013).
1.1.2. Commercial Banks in Kenya
Banks in Kenya have existed since the colonial times (CBK, 2010). During this period the banking
sector was dominated by foreign owned banks that were significantly unable to meet the demands
of all the Kenyans in need of banking services. The banks were located in the urban centers and
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also charged exorbitant account opening and maintenance balances which most low income
earners in Kenya were unable to raise (Nyamongo & Temesgen, 2013). As a result banking
continuously remained a preserve of the few rich Kenyans and therefore only had a minor
contribution on the economy. The performance of banks then in terms of customer numbers,
profits and other performance indicators remained very low (CBK, 2010).
Currently there are 46 banks in Kenya which are categorized as private and foreign owned (CBK,
2010). Large‐size banks constitute 46 percent of the industry while medium and small‐size banks
constitute 35 percent and 19 percent of the banking industry, respectively (CBK, 2010). There are
two fully Islamic banks - Gulf African Bank and First Community Bank - which opened their
doors in early 2009 and now have nearly 1 percent of gross banking assets (CBK, 2010). In
addition to the two Islamic banks other banks have also been able to offer banking services
through special accounts created to meet the needs of the Islamic banker. The banks have come
together under the Kenya Bankers Association (KBA), which serves as a lobby for the banks’
interests and also addresses issues affecting member institutions (CBK, 2010).
The banking industry in Kenya is generally a highly regulated industry, and government
restrictions on financial activities by banks have varied over time and location (Central Bank,
2010; Nyamongo & Temesgen, 2013). The industry is governed by the Companies Act, the
Banking Act, the Central Bank of Kenya Act and the various prudential guidelines issued by the
Central Bank of Kenya (CBK). The Central Bank Act enumerates the core functions of Central
Bank and gives it limited autonomy to manage and regulate the Banking sector in Kenya (CBK,
2010; Nyamongo & Temesgen, 2013).
6
In the recent wave of globalization, increased technological growth and competition there has been
a lot of emphasis on performance in the Kenyan banking sector. Many scholars and researchers
have used performance synonymously with productivity, efficiency, effectiveness and
competitiveness. According to Bohlander and Snell (2007) organizational performance comprises
the actual output or results of an organization measured against its intended outputs (organizational
goals and objectives). According to Barney (2000) firms that use resources and capabilities to
exploit opportunities and neutralize threats will see an increase in their net revenue or a decrease in
their net costs or both and vice versa. Players in this sector have experienced increased competition
over the last few years resulting from increased innovations among the players and new entrants
into the market.
Although the banking sector in Kenya has experienced problems over the last 25 years, with 37
banking institutions collapsing between 1986 and 1998 (Kithinji & Waweru, 2007; Ngugi, 2001),
there has been a continued growth in performance over the last eight years, with the banking sector
collectively registering impressive performance(Nyamongo & Temesgen, 2013). Under such
competitive environments bank employees have had a lot of pressure to try and come up with
creative ideas and products that enable them survive in such an extremely turbulent and
competitive environment. Such creative innovations include the introduction of the M-Kesho
account through partnership between Equity Bank and Safaricom, PesaPap by Family Bank and
KCB Connect by KCB (CBK, 2010). In order to motivate employees to remain creative and
innovative the banking sector in Kenya has had to rethink its approach on how it uses its most
important resource - the people. This has led banks to adopt strategic human resource management
which in turn will lead to increased profits.
7
According to the CBK (2010) recently the banking sector in Kenya has recorded a very fast growth
rate and huge profits. The sector's total profit before tax, which stood at KSh6.0 billion in 2002,
grew to KSh48.9 billion in 2009 (CBK, 2005‐2009). The sector has also experienced growth in
profits with most banks reporting very high profits after tax; this further confirms the growth of the
sector despite the global financial meltdown which had a very negative effect on world financial
performance especially in the banking sectors (Nyamongo & Temesgen, 2013). According to The
Central Bank, (2010) over the last few years, the Banking sector in Kenya has continued to grow in
assets, deposits, profitability and products offering. The growth has been mainly underpinned by;
1) an industry wide branch network expansion strategy both in Kenya and in the East African
community region, and 2) automation of a large number of services and a move towards emphasis
on the complex customer needs rather than traditional ‘off-the-shelf’ banking products (CBK,
2010).
Over the last decade labour productivity has been of concern to bankers due to the current
competitive environment. The current global trend of deregulation of the banking industry,
increased expenditure on development of human resources coupled with technological
developments like internet banking and ATMs have opened up many new businesses to the banks
in Kenya location (CBK, 2010). According to the Central Bank (2010) performance indicators in
banks include: financial (profits), market share, efficiency, reliability, flexibility and share value in
the stock market. It is commonly accepted that employees create an important source of
competitive advantage for firms (Goel, 2008; Pattanayak, 2008).The banks' specific characteristics
also tend to play a great role in the performance of the banking sector (Nyamongo & Temesgen,
2013). Indeed, the available evidence also tends to link high performance to capital adequacy
(Athanasoglou 2005; Goddard, 2004). There has been substantial growth in the number of banks
8
and branches country wide (CBK, 2010). Other growth indicators include the increase in the
number of account holders as well as an increase in the number of banks listed in the Nairobi
Securities Exchange. Share prices of listed banks have continuously gained value showing the
current growth trend in the sector.
Despite the increase in banking sector profit over the years, the distribution of profits being
accounted for by the “large” banks remained skewed, in particular with four banks, whose assets
market share stood at 46 percent, having contributed 54.3 percent of the sector's total pre‐tax
profits (CBK, 2006). The recent initiatives undertaken by the government of Kenya to increase the
capital base of banking institutions coupled with a robust regulatory framework and effective
supervisory regime has the potential to reduce future bank failures, forestall systemic risk and
improve the financial performance of medium‐ and small‐size banking institutions (Nyamongo &
Temesgen, 2013). The diversification of banking assets has been found to influence the
performance. Banks that are known to diversify their products beyond the traditional products tend
to register additional revenues which may improve their balance sheets. However, banks relying
heavily on the traditional sources of revenue may post lower performance (Nyamongo &
Temesgen, 2013). There is also evidence in the literature that corporates that diversify heavily tend
to stretch their resources to the detriment of the overall performance as a result of diseconomies of
scope.
Commercial banks are coming up with more and more vacancies, and the banking sector now has
more new jobs than any other sector. Right from the branch level to the highest level, there is
tremendous range of opportunities available in the sector. Players in this sector have experienced
increased competition over the last few years resulting from increased innovations among the
9
players and new entrants into the market. Under such competitive environments bank employees
have had a lot of pressure to try and come up with creative ideas and products that will enable
them survive in such an extremely turbulent and competitive environment. It is based on the recent
successes and improved performance of the banking sector that this study was undertaken in order
to establish the human resource strategies that affect the performance of the banking sector. There
is need to understand the effect of HR strategies on employee performance in banks since currently
there is a lot of interest in this area. In particular there is need to have documented information on
the effect of employee resourcing strategies, training and development strategies, reward strategies
and employee relations strategies on the performance of banks.
1.2. Statement of the problem
The rapid technological growth and increased competition have forced commercial banks in Kenya
to aggressively compete for employees in order to remain competitive (Central Bank of Kenya,
2010). This trend has created a lot of interest on the effect of HRM strategies on performance.
Many studies have shown a positive relationship between HRM strategies and performance
(Huselid 2007; Armstrong & Baron, 2009; Katou, 2008; Ahmad & Schroeder, 2003; Bae &
Lawler, 2000; Batt, 2002; Delery & Doty, 1996; Guthrie, 2001; Gardner & Moynihan, 2003).
Despite these findings most studies have been characterized by lack of a solid theoretical
foundation explaining the mechanisms causing the observed enhanced performance. Available
studies do not adequately investigate exactly how a good alignment between HRM and firm
strategy leads to improved performance. Researchers have termed the link between HRM and
organizational performance to be a ‘black box’, that is, lack of clarity regarding ‘what exactly
leads to what’ (Purcell, 2004; Gerhart, 2005 & Katou, 2008).

10
While investigations have been initiated in emerging markets and in transitional countries
(Ahlstron, Foley, Young, & Chan, 2005; Zupan & Kase, 2005), available literature shows that
most studies examining the relationship between HRM and performance have been conducted in
the manufacturing sector mostly in the United States (Huselid, 1995; Guest, Michie, Conway, &
Sheehan, 2003). Without a clearly delineated theoretical model of HPWS and their effects on
performance, scholars cannot adequately validate the efficacy of such strategies and provide useful
suggestions to practitioners. There is, therefore, a great need for additional evidence to support the
HRM-performance relationship from different sectors and contexts. It is from this background that
this study was conducted to investigate how human resource strategies affect the performance of
commercial banks in Kenya.
1.3. Objectives of the study
The study was guided by the following objectives:
1.3.1 General objective
To investigate the effect of human resources management strategies on the performance of
1.3.2 Specific objectives
1. To examine the extent to which recruitment and selection strategies affect the performance of
2. To investigate the extent to which reward and compensation strategies affect the performance of
11
3. To investigate the extent to which training and development strategies affect the performance of
4. To establish the extent to which employee relations strategies affect the performance of
1.5. Research hypotheses
In order to achieve the objectives designed for this study, the following research hypotheses were
stated based on the revelations in the review of literature concerning HRM strategies and firms’
performance.
H1: Employee recruitment and selection strategies have a significant effect on the performance of
H2: Training and development strategies have a significant effect on the performance of
H3: Employee reward and compensation strategies have a significant effect on the performance of
H4: Employee relations strategies have a significant effect on the performance of commercial
banks in Kenya.
5H: Human resources management strategies have a significant effect on the performance of
1.6. Significance of the study

12
The study results will enable the management to establish the effects of human resource strategies
on employee performance, hence identify the areas where improvements can be done. It will also
help the management in planning for the development and implementation of effective and
efficient human resource strategies that will lead to improved performance of the banks. This will
in turn help in ensuring economic growth and stability of the country.
Other researchers who may need reference to information on role of human resource strategies on
employees’ performance will also benefit by being able to assess previous approaches used to
solve similar management questions and revise their research on human resources strategic plans.
In addition they will be able to spot flaws in the logic, errors in assumptions or even management
questions that are not adequately addressed by the objectives and designs. The study will also
advance literature by differentiating between human resources strategies used to improve
organizational performance.
1.7. Scope of the study
The study was done covering all the commercial banks in Kenya. However the headquarters of
each bank branch was purposively sampled for the study. The study was done mainly in Nairobi
province where the researcher was able to get all the relevant officers. This included Bank CEOs,
HR Managers, Operations managers and other employees. The study was only limited to human
resources strategies, their development, use and effect on organizational performance in the
banking sector in Kenya. It did not include the effect of human resource strategies on the
performance of other sectors of the economy. The research was conducted within a period of
fifteen months which was enough to exhaustively examine all the issues at stake.
1.8. Limitations of the study

13
Most banks were not willing to provide data related to their employees’ problems and inner details
of the banks. Some respondents may also have given false information/ responses to the questions
asked. Banks that may not actually have written the human resource strategies per se may also
have tried to infer that they actually have them. It was very hard to convince them of the intention
of my research in a bid to collect information from them based on the sensitivity of the sector.
However, with the assistance of friends working in the sector and with the introduction letter from
the university the researcher was given the opportunity to undertake the research.
Some of the respondents were also not co-operative to the interview and attempted to ignore the
questionnaires; this threatened to reduce the response rate. The researcher minimized non response
cases by taking and collecting summary questionnaires by hand from each respondent. Also, by
having trustworthy people (especially one bank employee in each sampled bank) to distribute and
collect the questionnaires and knowing how best to deal with those reluctant to interviews. Those
who did not respond were also called later and interviewed via telephone.
14
CHAPTER TWO
LITERATURE REVIEW
2.1. Introduction
Human resources are a significant organizational asset if properly used and managed. The
application of appropriate strategies for the development of human resources can lead to
improvement of corporate performance both in the short and long term. This chapter describes
available literature in the topic. It also offers a critical analysis of previous studies that have been
done by other scholars in the area. It finally presents the research gap which the research intends to
explore.
2.2. Theoretical review
Tyson (1995) as quoted in Torrington et al (2005) described human resource management strategy
as the intentions of the corporation both explicit and covert, towards the management of its
employees, expressed through philosophies, policies and practices. Effective human capital
strategy and practices are directly related to higher levels of financial and market success. Strategic
human resource management has three theoretical approaches (Torrington et al, 2005; Armstrong,
2009). The first is founded on the concept that there is one best way of managing human resource
in order to improve business performance. The second is based on the need to align employment
policies and practices with the requirements of the business strategy in order that the later will be
achieved and the business will be successful. The third is derived from the resource based view of
the firm and the perceived value of the human capital. This approach is grounded in the nature of
the reward–effort exchange and, more specifically, the degree to which managers view their
human resources as an asset as opposed to a variable cost.

15
An further analysis of the literature on the HRM-performance relationship by Boselie, Dietz and
Boon (2005), found that the theoretical frameworks which dominate this field are the resource-
based view (i.e., HRM influences performance according to the human and social capital held by
the organization) (Barney, 1991), the AMO theory (i.e., HRM influences performance in relation
to employees’ Ability, Motivation and Opportunity to participate) (Appelbaum, Bailey, Berg, &
Kalleberg, 2000; Katou, 2008) and the “contingent framework” (i.e., HRM influences performance
in relation to contingent factors such as business strategies).
2.2.1. The Resource Based View (RBV)
An organization’s resources can be divided into tangible (financial, technological, physical and
human) and intangible (brand-name, reputation and know-how) resources. Barney (1991) argued
that resources lead to sustainable competitive advantage when they are valuable, rare, inimitable,
and non substitutable. Resources such as technology, natural resources, finances and economies of
scale can create value, however the resource based theory argues that this sources of value are
available to all and easy to copy, compared to complex social systems like human resources.
The resource based view of the firm is a model of firm performance that focuses on the resources
and capabilities controlled by a firm as sources of competitive advantage (Perce & Robinson,
2007). The genesis of the resource-based model can be traced back to Selznick (1957), who
suggested that work organizations each possess ‘distinctive competence’ that enables them to
outperform their competitors, and to Penrose (1959) who conceptualized the firm as a ‘collection
of productive resources’. This view focuses on the quality of the human resource available to the
organization and their ability to learn and adapt more quickly than their competitors. These
resources include the human resources such as the training, experience, judgments, intelligence,
16
relationships and insights of individual managers and workers in an organization. The sum of
people’s knowledge and expertise, and social relationships, has the potential to provide non-
substitutable capabilities that serve as a source of competitive advantage (Cappelli & Singh, 1992).
Perce and Robinson (2007) argue that the resource based view of a firm helps improve upon the
SWOT analysis by examining a variety of different yet specific types of resources and capabilities
any firm possesses and then evaluating the degree to which they become the basis for sustained
competitive advantage based on industry and competitor considerations. Thus theoretical work on
the resource based view of the firm (Barney, 1991; Perce & Robinson, 2007) supports the notion
that HRM may be an important source of competitive advantage.
17
SHAPE
Firm’s resources
and capabilities
• Value
• Rarity Strategies Sustained competitive advantage
• Inimitability
• Non-substitutability
DEVELOP
Figure 2.1 Relationship between resource endowment, strategies and sustained competitive
advantage
Source: Based on Barney (1991) and Hill and Jones (2001)
2.2.2. Ability, Motivation, Opportunity Theory (AMO Theory)
Expectancy theory of motivation explains the link between motivation and performance. The
theory proposes that performance at individual level depends on high motivation, possession of the
necessary skills and abilities and an appropriate role and understanding of that role (Savaneviciene
& Stankeviciute, 2010). It is a short step to specify the HRM practices that encourage high skills
and abilities, for example careful selection and high investment in training; high motivation, for
example employee involvement and performance-related pay; and an appropriate role structure and
role perception, for example job design and extensive communication and feedback. According to
Vroom (1964) “the effects of motivation on performance are dependent on the level of ability of
the worker, and the relationship of ability to performance is dependent on the motivation of the
worker.” The effects of ability and motivation on performance are not additive but interactive.
Vroom proposed the following formula showing that performance is a function of ability and
motivation:
18
Performance = f(Ability x Motivation) or P = f(A, M).
Boxall and Purcell (2003) summarize it as: P = f(A,M,O)
Where P is performance, A is ability, M is motivation, and O is opportunity.
In other words, HR systems will be most effective when they foster ability, motivation, and
opportunity to contribute to effectiveness (Boselie et al., 2005; Purcell & Hutchinson, 2007).
Different HR practices/policies have many effects on ability, motivation, and to some degree,
ability requirements/opportunity (Purcell et al., 2003; Lepak et al., 2006; Katou, 2008).
Recruitment and selection, training and development policies are expected to have their primary
effect on ability (and related expectancy motivation perceptions). Job design and job analysis
primarily determine ability requirements/opportunity and to some degree, (intrinsic) rewards
offered. Compensation has its primary effect on rewards offered and instrumentality perceptions
(motivation). Motivation needs/values are primarily influenced by employee selection and training
as well as compensation. Thus the AMO theory thus states that performance is the function of
employee ability, motivation and opportunity (Musah, 2008).
Scholars have argued that a skilled, motivated, and flexible workforce can help develop a
company's sustainable core competencies (Levine, 1995, Hsi-An Shih, Yun-Hwa Chiang & Chu-
Chun Hsu , 2006; Musah, 2008). A committed and motivated workers are less likely to want to
leave the organization (Gould-Williams & Davies, 2003). The AMO theory claims that people will
perform well when they are able to do so (because they have the necessary knowledge and skills to
the job), they have the motivation to do so (they will do the job because they want to) and finally,
there will be enhance performance if their work environment provides the necessary support (for
19
example through functioning technology) (Musah, 2008). Whitener (2001) argued that the
organization may adopt a high-commitment strategy, including employment practices, appraisal,
competitiveness, fair compensation, and comprehensive training and development in order for
employees to have high commitment and motivation.
2.2.3. Social Exchange Theory
Social exchange theory is a social psychological and sociological perspective that explains social
change and stability as a process of negotiated exchanges between parties. Social exchange theory
posits that all human relationships are formed by the use of a subjective cost-benefit analysis and
the comparison of alternatives (Gould-Wiliams, 2007). The theory has roots in economics,
psychology and sociology. Social exchange theory is reliant on voluntary actions rather than
formal contracts (Pearce & Peters, 1985; Tsui et al., 1997; Aryee et al., 2002). According to this
theory, individuals regulate their interactions with other individuals based on a self-interest
analysis of the costs and benefits of such an interaction. SET argues that when workplace
relationships are effective, then the organization benefits. The social exchange theory explains
social change and stability as a process of negotiated exchanges between parties. Thus people
calculate the overall worth of a particular relationship by subtracting its costs from the rewards it
provides. Outcome is defined to be the difference between the benefits and the costs:
Worth = Rewards – Costs
People seek to maximize their benefits and minimize their costs when exchanging resources with
others (Molm, 2001). Individuals engage in an interaction with the expectation of reciprocity
(Gouldner, 1960). These benefits need not be tangible and include things such as material or
20
financial gains, social status, and emotional comforts. Costs generally consist of sacrifices of time,
money, or lost opportunities.
Social exchange theory is used as a framework for predicting the effects of management practice
on worker attitudes. According to Stafford (2008), social exchanges involve a connection with
another person; social exchanges involve trust, not legal obligations; they are flexible; and rarely
involve explicit bargaining. Positive social exchanges can result in mutual benefits to both the
employing organization and the workforce.
According to empirical findings, the practices of high-commitment HRM can affect employee
motivation (Whitener, 2001), and a positive relationship exists between supportive HRM and POS
(Allen et al., 2003; Hsu-Hsin Chiang, Tzu-Shian Han & Ju-Sung Chuang, 2011). There is also
emerging evidence that trust affects the relationship between HRM practice and employee
commitment (Guest & Conway, 1997; Aryee et al., 2002; Gould-Williams, 2003), with a lack of
trust identified as the ‘primary culprit in the failures of management activities and human resource
activities’ (Whitener, 1997). Trust is regarded as a critical factor underpinning social exchanges in
that the act of initiating social exchange relationships requires the originator to trust that the
recipient will respond in kind (Aryee et al., 2002). Lack of trust leads to dysfunctional outcomes,
such as low commitment, low motivation and a lack of confidence between parties.
According to Flynn (2005) employees with relational identity orientation prefer reciprocal
exchange, i.e. these employees may reciprocate an organization when they are in an interdependent
task environment. Organizations adopt high-commitment HR practices making employees
perceive organizational support and feel that they are important in the interdependent organization.
Based on social identity theory, employees who feel they are appreciated by their organization may
21
perceive high status in the organization (Fuller et al, 2003). Employees who experience mutual
reciprocity of resources, information, respect and power with management experience high
perceptions of autonomy hence, they would be satisfied with the resources, information and
support offered by the supervisor, as well as the job generally – hence, they would be committed to
staying in the organization and also perform well. Empirical evidence shows that high levels of
employee involvement and job security have contributed to increased employee commitment
(Guest et al. 2000; Whitener 2001; Gallie et al. 2001).
An organization can utilize high-commitment HRM to make employees feel that they are valuable
and then perceive organizational support. Therefore, high-commitment HRM is a good strategy for
the organization to make employees perceive organizational support and commit to their
organization. According to empirical findings, the practices of high-commitment HRM can affect
employee motivation (Whitener, 2001), and a positive relationship exists between supportive HRM
and POS (Allen, 2003; Hsu-Hsin Chiang, Tzu-Shian Han & Ju-Sung Chuang, 2011).
2.2.4. The Universalistic Perspective
Strategic HRM theorists have argued that the HRM contribution to organizational outcomes is a
function of three interrelated processes. First, HR strategy, through policies, programs, and
practices, shapes the human capital base (Bratton & Gold, 2003). Second, HR strategy influences
the degree to which the organization is able ‘to exploit this human capital base’ in terms of worker
motivation to maximize the full potential of human capital (Bamberger & Meshoulam, 2000).
Third, HR strategy enhances organizational performance by influencing the degree to which
motivated and gifted workers are provided with the opportunity and the means to contribute to
operational decision making (Bamberger & Meshoulam, 2000).
22
The universalistic perspective of HRM is also known as the “best practice‟' approach, and claims
that there exists a bundle of best HRM practices which can be used by any organization
irrespective of industry, size, workforce or product market to improve performance. The
universalistic model suggests the existence of a linear relationship between HR and performance
(Pfeffer, 1994) and argues that certain single or set of HR policies and practices are linked to high
performance (Zheng, Rolfe, Di Milia & Bretherton, 2007). Empirical studies have shown a
positive relationship between universal approach to HRM practices and firm performance (Daud,
2006; Syed, & Jamal 2012). It will lead to positive outcomes for all types of firms when it is
implemented. This approach argues that there is a one-best-way of managing and organizing
people, embodied in specific functional best practices in recruitment, appraisal, compensation,
among other functions. There are certain “best” HRM practices that contribute to increased
financial performance regardless of the strategic goals of organizations. Pfeiffer (1998) identified
employment security, selective hiring, extensive training, information sharing, self managed teams,
high pay based on company performance and the reduction of status differentials as best practices
because according to Delery and Doty (1996) they are universal across all organizations.
According to researchers such as Osterman (1994) and Gooderham et al. (2008) job rotation,
quality circles and TQM will improve firm outcomes for all types of companies.
Allen et al. (2003) also identified antecedents, including employee participation in decision-
making, rewards fairness, and chances for development, which affect POS. The combination of
HRM practices which is called high performance work systems or high involvement work systems
have been shown to have a positive effect on firm performance (Guthrie, 2001; Datta et al., 2005).
This perspective focuses mainly on certain practices oriented to reinforce employees’ abilities, for
example, variable compensation (Gerhart & Milkovich, 1990), certain methods of recruitment and
23
selection (Terpstra & Rozell, 1993), comprehensive training (Russell et al., 1985) or performance
appraisal (Borman, 1991).
According to the human capital theory people possess skills, knowledge, and abilities that provide
economic value to firms (Youndt et al., 1996). The theory argues that organizations with valuable
knowledge, skills and abilities will present better performance levels, and therefore it has also
fostered many universalistic conclusions. An alignment of organizational strategy and HR strategy
will improve organizational performance and competitiveness. The more likely it is that the firm
will invest in human capital and that these investments will lead to higher individual productivity
and firm performance (Youndt et al., 1996).
People have a crucial value for organizational strategies and certain practices can foster and
develop this value, leading to superior performance (Gonzalo Sańchez-Gardey & Romero-
Fernańdez, 2005). The “universalistic” perspective alleges that certain HR practices are always
better than others and all organizations should adopt such practices on every occasion (Hsi-An
Shih, Yun-Hwa Chiang & Chu-Chun Hsu, 2006; Daud, 2006). According to the theory HRM
practices contribute to worker motivation (and thereby increased productivity) as well as increased
efficiency (Ichniowski, Kochan, Levine, Olson & Strauss, 1996). Firms should however create a
high degree of internal consistency, or fit, among their HR practices.
The universalistic perspective has been criticised for failing to consider the context in which these
practices are used. It does not study either the synergic interdependence or the integration of
practices, and the contribution of these practices to performance is analysed only from an additive
point of view (Pfeffer, 1994; Osterman, 1994; Becker & Gerhart, 1996). Thus this view denies that
the different elements that build the system could be combined in different patterns of practices
24
that could be equally efficient for the organization (Gonzalo Sańchez-Gardey & Romero-
Fernańdez, 2005). The universalist approach also ignores the consistency/fit argument.
Differences in legislative context as well as culture require at least some reconfiguration of
practices to be effective.
2.2.5. The Matching Model
The 'matching model' is also known as the Michigan model, "best practice" or 'best-fit' approach to
human resource management. This means that there is a correlation between the HRM strategy and
the overall corporate strategy. The model was developed by scholars at the Michigan School in
1984. They stated that human resource systems and the structure of an organization should be
managed in line with organizational strategy. Early interest in the “matching” model had been
evident in Devanna et al.’s (1984) work:
“HR systems and organizational structure should be managed in a way that is
congruent with organizational strategy”.
This was closely related to Chandler’s (1962) distinction between strategy and structure (“structure
follows strategy”). According to this model people have to be managed in a similar manner to
equipment and raw materials. It highlights the ‘resource’ aspect of HRM and emphasises the
efficient utilisation of human resources to meet organisational objectives. Human resources have to
be obtained cheaply, used sparingly and developed and exploited as fully as possible (Budhwar &
Aryee, 2002). Therefore it requires that human resource strategies should have a tight fit to the
overall strategies of the business. The model asserts that organizational effectiveness depends on a
25
“tight - fit” between HRM strategy and business strategy. The essential idea of this model is that
HR practices should be matched to the firm’s desired competitive position. This is seen to make
the organization more effective.
The matching model is credited for been simple and offering a basis for integrating HR practices.
The different functions of HRM are brought together around a common theme, behavioral
consistency with pre-selected competitive position. The model however has been criticized
because it limits the role of HR to a reactive, organizational function and under-emphasizes the
importance of societal and other external factors (Daud, 2006). For example, it is difficult to see
how the current concern for work life balance could be integrated into this model. The theory is
also seen to depend on a rational, mechanical form of organizational decision-making. In reality,
strategies are often determined and operationalized on a more intuitive, political and subjective
level. Certainly, the decision-making is more complex than the model allows. It is also both
prescriptive and normative, implying that the fit to business strategy should determine HR strategy.
2.2.6. The Contingency Perspective
This perspective on HRM is also known as “best fit‟ approach and proposes that the extent (or
even the direction) of the effect of HRM strategy on firm performance will depend on a firm's
context or environmental conditions (Burns & Stalker, 1994). It questions the “best practice‟
approach and suggests that “best practice‟ may not be appropriate for all situations and other
approaches may have greater success in impacting on organizational performance. Best fit HRM
attempts to fit HRM systems to a number of contingencies including business strategy, competitive
circumstances and national business systems (Youndt, Snell, Dean & Lepak, 1996; Truss, 2001).
26
This contingency examines the resource and capabilities from a context point of view. It should be
a way to overcome the criticism about boundary issues. This perspective advocates that firm’s
resources and capability should be consistent with other aspects of the company (Delery & Doty,
1996). Resources and capabilities are not valuable themselves; they have to be applied to context
(Barney, 1991; Yang, 2005). This contingency is further proved by a number of studies such as
Guthrie's (2001) study of New Zealand companies and Datta et al (2005) testing the moderating
effects of industry characteristics on HRM-performance linkage. The two perspectives on the
linkage of HRM and performance seem to be competing with each other on the surface. But
Youndt et al. (1996) argued that they are also complementary.
2.3. Conceptual framework
A conceptual framework is a theoretical structure of assumptions, principles, and rules that holds
together the ideas comprising a broad concept (Zikmund, 2003). The independent variables of
this study are the following human resource management strategies: employee resourcing
strategies, training and development strategies, employee relations strategies and employee
reward and compensation strategies. These strategies affect commitment of employees to work
and this in turn affects the dependent variable of the study which in this case is organizational
performance. Firm size, technology and capital intensity are variables that will play a moderating
role in this relationship. The conceptual frame work is presented in Figure 2.2.
Organizational performance comprises of the actual output or results of an organization
measured against its intended outputs (goals or objectives). The nature of human resources
and strategies adapted to utilize them will have a great effect on achievement of
27
organizational goals. Good human resource strategies if well implemented will lead to
improved performance.
Employee
H1
recruitment
and selection
strategies
Training and H2
development Employee Employee Firm
strategies motivation commitment performance
H4
Employee
relations
strategies
H3 Firm size,
Employee reward
technology
and compensation
, capital
strategies
intensity,
culture
Independent intervening moderating dependent

variables variable variables variable
Figure 2.2. Conceptual framework
2.5. Empirical studies
2.5.1. Performance of Commercial Banks
Performance has been used synonymously with productivity, efficiency, effectiveness and
competitiveness. According to Bohlander and Snell (2007) organizational performance comprises

