The Relationship Between Internal Management Controls and Efficiency of Service Delivery of Commercial Banks in Kenya

Abstract

Internal management control frameworks are expected to fundamentally improve the quality and efficiency of service delivery in organizations, either specifically or by implication by expanding responsibility among data suppliers in an association. Internal management controls hence have an extremely wide impact on the objectives, purpose and targets of the association and the level of control of issues connected with service delivery. In most recent couple of years, the banking industry in Kenya has kept on developing in resources, stores, benefit and items offering and this has prompted an expanded requirement for internal review in banks to improve resource administration, control of dangers and management controls. The primary goal of this study was to find out the relationship between internal management controls and the efficiency of service delivery of commercial banks in Kenya by examining the following variables:- monitoring and evaluation; risk assessment controls; information and communication controls and control environment controls. Literature review looked at theories such as Agency Theory, Attribution Theory and Reliability Theory. This study adopted descriptive survey research design to carry out an investigation on the relationship between internal management controls and efficiency of service delivery of commercial banks in Kenya. The target population for this study was 42 registered business banks in Kenya as at 31th March 2016 and the unit of analysis was heads of business banks from each type of bank and a census study was conducted. The results of the investigation showed that there exists was a significant variation in service delivery efficiency in Kenya commercial banks due to changes in the independent variable which were monitoring and evaluation risk assessment, control environment and information Communications. The study further revealed that risk assessment was the highest of the independent variables and this means that a unit increase in the determination towards risk assessment in the commercial banks service delivery efficiency will increase by 32%. One of the conclusions of the study was that internal management control is a critical system to efficiency of service delivery of commercial banks in Kenya. Commercial banks can be able to attain service excellence and retained customer with overwhelming referrals if their internal management controls are strengthened. The internal management control system is a tool which can enhance an effective and efficient service delivery mechanism in organizations. All the components of internal management control examined in this study must be fully implemented in an integrated manner to strengthen efficiency of service delivery at all times. The study recommends that bank employees should be encouraged to familiarize themselves with all the reviewed policies and procedures within the internal management control framework and Banks should also hold policy brief session periodically wherein changes and amendments made in individual policies are communicated to all staff and stakeholders for efficiency in service provision.