The Nexus between Strategic Human Resource Planning and Performance of State Corporations: Perspectives from Kenya

The Nexus between Strategic Human Resource Planning and Performance of State Corporations: Perspectives from Kenya

Ms. Otieno Dina, Dr.  Kegoro O. Henry, Ochieng O. Judith

Kiriri Women’s University of Science and Technology

DOI: https://dx.doi.org/10.47772/IJRISS.2024.802107

Received: 31 January 2024; Revised: 09 February 2024; Accepted: 13 February 2024; Published: 15 March 2024

ABSTRACT

Despite the critical role that strategic human resource planning plays in organizational performance, little is known, particularly with regard to Kenya’s State corporations.  This study looked into how well-being of State enterprises in Kenya is affected by strategic human resource planning. The foundation of this investigation was empowerment theory. It was decided to use a cross-sectional study strategy to gather information from respondents. 13 State corporations in Kenya were the study’s target population. The study’s respondents were chosen from middle- and lower-level workers. The target demographic for the study consisted of 304 employees from 13 State Corporations in Kenya. 185 respondents made up the study’s sample size. To choose respondents, a stratified sample strategy was utilized. Structured questionnaires with both open-ended and closed-ended questions were used to gather primary data. Acts of Parliament, service delivery charters, Vision 2030, session papers on public service delivery, and yearly performance reports were used to gather secondary data. Using experts in human resource management, the validity of the study instrument was assessed. The Cronbach Alpha formula, which adopted reliability coefficients of 0.7 as advised in literature was used to assess reliability. Using the content analysis method, major themes from both written and spoken word were examined, and deductive arguments were produced based on the fundamental assumptions of the theories. Statistical Package for Social Sciences version 24 was used to perform the descriptive statistics, correlation, and regression analyses on the quantitative data. At a 95% confidence level and a 5% significance level, mean scores, standard deviations, percentages, and frequencies were utilized to define the components of each variable. The findings disclosed a significant and positive link between strategic human resource planning and performance of State corporations. The study concludes that for improved performance of State corporations in Kenya, embracing strategic human resource planning in inevitable. According to this report, top leadership in State corporations should make sure that strategic human resource planning strategies are updated to consider the shifting dynamics of the labour market if they want to remain competitive.

Key Words: Strategic Human Resource Planning and Performance of State Corporations

INTRODUCTION

Strategic Human Resource Management (SHRM) approaches are gradually replacing traditional HRM approaches in organizations functioning in the twenty-first century (Lamba & Choudhary, 2013). Organizations in developed and developing countries alike must adopt strategic human resource management to remain competitive due to the shifting business environment, competition, influence of technology, employee diversity, shifting consumer demands, and operational costs (Thite & Russell, 2010). Since the 1980s, the SHRM concept has evolved, causing changes in numerous businesses both locally and globally (Abdus, 2011). The idea of SHRM is well-known throughout the world, but it is most prevalent in developed nations like Australia, the United States, Japan, and China. According to a survey conducted in Israel by Adnan and Izzat (2012), one of the core practices that has significantly increased organizational productivity is SHRM. Equally, Ali and Nur (2016) in Iraqi identified that effective talent management and human resource planning can help oil businesses thrive in a highly competitive climate.

Globally, Abdus (2011) observed that SHRM is a function of organizational performance in the United States of America if effectively embraced. Further, Izzat (2012) in Israel suggested that deteriorating productivity of firms was attributed to inability of leaders to implement SHRM practices. Regionally, Swapna and Raja (2012) in India as well as Ali and Nur (2016) in Iraq, observed that despite external hurdles, embracing SHRM approaches can help organizations thrive in the turbulent business environment. Furthermore, Masaiti (2011) in Zambia found that a lot of businesses, both in established and developing nations, are attempting to use human resource strategies to deal with problems connected to customer demands, production costs, employee job satisfaction, and workplace technology. Strategic human resource management is one of the core competencies of successful businesses, according to Gopal (2012) in India.