28
the actual output or results of an organization measured against its intended outputs (organizational
goals and objectives). Various scholars have defined performance management in different ways,
for example, Armstrong (2006) defines performance management as a systematic process for
improving organizational performance by developing the performance of individuals and teams.
Armstrong and Baron (2004) view performance management as a discipline of acting upon
intelligence and reported information in planning ahead and in managing service operations both
directly and through partnerships with other service delivery agents. They describe it as a process
which contributes to the effective management of individuals and teams in order to achieve high
levels of organizational performance. It establishes a shared understanding of what is to be
achieved and an approach to leading and developing people which will ensure that it is achieved.
Supported by joint strategies, shared outcomes and shared targets performance management should
be exercised at all levels of the organization (Armstrong, 2008). It is a holistic process bringing
together many of the elements which go to make up successful people management including
learning and development.
To successfully face the increasing uncertainty and competitiveness what is required is performing
employees to build performing organizations (Pattanayak, 2008). Efforts have been made by
human resources management theorists to try to establish a causal link between human resource
management and performance (Cook, 2000). Managers should develop a targeted employee
performance coaching plan that will identify the unique development needs of team members and
holds them accountable for their performance. Performance management and governance is
therefore an essential feature of modern organizational management (Armstrong, 2006). It enables
an organization to continuously monitor and improve its performance in order to achieve its
strategic goals (Dessler, 2005). Research has shown that a company emphasizes performance when
29
a substantial portion of its employees pay is tied to individual or group contributions and the
amount received can vary significantly from one person or group to another (Gomez-Meija et al,
2008).
There is need for a theoretical link on how human resources management and performance are
related. According to Cook (2000) performance is enhanced by systems of practices (bundled
human resource practices) that support each other and have a mutually reinforcing effect on
employee contribution to performance. There is a symbiotic relationship between human resources
strategy and performance in the manufacturing sector (Cook, 2000; Barney, 2000; Paterson et al,
2006). However we may not conclusively generalize this to the banking sector due to the fragility
of banking.
HRM strategies can improve productivity by: 1) increasing employee skills and abilities; 2)
promoting positive attitudes and increasing motivation, and 3) providing employees with expanded
responsibilities so that they can make full use of their skills and abilities. Performance indicators
include: financial (profits), market share, efficiency, reliability, flexibility among others. The aim
of human resource strategy is to devise ways of managing people in order to assist in achievement
of organizational objectives. Participation of individuals and team transforms exchanges from
economic to social. According to Mahoney and Watson (1993) employee involvement has a
beneficial impact on performance.
2.5.2. Human Resource Strategies
30
Barney and Hesterly (2008) define a strategy as its theory about how to gain a competitive
advantage. Redman and Wilkinson (2001) argue that a competitive advantage can be achieved
either through cost leadership or product differentiation. Barney and Hesterly (2008) believe that a
firm has a competitive advantage when it is able to create more value than rival firms. A good fit
between human resource strategies and the business strategy of the firm tend to lead to superior
outcomes (Delery & Doty, 1996; Noe et al, 2006). Torrington et al, (2005) view strategy as a
process which is not necessarily rational and top down but a political and evolutionary process.
Mintzberg (1994) argues that a strategy can evolve in response to an evolving situation. He argues
that strategy is formed rather than formulated and that any intended strategy is changed by events,
opportunities, the actions of employees and so on so that the realized strategy is different from the
initial vision. As explained by Delery and Doty (1996) and Goel (2008) when the company human
resource practices support firm strategy, superior performance is expected. According to
Richardson and Thompson (1999) a strategy must have two key elements- there must be strategic
objectives (things the strategy is supposed to achieve) and there must be a plan of action (the
means by which it is proposed that the objectives will be met). According to Boxal (1996) HRM
strategies provide a framework of critical ends and means.
Faced with rapid changes in technology and globalization (Noe et al., 2006) organizations need to
develop a more focused and coherent approach to managing people. HR strategies set out what the
organization intends to do about the different aspects of human resource management policies and
practices. Employees create an important source of competitive advantage for organizations
(Barney, 1991; Pfeiffer, 1994). Organizations should thus adopt HRM practices that make best use
31
of its employees. According to Dessler (2008) leading organizations are places where people know
the strategy and goals, feel respected and valued, understand their role, and know how to succeed.
Human resource management strategies for professional groups help ensure that the professional
development and career needs of its members are met. Employee behavior is very critical in
realizing goals and increasing productivity (Pattanayak, 2008). According to Torrington et al
(2005), if you require an organization which really values quality and service you not only have to
retrain staff, you must also review the organization, reward, and appraisal and communications
systems. Human resource management strategies direct, maneuver and wield workers into better
work performance. Skillful managers form work groups when possible with the hope that peer
pressure will induce high levels of performance.
2.5.3. Employee resourcing strategies
According to Noe (2008) staffing strategy refers to a company’s decision regarding where to find
employees, how to select them and the mix of employee skills and statuses (temporary, full time
e.t.c). Employee resourcing strategies exist to provide the people and skills required to support the
business strategy; it is concerned with any means available to meet the needs of the firm for certain
skills and behaviour (Armstrong, 2010). This role has long been regarded as part of the domain of
personnel management and personnel textbooks conventionally describe resourcing as a passive,
technical procedure - a matching of available candidates to the requirements of the organization.
The objective of HRM resourcing strategies is to obtain the right basic material in the form of
workforce endowed with the appropriate qualities, skills, knowledge and potential for future
training (Armstrong, 2010). The selection, recruitment of workers best suited to meeting the needs
of the organization ought to form a core activity upon which most other HRM policies geared
32
towards development and motivation should be built (Armstrong, 2010). Organizations can take
one of three actions to fulfill their employee resourcing: 1) reallocate tasks between employees, so
that existing staff take on more or different work. 2) re-allocate people within the company; and 3)
recruit new staff from the external job market. The emphasis is on flexible working practices,
requiring multi-skilled workers and sophisticated assessment and development programmes.
Gaining competent employees at all levels of the organization is more than a matter of training. It
stems from changes in recruitment and selection philosophy (Huselid, 1995). Staffing the most
competent employees, staffs and managers is a continuous challenge for the human resource
management department. It influences training. Somenfeld and Peiper (1988) as quoted in Noe
(2008) say that two aspects of a company’s staffing strategy influence training: the criteria used to
make promotions and assignment decisions (assignment flow) and the places where the company
prefers to obtain the human resource to fill open positions (supply flow). According to Johnson et
al. (2006) recruitment is a key method of improving the strategic capability of an organization.
Redeployment and redundancy planning are also important in organizations facing change.
To successfully face the increasing uncertainty and competitiveness what is required is performing
employees to build performing organizations (Pattanayak, 2008). In order to ensure the on-going
delivery of government programs and services, all sectors require a continuous supply of fully
qualified people in the right positions at the right time. According to Noe (2008) deciding what
skills new employees will be selected on and what skills the company will develop is another
staffing strategy. The companies also need to motivate good employees to remain and work with
the organization. Faced with this rapid change organizations need to develop a more focused and
coherent approach to managing people.
33
According to William and Kinicki (2008) when employment rates are high companies are
desperate to attract, retain and motivate key people. They further mention that “even in tough
economic times there are always industries and occupations in which employers feel they need to
bend backwards to retain their human capital”. Organizational behavior studies suggest that
employee retention is dependent upon levels of organizational commitment. Research has
established a direct link between employee retention rates and employee performance, for example
Noe et al (2006). Thus there is need to generate satisfaction and loyalty among employees. Their
study focused on the potential influence that human resources management (HRM) strategies have
on organizational commitment levels among employees.
Researchers and scholars argue that excellent management of people is crucial to maintain a
foothold in the market. According to Hitt, Ireland and Hoskisson (2001) people should be placed in
positions that fit them best, this is based on believe that failure to properly allocate employees
would result in forfeiture of the company’s competitive position. Successful firms have ability and
willingness to dismiss employees who engage in counterproductive behavior. This ensures that
productive employees are not made miserable by supervisors or co workers who engage in
unproductive, disruptive or dangerous behavior. Thus as explained by Noe et al (2006) job
satisfaction and retention are related to organizational performance.
2.5.4. Training and development strategies
Employee training and development is an important determinant of organizational performance.
According to Noe (2006) development refers to formal education, job experiences, relationships
and assessments of personality and abilities that help employees perform effectively in their
current or future jobs and organization. It often results from work experiences and involves
34
learning that is not necessarily related to an employee’s current job. HollenBeck, Gerhart and
Wright (2006) argue that employee development is a key contributor to a business strategy based
on developing intellectual capital. It helps develop managerial talent and allows employees to take
responsibility for their careers. It is a necessary component of a company’s effort to compete in the
new economy, to meet the challenges of global competition and social change, and to incorporate
technological advances and changes in work design. It is the key to ensuring that employees have
the competences necessary to serve customer solutions.
It ensures companies have the managerial talent needed to successfully execute a growth strategy.
According to Nzuve (1999) training is the process that enables people to acquire new knowledge,
learn new skills and perform tasks better than before. According to Barker (2000) training is the
planned provision of learning that equips us with skills. It differs from teaching in that it
emphasizes improvement in behavior or performance rather than increasing knowledge. Training
and development helps the company create a workforce that is able to cope with change, meet the
increasing demands of consumers and prepare the future leadership of the company (Noe, 2008).
Barker (2000) argues that training helps employees to maintain standards or improve their
competence hence their performance.
A variety of human resource management practices are related to the development of human
resource of the organization. For strategic purposes it is important to target much more specifically
on the development of competences which can provide a competitive advantage (Johnson et al,
2006). It helps to maintain the cultural processes within an organization. It also provides a
common reference point (norms) to which people can relate their own work and priorities and a
common language with which to communicate with other parts of the organization. Barker (2000)
35
argues that developing somebody’s skills enables an organization to achieve greater productivity,
improved job performance, greater empowerment, more satisfactory recruitment and selection and
reduced labour turnover. The manager and the employee will identify gaps in past experience,
training or knowledge that will need to be bridged to make the veteran employee functional in the
new role. Company investment in both technical and non technical training are likely to have a
positive impact on the extent to which the firm actually succeeds in developing the skills/
knowledge of its employees. To contribute to a company’s success training activities should help
the organization achieve its business strategy.
A business strategy is a plan that integrates the company’s goals, policies and actions (Noe, 2008).
Research by Delaney and Huselid (1996); Huselid, (1995); Koch and McGrath (1996) and
MacDuffie (1995) suggests that training is a high performance human resource practice. A positive
relationship has been established between employee training and organizational performance
(Delaney & Huselid 1996; Koch & McGrath 1996). According to Noe (2008) there is both a direct
and indirect link between training and business strategy and goals. Training can help employees
develop skills needed to perform their jobs, which directly affects the business performance.
Giving employees opportunities to learn and develop creates a positive work environment which
supports the business strategy by attracting talented employees as well as motivating and retaining
current employees. According to Johnson et al (2006) formal programs are reduced and more
emphasis is on coaching and mentoring to support self development. Ivancevich et al (2007)
argues that training and development of human resources involves change in skills, knowledge,
attitudes and/ or social behavior in order to remain competitive. Organizations that emphasize
quality do training in problem solving, problem analysis, quality measurement, feedback and team
building.
36
Training can also be used to prepare employees for increased responsibilities in their current
human resource plan, Johnson et al (2006). According to Ivancevic et al (2007) strategic
management of employees requires managers to dedicate time, money and attention to training and
development. This increases workers value and enhances their capacity for continuous
improvement. Employees must see value in the training they receive. The training should help the
employee’s progress in their careers. Training differs from learning in that training is a group of
activities while learning is more effective as an individual activity. Managers who provide both
training and learning environment for employees will create more innovation, better service and
more efficient operations than competitors.
Business strategy has a major impact on the type and amount of training that occurs and whether
resources (money, trainers’ time and program development) should be devoted to training. Also
strategy influences the type, level and mix of skills needed in the company (Noe, 2008). According
to Hitt, Ireland, Hoskisson, Sheppard and Rowe (2006) human resource managers need to be well
trained to ensure proper staffing skills, change management, counseling, project management and
organizational design.
2.5.5. Employee reward and compensation strategies
To motivate behavior, the organization needs to provide an effective reward system. A reward
strategy is a declaration of intent that defines what the organization wants to do in the longer term
to develop and implement reward policies, practices and processes that will further the
achievement of its business goals and meet the needs of the stakeholders (Armstrong, 2006). An
effective reward system has four elements: rewards need to satisfy the basic needs of all
employees; rewards need to be included in the system and be comparable to ones offered by a
37
competitive organization in the same area; rewards need to be available to people in the same
positions and be distributed fairly and equitably (Goel, 2008). Managers often use rewards to
reinforce employee behavior that they want to continue. According to Perce and Robinson
(2007) reward power is available when the manager confers rewards in return for desired actions
and outcomes. A reward is a work outcome of positive value to the individual (Armstrong,
2006).
According to Barney and Hesterly (2008), an organizations employee compensation policy and
practice is important in implementing a strategy. A company that adopts a compensation policy
that is consistent and reinforces its strategies is more likely to implement those strategies than a
firm that adopts compensation policies that are inconsistent with its strategies (Armstrong, 2006).
A reward strategy should enhance commitment and engagement and provide more opportunities
for the contributions of people to be valued and recognized.
According to Rudman (2003) paying for performance is a big issue in contemporary human
resources management; organizations have long believed that productivity improve when pay
is linked to performance and payment by results systems and incentives are developed to
support this belief. Studies have found a positive relationship between performance related
pay and performance (Huselid, 1995; Dotty, 1996; Goel, 2008). People receive extrinsic e.g.
pay bonuses, promotions, time off, special assignments, office fixtures, awards and verbal
praise or intrinsic rewards (Armstrong, 2008, Dessler, 2006, Goel 2008). Intrinsic rewards are
self-administered (Dessler, 2006).
The overall reward system needs to be multifaceted. Because all people are different,
managers must provide a range of rewards—pay, time off, recognition, or promotion
38
(Armstrong, 2008). Rewards demonstrate to employees that their behavior is appropriate and
should be repeated. Different scholars have spoken strongly on the use of team incentives, for
example, Dessler (2008) says that firms that rely on teams to manage their work must develop
incentive plans that encourage teamwork and focus team member’s attention on performance.
Goel (2008) argues that performance related pay is an effective motivator and conveys a clear
message that high levels of performance are expected and will be rewarded. However they
should not be distributed on the basis of narrow definition of the output of each individual,
but also on the basis of appraisals of how well the individual contributes to the performance
of the team, unit or company as a whole depending on the company structure. According to
Johnson, Scholes and Whittington (2006) planning of rewards should take on board the reality
of more team working in delivering strategy.
Establishing meaningful incentives for performance is a difficult task because individuals are
unique and maintain different value systems. What may reward one employee may not be a reward
to others (Dessler, 2006). Maslow in 1943 proposed a theory of motivation in which he said that
money is motivator; however later Hertzberg in his two factor theory of motivation differs with
that and instead classifies money as an hygiene factor. Financial incentives and rewards can be true
motivators, but only when balanced against the potential drawbacks and packaged with ongoing
verbal recognition, encouragement and support. How targets, budgets and rewards are
structured will affect the way in which managers and other people behave and pursue the
organizational objectives (Johnson, Scholes & Whittington, 2006). According to Armstrong
and Murlis (2006), it is also important to consider non financial rewards which vary according
to the nature of the employment relationship and also the personal characteristics of the
employee. Lewis et al (2003) identify the following non financial rewards: feeling part of a
39
community, a sense of personal achievement, social recognition and social and societal
responsibility.
2.5.6. Employee motivation strategies
Motivation has been defined differently by different scholars, for example, it has been defined as
the psychological process that arouse and direct goal directed behavior (William & Kinicki, 2008);
a psychological process that gives purpose and direction (Reinter, 1995); a predisposition to
behave in a purposive manner to achieve specific unmet needs (Buford, Bodlein & Lindner, 1995),
an internal drive to satisfy an unsatisfied need (Higgins, 1994) and the will to achieve (Boldleian,
1993).
Motivation is the desire to achieve some given targets at any given time. According to Franken
(2002) motivation is the study of behavior principles; and behavior indicates the attempt to
perform situation adaptation. Franken mentioned that employees have an intrinsic motivation to
overcome and survive. It is the process of inspiring people to actions to achieve the goals.
Employee motivation is one of the policies of managers to increase effectual job management
amongst employees in organizations (Muogbo, 2013). A motivated employee is responsive of the
definite goals and objectives he/she must achieve, therefore he/she directs its effort in that
direction. Rutherford (1990) as quoted in Muogbo (2013) reported that motivation formulates an
organization more successful because provoked employees are constantly looking for improved
practices to do a work.
Research has proved that motivational practices affect employee performance positively
(Chaudhry, Sohail & Riaz, 2013). Motivated employees are inclined to be more productive than
non-motivated employees (Chaudhary & Sharma, 2012). The study shows that training and
40
motivation has positive impact on performance of employees (Khan, 2012). This study concludes
that organizations having good training plans for employees can enhance the performance of
employees (Khan, 2012)). All the organization that wants to enhance their employee performance
should focus on training as it also motivate employees to achieve higher performance levels (Khan,
2012).
Howes (2010), Ernst and Young’s office of workforce retention (2000), Handin (2000), Cuthie
(2010) and Werbler and Harris (2009) stated that best practices for improving employee retention
and having motivated employees are summarized such as selection process, leadership, growth and
development, meaningful work and ownership, rewards, organizational influences, individual
influences, financial benefits, good working conditions, personal loyalty to employee, tactful
discipline, empowerment, creativity and innovation and quality of life. Howes (2010) researched
that better communication and attention to personal needs of employees are to improve motivation
and performance. The study by Chaudhry, Sohail and Riaz (2013) found a direct positive
relationship between motivation and employee performance
The study by Chaudhry, Sohail and Riaz (2013) found overall support for the hypothesis that
Employee Relations Practices Impact positively on Performance of Employees working in
Hospitality Industry of Pakistan as the relationship specified in Hypothesis is found to be
significant. Therefore, the proposed direct relationships between a set of Employee Relation
Practices and Motivation and between Motivation and Employee Performance are empirically
validated.
Motivated employees are very productive (William & Kinicki, 2008); and hence help to improve
performance. However according to scholars, motivation is one of the very complex roles of a
41
manager (William & Kinicki, 2008; Dessler, 2008; Armstrong, 2006). This is because it is difficult
to actually see it or know it in another person; it has to be inferred from ones behavior (William &
Kinicki, 2008). Scholars have also based their arguments on the complexity of motivation from the
fact that what motivates employees changes constantly (Bowen & Radhakrishna, 1991,) and also
that what motivates one employee may not motivate others (William & Kinicki, 2008; Dessler
2008; Armstrong, 2008). To some extent, a high level of employee motivation is derived from
effective management practices.
According to Locke (1997) motivation is determined by goal directness, human volition or
free will and perceived needs and desires, sustaining the actions of individuals in relation to
themselves and to their environment. To develop motivated employees, a manager must treat
people as individuals, empower workers, provide an effective reward system, redesign jobs,
and create a flexible workplace. It is through behavior that people influence the organizational
environment. Dessler (2005) argues that the HR managers should create value by engaging in
activities that produce the employee behavior the company needs to achieve its strategic goals.
The challenge of motivating employees has long been recognized as an integral part of managing
organizations. Studies have suggested that motivation is very important to organizations that want
to improve performance (Moorhead & Griffin, 1998; Ambrose & Kullik, 1999; Selden & Brewer,
2000). Scholars for example William and Kinicki (2008); Dessler (2008) and Armstrong (2008)
have also suggested that organizations must motivate employees to be productive. According to
Noe et al (2006) an employee with high job motivation produces high quality and more quantity of
work leading to high level of job satisfaction hence lead to high performance. Research has
established that as employee income increases, money becomes less of a motivator (Armstrong,
42
2007; Dessler, 2008). Managers therefore should be aware of the motivational bases of incentive
plans.
Employees are bound to be much more productive when they work in a positive, supportive
environment. Managers must strive to maintain an enjoyable, family-oriented atmosphere in which
all employees focus on achieving team goals. According to Dessler (2008) recognition has a
positive impact on performance either alone or in conjunction with financial rewards. Praising
employees for achieving their goals is important in maintaining an enjoyable work environment.
Recognizing success is critical, and equally important is inspiring employees to work toward
achievements. Employees will be inspired by knowing their contributions are valued and that
management is confident in their capabilities.
2.5.7. Employee relations strategies
The employment relationship as an economic, social and political relationships in which
employees provide manual and mental labour in exchange for rewards by employers
(Lewis, Thornhill & Suanders, 2003). Due to increased global competition over the last three
decades, organizations have emphasised on labour efficiency and cost control (Perkins &
Shortland, 2006). This has called for effective employee relations strategies that enable the
employees to dedicate their energy to the achievement of organizational goals.
The term employee relation has been used synonymously with industrial relations and
employment relations. According to Lewis et al (2003) Industrial Relations is associated
with the declining “ Smokestack” industries and blue collar workers and the accompanying
emphasis upon Collective Bargaining Agreements between employers and Trade Unions.
43
Employee Relations suggests a wider employment canvas being covered with equal
importance attached to non union employment arrangements and white collar jobs. It is
concerned with the social economic relationship that forms and revolves around a contract between
the parties to perform work in return for employment benefits such as remuneration (Perkins &
Shortland, 2006). The emphasis on both employee relations and industrial relations is on
participation, process and practices (Salamon, 2000; Lewis et al., 2003).
Employee relations shows the existence of a psychological contracts that is different from
any other relationships (Lewis et al, 2003). There is a non formalized kind of contract which is
based on what each party expects from the other and is different from the normal written and legal
expectations of the parties from each other. Perkins and Shortland (2006) argue that the socio
political relations around employment are not static hence it is important to consider the future of
the bipartite and/or tripartite employment systems context for determining the employment
relations outcomes.
According to Pearce and Robinson (2009) firms actively seek good employee relations whether or
not they are bound by union contacts. Proactive steps in anticipation of employee needs and
expectations are therefore characteristic of strategic managers. Organizations should strive to
satisfy their employees with good pay, good supervision and good stimulating work (Pearce &
Robison, 2009). Employee satisfaction is related to customer satisfaction. Managers believe that
productivity is linked to loyalty and to appreciation of manager’s interests in employee welfare.
According to Harzing and Ruysseveldt (2004) there are many national characteristics that
influence the way in which firms are organized and managed, for example, as put forward by
Porter; attitudes towards authority, norms of interpersonal relationships, social norms of individual
44
or group behavior, and professional standards. Porter places special emphasis on labour
management relationships because he believes they are central to the ability of the firm to improve
and innovate.
Employee participation involves direct participation of employees and also trade union
representation. According to Lewis at al (2003) the direct part personally involves employees
directly in decisions that go beyond their immediate work tasks. Employee involvement is
based on the fact that participation in goal setting has been found to be related to the acceptance
and subsequent commitment to the established goals, leading to favourable outcomes in terms of
performance and attitudes (Harzing & Ruysseveldt, 2004). Empowerment is the act of allowing an
individual or team the right and flexibility to make decisions and initiate action (Pearce &
Robison, 2009). Training, self managed work groups, eliminating whole levels of management in
organizations and aggressive use of automation are some of the ways and ramifications of this
fundamental change in the way business organizations function. Employees work not because of
desire to serve the community or fulfill personal ambitions but because of economic
necessity. Hence there is a need for managers to devise strategies of making them do what
the employer wants them to do. This requires a good understanding of the employee needs.
Research by Bernardin (2010) has shown a strong relationship between an employee’s
organizational commitment and job performance and employee turnover. Employees with higher
commitment are likely to perform better and stay with the organization longer. Lewis et al (2003)
advocates a managerial policy where employees and employers share goals and agree on the
means to achieve them. This he believes will elicit employees commitment which in turn will
yield both better economic performance and greater human development.
45
Managers should give employees responsible autonomy (Lewis et al, 2003). This involves giving
employees the opportunity to have control over their own work situations in a manner that
benefits the organization (Lewis et al, 2003). Managers give employees status, authority and
responsibility. This is based on McGregor theory Y which assumes that employees are
responsible people who seek responsibility and are creative. This helps to win employees loyalty
and attempts to get employees to adopt the organizational goals. According to Lewis et al (2003)
direct control has declined with the realization by employers that greater productivity can
be achieved using a strategy of responsible autonomy (Lewis et al, 2003).
Related to employee relations is employee communication which helps in communicating the
strategies of the organization to all the employees. In the era of increasing public accountability it
is imperative that organizations can communicate vision and strategy and demonstrate progress
and outcomes in achieving that vision. According to Ivancevich et al (1997) top management
should play a role in communicating the strategy to the organizations employees and other
stakeholders. Effective communication makes sure people have the information they need and is
the foundation for any good relationship. Being honest and open with employees is especially
important at a time when they may be dealing with serious concerns outside of the office.
According to Harzing and Ruysseveldt (2004) communication of tasks to be performed should
occur with extensive employee involvement and in the context of both immediate positions and the
whole organization. As their leader you have the responsibility to lessen any stress they might be
feeling by communicating openly. Effective communication is absolutely critical to successful
integration of employee. Performance expectations, if not properly communicated, are far more
difficult to re-work after the fact. Management’s openness to staff members’ input, feedback, ideas
46
and suggestions is the cornerstone of good communications and strong employee relationships.
Everybody wins when they are all part of a supportive team.
2.5.8. Organizational commitment
The concept of organizational commitment derives from an article “The organization Man” written
by Whyte in 1956 (Dixit & Bhati, 2012). Zheng (2010) describes employee commitment as simply
employees’ attitude to organization. This definition of employee commitment is broad in the sense
that employees’ attitude encompasses various components. According to Dixit and Bhati (2012)
commitment comes into being when a person, by making a side bet, links extraneous interests with
a consistent line of activity. Brown (1969) as quoted in Dixit and Bhati (2012) categorize
commitment as: (1) it includes something of the notion of membership; (2) it reflects the current
position of the individual; (3) it has a special predictive potential, providing predictions concerning
certain aspects of performance, motivation to work, spontaneous contribution, and other related
outcomes; and (4) it suggests the differential relevance of motivational factors. According to
Akintayo (2010) employee commitment can be defined as the degree to which the employee feels
devoted to their organization. Meyer and Allen (1997) argue that commitment “is a psychological
state that characterizes the employee’s relationship with the organization and has implication for
the decision to continue membership in the organization.” Dixit and Bhati (2012) argue that
commitment is different from motivation or general attitudes since it can lead individuals to
behave in a way, from the prospective of neutral observer, might seem in contrast to their own self-
interest. Ongori (2007) described employee commitment as an affective response to the whole
organization and the degree of attachment or loyalty employees feel towards the organization.
47
In the past two decades, Meyer and Allen (1991) developed a three-component model of OC
which has been the dominant framework for OC since then .This three-component model is based
on a more comprehensive understanding of OC. The three -component model consists of:
(a) Affective commitment (AC) is the emotional attachment to one’s organization: the degree to
which an individual is psychologically attached to an employing organization through feeling such
as loyalty, affection, worth, belongingness, pleasure and so on.
(b) Continuance commitment (CC) is the attachment based on the accumulation of valued side bets
(pension, skill transferability, relocation, and self-investment) that co-vary with organizational
membership: the degree to which an individual experience a sense of being locked in place
because of the high cost of leaving. It is the desire to remain a member of the organization.
Continuance Commitment refers to an awareness of the costs associated with leaving the
organization. The cost perception for leaving an organization leads to the commitment of a
members stay in an organization (Dixit & Bhati, 2012). Continuance commitment based on
individual having to remain with the organization lost their previous investment before gone (Dixit
& Bhati, 2012).
(c) Normative commitment (NC) is the attachment that is based on motivation to conform to social
norms regarding attachment. Maintaining loyalty to an organization is the result of socialization,
experience, responsibility of repaying the organization can be constructed in a members mind
through organization profits (Dixit & Bhati, 2012). In normative commitment an individual is
willing to stay within an organization and contribute to an organization to correspond with a group
norm (Dixit & Bhati, 2012).
In today’s competitive world every organization is facing new challenges regarding sustained
productivity and creating committed workforce (Dixit & Bhati, 2012). Organizations value
48
commitment among their employees because it is typically assumed to reduce withdrawal
behaviour, such as lateness, absenteeism and turnover (Irefin & Mechanic, 2014). Employees with
a sense of commitment are less likely to engage in withdrawal behaviour and more willing to
accept change (Lo, 2009). Business organizations today are aware of the importance of employee
commitment and its role in motivating employees. No organization can perform at peak levels
unless each employee is committed to the organizations objectives. Previous studies by Ali (2010)
as well as Ajila and Awonusi (2004) have found that one of the antecedent determinants of
workers’ performance is employee commitment. Organizations depend on committed employees
to create and maintain competitive advantage and achieve superior performance (Akintayo, 2010;
Tumwesigye, 2010; Irefin & Mechanic, 2014). Employees with high commitment to an
organization see themselves as an integral part of the organization (Irefin & Mechanic, 2014).
Anything that threatens the organization is an imminent danger to them as well. Such employees’
become creatively involved in the organization’s mission and values, and constantly think about
ways to do their jobs better. In essence, committed employees work for the organization as if the
organization belongs to them (Irefin & Mechanic, 2014). Committed employees who are highly
motivated to contribute their time and energy to the pursuit of organizational goals are increasingly
acknowledged to be the primary asset available to an organization (Hunjra, 2010).
A large numbers of studies have been conducted to investigate the concept of organizational
commitment (OC) (Dixit & Bhati, 2012). Khan (2010) investigated the impact of employee
commitment (Affective commitment, Continuance commitment and normative commitment) on
employee job performance from a sample of 153 public and private and public sector employees of
oil and gas sector in Pakistan. The results revealed a positive relationship between employee
commitment and employees’ job performance. In the comparative analysis of the three dimensions
49
of organizational commitment, normative commitment was found to have a positive and
significant correlation with employees’ job performance. Irefin and Mechanic (2014) did a study to
examine the Effect of Employee Commitment on Organizational Performance with special interest
in Coca Cola Nigeria Limited and found that there is a fairly high relationship between employee
commitment and organizational performance.
A study of 2002 data from the Families and Work Institute's National Study of the Changing
Workforce showed that using 13 specific flexibility measurements, employees with more access to
workplace flexibility were "more engaged in their jobs and committed to their current employers—
more loyal and willing to work harder than required to help their employers succeed" (Galinsky,
Bond & Hill, 2004). Dixit and Bhati, 2012) did a study to identify the impact of employees’
Commitment on sustained productivity in Auto component Industry in India (Denso) and found
that the Employees Commitment (Affective, Normative, continuous) are significantly related to
sustained productivity in Auto component industry. In a Canadian study involving 2,200 smaller
businesses (with less than 100 employees), The Centre for Families, Work and Well-Being found
that supporting employees working flexibly enhanced employee commitment at small businesses.
As one owner of a small multimedia company noted:
"A lot of time we end up having people work past regular hours to meet deadlines. There's no way
we could see people doing that and not allowing them to be flexible in their work hours in other
ways" (Daly, 2000).
From the findings it has been proved that sustained productivity is strongly related to employee
commitment (Dixit & Bhati, 2012). The research findings reveal that there exists positive
50
relationship between the three commitments affective, continuance and normative commitment
and sustained productivity of the organization.
2.5.9. HRM strategy and organizational performance
Barney and Hesterly (2008) believe that it is very difficult to predict how competition in an
industry will evolve and so it is rarely possible to know for sure that a firm is choosing the right
strategy hence a firms strategy is almost always a theory: It is a firms best bet about how
competition is going to evolve and how that evolution can be exploited for competitive advantage.
A HRM strategy thus is an overall plan, concerning the implementation of specific HRM
functional areas. According to Boxal (1996) HR strategies provide a framework of critical ends
and means. They set out what the organization intends to do about the different aspects of human
resource management policies and practices. The implementation of an HR strategy is not always
required, and may depend on a number of factors, namely the size of the firm, the organizational
culture within the firm or the industry that the firm operates in and also the people in the firm. An
HRM strategy normally includes employee resourcing, training and development, reward and
employee relations; however all of these functional areas of HRM need to be aligned and
correlated, in order to correspond with the overall business strategy.
Many authors have contended that HR strategies may be a better source of core competencies
which can lead to sustainable competitive advantage (Barney, 1991; Pfeiffer, 1994; Perce &
Robinson, 2007; Pfeiffer, 1994; Snell et al, 1996; Wright & McMahan, 1992). This supports the
view of Hamel and Prahalad (1992) that core competencies are normally people embodied skills.
There is empirical support for the hypothesis that firms which align their human resource
management practices with their business strategy will achieve superior outcomes (Huselid, 1995;
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Dyer & Reeves, 1995; Guest, 1997; Becker & Huselid, 1998). As explained by Delery and Doty
(1996) and Goel (2008) when the company human resource practices support firm strategy,
superior performance is expected. Employee behavior is very critical in realizing goals and
increasing productivity (Pattanayak, 2008). Skillful managers form work groups when possible
with the hope that peer pressure will induce high levels of performance. A firm may not need a
uniquely endowed workforce to establish a distinctive competency as long as it has managerial
capabilities that no competitor possesses. Collective learning in the workplace, especially on how
to coordinate workers’ diverse knowledge and skills and integrate diverse information technology,
is a strategic asset that rivals find difficult to replicate. Thus leadership capabilities are critical to
harnessing the firm’s human assets.
Each employee is essential for the overall success of the firm (Barney & Hesterly, 2008). While
human resources are an important attribute of single individuals, organizational resources are an
attribute of a group of individuals and includes a firms formal reporting structure, its formal and
informal planning, controlling and coordinating systems, its culture and reputation as well as
informal relationships among groups within a firm and between a firm and those in its
environment. To give rise to a distinctive competency, an organization’s resources must be both
unique and valuable. Capabilities are the collective skills possessed by the organization to
coordinate effectively the resources. The link between human resource strategies and
organizational performance is summarized in Figure 2.2.
HR Strategy
Business strategy
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HR Practices
HR Effectiveness
HR Outcomes
Productivity
Quality service
Financial performance
Figure 2.3. Link between human resource strategies and organizational performance
Source: Adapted from Guest, 2000.
As illustrated by Guest (2000) there is a link between a human resources strategy and a business
strategy and organizational performance. The business strategy is derived from the corporate
strategy and helps in achievement of the corporate strategy of the firm. The human resource
strategy is derived from the business strategy and aims to come up with human resource strategies
that will support the achievement of the organizations strategic goals. This leads to the
improvement in the performance of the organization. Scholars have suggested that a good fit
between human resource strategies and the business strategy of the firm tend to lead to superior
outcomes (Perce & Robinson, 2007; Delery & Doty, 1996; Noe et al 2006). Thus HRM strategies
have an effect on the performance of an organization.
2.6. Critical review of existing literature
While many studies have been done on the effect of human resource strategies on performance
most of them have been done in the manufacturing sector which makes it impossible to generalize
53
on the banking sector, for example, a study by Cook (2000) found a positive relationship between
human resource strategies and performance in the manufacturing sector in Britain. This clearly
may have minimal relationship with the banking sector due to the nature of the human resource
tasks involved in both. At the same time as mention by Mullins (2005) there are national
differences on what constitute performance goals, therefore what may be high performance in
Britain may not be so in Kenya.
As explained by Harzing and Ruysseveldt (2004) there are cultural differences in performance
goals and based on the nature of the two countries it may not be possible to draw a link between a
study in Britain and apply it in the Kenyan situation. The two countries are also at different levels
in their economic development, while Kenya is a developing country that is still at its young stages
Britain is a first world economy. As explained by Perkins and Shortland (2006) employers in the
industrialized markets and economies have had to restructure and emphasize on labour efficiency
and cost control in the wake of increasing competition. At the same time the employment levels in
the two countries are different; in Kenya there is a lot of unemployment and therefore employees
may commit their energies towards achievement of organizational goals not because the strategies
are good but because they are afraid of not meeting their targets leading to them been declared
redundant. As explain by Perkins and Shortland (2006) growing unemployment has sapped the
strength of workers and their unions. Thus a tougher employer’s stance and the introduction of
HRM practices have been observed. In Britain this may not be the case and employees will be
able to work without such fears because there are low unemployment rates hence the employees
may not fear losing jobs.
2.7. Summary of literature
54
The aim of human resource strategy is to devise ways of managing people in order to assist in
achievement of organizational objectives. It is now commonly accepted that employees create an
important source of competitive advantage of organizations (Barney, 1991; Pfeiffer, 1994). As a
result it is important for an organization to adopt human resource management practices that make
best use of its employees. This trend has led to increased interest on the impact of human resource
strategies on organizational performance and a number of studies have found a positive
relationship between high performance work practices (Huselid, 1995) and different measures of
company performance. Furthermore there is some empirical support for the hypothesis that firms
which align their human resource management practices with their business strategy will achieve
superior outcomes (Dyer & Reeves, 1995; Guest, 1997; Becker & Huselid, 1998).
The emerging field of human resources management on performance suffers from lack of unity in
theory and inconsistency in research methodology hence has led to many opposing findings and
rich competing theoretical perspectives. Recently efforts have been made by human resources
management theorists to try to establish a causal link between human resource management and
performance (Cook, 2000).
Research has shown that a company emphasizes performance when a substantial portion of its
employees pay is tied to individual or group contributions and the amount received can vary
significantly from one person or group to another (Gomez-Meija et al, 2008). According to Barney
(2000) firms that use resources and capabilities to exploit opportunities and neutralize threats will
see an increase in their net revenues or a decrease in their net costs or both and vice versa. In
general there is a positive relationship between staff retention, motivation, training and
55
development, employee relations and management and performance however not much research
has been done in the banking sector.
The existence of very many different resources that contribute to the performance of an
organization also renders previous researches inappropriate at most. This is because improved
performance may be as a result of increased investment on plant and machinery rather than on the
human resource strategies that are applied in the organization. As explained by William and
Kinicki (2008); Dessler (2008) and Armstrong (2008) performance is also affected by firm size
and duration of the company has been in existence. The researchers found that larger firms tend to
perform better than smaller firms. At the same time if companies are provided with the same
resources old companies tend to perform better than companies that have been in the industry for a
short period. This was attributed to the goodwill that has already been established with all the
stakeholders in the industry.
2.8. Research gap
The rapid growth of banks, increase in environmental variability and degree of competition, acute
shortage of qualified labor and the corresponding increase in labor turnover and costs of employee
replacement have forced banks to aggressively compete for the best employees. This has led banks
to focus on strategic management of its employees. The shift by banks to strategic management
has created a lot of interest on the effect of HRM strategies on organizational performance. A vast
majority of empirical research on strategic management has focused on the performance issue and
most studies show that well directed human resource strategies increase firm performance
(Huselid, 2007; Armstrong & Baron, 2009; Katou, 2008; Ahmad & Schroeder, 2003; Bae &
Lawler, 2000; Batt, 2002; Delery & Doty, 1996; Guthrie, 2001; Gardner & Moynihan, 2003).
56
Despite these findings most SHRM studies have been characterized by lack of a solid theoretical
foundation explaining the mechanisms causing the observed enhanced performance. For instance,
so far there is no consistent agreement on how to measure HRM strategies and what to measure
with regards to organizational performance (Wright & Gardner, 2003).
The available literature also indicates a serious lack of empirical studies designed to investigate
exactly how a good alignment between HRM and firm strategy leads to improved performance
(Katou, 2008). The literature points out that the link between HRM and organizational
performance is like a ‘black box’, i.e., lack of clarity regarding ‘what exactly leads to what’
(Gerhart, 2005; Katou, 2008). Serious gaps also still remain with respect to the causal ordering of
the variables involved in the HRM – performance relationship (Purcell, Kinnie, Hutchinson,
Rayton, & Swart, 2003; Wright, Gardner, Moyniham, & Allen, 2005; Katou, 2008).
Considering that previous researchers do not agree on the HRM practices, policies, and systems
employed, and accordingly the constructs developed scholars such as Boselie et al. 2005; Lepak,
Liao, Chung and Harden, 2006; and Wright et al., 2005 have argued that the results derived from
these studies are not comparable. Without a clearly delineated theoretical model of HPWS and
their effects on performance, scholars cannot adequately validate the efficacy of such practices, let
alone provide useful suggestions to practitioners. There is a great need for additional evidence to
support the HRM-performance relationship to show exactly what leads to what (Gerhart, 2007).
It is on this background that this study will be done in order to investigate the effect of human
resource strategies on the performance of the banks in Kenya and provide a better understanding of
the relationship between these variables. It will also show the relationship between the different
HR strategies.
57
58
CHAPTER THREE
RESEARCH DESIGN AND METHODOLOGY
3.1. Introduction
This chapter describes the research design that was used in the study. This will help in adequate
planning for the study. The chapter further goes ahead and discusses the study population,
sampling design and sample size, data collection methods, tools and procedures and the data
analysis procedures that were used. The measures used to ensure validity and reliability of the
study instruments is also discussed in this chapter. In addition, this chapter also presents the
measures that were put in place to ensure that the study is done in an ethical manner.
3.2. Research design
According to Kothari (2004) a research design stands for advance planning of the methods to be
adopted for collecting the relevant data and the techniques to be used in their analysis, keeping in
view the objective of the research and the availability of staff, time and money. This study adopted
the mixed method approach utilizing both qualitative and quantitative methods. Qualitative
approach was used to supplement and strengthen the quantitative aspects and provide an
opportunity for the researcher to observe the application of HRM strategies first hand. The method
adopted by this study was specifically a survey research. The characteristics of the banks and their
employees were completely and accurately described to minimize bias and ensure reliability
(Kothari, 2004). This provided the information that helped in determining the relationship between
the study variables. Personal interviews and questionnaires were used.
3.2. Study population
The population of the study was all the headquarters of the 46 banks in Kenya. The study targeted
the CEOs, HR managers, Operations managers and other employees of the commercial banks in
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Kenya. The total population targeted was 2,738 people located at the head quarters of the banks.
This is because most of the strategic decisions of banks are made at the headquarters and then
cascaded down to the branch levels. Hence the strategies at the headquarters are normally the same
strategies used at the branches. The target population was stratified as shown in Table 3.1.
Table 3.1. Study population
Category Population
CEOs 46
Operations managers 46
Human resources managers 46
Other employees
Supervisors 920
Tellers 1400
Support staff 280
Total 2738
3.3. Sample design
According to Kothari (2004) a sample design is a technique or procedure that the researcher adopts
in selecting items for a sample. It was not possible to study all members of the population since it
would have involved tremendous amounts of time and resources (Mugenda & Mugenda, 1999;
Kothari, 2004). As a result a sample was selected and studied to represent the entire population. An
optimum sample of 349 employees, which fulfils the requirements of efficiency, representativeness
(Kothari, 2004; Mugenda & Mugenda, 1999), reliability and flexibility, was selected based on
cost, accepted confidence level and size of the population. This enabled the researcher to gain
information about the population. The Yamane (1967) formula for calculating sample sizes was
used to calculate the sample size at 95% confidence level and P = 0.5.
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Where n is the sample size, N is the population size, and e is the level of precision.
N= 2738
1 + 2738/(0.05×.05)
N= 2738
1 + 2738/0.0025
= 2738/ 7.845 = 349
Sampling was done using the multi stage approach involving purposive sampling and
stratified sampling methods. The CEOs, operations managers, and HR managers were purposely
selected from each bank. Due to the small number and the importance of the managerial cadre in
this study, a census was adopted in which all the said managers were purposively selected and
involved in the study. The sample size for managerial staff is shown in Table 3.2.
Table 3.2. Sample selection of managerial staff
Population Category Population Sample
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CEOs 46 46
Operations managers 46 46
Human resources managers 46 46
Total 138 138
Other employees were selected using stratified random sampling because this method enables the
researcher to achieve the desired representation from the various subgroups in the population
(Mugenda & Mugenda, 1999; Kothari, 2004; Cooper & Schindler, 2006). This according to
Mugenda and Mugenda (1999) gives the researcher confidence that if another sample of the same
size is selected the findings from the two samples will be similar to a high degree. This method
also gives each employee in the organization an equal chance to be selected. The sample size for
lower level employees and supervisors is shown in Table 3.3.
Table 3.3 Sample selection for lower level employees and supervisors
Population Category Population Sample
Supervisors 920 92
Tellers 1400 140
Support staff 280 28
Total 2600 260
3.4. Data collection instruments
Both primary and secondary data were collected. The major primary data collection instruments
(information collected for the first time) that were used are questionnaires and interviews which
62
were self administered. Secondary data (the already available data which had been collected and
analyzed by someone else) was collected from relevant documentaries as well as company
publications.
A standard questionnaire was used in order to produce accurate information. The questionnaire
comprised of three sections as follows: The first section comprised of demographic data such as
age, sex, years of experience and level of education and monthly salary; the second section
comprised of data describing the individual human resources management strategies such as
employee recruitment and selection, training and development, employee reward and
compensation and employee relations and in the third section data relating to performance was
examined.
The questionnaire was constructed on the basis of closed and open-ended questions. This enabled
the researcher to study the employee’s perception on effect of HR strategies on performance. The
researcher also used the likert scale type of questions. Since the research was done under some
limitations, a combination of the said methods was used so that the collected data enabled effective
analysis and presentation in an orderly logical manner.
3.5. Data collection procedures
Questionnaires were distributed to the respondents and duration of two weeks given to fill them.
The researcher then made follow-up calls to ensure that adequate response was obtained from the
respondents. To obtain data free from errors introduced by the research assistants it was necessary
to supervise them closely as they collect and recorded information from respondents. This was
done by the researcher.
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In cases where the questionnaire had not been received after follow up telephone calls, additional
copies of the questionnaire and a reminder letter were send to the respondents, followed by a final
follow up telephone call. Interviews were conducted by the researcher only. Structured interview
approach was used in order to ensure that only relevant data was collected. Secondary data was
then collected by analyzing the financial statements for the last five years in the banks that
responded to the questionnaires and had interviews conducted.
Data was collected from both senior managers (CEOs, HR managers and operations managers) and
lower level employees for two reasons. First, the CEOs, HR managers and operations managers
had the greatest opportunity to assess the extent to which HR policies are integrated vertically and
horizontally with the firm’s strategy (human resource strategy measure); on the other hand, it was
assumed that other employees were likely the best source of information about HR practices since
HR practices become effective only if they are inherited by line workers and their immediate
beneficiaries.
3.6. Pilot test
To test the study instruments, the researcher did a pilot study (a small-scale version of the full
study). This was done to test the questionnaire and survey techniques (Kothari, 2004). Pretesting
(Kothari, 2004; Mugenda & Mugenda, 1999) ensured that the items in the instrument were stated
clearly and had the same meaning to all respondents (Mugenda & Mugenda, 1999). Pilot testing
enabled the researcher to know if the instruments were valid and that the study’s design was able
to capture the required data. The pilot study made reference to twenty respondents from the
population and took one week. The same method that was used in the full study was also applied in
the pilot study.
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3.7. Data analysis procedures
The collected data was processed and organized for statistical analysis. During the process age,
gender and academic were treated as control variables and were therefore tested to establish how
they affect performance. Data analsysis involved first coding the responses; tabulating the data;
and performing several statistical computations (i.e. averages, frequencies, percentages and
regression coefficients). To begin the data analysis process, descriptive statistics were calculated
on the independent variables to summarize and describe the data collected. This helped in
determining the extent of adoption of HRM strategies in the banks. Inferential statistics were used
to reach conclusions and make generalizations about the characteristics of populations based on
data collected from the sample.
Item analysis was conducted to determine the internal consistency and reliability of each individual
item as well as each subscale. Cronbach’s Alpha test was used to test internal reliability. The
Pearson’s correlation coefficient was used to show the direction and magnitude of the
interrelationship between variables. The predictor powers and moderation effect of the variables on
organizational performance were tested by conducting a moderated regression analyses suggested
by Pedhazur (1982). The Multiple regression model used in this study is as shown:
= β1xi1+ β2xi2+ β3xi3 + β4xi4 + β5xi5+
where xij is the ith observation on the jth independent variable, and where the first independent
variable takes the value 1 for all i (so is the regression intercept).
is called the measured variable, or dependent variable (organizational performance)
Xi are the independent variables(xi1 employee resourcing strategies, xi2 training and development
strategies, xi3 reward strategies and xi4 relations strategies)
is a p-dimensional parameter vector.
65
is called the error term, disturbance term, or noise.
Factor analysis of the individual HRM strategies (resourcing, training and development, reward
and employee relations and performance). Independent t-tests and/or simple analysis of variance
(ANOVA) wiere used to look for significant differences between the HR strategies employees
deem important when grouped by gender, or years worked. SPSS (Statistical Package for Social
Sciences) software program was used for in-depth data analyses. Analyzed data was then presented
using tables, pie charts, percentages and text.
3.8. Validity and Reliability Issues
An instrument is valid if it measures what it is intended to measure and accurately achieves the
purpose for which it was designed (Patten, 2004; Wallen & Fraenkel, 2001). According to Patten
(2004) validity is a matter of degree and no test instrument is perfectly valid. The instrument used
should result in accurate conclusions (Wallen & Fraenkel, 2001). Validity involves the
appropriateness, meaningfulness, and usefulness of inferences made by the researcher on the basis
of the data collected (Wallen & Fraenkel, 2001). Validity can often be thought of as judgmental.
According to Patten (2004) content validity is determined by judgments on the appropriateness of
the instrument’s content. Patten (2004) identifies three principles to improve content validity: 1)
use a broad sample of content rather than a narrow one, 2) emphasize important material, and 3)
write questions to measure the appropriate skill. These three principles were addressed when
writing the survey items.
To provide additional content validity of the survey instrument, the researcher formed a focus
group of five to ten experts in the field of HRM to provide input and suggestive feedback on
survey items. Members of the focus group were senior employees of the banks and other
employees who had worked in the sector for more than five years. Reliability relates to the
66
consistency of the data collected (Wallen & Fraenkel, 2001). Cronbach’s coefficient alpha was
used to determine the internal reliability of the instrument. The survey instrument was tested in its
entirety, and the subscales of the instrument were tested independently.
3.9. Ethical Issues
According to McNamara (1994) ethical concerns in research deal with voluntary participation, no
harm to respondents, anonymity and confidentiality, identifying purpose and sponsor, and analysis
and reporting. To help eliminate or control any ethical concerns the researchers made sure that
participation was completely voluntary but this can sometimes lead to low response rate which can
in turn introduce response bias (McNamara, 1994). To encourage a high response rate, Dillman
(2000) suggests multiple contacts. For this study, up to five contacts were made per potential
participant. To avoid possible harm such as embarrassment or feeling uncomfortable about
questions to respondents, the study did not include sensitive questions that could cause
embarrassment or uncomfortable feelings.
Harm could also arise in data analysis or in the survey results. Anonymity and confidentiality was
exercised to protect a respondent’s identity. A survey is anonymous when a respondent cannot be
identified on the basis of a response (McNamara, 1994). Participant identification was kept
confidential and was only used in determining who had not responded for follow-up purposes.
All prospective respondents knew the purpose of the survey and the organization that is sponsoring
it. A cover letter was used to explain that the results of the study would be used in a dissertation as
partial fulfillment for a Doctoral degree. The researcher also accurately reported both the methods
and the results of the surveys to professional colleagues in the educational community. Because
advancements in academic fields come through honesty and openness, the researcher assumed the
67
responsibility to report problems and weaknesses experienced as well as the positive results of the
study.
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CHAPTER FOUR
DATA ANALYSIS AND PRESENTATION OF FINDINGS
4.1. Introduction
This chapter describes the analysis of data followed by a discussion of the research findings. The
findings relate to the research questions and objectives that guided the study. Data were analyzed
to identify, describe and explore the relationship between Human resources management strategies
and performance of commercial banks in Kenya. Data were obtained using a semi structured
interview and a self administered questionnaires, completed by 314 people (n=314) out of a sample
of 349 employees.
Every data set contains some errors which can significantly affect the final statistical results and
lead to drawing wrong conclusions if the errors have not been rooted out. In this study, data
cleaning involved firstly examining and correcting the key variables. This involved detection and
then correction of errors in the data set. Cleaning involved using SPSS to conduct consistency
checks in order to identify the data, which are out of range, logically inconsistent or have extreme
values. The missing responses were treated carefully to minimize their adverse effects by assigning
a suitable neutral value or discarding them methodically. Errors that were easily detectable
included data entry and respondent errors were also corrected. Data entry errors included
mistyping responses, entering data out of range or leaving an answer blank when a valid response
was included in the questionnaire. Respondent errors included failing to accurately follow a skip
pattern, writing a response that is difficult to interpret or providing false answers.
Collected data was analyzed using descriptive and inferential statistics. Descriptive statistics
namely, frequency distributions, cross-tabulation and measures of central tendencies including
means and standard deviations were used to describe the characteristics of the collected data.
69
Hypothesis H1, H2, H3, H4and H5 were tested using Pearson`s Correlation Coefficients to
determine the strength and direction of the hypothesized relationships.
Descriptive statistical analysis was used to identify frequencies and percentages of responses given
to all the questions in the questionnaire. Most respondents answered all of the questions therefore
percentages reported correspond to the total number of respondents answering the individual
questions. The statistical significance of relationships among selected variables was determined
using the regressions analysis. The level of significance was set at 0.05.
4.2. Data Analysis and Presentation of Findings
4.2.1. Response rate
The sample for the study comprised of a total of 349 employees in 46 commercial banks in Kenya.
Out of this a total of 325 questionnaires were filled and returned by employees from 38
commercial banks, however, only 314 questionnaires were usable for this study and met the
required inclusion criteria. This represented 82.6 % response by the commercial banks and 89.7%
of the individual employees. According to Mugenda and Mugenda (2003) a response rate of more
than 10% of the sample is adequate for data analysis. Cooper and Schindler (2003) also argues that
a response rate exceeding 30% of the total sample size provides enough data that can be used to
generalize the characteristics of a study problem as expressed by the opinions of few respondents
in the target population. This also meets the acceptable response rate, 40%, as suggested by
Sekaran (2000). This means that the data gathered from the 314 respondents demonstrated the true
nature of the effect of Human Resource Management Strategies on the Performance of
Commercial Banks in Kenya. Therefore, the 89.7 % response rate was adequate for the researcher
to proceed with data analysis and interpretation. The response rate in the study is shown in Figure
4.1. Neither the reasons for refusal to participate nor the characteristics of the non-respondents are
70
known. Of the remaining 11 questionnaires deemed unusable, 6 respondents did not complete the
questionnaire in that two or more subsections of the questionnaires were omitted. Five respondents
reported that they had worked in the banking sector for less than three months and thus did not
meet the inclusion criteria for this study because they were assumed to lack adequate knowledge of
the sector.
Figure 4.1. Response rate
4.2.2. Demographic characteristics
Although it was not part of the purpose of the study, this set of data was intended to describe
demographic characteristics of the sample and to assess for any influence on the research findings.
The study found it crucial to ascertain the broad information of the respondents
since it plays a great role in determining the nature of information provided in terms of
accuracy. The analysis relied on the information of the respondents to classify the different results
according to their knowledge and responses. The demographic data consisted of age, sex, years of
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experience, educational level, monthly salary working capital and size of the bank. For this study
age, gender and academic were treated as control variables.
When descriptive analysis was done on the demographic characteristics, it was found that gender
had a mean of 1.4586 and a standard deviation of 0.49908, age had a mean of 2.9682 and a
standard deviation of 0.89671, academic qualification had a mean of 3.2930 and a standard
deviation of 0.98397, number of years worked had a mean of 2.5064 and a standard deviation of
1.41927, monthly salary had a mean of 4.0701 and a standard deviation of 1.18357, bank
ownership had a mean of 2.8662 and a standard deviation of 0.14225, number of employees had a
mean of 5.6083 and a standard deviation of 1.96846, annual turnover had a mean of 2.8949 and a
standard deviation of 0.30717, registered capital had a mean of 2.6338 and a standard deviation
of 0.54475 while the dependent variable (performance) had a mean of 2.3863 and a standard
deviation of 0.77725. The results of this analysis are shown in Table 4.1.
Table 4.1. Descriptive analysis on the demographic characteristics
Descriptive Statistics
Mean Std. Deviation N
Gender 1.4586 .49908 314
Age 2.9682 .89671 314
Academic qualification 3.2930 .98397 314
Number of years worked 2.5064 1.41927 314
Monthly salary 4.0701 1.18357 314
Bank ownership 2.8662 1.14225 314
Number of employees 5.6083 1.96846 314
Annual turnover 2.8949 .30717 314
Registered capital 2.6338 .54475 314
Performance 2.3863 .77725 314
A regression analysis was used to test if there is a significant effect of demographic factors
(registered capital, age, gender, academic qualification, bank ownership, annual turnover, monthly
salary, number of employees, number of years worked) on the performance of commercial banks
72
in Kenya. Since p (0.000) is less than alpha (.05), we conclude that with the obtained data, there is
evidence of significant effect of demographic factors on the performance of commercial banks in
Kenya ( F 20.354, df=9, and P<0.05). The results of the hypothesis test are presented in Table 4.2.
Table 4.2. ANOVA results showing the effect of demographic characteristics on performance
of commercial banks in Kenya
ANOVAb
Model Sum of F Sig.

