Total Quality Management and Organizational Performance of Deposit Taking Micro Finance Institutions in Nyandarua County, Kenya

Abstract

In Kenya, micro finance institutions have continued to grow though most of them continue to face serious financial difficulties and poor performance. The micro finance institutions have barely been able to grow the customer base and have faced stiff competition from other players in the financial sector. The firms have experienced internal inefficiencies in customer focus as the financial sector transforms powered by innovations with a change customer demand. While studies indicate that total quality management is important for businesses, there still exists a dearth of information on its effect on the organizational performance of deposit taking microfinance institutions in Nyandarua County. The study adopted a descriptive survey research design. The target population comprised 86 managers of 11 micro finance institutions in Nyandarua County, Kenya. A census approach was adopted. Primary data was collected through semi structured questionnaire and administered through the drop and pick method. Secondary data was extracted from the managements and financial reports and corporate handbooks. The study findings indicate that all the four Total Quality Managements practices (management commitment, customer focus, employee engagement and continuous improvement) affected the performance of micro finance institutions in Nyandarua County. Continuous improvement had a significant effect on the micro finance institutions performance. However, the effect of management commitment, customer focus and employee engagement on micro finance institution performance were lowly rated. The study thus concluded that among the Total Quality Management practices under considerations, continuous improvement had the most significant effect on the performance of the micro finance institutions in Nyandarua County. The study recommended that the micro finance institutions should re-evaluate the policies for quality improvements to ensure that management is fully supported to influence desired total quality. Clear guidelines on quality goals achievement should be fully disseminated to the managers to ensure that the right strategies are adopted and implemented.