Human resource audit practices and performance of commercial banks in Kenya

Abstract

Human resource audit is a key tool to the analysis of the key strengths of a firm, its weaknesses, its opportunities and threats in relation to its human resource capital. It is therefore very important that firms undertake human resource audit as a strategy to document its SWOTs (Strengths, Weaknesses, opportunities and Threats) as well as a strategy towards creating a competitive edge in the firm. Indeed, human resource audit is necessary in the development and identification of skills gaps and strengths which is critical to the attainment of organization goals and acquisition of a competitive edge. The research objective of the study was to determine the effect of human resource audit on performance of commercial banks in Kenya. The study used descriptive survey design because data was collected from several organizations. In addition, comparative data analysis was used. The target population for the study included all the commercial banks that are registered by Central Bank and operational in Kenya as at 31st December 2014. Primary data was used and the same was collected using a semi-structured questionnaire. Raw data collected from the field was cleaned for further analysis. Data was then subjected to SPSS for analysis and interpretations using descriptive statistics. Findings were presented in form of tables, pie charts and frequencies. Pearson‟s correlation was used to establish the relationship between HR audit Practices and performance of Commercial Banks. The results show that the banks human resource audit entails the examination of policies, procedures, documentation, systems and practices with respect to its human resource function. The management of the banks are committed to fostering co-operative relations with the unions representing the employees and the union leaders in order to achieve the banks objectives. Finally, human resource audit influenced various performance indicators in the banks including the employee, shareholders as well as the organization in general. Inter-correlation analysis carried out to test the relationship between HR audit practices and performance of Commercial Banks showed a significant relationship (r=0.697, n=79, p<.05) between them. The relationship between the variable is significant with strong relationship. Based on the findings, this study recommended that; Management should focus on analyzing and improving the human resource function in the organization. The human resource audit itself is a diagnostic tool, not a perspective instrument. Therefore the management should act on the finding and evolve its function to a level where it‟s full potential to support the organization‟s mission and objectives can be realized. Human resource audit should be applied on a sample basis of practices and systems for identifying problems and ensuring that sound accounting principles are followed.