EFFECT OF HUMAN CAPITAL MANAGEMENT ON EMPLOYEE PERFORMANCE AT CO-OPERATIVE BANK OF KENYA

Abstract

Purpose: The general objective of the study was to examine the effect of human capital management on employee performance at Co-operative Bank of Kenya. The study was guided by three specific objectives namely; to analyze the effect of employee skills, employee perception and employee engagement on employee performance at Co-operative Bank of Kenya. The study was anchored on theories of human capital and resource based view.Methodology: The study adopted a descriptive research design. This enabled the use of multiple methods for data collection and data analysis and purposive stratified random sampling technique was used with a target population of 198 employees and a sample size of 132. Primary data was collected using a self-administered questionnaire and analyzed quantitatively using descriptive and inferential statistics and presented using frequencies, percentages, tables and charts.Results: The study found out that human capital management has a strong influence on employee performance. The study therefore rejected the three null hypotheses and adopted the alternate hypothesis to indicate that there is statistical significance effect between the independent variables and the dependent variable. The findings revealed that employee skills have a statistical significant effect on employee performance. This was evident because the study found out that the bank develops its employees to take up more responsibilities and to improve on their performance. The study also found out that the bank identifies the training needs of employees using a formal performance appraisal mechanism. The study also found out that employee perception also influence employee performance positively. The study indicated that employees perceive that human capital management has a positive impact on skill development. The employees also perceive that they are recognized by the organization which has increased their self confidence ad as a result increased their performance. Employee engagement has also been proven to have a positive significant on employee performance. The employees feels that been engaged has increased their commitment. Engaging employees has helped the organization to achieve its objectives and goals. Contribution to theory, practice and policy: The study recommends that the organization should involve all the employees fully in decision making on decisions concerning development and conduct development on a yearly basis based on performance appraisal.