EFFECT OF HUMAN CAPITAL MANAGEMENT DRIVERS ON ORGANIZATIONAL PERFORMANCE IN KENYA A CASE OF INVESTMENT AND MORTGAGES BANK LTD.

Abstract

The skills and capacities that reside in people that are put to productive use can be a more important determinant of the nation’s long term economic success and that of an organization. In Kenya, the contribution of the financial sector to Gross Domestic Product has remained unstable and showing slow growth. The sector also recorded a slow growth of 6.5 per cent in 2012 compared to 7.8 per cent in 2011. Investment and Mortgages Bank strive to achieve the best globally through effective utilization of human capital management drivers to attain sustainable competitive edge in the highly and globally competitive banking industry. The Bank’s outstanding operational efficiency maintained at 34.8 per cent, making it one of the best in the Kenyan Banking Industry. The Bank’s success relies heavily on human capital management drivers such as leadership practices, employee engagement, knowledge accessibility, learning capacity and workforce optimization. The main objective of the study was to establish the effect of human capital management drivers on organizational performance. The specific objectives are to: determine the effect of leadership practices, identify the effect of employee engagement, establish the effect of knowledge accessibility, investigate the effect of workforce optimization and determine the effect of learning capacity on organizational performance. The study was anchored on theory of Resource based view, human capital theory, goal theory and contingent leadership theory. The study adopted a case study research design and stratified random sampling. Qualitative and quantitative technique of data analysis was used. The study concludes that it is possible to use human capital management drivers to benchmark organizational capabilities, identify human capital management strengths and weakness, and link improvements in specific human capital management practices with improvements in organizational performance and obtain sustainable competitive edge.