squares Df Mean square
1 71.100 9 7.900
Regression 20.354 .000a
Residual 117.991 304 .388
Total 189.091 313

a Predictors: (Constant), Registered capital, Age, Gender, Academic qualification, Bank ownership, Annual turnover, Monthly
salary, Number of employees, Number of years worked
b Dependent Variable: performance
When regression analysis was done to determine the effect of demographic characteristics on the
performance of commercial banks in Kenya. This analysis of the demographic factors obtained an
adjusted R2 of 0.358%. This implies that the simple linear model with demographic factors as the
independent variable explains 35.8% of the variations in performance of commercial banks. This
means that with demographic factors as the only independent variables the performance of
commercial banks will change by 35.8.1%. These results are shown in Table 4.3.
Table 4.3. Model summary showing demographic characteristics of respondents
Model Summary
Model
R R Square Adjusted R Square Std. Error of the Estimate
1
.613(a) .376 .358 .62300
a Predictors: (Constant), Registered capital, Age, Gender, Academic qualification, Bank ownership, Annual turnover, Monthly
salary, Number of employees, Number of years worked
73
Correlation analysis was done to investigate the existence and nature of relationship between
demographic characteristics and performance of commercial banks in Kenya. From the correlation
analysis it was noted that bank ownership has the highest positive relationship with performance
with a Beta value of 0.359, monthly salary had the second highest positive relationship with a Beta
value of 0.252, number of years worked has a Beta value of 0.187. The other factors have low
positive Beta values as follows: gender a Beta value of 0.016, age a Beta value of 0.070, academic
qualification a Beta value of 0.009 and annual turnover with a Beta value of 0.00.4. This shows
that there is some minimal positive relationship between the factors and performance of
commercial banks in Kenya. Number of employees and registered capital had negative Beta
values, showing a negative relationship with performance of commercial banks in Kenya. Gender
explains a 2.5% variance in performance; age explains 6.1% variance in performance; academic
qualification explains 0.7% variance in performance; number of years worked explains 10.2%
variance in performance; monthly salary explains 16.6% variance in performance; bank ownership
explains 24.4% variance in performance; annual turnover explains 0.9% variance in performance.
All this showed the existence of a positive relationship with performance of commercial banks in
Kenya. Registered capital explains a -21.3% variance in performance while number of employees
explains a -2.1% variance in performance. This shows that bank ownership, monthly salary and
number of years worked have the highest positive relationships with performance of commercial
banks while registered capital and number of employees have negative relationships with
performance of commercial banks in Kenya. Thus registered capital and number of employees
have a negative relationship with performance of commercial banks in Kenya. Results of this
analysis are shown in Table 4.4.
74
Table 4.4. Coefficient results showing the relationship between the demographic
characteristics and performance
Coefficients(a)
Model Unstandardized coefficients Standardized coefficient
B Std. Error Beta T Sig.
1 (Constant) 1.166 .477 2.443 .015
Gender .025 .083 .016 .303 .762
Age .061 .073 .070 .832 .406
Academic qualification .007 .045 .009 .152 .879
Number of years worked .102 .049 .187 2.080 .038
Monthly salary .166 .045 .252 3.719 .000
Bank ownership .244 .037 .359 6.565 .000
Number of employees -.021 .027 -.052 -.754 .452
Annual turnover .009 .149 .004 .063 .950
Registered capital -.213 .092 -.149 -2.306 .022
a Dependent Variable: performance
A correlation analysis was done to investigate if there is a significant relationship between
demographic factors (Registered capital, Age, Gender, Academic qualification, Bank ownership,
Annual turnover, Monthly salary, Number of employees, Number of years worked) and
performance of commercial banks in Kenya. From the analysis it was found that there is a
significant positive relationship between gender and performance, a significant positive
relationship between age and performance, a significant positive relationship between academic
qualification and performance, a significant positive relationship between number of years worked
and performance, a significant positive relationship between monthly salary and performance, a
significant positive relationship between bank ownership and performance and a significant
negative relationship between registered capital and performance. However it was that the
relationship between number of employees and performance and the relationship between annual
turnover and performance were not significant.
From the analysis it was also found that there is a significant positive relationship between
academic qualification and age, number of years worked and age, number of years worked and
75
academic qualification while there is a negative significant relationship between number of years
worked and gender. Analysis also revealed a significant positive relationship between monthly
salary and age, monthly salary and academic qualification, monthly salary and number of years
worked and a significant negative relationship was found between monthly salary and gender.
Analysis of results also found a significant positive relationship between bank ownership and
gender, bank ownership and age and also between bank ownership and number of years worked.
However it was also found that there was a negative relationship between number of employees
and gender and also between number of employees and bank ownership. A positive significant
relationship was found between number of employees and academic qualification; number of
employees and number of years worked and between number of employees and monthly salary.
Further analysis revealed that there was a positive relationship between annual turnover and
academic qualification; annual turnover and number of years worked; annual turnover and monthly
salary and also between annual turnover and number of employees. However there was a negative
relationship between annual turnover and gender and also between annual turnover and age. From
the analysis it was found that there is a significant positive relationship between registered capital
and academic qualification; registered capital and number of years worked; registered capital and
monthly salary; registered capital and number of employees and also between registered capital
and annual turnover. There is however a negative but significant relationship between registered
capital and gender as well as between registered capital and bank ownership.
From the study it was found that the relationship between age and gender; bank ownership and
academic qualification; bank ownership and monthly salary; number of employees and age; annual
76
turnover and bank ownership and registered capital and age were not significant. The results of this
Table 4.5. Correlations coefficient on demographic characteristics and performance of
1 2 3 4 5 6 7 8 9 10
1 Gender Pearson
1
Correlation
Sig. (2-tailed)
N 314
2 Age Pearson
.061 1
Correlation
Sig. (2-tailed) .279
N 314 314
3 Academic Pearson
qualificatio Correlation -.060 .308** 1
n
Sig. (2-tailed) .291 .000
N 314 314 314
4 Number of Pearson
years Correlation -.121* .778** .367** 1
worked
Sig. (2-tailed) .031 .000 .000
N 314 314 314 314
5 Monthly Pearson -
salary Correlation .174(* .445(**) .569(**) .576(**) 1
*)
Sig. (2-tailed) .002 .000 .000 .000
N 314 314 314 314 314
6 Bank Pearson .366(*
.245(**) .063 .135(*) -.054 1
ownership Correlation *)
Sig. (2-tailed) .000 .000 .263 .017 .336
N 314 314 314 314 314 314
7 Number of Pearson -
-
employees Correlation .308(* .063 .310(**) .386(**) .371(**) 1
.137(*)
*)
Sig. (2-tailed) .000 .262 .000 .000 .000 .015
N 314 314 314 314 314 314 314
8 Annual Pearson -
.460
turnover Correlation .352(* -.140(*) .229(**) .122(*) .319(**) -.058 1
(**)
*)
Sig. (2-tailed) .000 .013 .000 .030 .000 .302 .000
N 314 314 314 314 314 314 314 314
9 Registered Pearson -.262 .147 .270 .174 -.289 .649 .399
.035 1
capital Correlation (**) (**) (**) (**) (**) (**) (**)
Sig. (2-tailed) .000 .538 .009 .000 .002 .000 .000 .000
N 314 314 314 314 314 314 314 314 314
10 Performanc Pearson .138 - - .192*
.411** .227** .377** .330** .444** 1
e Correlation (*) .029 .011 *
Sig. (2-tailed) .014 .000 .000 .000 .000 .000 .612 .846 .001
77
N 314 314 314 314 314 314 314 314 314 314
* Correlation is significant at the 0.05 level (2-tailed).
** Correlation is significant at the 0.01 level (2-tailed).
4.2.3. Gender differences of the participants in the sample
During the current study, participants were asked to indicate their gender by placing a tick next to
the relevant option provided (male or female). This was found necessary because previous studies
in USA, Canada, Spain, The Netherlands and Denmark by Adams and Ferreira, (2009); Krishnan
and Park,( 2005), Francoeur et al., (2008), Campbell and Minguez‐Vera, (2008), Marinova et al.,
(2010) and Smith et al., (2005) have linked gender diversity and firm profitability or financial
performance, therefore it was assumed that in the current study gender diversity may still play a
role in affecting performance. Three hundred and thirteen (313) out of the valid 314 participants
(100%) responded to this question. Of the 313 respondents, 169 were male and 144 were female.
The frequencies and percentage responses to this question are shown in Table 4.1. Therefore, it
was found that 54% of the respondents were male while 46% were female. This is indicative of the
male domination of the jobs in the banking industry. This implies that there is gender
inequality in occupation of jobs in Kenyan commercial banks. Anal ysis of gender in
the various levels of the organization revealed that most of the senior staffs in
various departments of the commercial banks in Kenya are occupied by the male.
Historically banking has been a male dominated profession although more females are joining the
profession in current trends. This is clearly coming out in this study where it was found that
women are almost getting to the 50% level while previously they have been at less than 30%. This
finding corroborates the findings of a study by Omar and Davidson (2001) which found that the
number of women pursuing banking careers has increased significantly while the number of
women holding seats on boards of directors is still generally low. Using a sample of Scandinavian
78
firms, Randoy et al. (2006) found that the proportion of women on the board has no significant
association with either accounting or market performance.
In order to determine if gender had any effect on performance, the responses were cross tabulated
and a chi square test done to test the null hypotheses that there is a significant effect of gender on
performance. The cross tabulation results are presented in Table 4.6.
Table 4.6. Cross tabulation showing gender and performance of commercial banks
Crosstab
Performance recoded
Agree Neutral Disagree Total
Gender Male Count 120 21 29 170

