The relationship between benchmarking and financial performance of Sacco’s in Nairobi

Abstract

Given that the inherent advantages of SACCOs in terms of flexibility and proximity to their markets are no longer sufficient to ensure their competitiveness in the new global economy, the adoption of new business practices by these organizations must be facilitated, practices whose identification will be made through a benchmarking exercise. Benchmarking activities developed for SACCOs must be specific to the environment and constraints of these organizations if the implementation of the practices identified by such activities is to succeed and result in increased performance. Distinct strategic objectives, greater environmental uncertainty and limited resources are some of the aspects that would require the development of benchmarking practices that are specific to SACCOs if these practices are to be adopted effectively. Most of the literature views benchmarking as a vector of performance, as this practice answers the firm's need to improve its quality, profitability and competitiveness brought about by rapid and important changes in the business environment. In Nairobi North, benchmarking has been taking place in SACCOs although no empirical study has been carried out to establish the extend and its impact. The main purpose of this study is to investigate the relationship between benchmarking and financial performance of SACCOs. This study adopted a causal research design in order to meet its objective. The population of interest of this study was selected using random sampling method to come up with a sample size of thirty five (35) SACCOs. The study used both primary and secondary data. The primary data was collected through the use of a structured questionnaire which was dropped and picked later at the selected employees` desks. The study adopted the use of descriptive and inferential statistics in the analysis of the data.