Human resource management methods are essential for organizations to succeed, and vice versa. In Pakistan, Hassan (2014) found that firms needed to create strategic human resource management policies in order to accomplish their goals more effectively and efficiently. In order for firms to succeed in the ever-changing business environment, it is essential to mold employee behavior through human resource policies or strategies. Locally, Thiriku and Were (2016) in Kenya indicates that SHRM is a function of organizational performance which is measured in terms of change management, technology adoption and employee teamwork. Similalry, Kilika et al. (2016), Gitonga, Kilika and Obere (2016) and Kiiru (2013) in Kenya observed that issues of inability to manage change, employees demotivation and inability to adopt technology at the workplace were attributed to failure of organizations to embrace SHRP practices thus the need for further studies to examine the link between SHRP and performance of organizations

According to Gitonga, Kilika, and Obere (2016) strategic human resource planning can enable modern organizations to achieve goals with minimal resistance, result to increased organizational competitiveness as well as facilitate employee creativity and innovation. Furthermore, Ligare (2010) and Ngatia (2011) assert that human resource planning, talent development, job design, knowledge management, learning and development, employee staffing and retention, and training and development should all be handled for any firm to be competitive.

According to Kilika et al. (2016), the process of coordinating an organization’s human resource management practices with its overarching strategic objectives and goals is known as strategic human resource planning (SHRP). It entails predicting, defining, and creating strategies to successfully address an organization’s future human resource demands. According to Armstrong (2020), SHRP goes beyond conventional HR duties like hiring, training, and compensation administration. It adopts a proactive stance by incorporating HR factors into the organization’s strategic decision-making process. This entails evaluating the present and future needs for the workforce, identifying skill and competency gaps, and putting measures in place to recruit, cultivate, and retain the best employees (Thiriku & Were, 2016). Several important components go into strategic human resource planning (Maina, 2011). Workforce planning prioritizes predicting and managing upcoming workforce requirements while considering variables like retirements, turnover, and skill requirements. (2010) Wright, Kroll, and Lado.

High-potential employee recruitment, development, and retention efforts are all included in talent management (Masaiti & Naluyele, 2011).  Planning for succession ensures that qualified people are available for key positions within the company. 2014’s Wangai. Finally, HR analytics offers data-driven insights to aid in decision-making for the implementation of HR planning and strategy (Dauda et al. 2010(. According to Kiiru (2013), strategic human resource planning is an essential step in fusing HR practices with corporate strategy. SHRP improves organizational performance and sustains competitive advantage by coordinating human capital with strategic goals (Yamamoto, 2011).

Different academics have continued to offer various interpretations of the idea of organizational performance. For instance, Shikha and Karishma (2012) consider employee contentment, customer satisfaction, low employee absenteeism, and a high degree of staff commitment to be indicators of an organization’s performance.  On the other side, organization performance is defined by Ghazala and Habib (2012) as the degree to which a corporation can accomplish its goals with a finite amount of resources.  According to Thiriku and Were (2016), a multitude of metrics, including as earnings, sales volume, and staff happiness, can be used to gauge an organization’s effectiveness. According Armstrong (2020), an organization’s performance may be gauged by looking at system innovation and creativity, customer happiness, and the efficiency and effectiveness of internal business operations. According to Abdullah (2014), there are two types of HRM performance outcomes: HR-related outcomes, which include employee turnover, absenteeism, job satisfaction, and commitment; and organizational outcomes, which include aspects of productivity, quality, customer service, costs of production, and customer satisfaction.

Maina (2011) opines that results of financial accounting are measured by profits, sales volume, return on assets and return on investment. The final outcome of the capital market is growth, market share, and stock price (Boxall, Purcell, and Wright, 2007). According to Bal, Bozkurt, and Ertemsir (2012), an organization’s performance can be understood as how effectively and efficiently managers use resources to serve consumers and accomplish their objectives. The better trained and contented people are, the more they can contribute to improving the success of their firms. This study will explore how strategic human resource management methods affect the success of state-owned businesses under Kenya’s ministry of industry, investment, and trade. State corporations are considered to be under the control of the government but independent and autonomous from it by national laws and regulations.