Expected Count 103.9 23.3 42.8 170.0
% within Gender 70.6% 12.4% 17.1% 100.0%
% within performance
62.5% 48.8% 36.7% 54.1%
recoded
% of Total 38.2% 6.7% 9.2% 54.1%
Female Count 72 22 50 144
Expected Count 88.1 19.7 36.2 144.0
% within Gender 50.0% 15.3% 34.7% 100.0%
37.5% 51.2% 63.3% 45.9%
recoded
% of Total 22.9% 7.0% 15.9% 45.9%
Total Count 192 43 79 314
Expected Count 192.0 43.0 79.0 314.0
% within Gender 61.1% 13.7% 25.2% 100.0%
100.0% 100.0% 100.0% 100.0%
recoded
% of Total 61.1% 13.7% 25.2% 100.0%
Table 4.7. Chi square test showing the effect of gender on performance of commercial banks
Chi-Square Tests
79
Value df Asymp. Sig. (2-sided)
Pearson Chi-Square 15.559a 2 .000

Likelihood Ratio 15.646 2 .000
N of Valid Cases 314
a. 0 cells (0.0%) have expected count less than 5. The minimum expected count is 19.72.
From the Chi square test results presented in Table 4.7, it was found that since p (0.000) is less
than alpha (α = .05) therefore we conclude that with the obtained data there is evidence of a
significant effect of gender on the performance of commercial banks in Kenya. The value of the
Chi square statistic is 15.559. This means that gender affects the performance of commercial banks
in Kenya. This is consistent with the findings from previous studies by Adams and Ferreira,
(2009); Krishnan and Park,( 2005), Francoeur et al., (2008), Campbell and Minguez‐Vera, (2008),
Marinova et al., (2010) and Smith et al., (2005) who have linked gender diversity and firm
profitability or financial performance. However, this findings are in contrast to previous results by
Eklund et al. (2009); Marinova et al. (2010); Rose (2007) and Darmadi, (2013) have not found
any significant relationship between gender and performance. These findings are also in support of
the findings from previous studies by Randoy et al. (2006) which have failed to find a significant
association between female proportion of employees and financial performance.
4.2.4. Age ranges of the participants in the sample
The age of the employees in an organization can help determine the preparedness of an
organization for succession planning as well as the amount of energy that employees have to help
in achieving corporate goals (Darmadi, 2013). Age is also an indicator to the maturity of the
80
respondents and accuracy of information provided. Participants were asked to tick the age category
appropriate to them. All the participants responded to the question (314 responses or 100%). Forty
two percent (42%) of those who responded were in the 31-40 years age category (133 responses)
and constituted the bulk of the sample. Two hundred and thirty nine (239) of the 314 respondents
(76%) were below the age of forty years while 297 respondents (99%) were below 50 years of age.
One hundred and six (106) comprising thirty four percent (34%) of the 314 respondents were
below 30 years of age. Cross tabulation was done and the result presented in Table 4.8.
81
Table 4.8. Cross tabulation showing age and performance of commercial banks
Performance recoded
Age 21 - 30 years Count 66 2 38 106
Expected Count 64.8 14.5 26.7 106.0
% within Age 62.3% 1.9% 35.8% 100.0%
% within permrecoded 34.4% 4.7% 48.1% 33.8%
% of Total 21.0% 0.6% 12.1% 33.8%
31 - 40 years Count 84 19 30 133
Expected Count 81.3 18.2 33.5 133.0
% within Age 63.2% 14.3% 22.6% 100.0%
% of Total 26.8% 6.1% 9.6% 42.4%
41 - 50 years Count 40 10 8 58
Expected Count 35.5 7.9 14.6 58.0
% within Age 69.0% 17.2% 13.8% 100.0%
% of Total 12.7% 3.2% 2.5% 18.5%
51 - 60 years Count 0 12 1 13
Expected Count 7.9 1.8 3.3 13.0
% within Age 0.0% 92.3% 7.7% 100.0%
% of Total 0.0% 3.8% 0.3% 4.1%
Over 60 years Count 2 0 2 4
Expected Count 2.4 .5 1.0 4.0
% within Age 50.0% 0.0% 50.0% 100.0%
% of Total 0.6% 0.0% 0.6% 1.3%
Expected Count 192.0 43.0 79.0 314.0
% within Age 61.1% 13.7% 25.2% 100.0%
% of Total 61.1% 13.7% 25.2% 100.0%
Table 4.9. Chi square test showing the effect of age on performance of commercial banks
Chi-Square Tests

a. 5 cells (33.3%) have expected count less than 5. The minimum expected count is .55.
82
In order to determine if age had any effect on performance, a chi square test was done to test if that
there is a significant effect of age on performance. The analysis results are presented in Table 4.4.
From the Chi square test, since p (0.000) is less than alpha (α = .05) we conclude that with the
obtained data there is evidence of a significant effect of age on the performance of commercial
banks in Kenya. The value of the Chi square statistic is 90.002. This means that age affects the
performance of commercial banks in Kenya. The responses to this question are shown in Table
4.9. Since majority of the respondents are below 40 years of age, this findings may imply that
commercial banks in Kenya have energetic employees who can adjust to the market need and
maintain their service delivery to the clientele hence improving organizational performance.
These findings also show that commercial banks are taking measures for succession planning by
ensuring a proper mix of young and old experienced employees. When a descriptive analysis of the
answers to this question was done, a mean of 2.9682 and a standard deviation of 0.89671 were
obtained. This shows that the average age of employees in the banking sector is approximately 40
years. This indicates that most bank employees are mature people. This finding is in contrast to
previous studies by Marinova et al. (2010) and Darmadi, (2013) which found the average age in
their respective studies to be approximately 50 years. Marinova et al. (2010) and Darmadi, (2013)
concluded that their employees were mature and therefore gave very reliable information.
83
Figure 4.2. Age
4.2.5. Academic qualification
Most promotions to management level depend on one’s academic qualification (Adegoroye,
Oladejo & Moruf, 2012). In terms of educational attainment, 75% (235) had received at least an
undergraduate or a first degree. It was found that 94% of the respondents held a diploma
qualification and above, implying that the banks have highly educated staff and at the same time,
they understood the issues under discussion in the research questionnaire. This depicts that most of
the employees working in Kenyan commercial banks are literate hence they are
capable to adopt any strategic issues that the organization formulates with the aim of improving
their performance. The responses to this question are shown in Figure 4.3. Further analysis of the
responses to this question gave a variance of 0.968 and a standard deviation of 0.98397.
84
Figure 4.3. Academic qualification
4.2.6. Number of years worked in the bank
One’s experience depends on the number of years of service in the sector involved (Randoy et al,
2006). It is assumed that the longer one worked in an organization, the more they understand the
organization and hence the higher the ability to articulate issues pertaining to the organization
(Afande, 2013). During this study, length of working experience was tabulated and respondents
were asked to tick the relevant option provided. Again a 100% response rate was achieved (314
responses). One hundred and ten (110) people (35%) of the 314 respondents reported 0-5 years
working experience, 51 people (16%) reported 6-10 years of working experience and 87
respondents (28%) reported 11-15 years of banking experience. Sixteen respondents representing
5% of the 314 respondents reported that they had between 16 and 20 years of working experience
and 50 people (16%) reported that they had over 20 years of working experience. The experience
of the respondents within the various commercial banks in Kenya therefore, indicates that 65% of
the respondents have worked in the sector for over five years, a period considered long enough for
85
an employee to understand the operations of their respective banks. This implies that most of the
respondents of this study had worked for an ample time thus they were conversant with the
information that the study sought pertaining to the organization. The responses were therefore
expected to be objective. This further indicates maturity and experience with matters related to
best-practice in banking. The responses to this question are shown in Table 4.10. and Figure 4.4.
86
Table 4.10. Cross tabulation showing number of years worked and performance of
commercial banks
Crosstab
Performance recoded
Number of
Below 5 Count 78 2 30 110
years worked
Expected Count 67.3 15.1 27.7 110.0
% within years worked 70.9% 1.8% 27.3% 100%
% within performance recoded 40.6% 4.7% 38.0% 35%
% of Total 24.8% 0.6% 9.6% 35%
5 - 10 years Count 31 4 16 51
Expected Count 31.2 7.0 12.8 51.0
% within years worked 60.8% 7.8% 31.4% 100.%
% within performance recoded 16.1% 9.3% 20.3% 16.2%
% of Total 9.9% 1.3% 5.1% 16.2%
11 - 15
Count 53 12 22 87
years
Expected Count 53.2 11.9 21.9 87.0
13.8
% within years worked 60.9% 25.3% 100.%
%
27.9
% within performance recoded 27.6% 27.8% 27.7%
%
% of Total 16.9% 3.8% 7.0% 27.7%
16 - 20
Count 2 14 0 16
years
Expected Count 9.8 2.2 4.0 16.0
87.5
% within years worked 12.5% 0.0% 100.%
%
32.6
%
% of Total 0.6% 4.5% 0.0% 5.1%
Over 20 Count 28 11 11 50
Expected Count 30.6 6.8 12.6 50.0
22.0
% within years worked 56.0% 22.0% 100.0%
%
25.6
%
% of Total 8.9% 3.5% 3.5% 15.9%
Expected Count 192.0 43.0 79.0 314.0
13.7
% within years worked 61.1% 25.2% 100.0%
%
100.0 100.0
% within performance recoded 100.% 100.0%
% %
13.7
% of Total 61.1% 25.2% 100.0%
%
In order to determine if the number of years worked had any effect on performance, a chi square
test was done to test if there is a significant effect of number of years worked on performance. The
87
analysis results are presented in Table 4.11. From the Chi square test, since p (0.000) is less than
alpha(α = .05) therefore, we conclude that with the obtained data there is evidence of a significant
effect of number of years worked on the performance of commercial banks in Kenya. The chi
square value is 92.096. This means that number of years worked affects the performance of
Table 4.1. Chi square test showing the effect of number of years worked on performance of
commercial banks
Chi-Square Tests

Figure 4.4. Number of years worked in the bank
4.2.7. Number of years in operation

88
The number of years an organization has been in operation influences its human resources
management practices (Adegoroye, Oladejo & Moruf, 2012). Those institutions that have been in
operation for long can be seen to be properly aligned to the best-practice human resources
management in a very fast changing and competitive environment. It was found that some of the
banks (52.9%) have been in operation for more than 20 years while 10% of the sampled banks
have been in operation for between 1-5 years. Those that existed for less than 10 years constituted
28.6% and those between 11 and 20 years were 18.5%. The responses to this question are shown in
Figure 4.5. The answers to this question give a very clear indication that all cadres of the banking
institutions were well represented. Majority of the banks (71.6%) studied have been in existence in
Kenya for a period over 10 years. The long period of existence shows that the Kenyan market is
favourable for banking and that the banks have been dealing with employees for a period that is
enough to understand employee behaviour. This may also imply that the banks have put in place
adequate human resources strategies to help manage their employees based on their previous
experience with their employees over the period they have operated.
89
Figure 4.5. Number of years in operation
4.2.8. Bank Ownership
The nature of ownership of an organization affects its management practices (Aktar & Sachu,
2012). When respondents were asked to state the ownership of their bank, it was found that,
seventy percent (70%) of the commercial banks in Kenya are predominantly local; 21 % are
predominantly foreign while 9% are balanced between foreign and local ownership. Twenty
percent (20%) of the banks are private owned, 11% are employed in foreign banks while 67% are
employed by local banks limited by shares. The responses to this question are shown in Figure 4.6.
Further analysis of the responses to this question gave a variance of 1.305 and a standard deviation
of 1.14225.
Figure 4.6. Bank ownership
4.2.9. Size of the bank
90
The size of an organization influences the amount of investment given to the human resources
function and also how the employees are managed. According to Gurbuz and Mert (2011) the
strategic role of HR in larger firms may be more widespread than small and medium sized firms. If
the organization is large it may have a well financed and well structured human resources
departments with clear roles, however, if the organization is small, it may not have well structured
human resources departments and as well may not invest heavily on HR related activities. The size
of the bank was determined by the value of assets owned by the banks and number of branches.
Banks with assets over Ksh 5billion were classified as large, assets between Kshs 3billion and
Kshs 5billion as medium, and assets of less than 3billion as small. When the question on the size
of the bank was asked and the responses analyzed, it was found that most of the banks (66.6 %)
were medium, 30.3% were large while only 3.2% were classified as small. The responses to this
question are shown in Figure 4.7. This shows that most banks are big enough to exert considerable
influence on the sector.
Figure 4.8. Size of the bank
91
4.2.10. Value of assets
The value of assets in an organization determines its size (Aktar & Sachu, 2012). When the
responses to the question on value of assets were analyzed it was found that 10.3% of the
respondents said that there bank had assets worth less than 3 billion shillings, 30% said that there
banks had assets worth between 3 and 5 billion shillings while 67% said that there banks had assets
worth over 5 billion. The responses to this question are presented in Figure 4.8. From the study it
was found that most commercial banks in Kenya had invested heavily in assets. This shows that
they have confidence in the growth of the sector.
Figure 4.9. Value of assets
4.2.11. Number of branches
The number of branches that an organization owns has a bearing on its size (Adegoroye, Oladejo
& Moruf, 2012). When the employees were asked the number of branches that there bank had, all
the respondents’ respondent to the question on number of branches owned by the bank they
92
worked for. Analysis of the responses to this question revealed that majority of the banks (30%)
have between 11 and 20 branches throughout the country while 7 banks have less than 5 branches.
Only 9 out of the 38 banks investigated have more than 20 branches. However interviews with the
human resources managers and CEOs found that 65% of the banks had opened agents to serve
customers in areas where they did not have branches. The responses to this question are shown in
Figure 4.9.
Figure 4.9. Number of branches
4.2.12. Number of employees
The number of employees of any organization influences its human resources management
practices(Adegoroye, Oladejo & Moruf, 2012; Aktar & Sachu, 2012). Those organizations with
many employees will have clear human resources departments with clear roles while organizations
with few employees may not have clear human resources departments and may instead delegate
the HR roles to other line departments. The researcher sought to determine the size of the work
stations by establishing the number of employees. The higher the number of employees,
93
considering that all operations of the organization are automated, the more the operations and
hence the bigger the size of the bank. The employees can be at management and low cadre levels.
When the responses to the number of employees were analyzed, it was found that the majority of
the commercial banks in Kenya (75%) have more than 1500 employees, 25% of the banks have
between 500 and 1500 employees while 5% have less than 500. From the study it was found that
most banks (51%) have over 1500 employees. The response to this question is presented in Figure
4.10. Further analysis of the responses to this question gave a variance of 3.875 and a standard
deviation of 1.96846.
Figure 4.10. Number of employees
4.2.13. Annual turnover
Analysis of the question on annual turnover found that 33 respondents representing 10.5% worked
for banks with an annual turnover of less than 10 billion shillings while 281 respondents
representing 89.5% worked for banks with an annual turnover of over 10 billion shillings. These
94
responses are shown in Table 4.12. When the responses to the question on annual turnover where
analyzed to get the descriptive statistics the responses gave a variance of .094 and a standard
deviation of .30717.
Table 4.12. Annual turnover
Frequency Percent Valid Percent Cumulative Percent

Valid 3 Billion – 10 Billion 33 10.5 10.5 10.5
over 10 Billion 281 89.5 89.5 100.0
Total 314 100.0 100.0
Total 314 100.0 100.0
4.2.14. Registered capital
When descriptive analysis of the responses to the question on the registered capital of the bank was
done, a variance of .297 and a standard deviation of.54475 were obtained. From the study it was
found that 3.2% or 10 respondents worked for a bank with a registered capital of less than Kshs 3
billion, 95 respondents or 30% worked for banks with a registered capital of between Kshs 3 and 5
billion while 209 respondents representing 66.6% worked for a bank with a registered capital of
over Kshs 5 billion. The responses to this question are shown in Table 4.13.
Table 4.13. Registered capital
Frequency Percent Valid

Percent Cumulative Percent
Valid Less than 3 billion 10 3.2 3.2 3.2
3 billion – 5billion 95 30.3 30.3 33.4
Over 5 billion 209 66.6 66.6 100.0
Total 314 100.0 100.0
4.2.15. Monthly salary
95
When the employees were asked to state their monthly salaries 183 (58.3%) indicated that their
salary was over 80,000 shillings, 16 (5.1%) said that they earned between 60,000 shillings and
80,000 shillings, 71 (22.6%) earn between 40,000 shillings and 60,000 shillings while 42 (13.4%)
earn between 20,000 shillings and 40,000 shillings. The response to this question is presented in
Figure 4.11. This shows that most bank employees are well paid in comparison to other sectors of
the economy. Further analysis of the responses to this question gave a variance of 1.401 and a
standard deviation of 1.18357.
Figure 4.11. Monthly salary
4.2.16. Existence of Human Resource Policies
The study question aimed to establish whether respondents’ organization had a set human resource
management practices and if the practices were clear to all employees. During the interview, the
respondents were asked to mention the human resource management policies that existed in the
organization. The aim of this interview question was to establish if the employees knew the human
96
resource management policies used in the bank. According to the findings, most respondents
interviewed indicated that there is a se t human policies set within their
o r g a n i z a t i o n . T h i s i m p l i e s t h a t m o s t o f t h e c o m m e r c i a l b a n k s had well
outlined human resource policies that are clear to everyone in the organization that gives
directive on service delivery.
4.3. Qualitative data analysis
4.3.1. Factor analysis for employee recruitment and selection strategies
When factor analysis on employee recruitment and selection was done only one component was
extracted for the 13 items. However one item was dropped from further analysis because it had a
loading value that was lower than 0.4 hence it was not logically appropriate for inclusion. Analysis
of the factor loading revealed that qualification and experience are the main factors considered
during selection had the highest value at 0.853, the bank recruitment process ensures that very
qualified candidates are attracted had a value of 0.820, the selection system followed in the bank
are highly scientific and rigorous had a value of 0.784, the bank retains high quality employees had
a value of 0.758, valid and standardized tests are used when required in the selection process had a
value of 0.751, the bank has an employee recruitment policy had a value of 0.726, in the bank, line
managers and human resource manager participate in the selection process had a value of 0.726,
the bank always selects only the highest quality employees had a value of 0.663, selection systems
in the bank select those having the desired knowledge, skills and attitudes had a value of 0.722, the
bank takes measures to attract good quality employees had a value of 0.588 while , to be selected
in this bank you must know someone had a value of 0.440 and non performers are encouraged to
leave the bank had the lowest value at 0.407. One variable (the recruitment and selection outcome
affects the performance of the bank with a loading value of 0.091) was suppressed and dropped
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from further analysis because it had a value of less than 0.4. This information is shown in Table
4.14.
Table 4.14. Factor analysis for employee recruitment and selection strategies
Component Matrixa
Component
1
The bank recruitment process ensures that very qualified candidates are attracted .820
The selection system followed in the bank are highly scientific and rigorous .784
The bank retains high quality employees .783
Valid and standardized tests are used when required in the selection process .758
The bank has an employee recruitment policy .751
In the bank, line managers and human resource manager participate in the selection process .726
The bank always selects only the highest quality employees .722
Selection systems in the bank select those having the desired knowledge, skills and attitudes .663
The bank takes measures to attract good quality employees .588
To be selected in this bank you must know someone .440
Non performers are encouraged to leave the bank .407
The recruitment and selection outcome affects the performance of the bank .091
Note: The bolded item was dropped from further analysis
4.3.2. Reliability analysis for recruitment and selection strategies
Reliability of the measurement instruments was analyzed using a Cronbach's alpha coefficient.
This helped to determine the level of accuracy and reliability of the obtained data from the study.
Cronbach's alpha was considered appropriate since according to Zinbarg (2005), Cronbach's alpha
is a coefficient of reliability that gives an estimation of data generalization without any bias.
When reliability analysis was done using Cronbach's Alpha for the items, before removing and
after removing the inadequate indicator, it was found that the value was 0.804 before removing
while it increased to 0.818 after removing the inadequate indicator. Therefore the internal
consistency reliability of the measure was excellent. This indicates that the data was reliable since
98
a Cronbach’s alpha coefficient value of between 0.804 to 0.818 was obtained on the research
variables. This was above 0.75 and an alpha coefficient higher than 0.75 signifies that the gathered
data has a relatively high internal consistency and could be generalized to reflect the respondents‟
opinions on the study problem. This information is shown in Table 4.15.
Table 4.15. Reliability analysis for recruitment and selection strategies
Reliability Statistics
Cronbach's Alpha Cronbach's Alpha Before Extracting a Number of Items

Before removing the inadequate Indicator 0.804 13
After removing the inadequate Indicator 0.818 12
4.3.3. Factor analysis for training and development strategies
When factor analysis on training and development was done only one component was extracted for
the 15 items. However four items were suppressed and dropped from further analysis because they
had a loading that was lower than 0.4. Analysis of the factor loading revealed that the variable that
the bank ensures that employees have the skills required to perform their duties had the highest
loading value of 0.855. The other variables had loading values as follows: employees in each job
will normally go through training programs every year had a loading value of 0.837,the bank
conducts extensive training programs for its employees in all aspects of quality had a loading value
of 0.833, new knowledge and skills are imparted to employees periodically to work in teams had a
loading value of 0.813, employees are trained to take up more responsibilities and other jobs in
future had a loading value of 0.750, training needs are identified through a formal performance
appraisal mechanism had a loading value of 0.746, training has led to increased teamwork had a
loading value of 0.701, training employees helps in improving their performance had a loading
value of 0.673, the bank has a training budget every year had a loading value of 0.666, there are
formal training programs to teach new employees the skills they need to perform their jobs had a
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loading value of 0.603,while training needs identified are realistic, useful and based on the
business strategy of the organization had a loading value of 0.589. The following items were
dropped from further analysis because they had loading values below 0.4: training employees
affects the market share by attracting customers with a loading value of 0.180, training and
development has a great effect on bank performance with a loading value of -0.173, training and
development affects the profits of a bank had a loading value of – 0.121 and training and
development affects the rate of growth of a bank with a loading value of 0.104. These results are
presented in Table 4.16.
Table 4.16. Factor Analysis showing Training and development strategies

Component Matrixa
Component
1
The bank ensures that employees have the skills required to perform their duties .855
Employees in each job will normally go through training programs every year .837
The bank conducts extensive training programs for its employees in all aspects of quality .833
New knowledge and skills are imparted to employees periodically to work in teams .813
Employees are trained to take up more responsibilities and other jobs in future .750
Training needs are identified through a formal performance appraisal mechanism .746
Training has led to increased teamwork .701
Training employees helps in improving their performance .673
The bank has a training budget every year .666
There are formal training programs to teach new employees the skills they need to perform their jobs .603
Training needs identified are realistic, useful and based on the business strategy of the organization .589
Training employees affects the market share by attracting customers .180
Training and development has a great effect on bank performance -.173
Training and development affects the profits of a bank -.121
100
Training and development affects the rate of growth of a bank .104
4.3.4. Reliability analysis for training and development strategies
while it increased to 0.914 after removing the inadequate indicator. According to Sekaran (2000),
the closer the Cronbach’s alpha is to one, the higher the internal consistency reliability. Therefore,
these results indicate that the data collected was reliable since the alpha coefficient values of
between 0.861 and 0.914 which were very close to one were obtained on the research variables.
This were above 0.75 and an alpha coefficient higher than 0.75 signifies that the gathered data has
a relatively high internal consistency and could be generalized to reflect the respondents opinions
on the study problem. This information is shown in Table 4.17.
Table 4.17. Reliability analysis for training and development strategies

4.3.5. Factor analysis on employee relations strategies
When factor analysis on employee relations was done only one component was extracted for the
13 items. However three items were dropped from further analysis because they had loading values
that were lower than 0.4. Analysis of the factor loading revealed that good employee relations lead
to increased performance in this bank had the highest loading value of 0.888. The loading values
of other items were as follows: employee relations affects the profits of your bank had a loading
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value of 0.877, employee relations affects your banks market share by attracting customers had a
loading value of 0.865, employee relations affects the rate of growth of this bank had a loading
value of 0.824, a formal environment is sustained between employees and managers/ supervisors
had a loading value of 0.816, the nature of relationship between employees and the managers
affects the employee performance had a loading value of 0.697, the bank involves the employees
and unions in making decisions that affect employees had a loading value of 0.648, employee
performance affects the performance of this bank had a loading value of 0.571, employees are
provided opportunity to suggest improvements in the way things are done here had a loading value
of 0.529 while the employees in the bank are asked by their superiors to participate in operations
related decisions had a loading value of 0.406, the following items were dropped from further
analysis because they had loading values of less than 0.4: employees in the bank are allowed to
make decisions related to cost and quality matters with a loading value of 0.330, an informal /
family like environment is sustained between employees and managers/ supervisors in this bank
with a loading value of 0.179 and the bank strives to maintain a harmonious work environment
with a loading value of 0.143. This information is presented in table 4.18.
Table 4.18. Component matrix showing Factor loading on employee relations strategies
Component Matrixa
Component
1
Good employee relations lead to increased performance in this bank .888
Employee relations affects the profits of your bank .877
Employee relations affects your banks market share by attracting customers .865
Employee relations affects the rate of growth of this bank .824
A formal environment is sustained between employees and managers/ supervisors .816
The nature of relationship between employees and the managers affects the employee performance .697
The bank involves the employees and unions in making decisions that affect employees .648
Employee performance affects the performance of this bank .571
Employees are provided opportunity to suggest improvements in the way things are done here. .529
102
Employees in the bank are asked by their superiors to participate in operations related decisions. .406
Employees in the bank are allowed to make decisions related to cost and quality matters. .330
An informal / family like environment is sustained between employees and managers/
.179
supervisors in this bank
The bank strives to maintain a harmonious work environment .143
4.3.6. Reliability analysis for employee relations strategies
while it reduced to 0.669 after removing the inadequate indicator. This information is shown in
Table 4.19.
Table 4.19. Reliability analysis for employee relations strategies

4.3.7. Factor analysis on reward and compensation strategies
When factor analysis on employee reward and compensation strategies was done only one
component was extracted for the 12 items. However none of the items was dropped from further
analysis because none had a loading that was lower than 0.4. Analysis of the factor loading
revealed that the rewards offered by the bank have an effect on employee performance had the
highest loading value of 0.865, good employee rewards affect the profits of a bank had a loading
value of 0.835, the compensation for all employees is directly linked to his/her performance had a
loading value of 0.804, rewards affect the market share of the banks by attracting customers had a
loading value of 0.801, employee rewards affects the rate of growth of a bank had a loading value
of 0.786, in the bank, salary and other benefits are comparable to the market had a loading value of
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0.727, the bank ensures that its rewards can attract and retain high quality employees had a loading
value of 0.713, good rewards have a positive effect on the performance of the bank had a loading
value of 0.672, job performance is an important factor in determining the incentive compensation
of employees had a loading value of 0.664, in the bank, compensation is decided on the basis of
competence or ability of the employee had a loading value of 0.601, in the bank, profit sharing is
used as a mechanism to reward higher performance had a loading value of 0.482 while the bank
has ensured that salaries are competitive had the lowest loading value of 0.369. This information is
shown in Table 4.20.
Table 4.20. Component matrix showing Factor loading on reward and compensation
strategies
Component Matrixa
Component
1
The rewards offered by the bank have an effect on employee performance .865
Good employee rewards affect the profits of a bank .835
The compensation for all employees is directly linked to his/her performance. .804
Rewards affect the market share of the banks by attracting customers .801
Employee rewards affects the rate of growth of a bank .786
In the bank, salary and other benefits are comparable to the market. .727
The bank ensures that its rewards can attract and retain high quality employees .713
Good rewards have a positive effect on the performance of the bank .672
Job performance is an important factor in determining the incentive compensation of employees. .664
In the bank, compensation is decided on the basis of competence or ability of the employee. .601
In the bank, profit sharing is used as a mechanism to reward higher performance. .482
The bank has ensured that salaries are competitive .369
Extraction Method: Principal Component Analysis.
a. 1 components extracted.
4.3.8. Reliability analysis for reward and compensation strategies

104
When reliability analysis was done using Cronbach's Alpha for the items, it was found that a value
was 0.899 was obtained. No items were removed and therefore reliability analysis was not done for
before and after dropping. This indicates that the data was reliable since a coefficient value of
between 0.899 was obtained on the research variables. This was above 0.75 because according to
Nunnally’s (1978) 0.7 criterion an alpha coefficient higher than 0.7 signifies that the gathered data
has a relatively high internal consistency and could be generalized to reflect the respondents
opinions on the study problem. This information is shown in Table 4.21.
Table 4.21. Reliability analysis for reward and compensation strategies
Cronbach's Alpha Number of Items

.899 12
4.3.9. Factor loading on performance
When factor analysis on performance was done only one component was extracted for the 18
items. However two items were dropped from further analysis because they had a loading that was
lower than 0.4. Analysis of the factor loading revealed that human resource strategies have led to
increased market share had the highest loading value of 0.889, return on equity had a loading value
of 0.884, human resource management strategies have led to increased total shareholder return had
a loading value of 0.884, human resource strategies have led to increased return on assets and
profits had a loading value of 0.858, growth rate of sales revenue had a loading value of 0.858,
return on assets had a loading value of 0.851, return on investment had a loading value of 0.834,
profitability had a loading value of 0.828, human resource strategies have led to increased account
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holders had a loading value of 0.787, human resource strategies have led to growth rate of revenue
had a loading value of 0.755, market share had a loading value of 0.732, human resource strategies
have led to increased sales had a loading value of 0.597, the quality of employees has a positive
effect on a banks market share had a loading value of 0.496, the type of employee has a positive
effect on the growth of a bank had a loading value of 0.465, financial strength e.g. Liquidity had a
loading value of 0.463 while the type of employees has an effect on the profits of a bank had the
lowest loading value of 0.418. The two items that were dropped from further analysis were: the
employees of a bank have a great effect on performance of banks with a loading value of 0.335 and
the quality of employees has a positive effect on performance with a loading value of 0.331. This
information is shown in table 4.22.
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Table 4.22. Component matrix showing Factor loading on performance
Component Matrixa
Component
1
Human resource strategies have led to increased market share
.889
Return on equity
.884
Human resource strategies have led to increased total shareholder return
.884
Human resource strategies have led to increased return on assets and profits
.858
Growth rate of sales revenue
.858
Return on assets
.851
Return on investment
.834
Profitability
.828
Human resource strategies have led to increased account holders
.787
Human resource strategies have led to growth rate of revenue
.755
Market share
.732
Human resource strategies have led to increased sales
.597
The quality of employees has a positive effect on a banks market share
.496
The type of employee has a positive effect on the growth of a bank
.465
Financial strength e.g. liquidity
.463
The type of employees has an effect on the profits of a bank
.418
The employees of a bank have a great effect on performance of banks .335
The quality of employees has a positive effect on performance .331
Note: The bolded item were dropped from further analysis
4.3.10. Reliability analysis for performance
while it increased to 0.943 after removing the inadequate indicator. This indicates that the data was
reliable since a coefficient value of between 0.939 was obtained on the research variables. This
was above 0.75 and an alpha coefficient higher than 0.75 signifies that the gathered data has a
relatively high internal consistency and could be generalized to reflect the respondents‟ opinions
on the study problem. This information is shown in Table 4.23.

