EFFECTS OF INTERNAL ORGANIZATIONAL POLICIES ON PERFORMANCE OF GOVERNMENT OWNED COMMERCIAL BANKS IN KENYA
Magdalene Mutheu Makau - Master of Public Policy and Administration, Kenyatta University, Kenya
Dr. Wilson Muna - Department of Public Policy and Administration, Kenyatta University, Kenya
ABSTRACT
Organizational internal policies are rules and guidelines that determine how activities are carried out in an organization. Changing markets and the business operating environment demand that any organization seeks to increase its performance develop and implement internal policies. For commercial banks it is important for them to develop and adopt internal policies that enhance their performance and chances of survival. This was done by looking at the effects of internal organizational policies on performance of government owned commercial banks in Kenya. The study was guided by looking at these variables to determine the effect of credit appraisal policies on performance of government owned commercial banks in Kenya, to examine the effect of recruitment policies on performance of government owned commercial banks in Kenya, to assess the effect of employee promotional policies on performance of government owned commercial banks in Kenya and to establish the effect of employee welfare policies on performance of government owned commercial banks in Kenya. The study was anchored on Theory of Information Asymmetry, Objective factor theory, Functional Theory of Labor Welfare, bureaucratic theory and Theory of the firm. This study used a descriptive research and the study targeted all the six government-owned commercial banks in Kenya. The study collected primary data through the use of questionnaire which had open-ended and close-ended questions so as to collect both qualitative and quantitative study. The instrument was piloted to test for validity and reliability. Descriptive statistics was used to analyze quantitative data after it was coded into descriptive codes which were analyzed using Statistical Package for Social Sciences (SPSS) version 23.0 computer program. Content analysis was used on qualitative data from the open-ended questions. Multiple regressions linked independent and dependent variables and findings were given in form of frequency tables, percentages and proportions.The study found out that commercial banks had implemented the internal rating system that had brought an improvement in the credit performance of the banks to a great extent. Recruitment method employed by the commercial banks helped to improve the performance of the employees. Commercial banks promoted performing employees and motivated employees to achieve better performance. Employees were provided with effective welfare facilities that were likely to stimulate performance-oriented employee. The study concludes commercial banks had the knowledge on how to establish their borrower’s creditworthiness. Commercial banks promoted employees who performed better with good intelligence to retain them and encouraged others to also work smart to achieve better performance. The study recommends that all commercial banks and even financial institutions should ensure that they possess efficient and effective credit appraisal techniques to be able to measure the reducing asset quality problems to improve the banks performance. Commercial banks should use good approaches which in turn can lead to selection of quality employees which gives a better organizational performance. The management of commercial banks should employ less subjective ways in setting targets, performance measurements performance review and giving incentive to employees in the promotion practices in order to enhance employee commitment and therefore improve the performance of the organization. Commercial banks should conduct employee satisfaction surveys so as to establish ways in which the banks can provide the best working conditions for their employees to improve their productivity and in turn that of the firm. The researcher sought authority from the relevant authorities. These authorities included the Kenyatta University, the National Science and Technology Commission, County Director of Examination and County Commissioner, Nairobi County.