According to Sections 11 and 12 of the Act of Parliament (Cap 446), all State Corporations are subject to regulation and control. These organizations are largely or entirely supported by the government. To some extent they make some money by charging clients for their services. State corporations are legally enabling laws known as edicts, or government flats in the lack of edicts, that are created to be financially semi-autonomous entities. In some instances, state corporations are established because the government cannot effectively conduct their business and they are also inappropriate or undesirable to the private sector (KIPPRA, 2015). In order to provide services in a way that is cost-effective, State Corporations place a focus on increasing efficiency in the management and utilization of resources entrusted to them.

It is highlighted that State corporations should not make promises or start new programs, initiatives, or activities with funds that are more than what is available to them from other sources, including domestically generated money or funds allotted to them under national budgetary requirements. In Kenya’s ministry of industry, commerce, and cooperatives, there are now 13 State-owned corporations. According to Kenya National Bureau of Statistics (2021), State corporations in Kenya have a lot of work to do if they are to live up to the expectations of the general public. Inconsistencies in-service delivery among the State corporations are attributed to neo-favoritism, financial mismanagement, slow pace of implementing reforms, and insufficient training.

Statement of the Problem

Although it is believed that strategic human resource planning affects organizational performance, it has been noted that little is known about how it affects the performance of organizations, particularly State-owned corporations in Kenya (Ali et al., 2016). There is a need for additional research to fill in the knowledge gaps in this field because existing empirical studies undertaken internationally, regionally, and locally have produced contradicting results about the relationship between strategic human resource planning and organizational performance. Consistency in service delivery among State corporations in developing countries, particularly in Kenya, has hampered economic growth and lowered stakeholder confidence in the quality of the services offered by these organizations (Kiiru, 2013). Adnan and Izzat (2012) conducted a study that found that strategic human resource management planning had a favorable, significant impact on the performance of commercial banks in Israel. In Iraq, Ali et al. (2016) found that there was no difference in the performance of State-owned enterprises and oil and gas companies’ human resource strategy. Strategic human resource management and staff motivation and retention in Zambia’s ministry of education are positively correlated, according to Masaiti and Naluyele (2011).

Even though Kenya’s state-owned corporations are committed to providing services to the general public, a high level of service inconsistencies is noted, including delays in services, a lack of service innovation, internal boycotts of service delivery, structural inertia, and low employee morale (Kenya National Bureau of Statistics, 2021). Concerns exist regarding the remuneration of workers as well as the state of working conditions (KIPPRA, 2021). In Kenya, over 50% of State businesses reported declining service delivery performance, according to a 2016 study by the Salaries and Remuneration Commission. This underscores the need for additional research to fill in the knowledge gaps. Concerns exist regarding inadequate career development options for employees as well as staff development policies. State firms need to reevaluate their strategic human resource planning due to inappropriate remuneration practices and unpleasant working conditions (Magutu et al., 2010).

Locally, Kiiru (2013)’s study focused only on SHRM procedures among State Parastatals in Kenya. Kilika et al. (2016) investigated the mediating impact of university-industry cooperation on the link between Kenyan universities’ performance and infrastructure for human resource development. Similar to this, Ligare (2010) investigated Kenyan state enterprises’ strategic human resource management techniques. Furthermore, the scope of studies by Maina (2011) and Mbondo (2011) was restricted to Kenyan secondary schools and Kenya Police Staff SACCO Ltd., respectively, even though the researchers did not use an integrated strategy to examining the factors of the current study. Abdus (2011), Adnan and Izzat (2012), Ali et al. (2016), Kilika et al. (2015), and Thiriku and Were (2016) all conducted extensive global and local research that show how strategic human resource planning can improve organizational performance. Additionally, according to KIPPRA (20121), there was a discrepancy in employees’ credentials, pay, and job responsibilities.

According to the results of studies by Transparency International (2017), the Salaries and Remuneration Commission (2016), Thiriku and Were (2016), Ali et al. (2016), Kilika et al. (2015), KIPPRA (2016), Ligare (2010), Maina (2011), Odunga (2011), Mutia (2011), Mbondo (2011), and Manguru (2011), there is no clear correlation between strategic human resource planning and performance of State-owned corporations in Kenya. It should be emphasized that none of the studies addressed the study’s factors holistically, instead only partially or in isolation. These investigations were also restricted to specific geographical and cultural contexts. Additionally, because each study utilized a distinct research methodology, there were discrepancies in the research findings as a result of the sample size, sampling strategy, and data analysis technique. Because of this, this study looked into how strategic human resource planning affected the performance of the Kenyan government corporation.

