Mediation Effect of Employee Engagement on Talent Management Practices and Perceived Sustainable Competitive Advantage Nexus of Kenya’s Commercial Banks in Nairobi County

Abstract

The inability of commercial banks to attain sustainable competitive advantage that can be defended over time and that which competitors are unable to imitate have exposed banks to survival challenges in their operating environment. The main aim of the study was to investigate the mediating effect of employee engagement in the relationship between talent management practices and perceived sustainable competitive advantage of commercial banks in Nairobi County, Kenya. The study was buttressed by both resource based view and equity theory, positivist research philosophy and explanatory research design. A total of 3,098 employees from 329 branches of 42 commercial banks were targeted but only 354 were sampled given Yamane Formula. Questionnaires led to collection of primary data that was subjected to correlation, Pearson correlation and mediation analysis. There was a positive and significant effect of talent management practices on perceived sustainable competitive advantage as indicated by β=.447 and p=.000 respectively. Moreover, the effect of talent management practices on employee engagement was positive and significant relationship (β=.541,p=.000). Likewise, the effect of employee engagement on perceived sustainable competitive advantage was positive and significant (β=.218,p=.000). Finally, the findings(t-statistic 4.069>1.96) showed that there was significant partial mediation effect of employee engagement on the relationship between talent management practices and the perceived sustainable competitive advantage. To sum up, commercial banks via employee engagement have a direct effect of talent management practice on perceived sustainable competitive advantage. The study recommends to the management of commercial banks to attract and retain talented employees other than promoting a conducive working environment for employees to be satisfied and emotionally connected. Future study to be conducted in other sectors with the use of structural equation modeling givena number of dimensions of talent management and employee engagement.