A Survey Of Relationship Between Strategic Human Resource Management Practices And Performance Of Firms Quoted In The Nairobi Stock Exchange

Abstract

Our understanding of how progressive human resource management impacts on performance of a firm is still limited. Existing researches on the area is still limited by their emphasis on measuring performance using financial indicators only at the expense of a broader range of outcome variables. The study contributes to the debate and investigates two issues regarding strategic human resource management among firms quoted in the Nairobi Stock Exchange. One is the alignment between corporate strategy and human resource strategies. Second is the relationship between human resources practices and firm performance. Cross-section survey is used and information was gathered using closed ended questionnaire from the respondents who were the chief executive officers and heads of human resource departments. Strategic stance is measured using Miles and Snow typology and evaluated the extent to which the firm is a prospector, defender, analyzer and reactor. Firm's performance was measured using both financial and non-financial variables while human resource practices are measured using natural bundles such as recruitment and selection, employee relations, performance management, salary and benefits and training and development. Several limitations such as use of few informants and method of self report were encountered and recommendations were made on how to overcome such limitations in future studies. Spearman's correlation co-efficient was used to establish the relationship human resource management practices and firms performance. The findings suggest that human resource management function in most firms quoted at the Nairobi Stock Exchange is not fully developed. Human resource management practices are significantly related with performance. The study results provide support for the suggestion that investment in human resource management practices can subsequently help a firm perform better. Several recommendations are made which requires management attention to make the important function human resource management to increase its contribution to the firm bottom line.