| dc.description.abstract | The purpose of this study was to find out the extent of Value Based Management (VBM) practice
among commercial banks in Kenya and also the extent of awareness and appreciation of the benefits
of VBM among them. The study focused on all the 42 commercial banks that were operational at
the time of the study. A questionnaire was sent to the chief executive and finance officers of the
banks. The questionnaire had open-ended and closed questions, and questions requiring answers on
a 5 point scale. The response was not high as 57 percent returned the filled questionnaire. The data
was then coded, fed into a computer program and analyzed. The results were presented in the form
of tables, frequency tables and cross tabulations.
The study revealed that the main goals of banks in Kenya are maximizing shareholder value,
corporate social responsibility, attaining market leadership and profitability. Several factors affected
formulation and implementation of goals. The main ones are the chief executive officer, available
resources, management, competition and market forces. Most banks revised their goals within five
years and investment in information technology, prevailing economic climate, leadership
commitment and improved customer service were the main factors affecting company performance.
Most banks had policies on employee compensation, link employee compensation to performance
and have their training needs affected by changing management practices.
Among respondents, 71 percent practiced VBM, but with only 42 percent doing so formally.
The concentration of those who practiced was highest among the quoted banks (86 percent). The
study reveals that VBM was a much admired practice especially with all those who practiced saying
it was desirable. For most banks, YBM was not the main management focus and most also had
practiced VBM for less than six years.
The main performance measure was found to be EVAlEP which is consistent with the practice of
VBM. The main benefits of VBM was found to be that it led to improved investment decisions,
increased profits, enhanced strategy formulation, improved decision making and increased
organization value. The main problems experienced in implementing VBM were found to be
inadequate training, difficulty in changing culture, lack of commitment, no available benchmarks
and resistance to change.
In conclusion, it was found that VBM was practiced by Kenyan banks, with a majority
finding it desirable. However, it seems that some of the banks had not implemented VBM fully but
only partially. It can thus be concluded that VBM is well appreciated and the extent of awareness
and practice is quite high. | en |