107
Table 4.23. Reliability analysis for performance

4.3.11. Factor Analysis on specific performance indicators
When factor analysis was done on the factors that were used to show performance, it was
discovered that out of the all the items, only one factor/ component was selected. From the given
table, the component comprises of the following items: Profitability, Return on assets, Growth rate
of sales revenue, Return on investment, Return on equity, Market share and Financial strength e.g.
liquidity. The associated probability in the Bartlett’s test of Sphericity is lower than 0.05 (0.000)
therefore it is small enough to reject the null hypotheses. This means that the correlations matrix is
not an identity matrix. This information is shown in Table 4.24.
Table 4.24. KMO and Bartlett's Test
KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .915

Approx. Chi-Square 2135.007
Bartlett's Test of Sphericity Df 21
Sig. .000
Further analysis revealed that profitability had the highest extraction value at 0.852, return on
assets had an extraction value of 0.851, growth rate of sales revenue had an extraction value of
0.830, return on investment had an extraction value of 0.797, return on equity had an extraction
108
value of 0.767, market share had an extraction value of 0.660 and financial strength e.g. Liquidity
had the lowest extraction value of 0.439. This information is shown in Table 4.25.
Table 4.25. Commonalities on specific performance indicators
Commonalities
Initial Extraction
Market share 1.000 .660
Growth rate of sales revenue 1.000 .830
Financial strength e.g. liquidity 1.000 .439
Return on equity 1.000 .767
Return on assets 1.000 .851
Profitability 1.000 .852
Return on investment 1.000 .797
Extraction Method: Principal Component Analysis
Analysis was also done to show all the factors extractable from the analysis along with the
eigenvalues, the percent of variance attributable to each factor and the cumulative variance of the
factor and the previous factors. From the analysis it was found that the first factor (profitability)
accounts for 74.2% variance. All the other factors are not significant. These results are shown in
Table 4.26.
Table 4.26. Total variance of performance explained

Total Variance Explained
Initial Eigenvalues Extraction Sums of Squared Loadings

Component
Total % of Variance Cumulative % Total % of Variance Cumulative %
1 5.196 74.232 74.232 5.196 74.232 74.232

2 .757 10.808 85.040
3 .399 5.703 90.744
4 .196 2.799 93.542
109
5 .178 2.548 96.091
6 .150 2.145 98.236
7 .123 1.764 100.000
Extraction Method: Principal Component Analysis
Rotation was also done to reduce the number of factors on which the variables under
investigation have high loadings. From the analysis it was found that all the items were
substantially loaded on the one factor (component). Profitability and return on assets had the
highest loading of 0.923, growth of sales revenue had a loading of 0.911, Return on investment
had a loading of 0.893 , Return on equity had a loading of 0.876, Market share had a loading of
0.812 while Financial strength e.g. liquidity had the lowest loading of 0.663. These results are
Table 4.27. Component matrix on specific performance indicators

Component Matrixa
Component
1
Profitability .923
Return on assets .923
Growth rate of sales revenue .911
Return on investment .893
Return on equity .876
Market share .812
Financial strength e.g. liquidity .663
Extraction Method: Principal Component Analysis.
a. 1 components extracted.
4.4. Descriptive statistics
4.4.1. Employee recruitment and selection strategies
When the responses to the statement that the selection system followed in the bank are highly
scientific and rigorous, were analyzed it was found that 37% of the respondents strongly agreed,
21% agreed, 24% were neutral, 2% disagreed while only 6% strongly disagreed. Further analysis
revealed a mode of 2 and a median of 2, meaning that the majority of the respondents agreed that
110
the bank uses a highly scientific and rigorous selection system. Analysis of the statement that line
managers and human resource manager participate in the selection process was also done and it
was found that, 49% of the respondents strongly agreed, 33% agreed, 16% were neutral, 2%
disagreed while none of them strongly disagreed. Further analysis revealed a mode of 2 and a
median of 1, meaning that the majority of the respondents agreed line managers and human
resource manager participate in the selection process.
When the responses to the statement that valid and standardized tests are used when required in the
selection process were analyzed, it was found that 17% of the respondents strongly agreed, 59%
agreed, 19% were neutral, 4% disagreed while only16% strongly disagreed. Further analysis
valid and standardized tests are used when required in the selection process. Analysis of the
statement that the selection systems in the bank select those having the desired knowledge, skills
and attitudes was also done. From the analysis, it was found that 18% of the respondents strongly
agreed with the statement, 53% agreed, 28% were neutral, 1% disagreed while none strongly
disagreed. Further analysis revealed a mode of 2 and a median of 2, meaning that the majority of
the respondents agreed that the selection system in the bank selects those employees having the
desired knowledge, skills and attitudes
When the responses to the statement that the bank recruitment process ensures that very qualified
candidates are attracted were analyzed, it was found that 31% strongly agreed, 42%, agreed, 15%
were neutral, 10% disagreed while 2% strongly disagreed. Further analysis revealed a mode of 2
and a median of 2, meaning that the majority of the respondents agreed that the bank recruitment
process ensures that very qualified candidates are attracted. Analysis of the statement that the bank
retains high quality employees revealed that 13% of the respondents strongly agreed, 39% agreed,
111
31% were neutral, 13% disagreed while 4% strongly disagreed. Further analysis revealed a mode
of 2 and a median of 2, meaning that the majority of the respondents agreed that the bank retains
high quality employees
When the responses to the statement that the non performers are encouraged to leave the bank
were analyzed it was found that 13% of the respondents strongly agreed, 16% agreed, 37% were
neutral, 20% disagreed while 12% strongly disagreed. Further analysis revealed a mode of 3 and a
median of 3, meaning that the majority of the respondents were neutral to the statement that the
non performers are encouraged to leave the bank
Analysis of the responses to the statement that to be selected in this bank you must know someone
revealed that none of the respondents strongly agreed,14%, agreed, 42% were neutral, 22%
disagreed while 22% strongly disagreed. Further analysis revealed a mode of 3 and a median of 3,
meaning that the majority of the respondents were neutral to the statement that to be selected in
this bank you must know someone. This means that to be employed in the bank you do not need to
know anyone.
When the responses to the statement that the qualification and experience are the main factors
considered during selection were analyzed, it was found that 21% of the respondents strongly
agreed, 45%, agreed, 23% were neutral, 10% disagreed while 2% strongly disagreed. Further
analysis revealed a mode of 2 and a median of 2, meaning that the majority of the respondents
agreed that qualification and experience are the main factors considered during selection. This
means that in the commercial banks people with high qualification and experience are considered
for employment.
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Analysis of the responses to the statement that the bank takes measures to attract good quality
employees revealed that 13% of the respondents strongly agreed, 59%, agreed, 17% were neutral,
11% disagreed while none strongly disagreed. Further analysis revealed a mode of 2 and a median
of 2, meaning that the majority of the respondents agreed that the bank takes measures to attract
good quality employees. This means the banks normally take actions to attract good quality
employees.
When the responses to the statement that the bank always selects only the highest quality
employees were analyzed, it was found that 1% of the respondents strongly agreed, 40%, agreed,
of 2 and a median of 2, meaning that the majority of the respondents agreed that the bank always
selects only the highest quality employees. This means high quality employees are selected in the
commercial banks.
Analysis of the responses to the statement that the bank has an employee recruitment policy
revealed that 25% of the respondents strongly agreed, 53%, agreed, 12% were neutral, 8%
meaning that the majority of the respondents agreed with the statement that the bank has an
employee recruitment policy. This means that commercial banks in Kenya have recruitment
policies and that the employees are aware of the policies. The responses to the statements are
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Table 4.28. Descriptive statistics on employee recruitment and selection strategies
Strongly Agree Agree Neutral Disagree Strongly Disagree Mean Std. Deviation
The selection system followed in the bank

21% 37% 24% 12% 6% 2.4490 1.13847
are highly scientific and rigorous
In the bank, line managers and human
resource manager participate in the 49% 33% 16% 2% 0% 1.7070 .79343
selection process
Valid and standardized tests are used when
17% 59% 19% 4% 1% 2.1401 .77467
required in the selection process
Selection systems selects those having
18% 53% 28% 1% 0% 2.1369 .71298
desired knowledge, skills and attitudes
The bank recruitment process ensures that
31% 42% 15% 10% 2% 2.1051 1.01668
very qualified candidates are attracted
The bank retains high quality employees 13% 39% 31% 13% 4% 2.5573 1.00711
Non performers are encouraged to leave 13% 16% 37% 20% 12% 3.2293 2.36014
To be selected in this bank you must know

0% 14% 42% 22% 22% 3.5255 .98275
someone
Qualification and experience are the main
21% 45% 23% 10% 2% 2.2611 .94681
factors considered during selection
The bank has measures to attract quality
13% 59% 17% 11% 0% 2.2675 .82981
employees
The bank always selects only the highest
1% 40% 33% 23% 3% 2.8758 .87229
quality employees
The bank has a recruitment policy 25% 53% 12% 8% 3% 2.1210 .97148
The recruitment and selection outcome

43% 35% 16% 4% 2% 1.8025 1.03880
affects the performance of the bank
When the responses to the statement that the bank conducts extensive training programs for its
employees in all aspects of quality were analyzed, it was found that 43% of the respondents
strongly agreed, 32%, agreed, 16% were neutral, 7% disagreed while 3% strongly disagreed.
Further analysis revealed a mode of 2 and a median of 1, meaning that the majority of the
respondents agreed that the bank conducts extensive training programs for its employees in all
aspects of quality. This shows that commercial banks are conducting trainings.
114
Analysis of the responses to the statement that employees in each job will normally go through
training programs every year, revealed that 45% of the respondents strongly agreed, 24%, agreed,
6% were neutral, 20% disagreed while 5% strongly disagreed. Further analysis revealed a mode of
2 and a median of 1, meaning that the majority of the respondents were in agreement with the
statement that employees in each job will normally go through training programs every year. This
means that commercial banks offer training programs annually.
When the responses to the statement that the training needs are identified through a formal
performance appraisal mechanism were analyzed it was found that 19% of the respondents
strongly agreed, 48%, agreed, 19% were neutral, 9% disagreed while 4% strongly disagreed.
respondents agreed that training needs are identified through a formal performance appraisal
mechanism. This means that training needs are identified before training is done.
Analysis of the responses to the statement that there are formal training programs to teach new
employees the skills they need to perform their jobs, revealed that 16% of the respondents strongly
agreed that there are formal training programs to teach new employees the skills they need to
perform their jobs. This means that there are formal training programs in commercial banks.
When the responses to the statement that new knowledge and skills are imparted to employees
periodically to work in teams were analyzed it was found that, 26% of the respondents strongly
agreed, 43%, agreed, 19% were neutral, 12% disagreed while none strongly disagreed. Further
115
agreed that new knowledge and skills are imparted to employees periodically to work in teams.
This means that new knowledge is imparted to help employees do their work.
Analysis of the responses to the statement that training needs identified are realistic, useful and
based on the business strategy of the organization revealed that 13% of the respondents strongly
agreed that needs identified are realistic, useful and based on the business strategy of the
organization. This means that there is a good link between the training and the business strategy of
the bank.
When the responses to the statement that the bank has a training budget every year were analyzed
it was found that 35% of the respondents strongly agreed, 48%, agreed, 13% were neutral, 3%
meaning that the majority of the respondents agreed that the bank has a training budget every year.
Therefore commercial banks have set budgets for trainings and this shows the seriousness with
which training is treated in commercial banks.
Analysis of the responses to the statement that training has led to increased teamwork revealed that
20% of the respondents strongly agreed, 45%, agreed, 22% were neutral, 12% disagreed while13%
strongly disagreed. Further analysis revealed a mode of 2 and a median of 2, meaning that the
majority of the respondents agreed that training has led to increased teamwork. This means that the
respondents were able to observe positive changes in terms of teamwork in the bank after the
trainings.
When the responses to the statement that the employees are trained to take up more responsibilities
and other jobs in future were analyzed it was found that 8% of the respondents strongly agreed,
116
58% agreed, 20% were neutral, 13% disagreed while 2% strongly disagreed. Further analysis
employees are trained to take up more responsibilities and other jobs in future. This means that the
training offered by commercial banks has a future/ strategic approach.
Analysis of the responses to the statement that training employees helps in improving their
performance revealed that 36% of the respondents strongly agreed, 46%, agreed, 17% were
neutral, 2% disagreed while none strongly disagreed. Further analysis revealed a mode of 2 and a
median of 2, meaning that the majority of the respondents were in agreement with the statement
that training employees helps in improving their performance. This means that training bank
employees leads to improvements in performance.
When the responses to the statement that the bank ensures that employees have the skills required
to perform their duties were analyzed it was found that 25% of the respondents strongly agreed,
50%, agreed, 18% were neutral, 7% disagreed while none strongly disagreed. Further analysis
the bank ensures that employees have the skills required to perform their duties. This shows that
banks train employees in the areas relevant to the work they do. The responses to the statements
are presented in Table 4.29.
Table 4.29. Descriptive statistics on training and development strategies
Strongly Agree Agree Neutral Disagree Strongly Disagree Mean Std. Deviation
The bank conducts extensive training

programs for its employees in all aspects 43% 32% 16% 7% 3% 1.9427 1.04678
of quality
Employees in each job will normally go
45% 24% 6% 20% 5% 2.1561 1.31270
through training programs every year
Training needs are identified through a 19% 48% 19% 9% 4% 2.2994 1.00773
117
formal performance appraisal mechanism
There are formal training programs to
teach new employees the skills they need 16% 60% 16% 8% 1% 2.1879 .82283
to perform their jobs

New knowledge and skills are imparted to
26% 43% 19% 12% 0% 2.1720 .94702
employees periodically to work in teams
Training needs identified are realistic,
useful and based on the business strategy 13% 45% 34% 5% 2% 2.3854 .86163
of the organization
The bank has a training budget every year 35% 48% 13% 3% 1% 1.8694 .83388
Training has led to increased teamwork 20% 45% 22% 12% 1% 2.2930 .96760
Employees are trained to take up more

8% 58% 20% 13% 2% 2.4236 .86587
responsibilities and other jobs in future
Training employees helps in improving
36% 46% 17% 2% 0% 1.8535 .76934
their performance
The bank ensures that employees have the
25% 50% 18% 7% 0% 2.0605 .84189
skills required to perform their duties
Analysis of the responses to the statement that employees in the bank are asked by their superiors
to participate in operations related decisions revealed that 12.4% of the respondents strongly
agreed, 38.2%, agreed, 30.9% were neutral, 14% disagreed while 4.5% strongly disagreed. Further
agreed that employees in the bank are asked by their superiors to participate in operations related
decisions. This means that there is involvement of employees in the affairs of the banks.
When the responses to the statement that the employees are provided opportunity to suggest
improvements in the way things are done here were analyzed it was found that 1.3% of the
respondents strongly agreed, 66.2%, agreed, 24.8% were neutral, 7.6% disagreed while none
118
majority of the respondents agreed that employees are provided opportunity to suggest
improvements in the way things are done here. This means that banks consult their employees on
how to improve the performance.
Analysis of the responses to the statement that the bank involves the employees and unions in
making decisions that affect employees revealed that 22% of the respondents strongly agreed,
42%, agreed, 15.3% were neutral, 18.2% disagreed while 2.5% strongly disagreed. Further
agreed that the bank involves the employees and unions in making decisions that affect employees.
This means that there is involvement of employees in the running of the banks either individually
or through unions.
When the responses to the statement that the nature of relationship between employees and the
managers affects the employee performance were analyzed it was found that 24.8% of the
respondents strongly agreed, 47.5%, agreed, 20.7% were neutral, 0.6% disagreed while 6.4%
majority of the respondents agreed that the nature of relationship between employees and the
managers affects the employee performance. Therefore it is important to keep good relations
between management and employees in order to improve performance.
Analysis of the responses to the statement that employee performance affects the performance of
this bank revealed that 21.3% of the respondents strongly agreed, 60.5%, agreed, 18.2% were
neutral, none disagreed or strongly disagreed. Further analysis revealed a mode of 2 and a median
of 2, meaning that the majority of the respondents agreed that employee performance affects the
performance of this bank. If the employees perform well then the bank also performs well and vice
versa.
119
When the responses to the statement that a formal environment is sustained between employees
and managers/ supervisors were analyzed it was found that 17.2% of the respondents strongly
agreed, 54.1%, agreed, 20.4% were neutral, 1.3% disagreed while 7%strongly disagreed. Further
agreed that a formal environment is sustained between employees and managers/ supervisors
Analysis of the responses to the statement that good employee relations lead to increased
performance in this bank revealed that 22.9% of the respondents strongly agreed, 62.4%, agreed,
7.6% were neutral, 7% disagreed while none strongly disagreed. Further analysis revealed a mode
of 2 and a median of 2, meaning that the majority of the respondents agreed that good employee
relations lead to increased performance in this bank.
When the responses to the statement that the employee relations affects the profits of your bank
were analyzed it was found that 22.9% of the respondents strongly agreed, 54.1%, agreed, 19.7%
were neutral, 3.2% disagreed while none strongly disagreed. Further analysis revealed a mode of 2
and a median of 2, meaning that the majority of the respondents agreed that employee relations
affect the profits of the bank. This means that employee relations affect profits of banks.
Analysis of the responses to the statement that employee relations affects your banks market share
by attracting customers revealed that 21.7% of the respondents strongly agreed, 48.7%, agreed,
27.1% were neutral, 2.5% disagreed while none strongly disagreed. Further analysis revealed a
mode of 2 and a median of 2, meaning that the majority of the respondents agreed that employee
relations affect the banks market share by attracting customers. if the bank has good employee
relations the image of the bank is improved leading to more customers been attracted to open
accounts.
120
When the responses to the statement that the employee relations affects the rate of growth of this
bank were analyzed it was found that 23.6% of the respondents strongly agreed, 52.9%, agreed,
14% were neutral, 9.6% disagreed while none strongly disagreed. Further analysis revealed a mode
of 2 and a median of 2, meaning that the majority of the respondents agreed that employee
relations affect the rate of growth of this bank. Therefore from analysis of this section it is found
that good employee relations affect the performance and growth of commercial banks. The
response to the statements is presented in Table 4.30.
Table 4.30. Descriptive statistics on employee relations strategies
Strongly Strongly
agree Agree Neutral Disagree Disagree Mean SD
Employees in the bank are asked by their

superiors to participate in operations 12.4% 38.2% 30.9% 14.0% 4.5% 2.5987 1.01968
related decisions.
Employees are provided opportunity to
suggest improvements in the way things 1.3% 66.2% 24.8% 7.6% .0% 2.3885 .64595
are done here.

The bank involves the employees and
unions in making decisions that affect 22.0% 42.0% 15.3% 18.2% 2.5% 2.5032 .96006
employees
The nature of relationship between
employees and the managers affects the 24.8% 47.5% 20.7% .6% 6.4% 2.3726 1.09224
employee performance
Employee performance affects the
21.3% 60.5% 18.2% .0% .0% 2.1624 1.01540
performance of this bank
A formal environment is sustained
between employees and managers/ 17.2% 54.1% 20.4% 1.3% 7.0% 1.9682 .62861
supervisors
Good employee relations lead to
22.9% 62.4% 7.6% 7.0% .0% 3.3057 4.07856
increased performance in this bank
Employee relations affects the profits of
22.9% 54.1% 19.7% 3.2% .0% 2.2675 .99444
your bank
Employee relations affects your banks
21.7% 48.7% 27.1% 2.5% .0% 1.9873 .76661
market share by attracting customers
121
Employee relations affects the rate of
23.6% 52.9% 14.0% 9.6% .0% 2.0318 .74491
growth of this bank
4.4.4. Reward and compensation strategies
When the responses to the statement that the job performance is an important factor in determining
the incentive compensation of employees were analyzed it was found that 24% of the respondents
strongly agreed, 51% agreed, 22% were neutral, 2% disagreed while 1% strongly disagreed.
respondents agreed that job performance is an important factor in determining the incentive
compensation of employees in commercial banks in Kenya.
Analysis of the responses to the statement that in the bank, salary and other benefits are
comparable to the market revealed that 14% of the respondents strongly agreed, 48% agreed, 19%
were neutral, 13% disagreed while 5% strongly disagreed. Further analysis revealed a mode of 2
and a median of 2 meaning that the majority of the respondents agreed that in the bank, salary and
other benefits are comparable to the market. This means that commercial banks in Kenya offer
comparatively similar rewards and compensation.
When the responses to the statement that in the bank, compensation is decided on the basis of
competence or ability of the employee were analyzed it was found that 2% of the respondents
strongly agreed, 39% agreed, 40% were neutral, 11% disagreed while 7% strongly disagreed.
122
respondents were neutral to the statement that in the bank, compensation is decided on the basis of
competence or ability of the employee. This shows that majority of the respondents were not aware
of how compensation is determined.
Analysis of the responses to the statement that the compensation for all employees is directly
linked to his/her performance revealed that 12% of the respondents strongly agreed, 24% agreed,
of 3 and a median of 3, meaning that the majority of the respondents were neutral to the statement
that the compensation for all employees is directly linked to his/her performance. This means that
the respondents were not very sure of that the bank linked an employee’s compensation to his / her
performance.
When the responses to the statement that in the bank, profit sharing is used as a mechanism to
reward higher performance were analyzed it was found that 13% of the respondents strongly
agreed, 20% agreed, 45% were neutral, 14% disagreed while 7% strongly disagreed. Further
were neutral to the statement that in the bank, profit sharing is used as a mechanism to reward
higher performance. This means that most respondents were not sure if the bank uses profit sharing
to reward them.
Analysis of the responses to the statement that the bank ensures that salaries are competitive
revealed that 5% of the respondents strongly agreed, 57% agreed, 27% were neutral, 9% disagreed
while 2% strongly disagreed. Further analysis revealed a mode of 2 and a median of 1, meaning
that the majority of the respondents agreed that the commercial banks in Kenya have ensured that
123
salaries are competitive. This means that the employees felt that the salaries offered to them were
competitive.
When the responses to the statement that the rewards offered by the bank have an effect on
employee performance were analyzed it was found that 28% of the respondents strongly agreed,
42% agreed, 22% were neutral, 8% disagreed while none of them strongly disagreed. Further
agreed the rewards offered by the bank have an effect on employee performance.
Analysis of the responses to the statement that good rewards have a positive effect on the
performance of the bank revealed that 24% of the respondents strongly agreed, 63% agreed, 13%
were neutral, none disagreed or strongly disagreed. Further analysis revealed a mode of 2 and a
median of 2, meaning that the majority of the respondents agreed that good rewards have a positive
effect on the performance of the bank. This means that rewards have a positive effect on
performance of employees.
When the responses to the statement that the bank ensures that its rewards can attract and retain
high quality employees were analyzed it was found that 23% of the respondents strongly agreed,
52% agreed, 20% were neutral, 4% disagreed while 1% strongly disagreed. Further analysis
revealed a mode of 2 and a median of 2, meaning that the majority of the respondents agreed the
commercial banks ensure that its rewards can attract and retain high quality employees.
Analysis of the responses to the statement that good employee rewards affect the profits of a bank
revealed that 22% of the respondents strongly agreed, 48% agreed, 16% were neutral, 14%
disagreed while none of them strongly disagreed. Further analysis revealed a mode of 2 and a
124
median of 2, meaning that the majority of the respondents agreed that good employee rewards
affect the profits of a bank.
When the responses to the statement that the rewards affect the market share of the banks by
attracting customers were analyzed it was found that 22% of the respondents strongly agreed, 48%
agreed, 15% were neutral, 14% disagreed while none of them strongly disagreed. Further analysis
the rewards affect the market share of the banks by attracting customers.
Analysis of the responses to the statement that employee rewards affects the rate of growth of a
bank revealed that 24% of the respondents strongly agreed, 50% agreed, 13% were neutral, 8%
meaning that the majority of the respondents agreed that employee rewards affects the rate of
growth of a bank. The responses to the statements are presented in Table 4.31.
125
Table 4.31. Descriptive statistics on employee reward and compensation strategies
S agree Agree Neutral Disagree S Disagree Mean SD

Job performance is an important factor in
determining the incentive compensation of 24% 51% 22% 2% 1% 2.0446 .79811
employees.
In the bank, salary and other benefits are
14% 48% 19% 13% 5% 2.4713 1.05480
comparable to the market.
In the bank, compensation is decided on
the basis of competence or ability of the 2% 39% 40% 11% 7% 2.8280 .92656
employee.
The compensation for all employees is
12% 24% 43% 16% 5% 2.7739 1.01576
directly linked to his/her performance.
In the bank, profit sharing is used as a
13% 20% 45% 14% 7% 2.0605 .84189
mechanism to reward higher performance.
The bank has ensured that salaries are
5% 57% 27% 9% 2% 2.9013 1.31827
competitive
The rewards offered by the bank have an
28% 42% 22% 8% 0% 2.4427 .80229
effect on employee performance
Good rewards have a positive effect on the
24% 63% 13% 0% 0% 2.0892 .89640
performance of the bank
The bank ensures that its rewards can
23% 52% 20% 4% 1% 1.9013 .62417
attract and retain high quality employees
Good employee rewards affect the profits
22% 48% 16% 14% 0% 2.0764 .80764
of a bank
Rewards affect the market share of the
22% 48% 15% 14% 0% 2.2134 .94700
banks by attracting customers
Employee rewards affects the rate of
24% 50% 13% 8% 6% 2.2229 .96321
growth of a bank
4.4.5. Performance of commercial banks