The main research objective pursued by this study was:

• To establish the effect of strategic human resource planning on performance of State corporation in Kenya.

Conceptual Framework

Figure 1.1: Conceptual Framework

Figure 1.1 shows that the dependent variable (performance of State corporations) is measured using four indicators, namely; efficiency, effectiveness, stakeholder satisfaction, and corporate image.  The independent variable (strategic human resource planning) is measured using three metrics, namely; recruitment policies, succession management, and reward management policies.

THEORETICAL REVIEW

Empowerment Theory

Initiator of the theory was Zimmerman (1992). According to the theory, empowerment is viewed as a process where people learn to recognize a tighter connection between their goals and an understanding of how to reach them, as well as a relationship between their efforts and a person’s outcome in life (Viljoen, 2004). According to Thiriku and Were (2016), organizational behavior and empowerment are included in the notion of structural empowerment. This idea contends that workplaces where staff members have access to knowledge, assets, support, and opportunities for learning and growth encourage empowerment.  Psychological empowerment, according to Kimani (2010), encompasses sentiments of competence, autonomy, job meaning, and the capacity to have an impact on the organization. Employees with more power are more dedicated to the company, more responsible for their work, and more capable of successfully completing their duties (Chebet, 2015). The workforce is empowered to achieve the organization’s goals when these concepts’ guiding principles are incorporated into individual and team behaviors. According to Chinowsky and Byrd (2001), employee empowerment has been recognized as a beneficial quality that is crucial to the efficient operation of an organization. It has also been demonstrated that empowerment is crucial to the objectives and results of shared governance models (Fred, 2005).

Organizational members who are inspired and motivated to make significant contributions and who are confident that their achievements were acknowledged and valued exhibit empowerment (Ondieki et al., 2017). According to Spanos and Lioukas (2011), empowerment is regarded to happen when an organization engages individuals really and reacts to this engagement gradually with a shared interest in growth. Employees gradually become more empowered as they have more influence over their life and participate in more decisions that have an impact on them. This theory is relevant to the study because it is assumed that State firms will adopt strategic human resource plans, such as recruitment, succession, remuneration, and retirement plans, to improve their performance.

Empirical Literature

Strategic Human Resource Planning and Organization Performance

Strategic human resource planning is one of the HR competitive strategies, according to Afsal et al. (2013), that boosts organizational productivity. Organizations should always look for candidates who have the necessary combination of knowledge and abilities. Lacking a clear HR strategy, organizations are more likely to fail. Furthermore, it should be noted that their research focused only on human resource planning in Pakistan’s telecommunications industry and discovered a strong correlation between organizational performance and human resource planning. The study also aimed to investigate the effects of HRP drivers like selection, training, and incentives on organizational performance.  In contrast, the goal of this study is to determine how strategic human planning affects Kenyan government corporations’ performance. Performance will be the dependent variable for the study, whereas the independent variables will be strategic human resource planning, strategic staffing and retention, and strategic training and development.  The study will examine the actual problems that contribute to the declining performance of State-owned corporations in the ministry of industry, trade, and cooperatives, including employees’ inability to advance their careers, a lack of policies that support staff development, subpar compensation practices, and unfavorable working conditions (Magutu et al. 2010).

Additionally, Chebet (2015) found that the sole strategy firms were utilizing to fulfill customer needs in the evolving business environment was effective HR planning. Organizations should hire HR specialists to examine employee needs.  The study, however, concentrated on studying the impact of pay, leadership, training, and working conditions on employee performance at the County government of Bungoma. 5,900 Bungoma County government employees made up the target population. The study used a descriptive survey research design, and a sample size of 375 people was selected via stratified random sampling, with the top, middle, and lower management levels serving as the strata. Descriptive statistics were used to analyze the data, however they were unable to prove a statistical relationship between the study’s variables.  According to Dauda et al. (2010), organizations that view their people as the most important component of the business seem to put human resource planning into practice. Organizations frequently fail to achieve their goals simply because their employees’ morale suffers in times of intense competition compared to that of their competitors.

