Abstract:
The concept of employee remuneration has remained a key factor of organizational
performance. Organizations that compensate their workers effectively are likely to
achieve maximum productivity and vice versa. With increased competition and changing
business environments, both small and large organizations in the local and global
context are experiencing deteriorating performance related to inappropriate
remuneration practices. The aim behind this study was to assess employee remuneration
determinants and the performance of micro finance institutions in Kenya. The specific
objectives of this study were to; examine the relationship between employee
competencies, compensation policy, technology and labour market conditions and
performance of microfinance institutions in Kenya .The study was anchored on human
capital theory and supported by agency theory, efficiency wage theory and technology
acceptance theory. The study adopted descriptive research design to establish the
problem that was under investigation. It was appropriate because it explored and
described the relationship between variables in their natural setting without manipulating
them.The target population of the study were 56 microfinance institutions operating in
Kenya. Purposive sampling technique was adopted to select the sample of the study.
Structured questionnaires were instruments of data collection due to their effectiveness
of capturing respondent information in a structured manner and the opportunity of
respondents giving their views freely without interference from the researchers.
Secondary data was collected from human resource records, related studies and books.
Validity and reliability of the research instruments were tested through a pilot study
using four employees selected from 2 MFI’s operating in Nairobi County, Kenya (Faulu
Kenya and Kenya Women Finance Trust). Internal consistency of the instrument was
tested using Cronbach’s Alpha method. Data was analyzed using Statistical Package for
Social Sciences (SPSS version 20) software using descriptive and inferential statistics.
Structured questionnaires were used to collect data and t-test, Pearson correlation as well
as multiple regression analysis used to analyze the data. The F-test was used to test the
hypothesis of the study. SPSS Version 22 aided in the data analysis. The analyzed data
was presented in form of tables. It was revealed that employee competence,
compensation policies, technology and labour market conditions had a positive
relationship on performance of MFI’s in Kenya despite small extent of adoption. The
study concludes that unless MFI’s realized the value of recruiting highly qualified
workers, review compensation policies, integrate technology into the system and
assessing labour market conditions before compensating workers, gaining competitiveness will be an uphill task. Therefore, the study recommends that top
management of MFI’s should allocate adequate budgets to recruit competent staff, train
workers, form industry partnership, implement change and review compensation policies
for them to remain competitive.