Effects of Institutional Factors on Employee Performance in Commercial Banks in Kenya

Abstract

The Kenyan banking industry has to compete in the global market, and one way is to compete by employing the best institutional practices that will stimulate employee performance. However, in the recent past increased scale-down of personnel within the banking industry has resulted in dwindling employee productivity. Further, the onset of the pandemic has brought an emotional and physical challenges that may affect the employee performance within the banking industry. This study reviewed how various institutional factors influence the employee performance within commercial banks. The study focused on how organization culture, organization structure, rewards and recognition and training and development influence employee performance. The research was grounded on the expectancy theory, the social exchange theory and the institutional theory. The study adopted a descriptive research design in solving the study problem. The target population for this study was the human resource managers of the 39 operational commercial banks. The study employed a census survey in the selection of study respondents. The main tool used in the data collection was a structured questionnaire that was developed guided by the study objectives. The study adopted drop and pick method as well as Google forms in the data collection process. The collected research data was analyzed using quantitative descriptive and inferential techniques. The study was able to obtain a 90% response rate with 60% of the respondents being female staff in the banking industry. The correlation results indicated a positive effect of organization structure, rewards and recognition and training and development on the employee performance within the banking industry. Based on the regression findings the study concluded that 57.3% the changes in employee performance can be predicted by the training development, rewards recognition, organization structure, organization culture within the commercial banks. The study recommends that the banks should stimulate an innovative culture which will ensure that the employees are able to tackle task and other responsibilities using emerging practices and technologies. Its’ also recommend that the bank should expand the welfare programs offered to their employees as a measure of stimulating employee productivity. The study recommends that commercial banks should empower their employees through offering free professional development programs which will improve their competencies and skills.