126
The respondents were asked to compare the performance of their bank in terms of market share
with that of the leading banks in the sector. Analysis of the responses to this statement established
that 13.1% of the respondents felt that the performance of their bank was very high , 30.6%felt it
was high, 36% were neutral, 14.3% felt it was low while 6.1% of the respondents said the
performance of their bank was very low. Further analysis revealed a mode of 3 and a median of 3,
meaning that the majority of the respondents were neutral in their response. This shows that most
respondents did not know the level of their banks performance in comparison to market leaders in
the sector.
The respondents were asked to compare the performance of their bank in terms of growth rate of
sales revenue with that of the leading banks in the sector. Analysis of the responses to this
statement established that 13.1% of the respondents felt that the performance of their bank was
very high, 55.1% said it was high, 15% were neutral, 13.7% said it was low 3.2% of the
respondents said the performance of their bank was very low. Further analysis revealed a mode of
2 and a median of 2, meaning that the majority of the respondents felt that their bank had grown
highly.
The respondents were asked to compare the performance of their bank in terms of financial
strength e.g. Liquidity with that of the leading banks in the sector. Analysis of the responses to
this statement established that 10.8% of the respondents felt that the performance of their bank was
very high, 58.3% said it was high, 25.5% were neutral, 4.8% said it was low while 0.6% of the
respondents said the performance of their bank was very low. Further analysis revealed a mode of
2 and a median of 2, meaning that the majority of the respondents felt that the performance of the
bank was high.
127
The respondents were asked to compare their performance in terms of return on equity with that of
the leading banks in the sector. Analysis of the responses to this statement established that 12.4%
of the respondents felt that the performance of their bank was very high, 49% said it was high,
27.1% were neutral, 10.2% said it was low while 1.3% of the respondents said the performance of
their bank was very low. Further analysis revealed a mode of 2 and a median of2, meaning that the
majority of the respondents felt that the performance of the bank was high.
When the respondents were asked to compare their performance in terms of return on assets with
that of the leading banks in the sector. Analysis of the responses to this statement established that
11.8% of the respondents felt that the performance of their bank was very high, said it was high,
their bank was very low. Further analysis revealed a mode of 2 and a median of 1, meaning that the
The respondents were asked to compare their performance in terms of profitability with that of the
leading banks in the sector. Analysis of the responses to this statement established that 13.1% of
the respondents felt that the performance of their bank was very high, 51.6% said it was high,
their bank was very low. Further analysis revealed a mode of 2 and a median of 2, meaning that the
When the respondents were asked to compare their performance in terms of return on investment
with that of the leading banks in the sector. Analysis of the responses to this statement established
that 12.4% of the respondents felt that the performance of their bank was very high, 60.8% said it
was high, 17.2% were neutral, 7.6% said it was low while 1.9% of the respondents said the
128
performance of their bank was very low. Further analysis revealed a mode of 2 and a median of 2,
meaning that the majority of the respondents felt that the performance of the bank was high. The
response to the statements are presented in Table 4.32.
Table 4.32. Descriptive statistics on performance
Very Very Standard

High High Neutral Low low Mean deviation
Market share 13.1% 30.6% 36.0% 14.3% 6.1% 2.6975 1.06086
Growth rate of sales revenue 13.1% 55.1% 15.0% 13.7% 3.2% 2.3885 .98324
Financial strength e.g. liquidity 10.8% 58.3% 25.5% 4.8% .6% 2.2611 .73824
Return on equity 12.4% 49.0% 27.1% 10.2% 1.3% 2.3885 .87675
Return on assets 11.8% 58.9% 19.1% 7.6% 2.5% 2.3025 .86880
Profitability 13.1% 51.6% 17.5% 17.2% .6% 2.4076 .94213
Return on investment 12.4% 60.8% 17.2% 7.6% 1.9% 2.2580 .84238
4.4.6. Human resources management strategies
Analysis of the responses to the statement that human resource strategies have led to increased
return on assets and profits revealed that 15.3% of the respondents strongly agreed, 51.6% agreed,
25.5% were neutral, 7.6% disagreed while none of them strongly disagreed. Further analysis
human resource strategies have led to increased return on assets and profits.
When the responses to the statement that the human resource strategies have led to increased
market share were analyzed it was found that 15.3% of the respondents strongly agreed, 49.4%
129
agreed, 28.3% were neutral, 7% disagreed while none of them strongly disagreed. Further analysis
the human resource strategies have led to increased market share.
Analysis of the responses to the statement that human resource strategies have led to increased
total shareholder return revealed that 15.9% of the respondents strongly agreed, 44.6% agreed,
29.9% were neutral, 9.6% disagreed while none of them strongly disagreed. Further analysis
human resource strategies have led to increased total shareholder return.
When the responses to the statement that the quality of employees has a positive effect on
performance were analyzed it was found that 30.9% of the respondents strongly agreed, 59.6%
agreed, 7% were neutral, 2.5% disagreed while none of them strongly disagreed. Further analysis
the quality of employees has a positive effect on performance.
Analysis of the responses to the statement that the type of employees has an effect on the profits of
a bank revealed that 28% of the respondents strongly agreed, 64% agreed, 5.1% were neutral,
2.9% disagreed while none of them strongly disagreed. Further analysis revealed a mode of 2 and a
median of 2, meaning that the majority of the respondents agreed that the type of employees has an
effect on the profits of a bank.
When the responses to the statement that the type of employee has a positive effect on the growth
of a bank were analyzed it was found that 22.6% of the respondents strongly agreed 61.5% agreed,
14% were neutral, 1.9% disagreed while none of them strongly disagreed. Further analysis
130
the type of employee has a positive effect on the growth of a bank. The responses to the statements
are presented in Table 4.33.
131
Table 4.33. Descriptive statistics on human resources management strategies
Strongly Strongly Standard

agree Agree Neutral Disagree Disagree Mean Deviation
Human resource strategies have led to
15.3% 51.6% 25.5% 7.6% .0% 2.2548 .80656
increased return on assets and profits
15.3% 49.4% 28.3% 7.0% .0% 2.2707 .80333
increased market share
15.9% 44.6% 29.9% 9.6% .0% 2.3312 .85639
increased total shareholder return
2.2% 68.8% 15.0% 14.0% .0% 2.4076 .75374
increased sales
14.0% 55.1% 16.2% 13.7% 1.0% 2.3248 .91293
increased account holders
19.1% 48.1% 29.3% 3.5% .0% 2.1720 .77235
growth rate of revenue
The quality of employees has a positive
30.9% 59.6% 7.0% 2.5% .0% 1.8121 .66859
effect on performance
The type of employees has an effect on
28.0% 64.0% 5.1% 2.9% .0% 1.8280 .64623
the profits of a bank
The type of employee has a positive
22.6% 61.5% 14.0% 1.9% .0% 1.9236 .62984
effect on the growth of a bank
4.5. Research hypotheses test results
In order to achieve the objectives designed for this study, the research hypotheses were tested. The
statistical test results (regression and correlation analyses) of each null hypothesis at 95%
confidence level are as shown in the hypotheses that follow:
132
H1a: Employee recruitment and selection strategies have a significant effect on the
performance of commercial banks in Kenya.
From the research it was found that there is a positive linear relationship between employee
recruitment selection strategies and Performance. This shows that the two variables co-vary.
Therefore as recruitment and selection strategies are been used the performance of commercial
banks also improves. The relationship between resourcing strategies and performance is shown in
figure 4.13.
Figure 4.13. Scatter Plot and Regression Line showing the relationship between employee
resourcing strategies and performance
Correlation analysis was done in order to determine the existence of a relationship and the nature
of relationship between employee recruitment and selection strategies and performance of
commercial banks. A Pearson correlation coefficient of 0.462 (p-value = 0.000) was obtained.
133
This confirms that there is a significant positive linear relationship between employee recruitment
and selection strategies and Performance of commercial banks. Recruitment and selection is
positively correlated to performance. This means that the variables co-vary. The results of the
Table 4.34. Correlations coefficient showing the relationship between employee recruitment
and selection strategies and performance
Correlations
Employee Recruitment and Selection
Performance Strategies
Performance Pearson Correlation 1 .462**
N 314 314
Employee Recruitment and Pearson Correlation
.462** 1
Selection Strategies
N 314 314
**. Correlation is significant at the 0.01 level (2-tailed).
Regression analysis was done to determine the effect of recruitment and selection strategies and
performance and the following results were obtained. The results of the analysis are shown in
Table 4.35.
Table 4.35. Model summary showing employee recruitment and selection strategies
Model Summary
Model
1 a
.462 .214 .211 .69025
134
a. Predictors: (Constant), Employee Recruitment and Selection Strategies
Further analysis of the employee recruitment and selection strategies obtained an adjusted R 2 of
21.1%. This implies that the simple linear model with employee recruitment and selection
strategies as the independent variable explains 21.1% of the variations in performance. This means
that when recruitment and selection strategies were used the performance of commercial banks
changed by 21.1%.
Table 4.36. ANOVA results showing the effect of employee recruitment and selection
strategies on performance
ANOVAb
Model Sum of F Sig.

1
Regression 40.439 1 40.439 84.876 .000a
Residual 148.652 312 .476
Total 189.091 313
b. Predictors: (Constant), Employee Recruitment and Selection Strategies
c. Dependent Variable: Performance
A regression analysis was done to determine the effect of recruitment and selection strategies on
performance of commercial banks in Kenya. From the analysis a p-value less than 0.05 (p-value =
0.0000) was obtained. This implies that the simple linear model with employee recruitment and
selection strategies as the only independent variable is significant. The results of the analysis are
shown in Table 4.36.
Table 4.37. Coefficient results showing the relationship between employee recruitment and
selection strategies and performance
135
Coefficients(a)
Model Unstandardized Standardized

coefficients coefficient
B Std. Beta t
Error Sig.
1
(Constant) .964 .159 6.053 .000
Employee Recruitment and
.593 .064 .462 9.213 .000
a Dependent Variable: PERFORMANCE
Correlation coefficients show that employee recruitment and selection strategies (X1) is significant
(p-value = 0.0000) in influencing performance (Y). The results of the analysis are shown in Table
4.37. The fitted model from this analysis is shown below:
Y  0.964  0.593X 1
4.5.1. Effect of gender on the perception of employees about the effect of recruitment and
selection strategies on performance of commercial banks in Kenya.
A Chi square test was done to test if gender has a significant effect on the perception of employees
about the effect of recruitment and selection strategies on performance of commercial banks in
Kenya. Since p(0.000) is less than alpha (α = .05) we conclude that with the obtained data there is
evidence of a significant effect of gender on the perception of employees about the effect of
recruitment and selection strategies on performance of commercial banks in Kenya. The chi square
value is 39.916.This means that gender affects the way the employees perceive the recruitment and
selection strategies to affect performance of commercial banks in Kenya. The results of the
Table 4.38. Chi square test showing the effect of gender on employee perceptions about the
effect recruitment and selection strategies on performance.

136
Chi-Square Tests
Value Df Asymp. Sig. (2-sided)

a. 0 cells (0.0%) have expected count less than 5. The minimum expected count is 14.68
4.5.2. Effect of age on the perception of employees about the effect of employee recruitment and
selection strategies on performance of commercial banks in Kenya.
A Chi square test was done to test if there is a significant effect of age on the perception of
employees about the effect of recruitment and selection strategies on performance of commercial
banks in Kenya. Since p (0.000) is less than alpha (α = .05) we conclude that with the obtained
data there is evidence of a significant effect of age on the perception of employees about the effect
of recruitment and selection strategies on performance of commercial banks in Kenya. The chi
square value is73.073. This means that age affects the way the employees perceive recruitment and
selection strategies affects performance of commercial banks in Kenya. These findings are
Table 4.39. Chi square test showing the effect of age on employee perceptions about the effect
recruitment and selection strategies on performance
Chi-Square Tests

137
4.5.3. Effect of number of years worked on the perception of employees about the effect of
employee recruitment and selection strategies on performance of commercial banks in Kenya.
A Chi square test was done to test if there is a significant effect of the number of years worked on
the perception of employees about the effect of recruitment and selection strategies on
performance of commercial banks in Kenya. Since p (0.000) is less than alpha (α = .05) we
conclude that with the obtained data there is evidence of a significant effect of number of years
worked on the perception of employees about the effect of recruitment and selection strategies on
performance of commercial banks in Kenya. The chi square value is 125.962. This means that the
number of years worked affects the way the employees perceive recruitment and selection
strategies affects performance of commercial banks in Kenya. These findings are presented in
Table 4.40.
Table 4.40. Chi square test showing the effect of number of years worked on employee
perceptions about the effect employee recruitment and selection strategies on performance
Chi-Square Tests

138
H2: Training and development strategies have a significant effect on the performance of
From the research it was found that there is a positive linear relationship between training and
development strategies and Performance. This shows that the two variables co-vary. Therefore as
training and development strategies are been used the performance of commercial banks also
improves. The relationship between training and development strategies and performance is shown
in figure 4.14.
Figure 4.14. Scatter Plot and Regression Line showing the relationship between training and
development strategies and performance
139
of relationship between employee training and development strategies and performance of
commercial banks in Kenya. A Pearson correlation coefficient of 0.579 (p-value = 0.000) was
obtained. This confirms that there is a significant and strong positive linear relationship between
employee training and development strategies and Performance of commercial banks. This means
that the variables co-vary- the more training and development is been done, the higher the level of
performance. These results are shown in Table 4.41.
Table 4.41. Correlations coefficient showing the relationship between training and
development strategies and performance
Correlations
Performance Training and Development Strategies

N 314 314
Training and Development Pearson Correlation
.579** 1
Strategies
N 314 314
Regression analysis was done to determine the effect of training and development strategies on
performance. This analysis of the training and development strategies obtained an adjusted R 2 of
33.4%. This implies that the simple linear model with training and development strategies as the
independent variable explains 33.4% of the variations in performance of commercial banks in
140
Kenya. This means that when training and development strategies were used the performance of
commercial banks changed by 33.4%. These results are shown in Table 4.42.
Table 4.42. Model summary showing training and development strategies

Model Summary
Model
1 a
.579 .336 .334 .63453
a. Predictors: (Constant), Training and Development Strategies
Table 4.43. ANOVA results showing the effect of training and development strategies on
performance
ANOVAb
Model Sum of F Sig.

1
Regression 63.470 1 63.470 157.636 .000a
Residual 125.621 312 .403
Total 189.091 313
b. Predictors: (Constant), Training and Development Strategies
c. Dependent Variable: Performance
From the analysis a p-value less than 0.05 (p-value = 0.0000) was obtained. This implies that the
simple linear model with employee training and development strategies as the only independent
variable is significant. The results of the analysis are shown in Table 4.43.
141
Table 4.44. Coefficient results showing the relationship between training and development
strategies and performance
Coefficients(a)

B Std. Beta t
Error Sig.
1
(Constant) .672 .141 4.760 .000
Training and Development
.837 .067 .579 12.555 .000
Strategies
Correlation coefficients show that employee training and development strategies (X2) is significant
4.44. The fitted model from this analysis is:
Y  0.672  0.837X 2
Hypotheses tests results suggest that training and development has a positive impact on business
performance. The regression results support this hypothesis. This finding is consistent with
previous studies indicating that the higher the training and development facility provided by the
company, the higher the performance will be. In other words, training and development program is
important factor for business performance of a company (Lee & Lee, 2007 & Abdullah, Ahsan &
Alam, 2009).
4.5.4. Effect of gender on the perception of employees about the effect of training and
development strategies on performance of commercial banks in Kenya.
142
A Chi square test was done to test if there is a significant effect of gender on the perception of
employees about the effect of training and development strategies on the performance of
commercial banks in Kenya. Since p(0.000) is less than alpha (α = .05) we conclude that with the
obtained data there is evidence of a significant effect of gender on the perception of employees
about the effect of training and development strategies on performance of commercial banks in
Kenya. The chi square value is 16.040. This means that gender affects the way the employees
perceive training and development strategies to affect performance of commercial banks in Kenya.
These findings are presented in Table 4.45.
effect training and development strategies on performance.
Chi-Square Tests
Value Df Asymp. Sig. (2-sided) Exact Sig. (2-sided) Exact Sig. (1-
sided)

b
Continuity Correction 14.999 1 .000
Fisher's Exact Test .000 .000
b. Computed only for a 2x2 table
4.5.5. Effect of age on the perception of employees about the effect of employee training and
development strategies on performance of commercial banks in Kenya.
A Chi square test was done to test the hypotheses that there is a significant effect of age on the
perception of employees about the effect of training and development strategies on performance of
143
commercial banks in Kenya. Since p (0.000) is less than alpha (α = .05) we conclude that with the
obtained data there is evidence of a significant effect of age on the perception of employees about
the effect of training and development strategies on performance of commercial banks in Kenya.
The chi square value is 72.792. This means that age affects the way the employees training and
development strategies affect performance of commercial banks in Kenya. These findings are
training and development strategies on performance
Chi-Square Tests

training and development strategies on performance of commercial banks in Kenya.
A Chi square test was done to test if there is a significant effect of number of years worked on the
perception of employees about the effect of training and development strategies on performance of
144
obtained data there is evidence of a significant effect of number of years worked on the perception
of employees about the effect of training and development strategies on performance of
commercial banks in Kenya. The chi square value is 26.133. This means that the number of years
worked affects the way the employees perceive training and development strategies affects
performance of commercial banks in Kenya. These findings are presented in Table 4.47.
Table 4.47. Chi square test showing the effect of number of years workedon employee
perceptions about the effect training and development strategies on performance
Chi-Square Tests

H3: Employee reward and compensation strategies have a significant effect on the performance
of commercial banks in Kenya.
From the research it was found that there is a positive linear relationship between employee reward
and compensation strategies and performance of commercial banks in Kenya. This shows that the
two variables co-vary. Therefore as reward and compensation strategies are been used the
performance of commercial banks also improves. The relationship between reward and
compensation strategies is shown in Figure 4.15.
145
Figure 4.15. Scatter Plot and Regression Line showing the relationship between reward and
compensation strategies and performance
of relationship between employee reward and compensation strategies and performance of
commercial banks in Kenya. A Pearson correlation coefficient of 0.309 (p-value = 0.000) was
obtained. This confirms that there is a weak positive linear relationship between employee reward
and compensation strategies and Performance of commercial banks. This means that the variables
co-vary but only to a small extent. The results of this analysis are shown in Table 4.48.
Table 4.48. Correlations coefficient showing the relationship between reward and
compensation strategies and performance
Correlations
146
Performance Reward and Compensation Strategies
N 314 314
Reward and Compensation Pearson Correlation
.309** 1
Strategies
N 314 314
Regression analysis was done to determine the effect of reward and compensation strategies on
performance. This analysis of the reward and compensation strategies obtained an adjusted R2 of
9.2%. This implies that the simple linear model with reward and compensation strategies as the
independent variable explains 9.2% of the variations in performance. This means that when reward
and compensation strategies were used the performance of commercial banks changed by 9.2%.
These results are presented in Table 4.49.
Table 4.49. Model summary showing reward and compensation strategies
Model Summary
Model
1
.309a .095 .092 .74049
a. Predictors: (Constant), Reward and Compensation Strategies
Regression analysis was done to determine the effect employee reward and compensation
strategies on performance of commercial banks in Kenya. From the analysis a p-value less than
0.05 (p-value = 0.0000) was obtained. This implies that the simple linear model with employee
reward and compensation strategies as the only independent variable is significant. The results of
the analysis are shown in Table 4.50.

147
Table 4.50. ANOVA results showing the effect of employee reward and compensation
strategies on performance
ANOVAb
Model Sum of F Sig.

1
Regression 18.013 1 18.013 32.851 .000a
Residual 171.078 312 .548
Total 189.091 313
d. Predictors: (Constant), Reward and Compensation Strategies
e. Dependent Variable: Performance
Table 4.51. Coefficient results showing the relationship between reward and compensation
Coefficients(a)
B Std. Beta t
Error Sig.
1
(Constant) 1.505 .159 9.443 .000
Reward and Compensation
.377 .066 .309 5.732 .000
Strategies
Correlation coefficients show that employee reward and compensation Strategies (X4) is
significant (p-value = 0.0000) in influencing performance (Y). The results of the analysis are
shown in Table 4.51. The fitted model from this analysis is:
Y  1.505  0.377X 4
148
The hypotheses tests results suggest that employee reward and compensation strategies have a
positive impact on business performance. The regression results show non significant relationship
with business performance. This study is counter to early study by Lee and Lee (2007). However
the findings are consistent with those from an earlier study by Abdullah, Ahsan & Alam (2009).
4.5.7. Effect of gender on the perception of employees about the effect of reward and
compensation strategies on performance of commercial banks in Kenya.
A Chi square test was done to test if gender has a significant effect on the perception of employees
about the effect of reward and compensation strategies on performance of commercial banks in
Kenya. Since p(0.000) is less than alpha (α = .05) we conclude that with the obtained data there is
a significant effect of gender on the perception of employees on the effect of reward and
compensation strategies on performance of commercial banks in Kenya. The chi square value is
87.611.This means that gender affects the way the employees perceive reward and compensation
Table 4.52.
effect reward and compensation strategies on performance.
Chi-Square Tests
149
4.5.8. Effect of age on the perception of employees about the effect of reward and compensation
strategies on performance of commercial banks in Kenya.
employees about the effect of reward and compensation strategies on performance of commercial
banks in Kenya. Since p (0.000) is less than alpha (α = .05) we conclude that with the obtained
data there is evidence of a significant effect of age on the perception of employees about the effect
of reward and compensation strategies on performance of commercial banks in Kenya. The chi
square value is 78.156. This means that age affects the way the employees perceive reward and
compensation strategies affects performance of commercial banks in Kenya. These findings are
reward and compensation strategies on performance
Chi-Square Tests
150
reward and compensation strategies on performance of commercial banks in Kenya.
perception of employees about the effect of reward and compensation strategies on performance of
of employees about the effect of reward and compensation strategies on performance of
commercial banks in Kenya. The chi square value is 86.479. This means that the number of years
worked affects the way the employees perceive reward and compensation strategies affects
performance of commercial banks in Kenya. These findings are presented in Table 4.54.
perceptions about the effect reward and compensation strategies on performance
Chi-Square Tests

151
H4: Employee relations strategies have a significant effect on the performance of commercial
banks in Kenya.
From the research it was found that there is a positive linear relationship between employee
relations strategies and Performance of commercial banks in Kenya. This shows that the two
variables co-vary. Therefore as employee relations strategies are been used the performance of
commercial banks also improves. These results are shown in Figure 4.16.
Figure 4.16. Scatter Plot and Regression Line showing the relationship between employee
relations strategies and performance
152
Correlation analysis was done In order to determine the existence of a relationship and the nature
of relationship between employee relations strategies and Performance of commercial banks in
Kenya. A Pearson correlation coefficient of 0.513 (p-value = 0.000) was obtained. This confirms
that there is a significant positive linear relationship between employee relations strategies and
Performance of commercial banks. This means that the variables co-vary. The results of the
Table 4.55. Correlations coefficient showing the relationship between employee relations
Correlations
Performance Employee relations strategies

N 314 314
Employee relations Pearson Correlation
.513** 1
strategies
N 314 314
Regression analysis was done to determine the effect of employee relations strategies on the
performance. This analysis of the employee relations strategies obtained an adjusted R2 of 26.1%.
This implies that the simple linear model with employee relations strategies as the independent
variable explains 26.1% of the variations in performance. This means that when employee
relations strategies were used the performance of commercial banks changed by 26.1%. These
results are shown in Table 4.56.
153
Table 4.56. Model summary showing employee relations strategies
Model Summary
Model
1 a
.513 .263 .261 .66832
a. Predictors: (Constant), Employee relations strategies
Table 4.57. ANOVA results showing the effect of employee relations strategies on
performance
ANOVAb
Model Sum of F Sig.

1
Regression 49.737 1 49.737 111.358 .000a
Residual 139.353 312 .447
Total 189.091 313
a. Predictors: (Constant), Employee relations strategies
b. Dependent Variable: Performance
A regression analysis was done to determine the effect employee relations strategies on
performance of commercial banks in Kenya. From the analysis a P-value less than 0.05 (p-value =
0.0000) was obtained. This implies that the simple linear model with employee relations strategies
as the only independent variable is significant. These results are shown in Table 4.57.
Table 4.58. Coefficient results showing the relationship between employee relations strategies
and performance
Coefficients(a)

B Std. Beta t Sig.
154
Error
1
(Constant) .956 .141 6.790 .000
Employee relations
.609 .058 .513 10.553 .000
strategies
Correlation coefficients show that employee relations strategies (X3) is significant
Y  0.956  0.609X 3
Hypotheses tests results suggest that employee relations strategies positively affect business
performance. The regression results support this hypothesis. This finding is consistent with studies
by (Lee and Lee, 2007; Ahmad & Schroeder, 2003; Abdullah, Ahsan & Alam, 2009) which found
that employee relations strategies have a significant relationship with business performance.
4.5.10. Effect of gender on the perception of employees about the effect of employee relations
employees about the effect of employee relations strategies on performance of commercial banks
in Kenya. Since p (0.000) is less than alpha (α = .05) we conclude that with the obtained data there
is evidence of a significant effect of gender on the perception of employees about the effect of
employee relations strategies on performance of commercial banks in Kenya. The chi square value
is 20.733. This means that gender affects the way the employees perceive employee relations
155
Table 4.59.
effect employee relations strategies on performance.
Chi-Square Tests

4.5.11. Effect of age on the perception of employees about the effect of employee relations
employees about the effect of employee relations strategies on performance of commercial banks
in Kenya. Since p (0.000) is less than alpha (α = .05) we conclude that with the obtained data there
is evidence of a significant effect of age on the perception of employees about the effect of
employee relations strategies on performance of commercial banks in Kenya. The chi square value
is 78.650. This means that age affects the way the employees’ perceive employee relations
Table 4.60.
156
employee relations strategies on performance
Chi-Square Tests

employee relations strategies on performance of commercial banks in Kenya.
perception of employees about the effect of employee relations strategies on performance of
of employees about the effect of employee relations strategies on performance of commercial
banks in Kenya. The chi square value is 135.896. This means that the number of years worked
affects the way the employees perceive employee relations strategies affects performance of
commercial banks in Kenya. These findings are presented in Table 4.61.
157
perceptions about the effect employee relations strategies on performance
Chi-Square Tests

H5. Human resources management strategies have a significant effect of on performance
This study combined four HRM strategies into one regression, to see the overall effect on business
performance. The results show that all the four are significant (p<0.05). Regression analysis was
done to determine the effect of the combined human resources management strategies on the
performance. From this analysis of all the strategies an adjusted R2 of 94% was obtained. This
implies that the simple linear model with all the strategies as the independent variable explains
94% of the variations in performance of commercial banks in Kenya. This means that when all the
strategies were used the performance of commercial banks changed by 94%. The results of the
Table 4.62. Model summary showing all combined human resources management strategies
Model Summary
Model
1 a
.970 .941 .940 .61464
158
A regression analysis was done to determine the effect of human resource management strategies
on performance. From the analysis a p-value less than 0.05 (p-value = 0.0000) was obtained. This
implies that the simple linear model with human resource management strategies as the
independent variable is significant. The results of this analysis are shown in Table 4.63.
Table 4.63. ANOVA results showing all human resources management strategies
ANOVA
Model Sum of F Sig.