Everyone can see that the personnel of that company do not possess the level of potential or motivation required to function at that level in the business. However, those businesses that are good at motivating their staff to take risks and give their all to achieve goals outperform their competitors in the market (Ondieki, Kwamboka, & Mbura, 2017). These businesses also do a good job of boosting employees’ job satisfaction levels. According to Spanos and Lioukas (2011), organizations frequently work to increase the workforce’s capacity in a focused manner and manage the talent of their large workforce in a variety of ways, such as by performing succession planning for the best employees so that they can fulfill their duties for important positions in the future. Therefore, organizations work on a variety of components of human resources planning, one of which is that they use to streamline the flow of communication throughout the entire organization, which in turn boosts employee satisfaction and significantly improves overall performance. However, it should be emphasized that the study was restricted to the corporate performance and strategic human resource management practices of small businesses in Lagos Metropoli, failing to address problems with Kenya’s state-owned firms. According to Hassan et al. (2013), the strategic role of human resource planning benefits the business both now and in the future. Thus, it can be seen that organizations that view human resource planning as a significant and integral component of their human resource management may find that it is very beneficial in managing their human capital and may even help them stand out from the competition in the market. Despite the fact that there is a strong relationship between strategic human resource planning and organizational performance, little study on this topic has been done in Kenyan state businesses.

RESEARCH METHODOLOGY

To determine the impact of strategic people planning on performance of State Corporations in Kenya, the study used a cross-sectional research approach. 344 respondents from 13 Kenyan state corporations made up the study’s target group. A sample of 185 respondents was selected by random selection out of the 344 respondents that were targeted from Kenya’s 13 State corporations. The entire population was divided into strata using the stratified sampling approach, and respondents were chosen at random from each stratum. Given that the study’s target population was finite, the study employed Israel’s (2009) method, which has the notation n = N/1+N (e)2, to determine the appropriate sample size. Here, n stands for the sample size, N for the entire population, and e for the error term (0.05). With N=344 in the calculation, 185 respondents made up the computed sample size (n).

Because they allow for systematic data collecting and analysis for strategic decision-making, questionnaires were the primary tools used in data collection. Additional secondary data came from Kenya’s Vision 2013 as well as Acts of Parliament and Service Charters. While reliability was evaluated using Cronbach’s alpha coefficient of 0.7, the validity of the research instrument was evaluated using the researcher’s supervisor (Mertler & Vannatta, 2010).  The Statistical Package for Social Sciences (SPSS) version 24 was used to examine quantitative data. To ascertain the statistical relationship between the variables, the multiple regression method was used. The regression approach was used, and the findings were presented in tables and figures, with a 95% confidence level and 5% level of significance. The regression model was of the form: Y= βо+β₁+ ε, where; Y represents Performance of State in Kenya. β₁ represents regression coefficients and ε is the error term that represents other factors not included in the model.

DATA ANALYSIS, PRESENTATION AND INTERPRETATION

Only 143 of the 185 surveys that were sent out had responses from medium and lower level managers. Twenty-two questionnaires were incomplete, and 22 were not returned.  The 79% response rate was influenced by this. This response rate was deemed suitable because it complies with Guest’s (2012) claim that any response rate greater than 50% is suitable for analysis and reporting.

