Human resource risk transfer practices and performance of commercial banks in Kenya

Johnstone Kuya; Nicholas Otado

doi:10.51867/ajernet.7.1.106

Authors

Johnstone Kuya East African University of Rwanda, Rwanda
Nicholas Otado Kiriri Women's University of Science and Technology, Kenya

DOI:

https://doi.org/10.51867/ajernet.7.1.106

Keywords:

Commercial Banks, Human Resource Risk Transfer Practices, Performance, Kenya

Abstract

With a penetration of more than 70% among Kenyans, commercial banks are a strong force behind the Kenyan economy, contributing more than 5% of the country's Gross Domestic Product [GDP]. As the primary cash custodians and financiers of the major economic activities, commercial banks need to be protected through fostering a risk-tolerant corporate environment. The main challenge is that most of the risks that commercial banks face either originate from or are fueled by employees. This study aimed at investigating the relationship between Human Resource (HR) risk transfer practices and the performance of commercial banks in Kenya. The risk transfer practices were insurance covers, employee indemnification, outsourcing, and technological risk transfer methods. The study was anchored on the risk compensation or risk homeostasis theory with a positivist research philosophy using a descriptive research design. A census survey covering all the 38 licensed banks at the time of the study with a total of 228 respondents was analyzed using descriptive and inferential statistics. Frequencies, percentages, and standard deviations were produced by descriptive analysis, while correlation and regression results from inferential analysis helped to identify the relationship between the variables. The hypothesis was tested using analysis of variance (ANOVA), correlation analysis, and multiple regressions, while Pearson's Product Moment Correlation Coefficient (r) was used to establish the correlation. From the results, the relationship between the HR risk transfer practices and performance was strong (R=0.67>0.5), positive, and linear. The R-squared of 44.90% indicated that the variance in performance could be explained by HR risk transfer practices. In addition to this, the p-value was statistically significant (p=0.000<0.05), leading to the conclusion that the relationship between HR Risk Transfer Practices and Performance was statistically significant. This study suggested a replication of similar studies using different samples, study contexts, and methodologies to continuously evaluate and inform on the need for a strong HR risk management environment as a boost for organizational performance. This study also advocates for routinely revamping HR risk mitigation measures and practices and strengthening the emerging HR risk policies in the wake of modern-day challenges such as the COVID-19 epidemic that has had a significant disruption on the normal operations of organizations around the world.

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