Human Resource Management Practices and Firm Performance: A Study of Manufacturing Firms in Kenya

Abstract

Manufacturing in Kenya account for the greatest share of industrial production output characterized by relatively low value addition of 7.5 per cent recorded in 2010 to 2.3 per cent recorded in 2011, low employment and capacity utilization and a paltry 25 percent export volumes. However, the share of Kenyan products in the regional market is only 7 percent of the US $11 billion regional market and its contribution to the GDP has remained at about 10 percent since the 1960s. This has given rise to the concern that practicing managers have put little effort to improve the situation. This study therefore sought to establish the relationship between Human Resource Practices and firm performance in the manufacturing firms in Kenya. Used a census survey of the 68 medium and large manufacturing firms whose core activities involved in production and marketing of edible oils, soaps and detergents, beverages or sugar registered in the Kenya Association of Manufacturers directory 2012. Data was collected through self administered questionnaires sent to the Production Manager, Brand Manager, Human Resource Manager, Marketing Manager, or the relevant manager dealing with innovations. The main findings of this study reveals that manufacturing firms apply human resource management practices to different extents. For instance, some models of human resource management practices such as licensing are not commonly used, while others like hiring of skilled employees and teaching company schemes are very common with average composite mean score of 4.00 and 4.08 out of the best score of 5.0 respectively.