Human Capital Focus and Organisational Performance in Kenya

Abstract

Leadership and governance determines success of organisations of all types and their sustainability hence the interest in what effective leadership is and how it relates with effectiveness of organisations. Drawing from strategic leadership model and transformational leadership theory we examined the relationship between human capital focus and organisational effectiveness in a Kenyan context using cross-sectional survey of 133 managers in savings and credit cooperative societies. We found that leaders had a moderate human capital focus (M = 3.91, SD = .69), performance was moderate (M= 3.80, SD = .79) and that three leader human capital focus behaviors reported by followers: ‘considers my feelings before acting’( r = .324, p < .001), ‘sees that my interests are given due consideration’ (r= .216, p = 0.012)’, and ‘encourages me to be the best that I can be’(r = .508, p < .001), were positively and significantly related with organizational effectiveness while ‘behaves in a manner which is thoughtful of my personal needs’ (r = .044, p = .616 > .05) was not significantly related with organisational effectiveness. In particular, inspiring the followers including encouraging them to be the best that they can be had the strongest relationship with performance. Overall, human capital focus was moderately correlated with organisational effectiveness (r = .359, p <.001). In addition, consideration of feelings and encouragement of followers significantly influenced probability of satisfactory performance by increasing the odds of satisfactory performance by about two times (exp (B) = 1.904) and more than threefold (exp (B) = 3.301) respectively. However, ‘thoughtfulness’ and ‘attention of follower interests’ did not significantly influence the odds for organizational effectiveness (satisfactory performance) (thoughtfulness: Wald = 1.781, t = .182, exp (B) = .641; attention to follower interests: Wald = 1.409, t = .235, exp (B) = .745). These findings suggest that leaders should improve human capital focused behaviors in order to improve their performance because the practice of these behaviours and performance were only moderately satisfactory. Further, there is need to conduct further study to determine why leaders’ thoughtfulness of followers’ personal needs appeared not to significantly relate with performance