Effect Of Transformational Leadership And Human Resource Management Practices On Financial Performance Of Deposit-taking Saccos In Kenya

Abstract

The Sacco Societies Regulatory Authority (SASRA) is a statutory state corporation established under the Sacco Societies Act (Cap 490) of the Kenyan law. The regulatory body from then standardized the operations by setting guidelines for operations and regulatory requirement that the Deposit Taking SACCOS must adhere for their operating licenses to be granted. The objective of this study was to establish the effect of transformational leadership and human resource practices on financial performance of Deposit Taking SACCOS in Kenya. Few or no studies have been done on areas around transformational leadership and human resource practices and financial performance of SACCOS in Kenya and therefore this study sought to link that knowledge gap. The study type conducted was a census focusing on SACCOS licensed to provide deposit taking services in Kenya in 2017. Both primary and secondary data was used for this study and data was analysed using Statistical packages for social sciences software (SPSS). Descriptive data analysis was conducted using linear regression model to analyse data. The study focused on four independent variables (transformational leadership practices, training and development practices, recruitment practices and compensation) whose effect on the dependent variable (return on assets) was predicted. The results of the data analysis indicates that transformational leadership, recruitment and training and development practices have significant positive effect on the return on assets for SACCOS. While compensation had a negative effect on the return on assets for SACCOS. The study indicated that the variables under study are correlated to one another. The expectation is that the findings of this research will assist in filling that knowledge gap and contribute to further research by considering the inclusion of SACCO characteristics such as common bond and duration of licensing by SASRA. The study also recommends that future research may focus on financial performance over different time periods for the same deposit taking SACCOS.