1
Regression 1859.970 4 464.992 1.231E3 .000
Residual 117.112 310 .378
b
Total 1977.082 314
Table 4.64. Coefficient results showing the relationship between the combined human
resource management strategies and performance
Coefficientsa,b

B Std. Beta t
Error Sig.
1
Employee Recruitment and
.235 .079 .232 2.992 .003
Training and Development
.878 .113 .741 7.760 .000
Strategies
Employee relations
.285 .074 .277 3.853 .000
strategies
Reward and Compensation
-.288 .080 -.278 -3.599 .000
Strategies

b. Linear Regression through the Origin
159
Correlation coefficients show that human resource management Strategies (X1) is significant
Y=0.235(x1) + 0.878(x2) + 0.285(x3)+0.288(x4)
From the findings of the correlation analysis it was noted that training and development has a very
significant positive relationship with performance with a Beta value of 0.741. This finding shows
that the commercial banks in Kenya are conducting training to a very high level and that the
respondents felt that training is very highly related with performance. Employee recruitment and
selection strategies and employee relations strategies had lower Beta values at .232 and .277
respectively. This shows that recruitment and selection strategies and employee relations strategies
have a weaker relationship with performance. Of great interest is the revelation from the findings
that reward and compensation in the banking sector in Kenya is negatively related to performance
at a Beta value of -0.278. This means that most respondents felt that the rewards and compensation
offered by the banks are low. This finding can be inferred based on the economic situation in the
Kenyan banking environment. The Kenyan economy has not been doing very well and therefore
the cost of living has become too high. This could be the main reason why the employees in the
banking sector feel that they are poorly compensated.
4.5.13. Effect of gender on the perception of employees about the effect of human resource
management strategies on the performance of commercial banks in Kenya.
employees about the effect of human resource management strategies on performance of
160
obtained data there is evidence of a significant effect of gender on the perception of employees on
the effect of human resource management strategies on performance of commercial banks in
Kenya. The chi square value is 15.559. This means that gender affects the way the employees
perceive human resource management strategies affect performance of commercial banks in
Kenya. These findings are presented in Table 4.65.
effect human resources management strategies on performance.
Chi-Square Tests

4.5.14. Effect of age on the perception of employees about the effect of human resource
management strategies on performance of commercial banks in Kenya.
employees about the effect of human resource management strategies on performance of
obtained data there is evidence of a significant effect of age on the perception of employees about
the effect of human resource management strategies on performance of commercial banks in
Kenya. The chi square value is 90.002.This means that age affects the way the employees perceive
161
human resource management strategies affects performance of commercial banks in Kenya. These
findings are presented in Table 4.66.
human resource management strategies on performance
Chi-Square Tests

human resource management strategies on performance of commercial banks in Kenya.
perception of employees about the effect of human resource management strategies on
performance of commercial banks in Kenya. Since p (0.000) is less than alpha (α = .05) we
conclude that with the obtained data there is evidence of a significant effect of number of years
worked on the perception of employees about the effect of human resource management strategies
on performance of commercial banks in Kenya. The chi square value is 92.096. This means that
the number of years worked affects the way the employees perceive human resource management
Table 4.67.
162
perceptions about the effect human resource management strategies on performance
Chi-Square Tests

4.6. Discussion of Findings
In this study correlation analysis revealed that there is a positive and statistically significant
relationship between employee recruitment and selection and performance of commercial banks in
Kenya. From this study, it was also found that there is evidence of a significant effect of employee
recruitment and selection strategies on the performance of commercial banks in Kenya. When
employee recruitment and selection strategies were used, the performance of commercial banks
improved by 21.1%. These findings of this study are in agreement with those from a previous
study by Christine (2003) who found that recruitment policies linked with the overall organization
strategy enables the organization to obtain the right number of people it needs i.e. the selection of
appropriate job candidates which in turn leads to improved performance. These findings are also
consistent with the findings from a study done by Zhu et al. (2005) which found a positive
relationship between employee resourcing and organizational effectiveness. In this study,
employee recruitment and selection was found to have a direct positive effect on employee skills.
163
Interviews with the human resources managers and supervisors revealed that when employee
recruitment and selection was done well the company was able to attract highly skilled and
knowledgeable workers which in turn led to high performance. This results are consistent with the
findings of other previous studies by Katou and Budhwar (2009); Christine (2003); Zhu et al.
(2005); Adegoroye, Oladejo and Moruf (2012) who found that when the human resource practices
are internally consistent and well integrated with business strategy, they help to develop a human
resources pool that adds value to the firm and in turn enhances firm performance. This also
supports the findings of previous studies by Bae and Lawler (2000) and Wright et al., (1995) who
got similar results in their respective studies. These findings are also consistent with Terpstra and
Rozell’s (1993) study of the relationship between recruiting/selection practices and firm
performance, where they found a significant and positive link between extensiveness of recruiting,
selection and the use of formal selection procedures and firm performance. A previous study by
Gurbuz and Mert (2011) also found that selection and development have a positive impact on the
perceived financial and market performance, the organizational performance, and the job
satisfaction. It has a negative effect on the turnover.
Interviews with the human resources managers revealed that the number of complaints from
customers had declined when the banks recruited skilled employees. The numbers of cases of bank
tellers giving customers less or excess money (due to counting errors) had also declined. This
shows that the quality of services offered by the employees had improved which in turn made it
possible for the commercial banks to attract more customers thus leading to increased sales and
profits. The banks CEOs, operations managers and human resources managers (52%) reported that
the number of branches increased when quality of service improved which in turn led to increased
market share hence leading to more profits. For instance, interviews with five of the banks human
164
resources managers were able to reveal that when the banks were able to lay down strategies of
enabling them to attract the most qualified persons, the performance of the bank improved by at
least 75%.
The HR managers also explained that the banks were also able to reduce the cost of supervising the
new employees since the new employees had the knowledge and skills required to perform their
duties. Thus from the study it was found that recruitment strategies have a high influence on
performance. When a commercial bank adopted the use of recruitment strategies, the performance
of the bank improved by at least 21%.The specific strategies used in the staffing process will
therefore directly impact an organizations success.
From this study it was found that 87% of the commercial banks in Kenya were now taking
recruitment and selection very seriously and therefore have set specific budgets for the process.
The commercial banks studied reported that 97% of their recruitment was done strategically hence
ensuring that the recruitment done by the bank has a future look and that it is able to contribute to
achievement of the goals of the bank. These findings were in agreement with findings by Stewart
(2010) that organizations that fail to link their recruitment and selection policy with the overall
corporate strategy often ends up recruiting non-competitive staff which in turn affects realization
of the organization performance goals. Specifically this study established that commercial banks in
Kenya are to a large extent (88% of the banks) emphasizing on the recruitment of people with high
academic qualifications such as masters degree holders. Banks that have used the new recruitment
and selection strategies such as the online advertising and use of private agencies, use of job
centre’s, direct links with schools, universities and colleges, recognition of the individual roles of
employees before they are employed and have keen selection procedures were able to access a
165
wider range of candidates and hence had a high chance of selecting the best employees in the
sector.
Interviews revealed that such banks were found to improve their performance by over 21% when
they adopted a strategic approach to recruitment and selection. Thus the use of recruitment
strategies was found to have a positive effect on the performance of the commercial banks that
have used them. This findings are consistent with findings from similar studies by Alalha et al
(2012); Taylor (1998); Chenevert and Trembly (2009); Obidat (2003); Katou and Budhwar (2006)
and Vlachos (2008) which found that recruitment has a positive effect on performance. According
to Taylor, (1998), the major components of employee resourcing are staffing (recruitment and
selection), performance and administration. The objective of employee resourcing strategy is ‘to
obtain the right workforce endowed with the appropriate qualities, skills, knowledge and potential
for future training. This research established that the selection and recruitment of workers best
suited to meet the needs of the organization ought to form a core activity upon which most other
HRM policies geared towards development and motivation can be built. An effective staffing
strategy requires in-depth planning for the recruiting process to ensure efficiency and generation of
a qualified applicant pool and also ensure an optimal fit between employees and the strategic needs
of the organization. This is consistent with the recommendations of previous studies by Mello
(2006) and Christine (2003). From this study therefore, it was found that there is evidence of a
significant effect of employee recruitment and selection strategies on the performance of
4.6.2. Employee reward and compensation strategies
From this research, it was found that there is a significant effect of employee reward strategies on
the performance of commercial banks in Kenya. When reward and compensation is done
166
strategically the performance of commercial banks improves by 9%. This results are consistent
with the results of the survey by Adegoroye, Oladejo & Moruf , (2012) on the Strategic Human
Resources Management practices in the Post Consolidated Nigerian commercial banks which
found that the compensation practices were ranked high at influencing the performance of banks.
The findings show that banks use rewards as a means towards ensuring that they achieve their
strategic goals. From this research, it was also found that education level had an effect on the
perception of the employees on whether the rewards and compensation offered by the bank was
attractive or not. The diploma holders felt that they were well paid and therefore devoted most of
their time and energy to achievement of the goals of the bank. On the contrary, the degree holders
felt that they were poorly paid and hence sought alternative sources of income by engaging in
businesses to earn extra income. This greatly affected their commitment to work which in turn
affected their output. With the obtained data, there is evidence of significance effect of employee
reward and compensation strategies on the performance of commercial banks in Kenya.
Commercial banks that reward their employees well perform better than their competitors.
Interviews revealed that this was because when an employee is well rewarded their motivation to
work increases leading to improved commitment towards achieving the goals of the bank.
From this study it was found that commercial banks in Kenya use both financial and non financial
rewards to motivate their employees. The financial rewards offered by commercial banks were
found to include pay increases, cash bonuses, commissions and stock options while non financial
rewards included recognition, learning opportunity, career advancement, challenging assignments
and expanded responsibilities, praises and commendations from managers, security, status, social
interaction, attention from leaders and opportunities to lead projects. Other instituted packages
were rent allowance, long service award, image enhancement allowance, food subsidy, utility
167
allowance, accountable laundry expense, group personal accident insurance policy, personal loans,
housing loans, car loans, overtime allowance, car maintenance allowance, fuel allowance, transfer
allowance, leave allowance, day trip allowance, refund of fees, and yearly appraisal (leading to
increase in pay levels).
Interviews with the employees and managers to get the extent of knowledge about existing reward
systems among the employees revealed that not all staff and managers are abreast with the
compensation packages of the banks. There was some level of ignorance exhibited by some
employees about their reward packages. From this study it was also found that commercial banks
use the same financial and non financial rewards but at different levels, that means that some offer
higher financial rewards as well as better non financial rewards, thereby making them more
competitive. When the performance of the banks was compared with the rewards it offered, it was
found that banks with higher financial and better non financial rewards performed better. For
instance, five banks which had very attractive reward strategy accommodating both financial and
non financial rewards were found to have had their performance improve by 75% over the last five
years.
It was found that incentives have a positive relationship with bank performance as measured by its
sale of loans. This findings are consistent with findings from previous studies by Alalha et al
(2012); Chenevert and Trembly (2009); Obidat (2003); Katou and Budhwar (2006) and Vlachos
(2008) which found that rewards have a positive effect on performance. Among all the factors
challenging work affects employees’ performance highly. The result from this study examined and
determined the relationship between rewards and employees’ performance and also determined the
relationship between intrinsic and extrinsic rewards and performance and found that intrinsic
rewards had a greater positive relationship with performance.
168
Based on a result from Pearson Correlation Analysis, it showed that there was a positive
relationship between rewards and employees’ performance and also showed a highly positive
significance in the relationship between intrinsic and extrinsic rewards. Based on result of the
current study, it was found that only financial or non financial rewards are not sufficient to
motivate employee to perform work highly. If commercial banks in Kenya keep both types of
rewards for the employees then they will increase their employees’ performance.
4.6.3. Training and Development strategies
From this research, it was found that there is a significant effect of training and development
strategies on the performance of commercial banks in Kenya. From the study it was found that
when training and development strategies were used the performance of commercial banks
changed by 33.4%. These findings are consistent with the findings from a previous study by
Rowden (2002) who suggests that training is an efficient tool for improving ones job satisfaction
hence leading to better employee performance. These results are also consistent with the study by
Keep (1989) who found that strategic training and development activities are central to the reality
of anything that can meaningfully be described as human resource management. According to
researchers Keep (1989); Black and Lynch (1996); Garcıá (2005) and Tharenou, Saks and Moore
(2007) training and development has a positive effect on performance. The findings of this study
are also consistent with a study by Khan et al (2011) on the impact of training and development on
organizational performance which found that training and development, on the job training,
training design and delivery style have significant positive effect on organizational performance.
A previous study by Gurbuz and Mert (2011) also found that selection and development have a
positive impact on the perceived financial and market performance, the organizational
performance, and the job satisfaction. It has a negative effect on the turnover. The selection and
169
development (including effective selection, appraisal, compensation, training and team based
work) were related with organizational performance. This provides support to the universalistic
perspective of HR practices (Kochan and Osterman 1994; Huselid 1995).
Fey et al. (2000) reported that training is positively associated with employees’ ability to carry out
tasks effectively. A similar study by Chenet al., (2004) also found that training programs, help
the workforce to decrease their anxiety or frustration, originated by the work or job. Those
workers who feel to be unable to undertake a task with the desired level of performance often
decide to leave the firm (Chen et al., 2004), otherwise their stay at firm will not add to productivity
(Kanelopoulos & Akrivos, 2006). The greater the gap between the skills necessary and those
possessed by the workforce, the higher the job dissatisfaction of the workers. Therefore as argued
by Khan, et al. (2011) training has a positive effect on the organizational performance. It improves
the organizational performance.
From this study it was found that training in commercial banks includes role orientation courses in
functional areas, special courses and seminars; as well as sales training for supervisory and field
personnel all designed and conducted by training centers and resource persons on a repetitive
basis. The performance of commercial banks that have been using training and development
periodically over the last five years was compared with that of the banks that do not do training
frequently. It was found that banks that do training frequently had higher performance in terms of
market share, loan sales, revenue, financial strength (e.g. Liquidity), return on equity, return on
assets, profitability and return on investment. For instance interviews with the CEO of one bank
which has a training college and which continuously trains its employees revealed that
performance improved by over 80% when it started the continuous training program 4 years ago.
This was also evident from the analysis of the financial statements for the last five years.
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It was found that training and development led to increased skill among the employees which in
turn led to improved quality of service to customers. Training involves any planned intervention
aimed at enhancing the elements of individual job performance (Chiaburu & Tekleab, 2005). It is
all about improving the skills that seems to be necessary for the achievement of organizational
goals (Khan et al, 2011). The efficiency and effectiveness of operations were also found to have
increased after training. The number of losses due to errors, the cost of overtime and the time taken
to serve a customer was found to have reduced when the bank cashiers (Tellers) were trained. This
helped to reduce the waiting time by the customers as a result of which more customers were able
to open new accounts with the bank. Thus from this study it was found that there is evidence of a
positive effect of training and development strategies on the performance of commercial banks in
Kenya.
4.6.4. Employee Relations strategies
From the study, it was found that there is a significant positive effect of employee relations
strategies on the performance of commercial banks in Kenya. From the study results it was found
that when employee relations strategies were used the performance of commercial banks changed
by 26.1%. The result is consistent with the argument of Whitener (2001) social exchange theory
and social identity theory, indicating that employees who feel they are appreciated by their
organization may perceive high status in the organization and may reciprocate an organization by
increasing their contribution to the achievement of the goals of the organization (Flynn, 2005;
Fuller et al., 2003). This in turn leads to improved individual as well as organizational
performance.
The performance of commercial banks that have maintained good employee relations (according to
the responses from employees and based on number of conflicts reported, communication,
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involvement in decision making e.t.c.) over the last five years was compared with that of the banks
that did not have good employee relations. It was found that banks that have good employee
relations had higher performance in terms of market share, loan sales, revenue, financial strength
(e.g. Liquidity), return on equity, return on assets, profitability and return on investment. For
instance interviews with the CEO of one bank which has maintained constant communication and
involvement of employees in decision making was found to have improved its performance by
over 40% during the last 5 years.
From this research it was found that, employee relations leads to intrinsic motivation and
motivational practices affect employee performance positively. The performances of commercial
banks were employees said they “felt motivated” was compared with that of other banks. It was
found that banks with “motivated” employees had higher performance in terms of market share,
loan sales, revenue, financial strength (e.g. Liquidity), return on equity, return on assets,
profitability and return on investment. Motivated employees are inclined to be more productive
than non-motivated employees. These findings are consistent with previous studies by Khan,
(2012); Chaudhary and Sharma, (2012) and Chaudhry, Sohail and Riaz, (2013). This study also
found that to some extent, a high level of employee motivation is derived from effective
management practices. This is consistent with findings of other studies by William and Kinicki
(2008); Dessler (2008) and Armstrong, (2008). To develop motivated employees, a manager
must therefore treat people as individuals, empower workers, provide an effective reward
system, redesign jobs, and create a flexible workplace. It is through behavior that people
influence the organizational environment. Dessler (2005) argues that the HR managers should
create value by engaging in activities that produce the employee behavior the company needs to
achieve its strategic goals.