Table 4.1: Strategic Human Resource Planning

Source: Research Data

When asked to identify the degree to which they agreed that strategic human resource planning influenced the performance of State corporations in Kenya, respondents supplied the applicable data shown in Table 4.1. According to the results in Table 4.1, the majority of respondents (70%) and above agreed with five of the seven claims, while the other respondents either disagreed or were neutral. Strategic human resource planning practices such as the ability to predict how future employee performance will affect results were found to have a mean of 4.26, a mean for implementing compensation after employee retirement policies was found to be 4.21, a mean for policies that support worker rewards was found to be 4.23, a mean for recruiting workers with a variety of skills was found to be 4.04, a mean for employee succession policies was found to be 4.59, and a mean for hiring workers on a competitive basis was found to be 5. This result suggests that although strategic human resource planning had an impact on performance, several procedures, like competitive hiring and routine employee needs assessments, were not adopted successfully. Some State corporations were noted to be understaffed, while others were noted to be overstaffed. Additionally, it was highlighted that some State corporations were somewhat obligated to hire workers through a competitive hiring process as a result of public service policies that supported a general degree for entry into public institutions. This result is consistent with those of Ogolla (2007), Ibullah et al. (2016), Shikha and Karishma (2012), Thiriku and Were (2016) who found that strategic human resource planning not only affected organizational increased productivity in terms of the quantity of goods produced, but also made it easier for the company to identify the skills and knowledge needed by employees to perform successfully in a changing business environment.

Table 4.2: Correlations Analysis

Source: Research Data

The performance of State corporations in Kenya was the dependent variable, and Pearson’s product correlation analysis was used to evaluate the relationship between the predictor variables (strategic human resource planning) and the dependent variable. The results are shown in Table 4.2, and they show that there is a significant positive relationship between (Strategic Human Resource Planning) and the dependent variable (Performance of Corporations) (r =.616, p 0.023).

Regression Analyses and Hypotheses Testing

This study was founded on the idea that there is a connection between Kenyan State firms’ performance and their use of strategic human resource management techniques. Simple and multiple linear regression analyses were carried out at a 95% confidence level to determine the statistical significance of the respective hypotheses.

Testing of Hypotheses 1

H₀₁: There was no relationship between strategic human resource planning and performance of State corporations in Kenya.

Table 4:3: Regression Results of Strategic Human Resource planning and Performance of State Corporations in Kenya

(a)The Goodness of Fit Test

Source: Research Data

According to Table 4.3’s findings, Performance State Corporations were significantly impacted by strategic human resource planning. (R2=.555) It explained 55.5% of the variation. The calculated strategic human resource planning scores had a standardized regression coefficient (353) value of 674 with a t-test of 4.327 and a significance level of p-value=. 000.The findings show a linear relationship between strategic human resource planning and the success of State corporations. Due to its independence from the original units of the predictor and outcome variables, the standardized regression coefficient was chosen. These results are in line with those of Ogolla (2007), Ibullah et al. (2016), Shikha and Karishma (2012), who discovered a direct relationship between strategic human resource planning and organizational performance. The study found that strategic human resource planning has a statistically significant impact on the performance of State corporations in Kenya, rejecting the null hypothesis with a 95% confidence level.

SUMMARY OF FINDINGS

According to the study, strategic human resource planning and state corporation performance in Kenya have a substantial positive link. It was found, however, that State firms were to some extent not adopting competitive recruitment criteria and do not undertake needs assessments prior to hiring employees. This has caused issues including a lack of staff members with the necessary knowledge and abilities to carry out specific technical duties and an inability to predict the number of workers needed to replace retiring, dying, and resigning employees.

CONCLUSIONS

The study finds that although there was a significant positive relationship between strategic human resource planning and the performance of State corporations in Kenya, there are still issues with understaffing, workers’ lack of technical skills, and ineffective human resource plans.

RECOMMENDATIONS

According to the survey, the majority of Kenya’s state enterprises lacked the personnel necessary for efficient operation with regard to specialized knowledge and abilities. In order to encourage the spirit of specialization and improve performance, this study advises top leadership of State corporations to reassess their recruitment procedures. The study found it difficult to predict how many people will be needed to complete specific jobs. According to this study, human resource managers of state corporations should consult with outside human resource consultants or experts to help them forecast the knowledge, expertise, and manpower that may be needed to handle performance issues as a result of the growing demand for public services.

Suggestion for Further Studies

Since the study was limited to strategic human resource planning and performance of State corporations in Kenya, further studies should seek to examine the moderating role of technology on the relationship between strategic human resource planning and performance of State corporations in Kenya to measure convergence or divergence of the results. Other researchers should seek to replicate a similar study in other countries to ascertain collaboration of the results. Researchers should go ahead and conduct comparative studies among countries in East Africa such Uganda, Tanzania and Rwanda to compare the findings in terms of performance of State corporations.

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