Strategic Human Resource Management Practices and Performance of Sugar Manufacturing Firms in Western Kenya

Abstract

The purpose of the study was to determine the relationship between Strategic Human Resource Management practices and Firm Performance. To achieve the objective, the study used a crosssection descriptive survey design in which 8 human resource managers in 8 sugar manufacturing firms in Western Kenya were investigated. They included Mumias Sugar Company, Nzoia Sugar Company, South Nyanza Sugar Company, West Kenya Sugar Company, Muhoroni Sugar Company, Kibos Sugar Company and Butali Sugar Company. The collected data in the study was analyzed and interpreted in line with the objective of the study. Strategic human resource management practices were based on the key functions namely recruitment and selection, training and development, training effectiveness and evaluation, performance-based compensation, flexible benefits, employee relations practices, consultative performance appraisal and human resource planning. Performance on the other hand was conceptualized through performance indicators such as quality of products, services or programmes and development of new products, services or programmes, efficiency of operations, profitability, sales growth,. The primary data was collected using questionnaires and analyzed using tables, means, percentage standard deviation and Pearson product moment correlation technique. Response rate was 100%. The study revealed that most of the firms had 500-1000 employees. The extent of information flow between human resource department and other departments was very great at 37.5%. The extent to which human resource department was treated as a specialized function was great at 50%. The study findings also revealed that strategic human resource management practices based on the key functions were practiced in all the firms under study. However the extent varied amongst the firms. The study examined the performance of the firms based on performance indicators such as quality of products, services or programmes and development of new products, services or programmes, efficiency in operations, profitability and sales growth. The sugar manufacturing firm’s performance in comparison to other firms in the same industry was generally above average. The study analyzed the relationship between strategic human resource management practices and firm performance using Pearson product moment correlation technique. The results revealed positive correlations ranging between 0.4 and 0.7 meaning that with improvement in Strategic Human Resource Management Practices, Firm Performance also increased. Thus the findings support the universalistic perspective. The study recommends that the firms should undertake efforts to improve the strategic human resource management practices to have improved performance. The study had two limitations which were that the study only captured views from one respondent in every organization. This made it difficult to compare the finding of the respondent with other respondents in an organization which is usually important in spotting bias in a respondent’s response. The other limitation was that some respondents may have feared giving information that their organization was not profitable, or had low sales. The study suggests that future researchers should do the same study in purely public or private organizations. The study recommends that future researchers should do a regression analysis study to establish the extent to which the strategic human resource management practices influence firm performance. This is because this study focused on establishing the relationship between human resource strategic practices and firm performance and not the extent to which the human resource strategic practices relate with performance.