Relationship Between Benchmarking and Operational Performance in the Kenyan Banking Industry

Abstract

This study sought to investigate the relationship between benchmarking and operational performance in the Kenyan Banking Industry. It addresses the type of Benchmarking pursued by the banking industry. Internal, competitor, Industry and World class types of benchmarking practices were studied. It also addressed the issue of the measures in place to ensure that for the benchmarking type pursued, there is information gathering about it. The major aim of this research was to establish if there is a relationship between the type of benchmarking pursued and the operational performance measured in terms of profitability. This was achieved by circulating a questionnaire to test the type of benchmarking pursued in the various banks in Kenya. The findings of the study indicated that there was an agreement among the respondents that internal benchmarking is strongly pursued in Kenya. Generally there is presence of all the benchmarking types with world class benchmarking having the least preference. The study recommended that the Kenyan banking industry should engage in activities to provide them with benchmarking strategy information and should also consider world class benchmarking so as to exploit its benefits. They should share information within the departments and also establish links with their peers/best in industry and world class performers so as to tap their best operations performance. If these recommendations would be implemented, Kenyan banking industry would have an edge above other financial institutions that provide other forms of banking services.