Human resource audit practices and corporate performance: a survey of Commercial Banks in Nairobi
Iga, Mary G
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Although Human Resource Audit plays a very important role in the evaluation of human resource capacity and corporate performance of organizations, very little research has been done on the relationship between Human Resource Audit and corporate performance. This study sought to determine the human resource audit practices adopted by commercial banks in Nairobi and to explore the effect of the extent of their application on firm performance. This was a descriptive survey. The target population were the 44 commercial banks in Nairobi as at December, 2007. The survey covered all the 44 banks. Both primary and secondary data were collected. Primary data was collected on human resource audit practices while secondary data was on financial performance indicators, specifically return on assets, return on sales and return on investment. Primary data was collected using questionnaires administered using drop and pick later method. The analysis was done with the aid of the Statistical Package for Social Sciences (SPSS). Relationship between human resource audit and performance was tested using Linear Regression Analysis. Most of the elements of human resource audit practices scored highest mean scores in most of the commercial banks surveyed. Thus, to a great extent, the banks practice human resource audit. It can therefore be concluded that the practice of human resource audit in commercial banks in Kenya is high as exemplified by the results of this study. Human resource audit practice has effect on performance as measured by STO, ROA, and ROI. However the link is so weak that the R2 shows that human resource audit practice explains very little variance in performance. It can therefore, be concluded that in as much as there might be a positive influence of human resource audit practice on firm performance, that influence is almost insignificant. It is recommended that issues of human resource audit practice for firms that are not practicing it be encouraged in the firms so as to comply with regulatory requirements as well as ensure accountability in the banks.