Effect of human resources management practices on employee performance of manufacturing firms in Nairobi industrial area, Kenya

Abstract

Employee performance in the manufacturing firms in the country have been faced with a lot of challenges and many of them have not been sustainable, making the company to lay off workers. Therefore, the study assessed the effect of human resources management practices on employee performance of manufacturing firms in Nairobi Industrial Area with a view of increasing employee performance. The study sought to establish the influence of recruitment, training, reward and employee retention and how they influenced employee performance level of manufacturing firms in Nairobi Industrial Area. The study adopted the goal setting theory and incorporated key human resource management practices into the model as a function of employee performance. The theoretical models that were used in the research study included; Human Capital Theory, Equity Theory and lastly Goal Setting Theory. The study employed an explanatory research design. The target population was 180 different manufacturing firms in Nairobi Industrial Area. Self-administered questionnaires was used to collect primary data. The study collected primary data from a sample of 180 which were selected through simple random sampling. The data collected was tested and analyzed and Recruitment, training, reward and employee retention were found to have significant effect on employee performance. Descriptive statistics was computed to describe the characteristics of the variables in the study while multiple regression analysis was used to establish the nature of the relationships between the independent and dependent variables. Regression analysis was also done to obtain the relationship between the above mentioned variables on employee performance. Regression analysis established that recruitment was 0.431, p= 0.000<0.05 .This implied that for every one percent increase in coefficient of recruitment practice, employee performance would increase by 0.431 percent. Coefficient of training practice was 0.378 p= 0.006<0.05. This implied that for every one percent increase in coefficient of training practice, employee performance would increase by 0.378 percent. Coefficient of reward practice was 0.359 p = 0.000 < 0.05. This implied that for every one percent increase in coefficient of reward practice, employee performance would increase by 0.359 percent. Applying regression model, the results revealed that coefficient of employee retention was 0.218, p = 0.002 < 0.05. This implied that for every one percent increase in coefficient of employee retention, employee performance would increase by 0.218 percent. The findings indicate that there is significant positive relationship between compensation and manufacturing firms’ performance in Nairobi Industrial Area, training has a significant positive relationship with performance of manufacturing firms while recruitment had a significant positive relationship with manufacturing firms’ performance in Nairobi Industrial Area and employee retention also had significant relationship with organizational performance. The findings support the theory of goal setting that working towards a goal provides the motivation to reach that goal and this therefore will improve employee performance. The recommendations were human resource managers should offer a competitive compensation to their staff, offer adequate training and recruitment while having employee retention that ultimately improved manufacturing performance as shown by the research findings. Model summary show that the predictor variables used explain 42.3% of variations in dependent variable meaning that there are still other variables that affect the employee performance level of manufacturing firms in Nairobi Industrial Area. Therefore, the study suggests the need for future studies to focus on effect of human resource management practices on employee performance. The study concludes that recruitment, training, reward and employee retention had a positive relationship on employee performance of manufacturing companies in Nairobi Industrial Area, Kenya. The HRM practices have been adopted by the firms in order to achieve positive employee performance.