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4.6.5. Human resource management strategies
This research found that four sets of HR practices – recruitment, training, relations, reward and
compensation – as contributing to improved performances in commercial banks in Kenya. When
all the four human resources strategies were used, the performance of commercial banks changed
by 94%. This shows that human resource management strategies have a significant effect on the
performance of commercial banks. From this study, it was found that the performance of
commercial banks in terms of market share, loan sales, revenue, financial strength (e.g. Liquidity),
return on equity, return on assets, profitability and return on investment had improved to some
extend when they adopted strategic human resource management. Banks that had more strategic
approach to management of human resources had a higher performance than other banks. This
findings are consistent with previous studies by Lam and White, (1998) and Hsi-An Shih, Yun-
Hwa Chiang and Chu-Chun Hsu, (2006) who reported that a firms’ HR orientations (measured by
the effective recruitment of employees, above average compensation, and extensive training and
development) were related to return on assets, growth in sales, and growth in stock values. These
findings are in support of previous literature SHRM scholars such as Armstrong and Baron (2009)
that certain HR practices can enhance the performance of an organization.
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CHAPTER FIVE
SUMMARY OF MAJOR RESEARCH FINDINGS, CONCLUSIONS AND
RECOMMENDATIONS
5.1. Introduction
This chapter presents a summary of the major findings from the study as presented in the previous
chapter. Conclusions are then presented based on the findings of the study. Recommendations are
then presented based on the findings and conclusions of the study. The chapter ends with
suggested areas in which further research can be undertaken.
5.2. Summary of major Findings
From this research, it was found that recruitment and selection strategies, training and development
strategies, employee relations strategies and reward and compensation strategies have a positive
effect on the performance of commercial banks in Kenya. When all these strategies were used, the
performance of commercial banks improved by 94% in terms of profits, sales, market share and
quality of service offered. Therefore, all these strategies were found to play a very great role in
enhancing the performance of commercial banks in Kenya.
From this study it was also found that demographic characteristics have a significant effect on the
performance of the banking sector. With demographic factors as the only independent variables the
performance of commercial banks will change by 35.8.1%. From the study it was found that
among the demographic factors, bank ownership, monthly salary and number of years worked
have the highest positive relationships with performance of commercial banks while registered
capital and number of employees have negative relationships with performance of commercial
banks in Kenya. From the analysis it was found that there is a significant positive relationship
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between gender, age, academic qualification, number of years worked, monthly salary and bank
ownership with performance of commercial banks in Kenya and a significant negative relationship
between registered capital and performance. However the relationship between number of
employees and annual turnover with performance of commercial banks in Kenya were not
significant. From this study it was found that gender, age and number of years worked have a
significant effect on the performance of the banking sector. Therefore as the percentage of women
employees, age of employees and number of years worked in the banking sector increases, we also
expect a change in the performance of the commercial banks in Kenya.
One very interesting finding of this study is that gender, age and number of years worked has a
significant effect on the perception of employees about the effect of human resources management
strategies on the performance of commercial banks in Kenya. This is shown by a statistically
significant relationship between gender, age and working experience and bank performance. These
findings suggest that gender, age and working experience could be important concepts in the
banking sector working environment. Whatever measure that could be taken to improve gender or
experience attributes of the employees have an effect on the bottom-line of banks. This is in
contrast with Campbell and Minguez-Vera (2008).
5.2.1. Human resources management strategies
From this research, it was found that there are significant positive relationships between human
resources management strategies used by commercial banks in Kenya and performance. It was also
found that human resources management strategies have a positive effect on performance. In
general, this study found that four sets of HR practices – recruitment, training, employee relations,
reward and compensation – as contributing significantly to improved performance of commercial
banks in Kenya. When all this strategies were used, it was found that the performance of
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commercial banks improved by 94%. The result presented in this study are consistent with the
findings of a similar study by Khattoon et al (2013) who suggests that practicing intensive
strategic human resources management leads to improved financial performance and can be
asserted to sustain in the competitive environment. This findings also corroborates the views of
Huselid (1995) and Wright and Mcmahan (1992) who argued that when a firm’s human resource
practices are consistent with each other (i.e. internal fit), and with the firm’s strategic goals (i.e.
external fit), organizational efficiency will be enhanced.
From this research, it was found that recruitment and selection strategies have a significant effect
on the performance of commercial banks in Kenya. When recruitment and selection was done
strategically the performance of commercial banks improves by 21.1%. From this study, it was
found that there is a positive relationship between recruitment and selection and performance.
From the obtained data it was also found that there is evidence of a significant effect of gender, age
and number of years worked on the perception of employees about the effect of recruitment and
selection strategies on the performance of commercial banks in Kenya. The role of the HR
department in recruitment was found to be significantly changing within the Kenyan commercial
banks. Commercial banks in Kenya have developed formalized recruitment and selection policies
aimed at ensuring that they attract, recruit and retain the most qualified people. These findings
were in agreement with previous study results by Christine (2003) that recruitment policies linked
with the overall organization strategy enables the organization to obtain the right number of people
it needs which improves the hiring standard i.e. the selection of appropriate job candidates hence
leading to increased performance. Recruitment and selection is the method through which
companies hire the most suitable candidate for the required job in least cost (Sheehan, Holland &
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De-Cieri, 2006). It was found that commercial banks in Kenya were now taking recruitment and
selection very seriously and have set budgets for the process. Specifically this study established
that commercial banks in Kenya are today emphasizing on the recruitment of experienced people
with high academic qualifications such as bachelors and masters degree holders.
From the study, it was also found that there is evidence of significant effect of employee
recruitment and selection strategies on the quality of services offered by commercial banks. The
high quality services offered by employees made it possible for the commercial banks to attract
more customers which in turn led to increased number of branches, sales and profits. The cost of
supervising the new employees was also reduced. Thus from the study it was found that
recruitment strategies have a high influence on performance. The improvement in performance
was noted in terms of profits, number of branches as well as market share. These findings are
consistent with those of a similar study by Khan (2012) which found a significant positive
relationship between recruitment and selection and employee performance.
The study found out that most respondents agreed that the bank had formulated an active
recruitment and selection policy and also agreed that the bank linked its recruitment and selection
policy to the overall banks strategy. This indicated that most banks recruitment policies were
linked with the overall banks strategy and this affected application of efficient recruitment and
selection process that enabled banks to obtain the right number of staff, reduce the cost of training
and supervision in the organization by obtaining staff with the right qualifications hence affecting
the realization of increased bank financial performance.
From the study it was found that there is a positive relationship between training and development
and performance of commercial banks. It was also found that there is a positive effect of training
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and development strategies and performance of commercial banks in Kenya. When employees
engaged in training and development the performance changed by 33.4%. From the obtained data
it was also that there is evidence of a significant effect of gender, age and number of years worked
on the perception of employees about the effect of training and development strategies on
performance of commercial banks in Kenya. From the research, it was found that commercial
banks in Kenya are engaging in training and development of their employees and have training
budgets for the purpose. They also do training needs analysis as the main determinant of the
training that is required for the employees. According to Kozlowski and Salas (2003) training
needs assessment is a diagnostic process that occurs before training. The purpose of formal needs
assessment is to identify the training targets. This focus is critical for uncovering whether a
training program was effective or ineffective due to characteristics of the program or to factors
outside the control of the training system. It was found that the employees in commercial banks are
happy with the training offered by the banks and have noted improvement in their individual as
well as bank performance. Commercial banks in Kenya were found to offer training on customer
care, quality management, and use of computers in accounting and detection of fake currency, time
management, team work, work life balance among other areas.
From this research, it was found training and development led to increased skill among the
employees which in turn led to improved quality of service to customers. The efficiency and
effectiveness of operations were also found to have increased after training. The number of losses
due to errors, the cost of overtime and the time taken to serve a customer was found to have
reduced when the bank cashiers (Tellers) were trained. This helped to reduce the waiting time by
the customers as a result of which more customers were able to open new accounts with the bank.
This supports previous arguments by Naris and Ukpere (2009) that training and development is a
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process of sharpening the employee skills and at the same time helps change of attitude and
behaviour in order to enhance the performance level of employees. Thus from this study it was
found that there is evidence of significance effect of training and development strategies on the
performance of commercial banks in Kenya. This was in agreement with Guest (2007) that training
and development policy play an importance role in HRM and contribute to improved organization
performance through strategic integration, employee commitment, flexibility and quality. This
further supports the argument of Khilji (2004) that training and development of employees and
studying their relations are helpful tools to improve individual employee performance and are
some of the HR practices that affect organizational results in form of improved employee
behaviours.
The finding of the study by Chahal (2013) also show that training and effectiveness boost the
morale of the employee, upgrade skills, improve their performance and gives them the opportunity
to get lucrative jobs and also enables them to excel in their jobs. The findings show that the
training is aimed at providing the trainee the opportunity of changing their behaviours and
contributes to their effectiveness and upgrading their skills. Training activities lead to better
performance within an organization (Qureshi et al., 2010). It is through education and training that
people who knew how to work hard learn how to also work smart (Geotsch &Davis, 2010).
Lincoln, Krishna and Rao (2008) conducted a study on “HRM Practices in Public Sector and
Private Sector Banks” and found that training and development if linked with overall strategy will
lead to improved performance. They suggested that HR policies of Public Sector Banks should be
revised there by making them more competitive in this challenging era of globalization.
5.2.4. Reward and compensation strategies
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From the study it was found that there is a positive correlation between employee reward and
compensation strategies and performance. This means that they co-vary. From this study it was
found that reward and compensation strategies have a positive effect on the performance of
commercial banks in Kenya. When commercial banks offer good rewards and compensation to its
employees, the performance of employees improves by 9.2% in terms of quality of output, level of
sales and customer service were found to improve. From the obtained data it was also that there is
evidence of a significant effect of gender, age and number of years worked on the perception of
employees about the effect of reward and compensation strategies on performance of commercial
banks in Kenya. This research also found that rewards and compensation offered by commercial
banks in Kenya affect their ability to attract applicants and retain employees, and also ensure
optimal levels of performance in meeting the bank's corporate goals. It was also found that
commercial banks in Kenya offer relatively similar rewards to their employees. Interviews with
human resources managers revealed that the similar rewards were offered to minimize employee
turnover to competitors which was likely to expose the affected banks to the risk of having their
secrets revealed to competitors by those employees who leave the banks. The employees were
more satisfied with their jobs when the rewards and compensation offered were attractive and this
enabled them to be more committed to achieve the goals of the bank.
The study found out that reward systems had a major contribution towards realization of increased
banks performance since application of effective reward strategies helped to improve staff work
morale that resulted to improvement of the individual employee performance and hence overall
organizational performance. This supported findings by Horton (2007) that organizations with
effective reward systems like transactional and relational rewards improves the level of employees
motivation and this supports realization of increased organization performance. Sigler (2011), in a
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study of 280 employees in the Nairobi Securities Exchange also found a positive and significant
relationship between the C.E.O’s rewards and organizational performance.
From the research, it was also found that the commercial banks in Kenya offer both financial and
non-financial rewards. The findings also revealed that the financial reward system as compared to
non - financial reward system had a greater impact on employee motivation. Both financial and
non-financial reward system are used to complement each other in enhancing employee motivation
which in turn leads to improved performance in terms of profits, market share, and return on
investment among others. Performance improved more when both financial and non financial
rewards are used. This is consistent with findings from a study by Tze San Ong and Boon Heng
Feh (2012), in a study of 105 manufacturing firms in Malaysia who also found positive
correlation/relationship between non financial rewards and financial performance of the
organizations. Namasivayam et al (2007) also conducted an online survey of 1223 US hotels and
concluded that there is a positive relationship between salary and individual benefits and
organizational performance. A similar study was also conducted by Qureshi et al (2007), where
they studied the relationship between rewards and employee performance in cement industry in
Pakistan, from the results they concluded that there is a direct relationship between extrinsic,
intrinsic rewards and employee performance.
From this research, it was found that there is a positive correlation between employee relations
strategies used and performance of commercial banks in Kenya. It was found that employee
relations strategies have a positive effect on performance of commercial banks in Kenya.
Employee relations were found to contribute to a 26.1% variance in performance of commercial
banks. This is consistent with findings from a similar study by Chenevert and Trembly (2009)
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who found that good employee relations have a positive effect on performance. The study found
out that existence of poor employee relations between the junior staff and the senior management
staff in many banks affected participation of junior staff in decision making process and hence
only top management staff were allowed to make decisions on how to undertake organization job
task functions. This negatively affected realization of increased banks financial performance since
most of the skilled and experienced junior staff were not given an opportunity to guide and
participate in formulation of key decisions on strategic execution of organization job task
functions. If employee relations were positive, the employees were found to commit themselves to
achieve the goals of the bank which in turn led to improved bank performance. It was also found
that with improved employee relations there was no time wasted in unnecessary conflicts between
the employees and the employer.
The results of this study show a positive effect of quality of communication between managers and
staff and between employees among themselves on performance. When there was proper,
continuous and efficient communication between employees and management and also with the
unions it was found that the levels of trust increased and this in turn led the employees to be ready
and willing to undertake their duties responsibly. The employees were also willing to accept
changes aimed at improving the performance of the bank. It was also found from this study that
despite the fact that there was a union serving the interest of bank employees, most unionisable
bank employees do not belong to any union. Interviews with the affected employees revealed that
the affected banks do not allow their employees to join unions for fear of the possible “incitement”
of the employees by union officials.
The study noted that existence of poor employee relations negatively affects participation of all the
employees in implementation of the banks strategic objectives that were meant to support
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achievement of increased bank performance. These findings were in agreement with findings by
Cowling (2009) that lack of good employee relations with senior management hinders
participation of junior staff in decision making process on matters relating to implementation of
organization strategic objectives and this negatively affects realization of increased organization
performance. These findings also supported findings by Ulrich (2007) that working environment
characterized with poor employee relations influences application of poor leadership styles that
negatively affects realization of organization performance. It was identified that poor employee
relations hindered recognition and utilization of employee talents and this affected effective
contribution of the talented staff towards realization of banks performance. From the obtained data
it was also found that there is evidence of a significant effect of gender, age and number of years
worked on the perception of employees about the effect of employee relations strategies on the
5.3. Conclusions
5.3.1. Effect of human resources management strategies on the performance of commercial
banks in Kenya
From this study it is concluded that human resources management strategies have a significant
positive effect on the performance of commercial banks. When all this strategies (recruitment,
training, employee relations, reward and compensation) were used, it was found that there was a
94% variance in performance of commercial banks. Among all of the four factors, training and
development is a highly significant factor which affects employees’ performance. However reward
and compensation has the least effect on performance.
Therefore human resource management strategies affect performance to a very great extent. Based
on results of the study, it is concluded that using only recruitment and selection, reward and
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compensation, training and development or employee relations strategy is not sufficient to improve
performance highly. If commercial bank in Kenya, use all the human resource management
strategies together, they will increase their performance to a very great extent. This is because
there strong correlation between the combined human resource management strategies and
performance. From this study it is concluded that demographic characteristics have a significant
effect on the performance of the banking sector. With demographic factors as the only independent
variables the performance of commercial banks will change by 35.8.1%. From the obtained data it
was also concluded that there is a significant effect of gender, age and number of years worked on
the perception of employees about the effect of human resource management strategies on the
As described by SHRM scholars certain HR practices can enhance the performances of
organizations (Adegoroye & Moruf, 2012). From the study it is concluded that the major human
resource management strategies that affect the performance of commercial banks in Kenya are:
recruitment and selection, reward and compensation, training and development and employees
relations. This findings are consistent with previous studies by Lam and White (1998) and Hsi-An
Shih, Yun-Hwa Chiang, Chu-Chun Hsu, (2006) who reported that a firms’ HR orientations
(measured by the effective recruitment of employees, above average compensation, and extensive
training and development) were related to return on assets, growth in sales, and growth in stock
values.
However, based on the findings of this study, it is also concluded that a set of HRM strategies will
not necessarily have a direct impact on the performance of commercial banks in Kenya. It is
therefore, necessary to use HRM practices tactfully and link them to the corporate goals of the
commercial bank in order to gain a sustained competitive advantage. These study findings suggest
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that, strategic programs, if properly implemented, can facilitate and nurture the desired capabilities
and induce better performances among employees in Kenyan Commercial banks. From the study it
is also concluded that commercial banks are adopting innovative HRM as an important strategic
tool of coping with turbulence associated with the banking sector reforms in Kenya. The research
findings are consistent with the findings of a similar study by Khatoon, Amin and Hossain (2013)
who also concluded that all the banks are formulating and executing strategic human resource
management activities. The results of the research by Adegoroye & Moruf (2012) on the Strategic
Human Resources Management practices in the Post Consolidated Nigerian commercial banks also
found that post consolidated Nigerian commercial banks are focusing on innovative recruitment
and compensation practices to improve their performance.
The researcher concludes that commercial banks that have implemented a set of HRM strategies
are more able to gain strategic organizational outcomes in terms of flexibility, quality,
administrative efficiency, cost effectiveness, performance, productivity and profitability in the
Kenyan market. This is in tandem with conclusions of a similar study by Khatoon, Amin and
Hossain (2013) which concluded that the quality of assets and loans varies from bank to bank but
most of them perform at the desired level when human resources management strategies are used.
From the study findings it is concluded that an HRM system as a whole, affects the performance of
commercial banks in Kenya to a very great extent.
Therefore, this study generally concludes that human resources are one of the most critical
components of strategic success across all organizations. The implementation of HRM strategies
results in better organizational outcomes in terms of employee commitment, flexible and quality
staff, and administrative efficiency and cost effectiveness among commercial banks in Kenya
which in turn helps in achieving bottom-line results. As many HRM studies have indicated, an
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HRM system as a whole, affects firm performance (Adegoroye & Moruf, 2012). Therefore,
workers are not just a cost to be incurred; rather, as is maintained in the resource based perspective
(Barney, 1991; Perce & Robinson, 2007), people and HRM are emerging as critical sources of
competitive advantage for firms (Barney, 1991; Bae & Lawler, 2000; Som, 2008; Adegoroye &
Moruf, 2012).
5.3.2. Extent to which employee recruitment and selection strategies affect the performance
of commercial banks in Kenya
From the findings of the study, it is concluded that recruitment and selection strategies have a high
influence on performance of commercial banks in Kenya. From this study it is concluded that
employee recruitment and selection strategies affect the performance of commercial banks to a
great extent. The use of recruitment and selection strategies explains a 21.1% variance in the
performance of commercial banks. The role of HR is generally seen in ensuring that firms are able
to attract, retain, motivate and develop human resources according to current and future
requirements in line with the findings from an earlier study done by Som (2008). More recruitment
and selection is occurring for those who are professionally trained and qualified bankers in the
Kenyan commercial banks. From the obtained data it is also concluded that there is a significant
effect of gender, age and number of years worked on the perception of employees about the effect
of recruitment and selection strategies on the performance of commercial banks in Kenya.
The specific strategies used in the staffing process will therefore directly impact the banks success.
From this study it was found that there is a significant positive link between extensiveness of
recruiting, selection and the use of formal selection procedures and performance of commercial
banks in Kenya. Innovative recruitment and selection practices have a significantly high influence
on banks performance. These findings are consistent with those of a study by Adegoroye, Oladejo
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and Moruf (2012) which found that innovative recruitment practices were ranked high at
influencing performance of banks. An effective staffing strategy requires in-depth planning for the
recruiting process to ensure efficiency and generation of a qualified applicant pool and also ensure
an optimal fit between employees and the strategic needs of the organization (Mello, 2006).
This findings are also consistent with previous studies by Sheehan, Holland and De-Cieri (2006)
and Wright and Kehoe (2008) who suggested that recruitment and selection plays significant role
to hire competent employees for better future performance at the workplace. This is also consistent
with Terpstra and Rozell’s (1993) study of the relationship between recruiting/selection practices
and firm performance, where they found a significant and positive link between extensiveness of
recruiting, selection and the use of formal selection procedures and firm performance.
These findings also corroborate other findings from previous studies by Lam and White (1998) and
Hsi-An Shih, Yun-Hwa Chiang and Chu-Chun Hsu (2006) who reported that a firms HR
orientations (measured by the effective recruitment of employees, above average compensation
and extensive training and development) were related to return on assets, growth in sales, and
growth in stock values. The specific strategies used in the staffing process will therefore directly
impact an organizations success. Overall findings of this study are also in support of Qureshi et al
(2010) study regarding the relationship between recruitment and selection, training and
development, organizational commitment and Performance based compensation for Pakistani
bankers.
5.3.3. Extent to which reward and compensation strategies affect the performance of
From this study it is concluded that reward and compensation strategies affect the performance of
commercial banks to a moderate extent. The use of reward and compensation strategies explains a
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9.2% variance in performance. From this study, it is concluded that there is a general
direct/positive relationship between employee rewards and employee performance. The results of
correlation matrix have supported the hypothesis that there exists a positive relationship between
rewards and employees performance. Based on the findings of this study, it was revealed that
reward and compensation strategy affects the motivation of employees which in turn influences the
firm’s performance. The findings are consistent with Sears et al. (2012) regarding performance
based compensation practice of human resource at workplace, proving that organizations should
remunerate and maintain internal compensation based equity among various designations. Frye
(2004) also examined the relationship between equity based compensation and firm performance
and found positive relationship between the two. He argued that for the human capital intensive
firms compensation plays a crucial role in attracting and retaining highly skilled employees.
Taseema and Soeters (2006) did a similar study and found a positive correlation between
compensation practices and perceived employee performance. Mills (2005) did a study on
employee reward and found that lack of effective reward systems for compensating employees
work efforts negatively lowers the level of employee work morale and these impacts negatively on
organization productivity.
Overall the findings of this study are also in support of Qureshi et al (2010) study on recruitment
and selection, training and development, organizational commitment and Performance based
compensation for Pakistani bankers where they found a positive relationship with firm
performance. Previous studies and arguments by Cole (2004) and Graham and Bennett (1998) also
show that compensation is used to recruit and retain qualified staff, increase and maintain the
morale of staff, reward and encourage peak performance, achieve internal and external equity,
reduce turnover and encourage company loyalty and modify behaviour through negotiations
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practices of unions. From the obtained data it is also concluded that there is a significant effect of
gender, age and number of years worked on the perception of employees about the effect of reward
and compensation strategies on the performance of commercial banks in Kenya.
From the research, it is concluded that commercial banks in Kenya offer both financial and non-
financial rewards. Financial rewards when offered alone are however limited in terms of being
able to satisfy and motivate employees to perform better in the long run. This corroborates the
views of Ichniowski et al., (1997) who argues that incentive pay plans positively and substantially
affect performance of workers if combined with innovative work practices like, flexible job design,
employee participation in problem-solving teams, training, extensive screening and
communication and employment security. Previous research has established that as employee
income increases, money becomes less of a motivator (Armstrong, 2007; Dessler, 2008). Managers
therefore should be aware of the motivational bases of incentive plans. Through embracing a total
reward approach to management of rewards, organizations are able to address diverse needs of
employees in their organizations and the diverse ways in which individuals are motivated to work
(Qureshi et al, 2007). The findings were also in tandem with findings by Drunker and Geoff (2007)
that implementation of effective reward management systems that leads to compensation of
employees work efforts with increased remuneration packages, transactional rewards and relation
rewards helps in improving the level of employees work morale leading to realization of individual
employees productivity that supports realization the overall organizational performance. The study
concluded that execution of reward management functions is a core human resource practice that
greatly influences the Performance of Commercial Banks in Kenya
From this study it is also concluded that reward is a very critical and central activity in the human
resource management function in any organization. Human resource is the most vital tool for
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organizational development and subsequently in a previous study by Khilji (2002) it has been
identified that compensation and benefits have positive impact on employees’ performance.
Compensation includes expenses such as bonuses, profit sharing, overtime and rewards that
includes monetary and non-monetary rewards such as house rent and car facility against hired
services of employees (Wright, Gardner & Moynihan, 2003).
5.3.4. Extent to which training and development strategies affect the performance of
From this study it is concluded that employee training and development strategies affect the
performance of commercial banks to a great extent. The use of training and development
strategies explains a significant 33.4% variance in performance of commercial banks in Kenya.
From the study, it is concluded that training programs enhance performance of commercial banks
in Kenya. The findings of this study are in support of Qureshi et al (2010) study in regarding
training and development as having a positive effect on organizational performance of Pakistani
bankers. Training and development strategies have a very significant contribution to make to
organization success. Strategic human resource training and development plan plays a very big
role in the achievement of the bank's strategic plan by providing employees with up to date
expertise to meet present and future performance demands. Training and development also
assumes a vital role in shaping strategy and enabling the commercial banks to take full advantage
of emergent business strategies. Commercial banks in Kenya use training and education
programmes in order to create knowledge and understanding among staff of how their attitudes
and behaviour towards customers form an integral part of the overall service offering. The
development of specific skills and core competencies is therefore the key to keep the banking
industry viable.
190
It is concluded that training and development strategies have a great role in influencing the
performance of bank employees hence contribute heavily to the performance of commercial banks
in Kenya. The findings are consistent with Khilji (2003), claiming that proper training and
development opportunities within an organization ensures a positive effect on employee
performance. A previous study by Naris and Ukpere (2009) also identified a positive relationship
between training and development and employee performance. Debnath (2003) in a study on the
relationship between training and performance of the banking sector in Bangladesh, indicates that
productivity of manpower in the banking sector of Bangladesh increased through proper training
both on the job and off the job. The banking industry therefore, requires skilled labour in its
various sections. The development of specific skills and core competencies is the key to keep the
industry viable. Training and development is the activity that increases the individual’s
performance and acts like a pasture that contains all those activities that increase the performance
of a group to achieve its goals in an organization (Khilji, 2004). Decenzo and Robins (2003) state
“training brings about changes in ability, awareness, approach and behavior”. The findings of this
study are also in support of Qureshi et al (2010) study in who found training and development as
having a positive effect on organizational Performance. This is also consistent with Keep (1989)
who argues that strategic training and development activities are central to the reality of anything
that can meaningfully be described as human resource management. The study shows that training
and motivation has a positive impact on performance of employees (Khan, 2012 Chaudhary &
Sharma, 2012). Omolo (2009) also studied on Practice of the Learning Organization and its
Relationship to Performance among Kenyan Commercial Banks and found out that there is an
inverse relationship between the practice of learning organization and organizational performance.
Barrington (2006) also did a study and found that application of training programs that do not
191
contribute towards realization of increased employee productivity negatively affects realization of
organization performance goals. Guest (2007) in their study found that training and development
policy play an important role in HRM and contribute to improved organizational performance
through Strategic integration, employee commitment, flexibility and quality. This study concludes
that organizations having good training plans for employees can enhance the performance of
employees.
5.3.5. Extent to which employee relations strategies affect the performance of commercial
banks in Kenya
From this study it is concluded that employee relations strategies affect the performance of
commercial banks to a great extent. Employee relations contribute to a significant 26.1% variance
in performance of commercial banks. From this research, it was found that there is a positive
correlation between employee relations strategies used and performance of commercial banks in
Kenya. This is consistent with findings from a similar study by Chenevert and Trembly (2009),
Ivancevich et al (1997) as well as Harzing and Ruysseveldt (2004) who found that employee
relations have a positive effect on performance. Overall findings of this study are also in support of
Qureshi et al (2010) study which found organizational commitment as having a positive effect on
performance among Pakistani bankers. The study found out that if employee relations were
positive, the employees were found to commit themselves to achieve the goals of the bank which
in turn led to improved bank performance. It is concluded that involvement, appreciation and
recognition of employees and employees’ tasks fulfillment stimulates them towards working with
more energy and dedication to the organization. Employees who feel they are appreciated by the
bank perceive high organizational status thus producing positive cognition and role behavior. The
192
motivated employees’ work best in the interest of the organizations which leads them towards
growth, prosperity and productivity. From this research, it was found that there is a positive
correlation between employee relations strategies used and performance of commercial banks in
Kenya.
From the results of this study it is concluded that there is a positive effect of quality of
communication between managers and staff and between employees among themselves and
through unions on performance. This supports previous arguments by Ivancevich et al (1997) and
Harzing and Ruysseveldt (2004) that effective communication is absolutely critical to successful
integration of employees. These is also supported with findings by Ulrich (2007) that working
environment characterized with poor employees relation influences application of leadership styles
that negatively affects realization of organization performance. The study noted that existence of
poor employee relations negatively affects participation of all the employees in implementation of
the banks strategic objectives that were meant to support achievement of increased bank financial
performance. These findings were in agreement with findings by Cowling (2009) that lack of good
employee relations with senior management hinders participation of junior staff in decision
making process on matters relating to implementation of organizational strategic objectives and
this negatively affects realization of increased organization performance. According to Pearce and
Robinson (2009) firms actively seek good employee relations whether or not they are bound by
union contacts. Organizations should strive to satisfy their employees with good pay, good
supervision and good stimulating work (Pearce & Robison, 2009). According to Lewis et al
(2003) direct control has declined with the realization by employers that greater productivity
can be achieved using a strategy of responsible autonomy and good working relations. The
study by Chaudhry, Sohail and Riaz (2013) also found overall support for the hypothesis that
193
Employee Relations Practices Impact positively on Performance of Employees working in
Hospitality Industry of Pakistan as the relationship specified in Hypothesis was found to be
significant. Therefore, the proposed direct relationships between a set of employee relation
practices and motivation and between motivation and employee performance were empirically
validated.
5.4. Recommendations
Based on the findings and conclusions of the study, the researcher provides the following
recommendations aimed at ensuring that the human resources strategies adopted by commercial
banks in Kenya play a positive role in ensuring the improved performance and competitive
advantage of the commercial banks that adopt them.
5.4.1. Policy recommendations
Commercial banks in Kenya should match their business strategies with dynamic environment and
the human resources management strategy with environment in order to achieve organizational
outcomes and organizational bottom-line performance. Commercial banks in Kenya need to
develop and document strategies for recruiting, selecting, training, and rewarding employees in
order to enhance employee and organizational performance. Commercial banks that want to
improve their performance should therefore ensure that the way they use these strategies is unique
in order to ensure that they are able to have a competitive edge over their competitors.
The commercial banks in Kenya should design effective recruitment policies that are linked to the
overall banks strategy. The policies should also be communicated to all the employees. The banks
recruitment practices should always be in accordance with the recruitment policy guidelines.
194
Commercial banks in Kenya need to re-evaluate their compensation programs within the context of
their corporate strategy and specific HR strategy to ensure that they are consistent with the
necessary performance measures required by the banking sector. In designing reward systems
banks should ensure that such systems are linked to the overall business and human resource
management strategies of the organizations for effectiveness and long-term success of the
organization. The reward strategy used by the commercial banks should align the performance of
the organization with the way it rewards its people, in order to provide the necessary incentives
and motivation required for the employees to deliver the goals of the bank. Commercial banks
should ensure that they develop rewards strategies, systems and practices that are able to cater for
the diverse motivation needs of their employees. In this endeavor, commercial banks should use
both financial and non financial rewards in addition to providing other incentives that will help
motivate employees. Commercial banks in Kenya should also formulate and implement an active
reward policy that is fully linked to the overall banks strategy.
Commercial banks should also conduct strategic human resources management training programs
including total quality management training programs. The training should be done to employees
at all levels and should also expand to include training on other areas in readiness for other jobs in
the future. Commercial banks in Kenya should also establish an active training and development
policy for its employees. To achieve this, employees should be involved in all activities of the
bank starting from the formulation through implementation and up to evaluation. The study also
recommends that the commercial bank managers in Kenya should ensure that training needs
analysis is conducted regularly in order to establish the training needs of the employees.
Commercial banks also need to create and sustain cultures that enhance employee attachment to
the service goals of the bank. Employees are bound to be much more productive when they work
195
in a positive, supportive environment. Managers must strive to maintain an enjoyable, family-
oriented atmosphere in which all employees focus on achieving team goals.
5.4.2. Academic recommendations
From this study it is recommended that scholars and practitioners in human resources management
should actively engage in joint research that will be used to assist human resources managers and
bank CEOs to effectively ensure the proper link between human resource management and
organizational performance. The academic research will go a long way in ensuring that there is
consistency between theory and practice.
Training institutions such as Universities and colleges in Kenya should also work together with
human resource practitioners to develop the curriculum for teaching students taking banking
related courses in order to ensure a proper link between theory and practice. It should also be made
mandatory for students to attend internships/attachment before they graduate in order to apply the
theory learned in class practically in the work environment. This should be done at the end of the
third year of studies. This will ensure that graduates leaving the training institutions to join the
banking sector are already trained in the various practical issues that they will encounter in the
banking sector working environment. It is also recommended that senior and experienced bank
staff should also be encouraged to co-teach banking related courses in conjunction with the
university lecturers. The bankers can come in class and offer support to the lecturers as resource
persons. This will give a practical perspective to the delivery of the content.
5.5. Suggestions for further research
This study was done in commercial banks in Kenya; similar studies can be done in other sectors of
the economy such as the manufacturing sector, the transport sector among other sectors in order to
196
compare the findings from these different sectors. Further research and data collection will help to
develop the theory of SHRM-performance linkage in contemporary organizations in the various
sectors of the economy. Further research should also be undertaken on the effect of management
style on performance of commercial banks in Kenya. Research can also be undertaken on the role
of the resource based view on competitiveness of the banking sector in Kenya; Impact of factors
other than rewards, recruitment, training and development and employee relations on employees’
performance of commercial banks in Kenya. Further research in this area should focus on the other
factors that affect the performance of commercial banks in Kenya.
Other studies can also be done to consider the different levels of employees in commercial banks
in Kenya and also compare the human resources strategies on performance of private and public
sector organizations in different sectors other than the banking sector. Various business strategies
implemented by the commercial banks in Kenya and how these strategies are embedded within the
organizations’ dynamic environment and drive the development of HRM strategies also need to be
explored. Further research in the areas of strategic human resource management practices would
be useful in understanding the impact that the practices have on organizations competitiveness and
management process for enhanced productivity.
197
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APPENDICES
APPENDIX 1: QUESTIONNAIRE
I am a PhD student at Jomo Kenyatta University of Agriculture and Technology. As part of the
requirement for the award of the degree I am required to undertake a research. To fulfil this
requirement I am doing a survey on the effect of human resource strategies on the performance of
commercial banks in Kenya. The survey focuses on employees in the banking sector. Your input
by filling this questionnaire is not only critical to the study but also highly appreciated. All the
information received will be handled with confidentiality and will only be used for ACADEMIC
purposes.
Where options are given, indicate your selection by marking “X” in the space [ ] provided.
Otherwise, write out your full response after each query.
A. Respondent’s Background
1. Gender: i) Male [ ] ii) Female [ ]
2. Respondents Age Groups (in years):
i) Below 20 [ ] ii) 21-30 [ ] iii) 31-40 [ ]
iv) 41-50 [ ] v) 51-60 [ ] vi) Over 60 [ ]
3. Highest academic qualification:
237
i) K.C.S.E [ ] iii) Diploma [ ] iv) Degree [ ]
v) Masters [ ] vi) PhD [ ] Other [ ] …………………….(Specify)
4. Number of years worked with the bank
Below 5 [ ] 5- 10 [ ] 11-15 [ ] 16-20 [ ] Over 20 [ ]
5. Monthly Salary
Less than 20,000 [ ] 20,001- 40,000 [ ] 40,001-60,000 [ ] 60,001-80,000 [ ] over 80,000 [ ]
B. Organizational Information
6. Type of bank ownership:
i) Private Bank [ ] ii) Foreign owned [ ]
iii) Limited company [ ] iv) Other [ ] Specify: ………………
7. No. of Employees in the bank
Less than 50 [ ] 51 – 100 [ ] 101-150 [ ] 151 – 200 [ ] 201 – 250 [ ] 251- 300 [ ] over
300 [ ]
8. Annual Turnover: ………………….
9. Registered capital: ………………………
10. What reward strategies do you use most often?…………………………….………………
238
………………………………………………………………………………………………………
………………………………………………………………………………
11. What barriers, if any do you encounter when implementing human resource plans? Explain.
………………………………………………………………………………… …………………
………………………………………………………………………………………
12. Which human resource plans or combination of human resource plans do you think are best for
improving performance of a bank? Why? …………….………………………………………
…………………………………………….………………………………………………………
14. In your own opinion what is the effect of human resource strategies on the performance of
banks?
………………………………………………………………………………………….……………
………………………………………………………………………………………………………
……………………………………………………………………………………………………
239
C. HUMAN RESOURCE STRATEGIES
i. Employee recruitment and selection strategies
On a scale of 1 to 5 (1 means strongly agree and 5 means strongly disagree) express the
extent to which you agree or disagree with the following statements as concerns the bank.
1= Strongly Agree 2=Agree 3=Neutral 4= Disagree 5=Strongly Disagree
1 2 3 4 5
1 The selection systems followed in the bank are highly scientific and
rigorous.
2 In the bank, line managers and HR managers participate in selection.
3 Valid and standardized tests are used when required in the selection
process.
4 Selection systems in the bank select those having the desired
knowledge, skills and attitudes.
5 The bank recruitment process ensures that very qualified candidates
are attracted
6 The bank retains high quality employees
7 Non performers are encouraged to leave the bank
8 To be selected in this bank you must know someone
9 Qualification and experience are the main factors considered during
selection
10 The bank takes measures to attract good quality employees
240
11 The bank always selects only the highest quality employees
12 The bank has an employee recruitment policy
13 The recruitment and selection outcome affects the performance of the
bank
ii. Training and development strategies
extent to which you agree or disagree with the following statements as concerns the
bank.
1 2 3 4 5
1 The bank conducts extensive training programs for its employees
in all aspects of quality.
2 Employees in each job will normally go through training programs
every year.
3 Training needs are identified through a formal performance
appraisal mechanism.
4 There are formal training programs to teach new employees the
skills they need to perform their jobs.
5 New knowledge and skills are imparted to employees periodically
to work in teams.
6 Training needs identified are realistic, useful and based on the
241
business strategy of the organization.
7 The bank has a training budget every year
8 Training has led to increased teamwork
9 Employees are trained to take up more responsibilities and other
jobs in the future
10 Training employees helps in improving their performance
11 The bank ensures that employees have the skills required to
perform their duties
12 Training and development has a great effect on bank performance
13 Training and development affects the profits of a bank
14 Training employees affects the market share by attracting
customers
15 Training and development affects the rate of growth of a bank
242
iii. Employee relations strategies
1 2 3 4 5
1 Employees in the bank are allowed to make decisions related to cost
and quality matters.
2 Employees in the bank are asked by their superiors to participate in
operations related decisions.
3 Employees are provided opportunity to suggest improvements in the
way things are done here.
4 The bank strives to maintain a harmonious work environment
5 The bank involves the employees and unions in making decisions
that affect employees
6 The nature of relationship between employees and the managers
affects the employee performance
7 Employee performance affects the performance of the bank
8 An informal / family like environment is sustained between
employees and managers/ supervisors
9 A formal environment is sustained between employees and
managers/ supervisors
10 Good employee relations lead to increased performance of banks
243
11 Employee relations affects the profits of a bank
12 Employee relations affects a banks market share by attracting
customers
13 Employee relations affects the rate of growth of a bank
iv. Reward and compensation strategies
1 2 3 4 5
1 Job performance is an important factor in determining the incentive
compensation of employees.
2 In the bank, salary and other benefits are comparable to the market.
3 In the bank, compensation is decided on the basis of competence or
ability of the employee.
4 The compensation for all employees is directly linked to his/her
performance.
5 In the bank, profit sharing is used as a mechanism to reward higher
performance.
6 The bank offers competitive salaries and wages
7 The rewards offered by the bank have an effect on employee
244
performance
8 Good rewards have a positive effect on the performance of the bank
9 The rewards offered attract and retain high quality employees
10 Good employee rewards affect the profits of a bank
11 Rewards affect the market share of the banks by attracting customers
12 Employee rewards affects the rate of growth of a bank
D.PERFORMANCE OF BANKS
On a scale of 1 to 5 (where 1 means very high and 5 means very low) and compared to the
performance of best performing bank in Kenya, rate the performance of your bank on
each of the areas in the last five years.
1= Very High 2= High 3=Neutral 4= Low 5= Very Low
1 2 3 4 5
Market share
Growth rate of sales or revenue
Financial strength (e.g. liquidity)
Return on equity
245
Return on assets
Profitability
Return on investment
extent to which you agree or disagree with the following statements as concerns the
organization.
1 2 3 4 5
Human resource strategies have led to increased return on assets
and profits
Human resource strategies have led to increased market share
Human resource strategies have led to increased total shareholder
return
246
Human resource strategies have led to increased sales
Human resource strategies have led to increased account holders
Human resource strategies have led to growth rate of revenue
The quality of employees has a positive effect on performance
The type of employees has an effect on the profits of a bank
The quality of employees has a positive effect on a banks market
share
The type of employee has a positive effect on the growth of a bank
The employees of a bank have a great effect on performance of
banks
Any other comments related to HR strategies concerning employees. (Specify) ……………
………………………………………………………………………………………………………
………………………………………………………………………………………………………
…………………………………………………………………………..
Thank you for your input.
247
248
APPENDIX 2:
INTERVIEW GUIDE
Greetings. I want to take the opportunity to thank you for taking the time to meet with me today.
My name is Thomas Katua Ngui. I am conducting a research for the award of a Ph.D in Human
Resources Management and my topic is The Effects of Human Resource Strategies on The
Performance of Banks. You have been selected to assist in providing relevant information. I would
like to talk to you about your experiences in developing and using human resources strategies in
your bank. Specifically as one of the components of our overall performance improvement I am
assessing the effect of human resource strategies on performance of banks in order to capture
lessons that can be used in future interventions.
The interview should take less than an hour. I will be taping the session because I don’t want to
miss any of your comments. Although I will be taking some notes during the session. I can’t
possibly write fast enough to get it all down. Because were on tape, please be sure to speak up so
that we don’t miss your comments.
All responses will be kept confidential. This means that your interview responses will only be
shared with research team members and supervisors and I will ensure that any information I
include in my report does not identify you as the respondent. Remember you don’t have to talk
about anything you don’t want to. Are there any questions about what I have just explained? Are
you willing to participate in this interview?
Interviewee: ------------------------------ Date: -------------------
Questions
249
a. For how long have you worked in this bank (In years)?
b. Approximately how many employees work in your bank?
c. How is recruitment done in your bank?
d. How is selection done in your bank?
e. How does the recruitment and selection process affect the performance of the bank?
f. How has the performance of the bank changed over the last five years?
g. To what extent does use of human resource strategies advance or hinder the performance of
the bank?
h. What human resource strategies would you recommend to be sustained and/or scaled up?
Why?
i. What barriers, if any do you encounter when implementing human resource strategies?
j. How do you ensure that your bank has the right caliber and number of employees?
k. How do you ensure that your employees have the right skills at all times?
l. How often is training done in the bank?
m. How are training needs identified?
n. Is the training given to the employees relevant to their performance?
o. How do you ensure that rewards are able to attract and retain good quality employees in the
bank?
250
p. What types of rewards are offered in the bank?
q. How do rewards affect motivation of employees?
r. Do rewards affect performance?
s. How do you relate with employees and trade unions?
t. How often do disputes arise between trade unions and the management?
u. How has the relationship with employees and trade unions affected performance?
v. How do you ensure that the various stakeholders are working together in unity?
Thank you for your time.
251
APPENDIX 3
LIST OF COMMERCIAL BANKS IN KENYA
1. African Banking Corporation Ltd.
2. Akiba Bank Ltd.
3. Bank of Baroda (Kenya) Ltd.
4. Bank of India Ltd.
5. Barclays Bank of Kenya Ltd.
6. Chase Bank (Kenya) Ltd
7. Charter House Bank Ltd
8. Citibank, N.A.
9. City Finance Bank Ltd.
10. Commercial Bank of Africa Ltd.
11. Consolidated Bank of Kenya Ltd.
12. Co-operative Bank of Kenya Ltd.
13. CFC Bank Ltd.
14. Credit Agricole Indosuez
15. Credit Bank Ltd.
16. Development Bank of Kenya Ltd.
17. Diamond Trust Bank Kenya Ltd.
18. Dubai Bank Kenya Ltd.
19. Ecobank Ltd
20. Equatorial Commercial Bank Ltd.
21. Equity Bank Ltd
252
22. Fidelity Commercial Bank Ltd.
23. Fina Bank Ltd.
24. First American Bank of Kenya Ltd.
25. Giro Commercial Bank Ltd.
26. Guardian Bank Ltd.
27. Habib Bank A.G. Zurich.
28. Habib Bank Ltd.
29. Imperial Bank Ltd.
30. Industrial Development Bank Ltd.
31. Investment & Mortgages Bank Ltd.
32. Islamic Bank Ltd
33. Jamii Bora Bank
34. Kenya Commercial Bank Ltd.
35. K-Rep Bank Ltd.
36. Middle East Bank of Kenya Ltd.
37. National Bank of Kenya Ltd.
38. National Industrial Credit Bank Ltd.
39. Oriental Commercial Bank Ltd.
40. Paramount Universal Bank Ltd.
41. Post Bank Ltd
42. Prime Bank Ltd.
43. Southern Credit Banking Corp. Ltd.
44. Stanbic Bank Kenya Ltd.
253
45. Standard Chartered Bank Ltd.
46. Trans-National Bank Ltd.
47. Victoria Commercial Bank Ltd.
254
APPENDIX 4- WORK PLAN
April May June July August September October November
Data collection    
Data analysis   
Report writing  
Thesis submission 
255
APPENDIX 5- BUDGET
Item Amount
1 Printing 10,000
2 Travelling 10,000
3 Photocopying 15,000
4 Binding 5,000
5 Internet Costs 20,000
6 Labour (Research Assistants) 20,000
7 Miscellaneous 10,000
TOTAL 90,000
256

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EFFECT OF HUMAN RESOURCE MANAGEMENT

STRATEGIES ON THE PERFORMANCE OF COMMERCIAL

THOMAS KATUA NGUI

(Human Resource Management)

JOMO KENYATTA UNIVERSITY OF

AGRICULTURE AND TECHNOLOGY

commercial banks in Kenya

Thomas Katua Ngui

A thesis submitted in partial fulfillment for the degree of Doctor of Philosophy

in Human Resource Management in the Jomo Kenyatta University of

Agriculture and Technology

Signature: _____________________ Date: _________________________

Thomas Katua Ngui

Signature: _____________________ Date: _________________________

Prof. Elegwa Mukulu

Signature: _____________________ Date: _________________________

Dr. Hazel Gachunga

love, understanding and support during my studies.

assistance that you gave to me while I was writing this thesis.

TABLE OF CONTENTS ……………………………………………………………………...V

LIST OF APPENDICES ……………………………………………………………………XIX

LIST ACRONYMS AND ABBREVIATIONS……………………………………………..XX

OPERATIONAL DEFINITION OF KEY TERMS ………………………………………XXI

1.1. Background of the study………………………………….………………………………….1

1.1.1. Global perspective of commercial banks …………………………………………………4

1.1.2. Commercial Banks in Kenya………………………………………………………………6

1.2. Statement of the problem……………………………………….………………………….11

1.3.1 General objective………………………………………………….………………………12

1.3.2 Specific objectives…………………………………………………...……………………13

1.4. Research hypotheses………………………………………………………………………..13

1.5. Significance of the study…………………………………………………..……………….14

1.6. Scope of the study…………………………………………………………...…………….15

1.7. Limitations of the study………………………………………………………...……..……15

2.1. Introduction …………………………………………...……………………….…………..16

2.2. Theoretical review…………………………………………….………………………..…..16

2.2.1. The Resource Based View (RBV)……………. ………..………………………………..17

2.2.2. Ability, Motivation, Opportunity Theory (AMO Theory)……….………………………19

2.2.3. Social Exchange Theory…………………………………………………………………21

2.2.4. The Universalistic Perspective…………………………………………..……………….24

2.2.5. The Matching Model ……………………………………………………….……………27

2.2.6. The Contingency Perspective …………………………..………………………………..28

2.3. Conceptual framework……………………………………………………………………..29

2.5.1. Performance of Commercial Banks…………………………………..……………….…30

2.5.2. Human Resource Strategies………………………………………………………………33

2.5.3. Employee resourcing strategies………………………………………………………….34

2.5.4. Training and development strategies…………………………………………………….37

2.5.5. Employee reward and compensation strategies………………………………………….40

2.5.6. Employee motivation strategies………………………………………………………….43

2.5.7. Employee relations strategies…………………………………………………………...47

2.5.8. Organizational commitment ………………………………………………………….51

2.5.9. HRM strategy and organizational performance………………………………...……..…55

2.6. Critical review of existing literature……………………………………………………..…58

2.7. Summary of literature………………………………………………………………………59

2.8. Research gap………………………………………………………………………………..61

RESEARCH DESIGN AND METHODOLOGY……...……………..………….…………..63

3.2. Research design………..………………………………...…………………………………63

3.2. Target population………...………….………………….………………………………….64

3.4. Data collection instruments…..…….…….……..………………………………………….67

Signature: _ Date: _____

Signature: _ Date: _____

Signature: _ Date: _____