Strategic Alignment and Performance of Commercial Banks in Nyeri County, Kenya
Muthaura, Martin Kimathi
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One of the biggest performance problems facing the financial sector is non-repayment of loans, weak legal structure, ineffective lender recourse and bad debt recovery strategies. The commercial banks have suffered due to NPLs which reduces their profits through credit losses and direct write-offs for those loans that turn into bad debts which eventually shrinks the money available for provision of loans. These problems have threatened the failure and collapse of some banks in Kenya. Based on this gap, the study investigated on the influence of strategic alignment on performance of commercial banks in Nyeri County. The study’s specific objectives included business cultural alignment, organizational structural alignment, technology alignment and resources alignment. The study employed descriptive research design and its targeted 14 commercial banks in Nyeri County and 126 employees of the banks. Questionnaires were used to collect primary data for the study and the instrument was semi-structured and was piloted tested by 18 staff of two commercial banks in Kirinyaga County. The researcher dropped the questionnaire at the workplace of the respondent and later picked them for analysis that was descriptive and inferential statistics and analysis was done. The findings were presented in tables, figures and discussions for qualitative analysis. The findings from correlation analysis showed that r values and p-values ranged from 0.5 to 0.9 an indication that strategic alignment significantly affected performance in the commercial banks. Structural alignment had the highest r values and thus the strongest effect to performance, followed by technological alignment, resource alignment and lastly cultural alignment had the least effect to performance. The results also showed that 64.2% of the variations in the banks’ performance can be traced to strategic alignment. The study concluded that strategic alignment employed by the commercial banks led to its improved performance. The culture of information sharing, participation and engagement of all employees and structure that divides the labor, coordinates work processes and communication channels led to improved performance. The study also concluded that technological alignment through modern-day banking technologies, investing and equipping the bank with new technologies that is accessed by all staff and availability of financial and human resources under resource alignment resulted in improved bank performance. The implication is that strategic alignment affected commercial bank performance hence the recommendation is for other commercial banks in different regions and other organizations to adopt strategic alignment as they seek to improve their performance. The study recommends that other organizations seeking to improve performance in profitability, market share and customer and employee satisfaction to adopt the use of elements of strategic alignment.