The relationship between strategic planning intensity and financial performance of Commercial Banks in Nairobi

Abstract

This was a survey on the relationship between strategic planning intensity and financial performance in commercial banks in Kenya. The collected data was analyzed and interpreted in line with the aim of the study. The respondents were two senior managers, preferably the Chief Executive Officer/strategic planning manager and the finance/capitalization manager ("team leadership") of these banks. Out of the eighty-eight (88) respondents to whom the questionnaires were administered, only sixty - two (62) respondents in the commercial banks in Kenya responded. Firstly, it was found that, strategic planning is critical to a bank's financial success, but it is critically complex looking at the level of expertise that exists in the bank to perform strategic planning. Secondly, the elimination of duplication of effort from the bank; making greater use of paraprofessionals; reducing overhead costs; and dealing with underperfonners are the managerial factors that moderate the relationship between strategic planning intensity and financial performance of the bank. The management's goal is to be perceived by clients as the quality leader in the areas in which they practice. Thirdly, it was found that factors that the commercial banks have given the best shot as some of the most practical ways to become more valuable to their clients than their best competitors are: staffing projects with innovative ways that render extra value; being better at accumulating, disseminating/building on accumulated expertise and experience. Fourth, it was found that the business processes of the commercial banks that the banks are dominant in to become more valuable to their clients than their best competitors are creating innovative solutions to clients' problems; turning inquiries into assignments ("sales process" effectiveness); developing and growing new partners from junior ranks; disseminating and sharing skills and knowledge among stakeholders. Lastly, it was found that the banks' operating environment factors, which in turn have some influence on the banks' strategic planning process and in achieving their goals on excellent level are: perception as quality leader in the areas of practice; attraction and retention of a fair share of the best individuals.