Turnaround Strategies and Performance of Savings and Credit Cooperative Societies in Kirinyaga County, Kenya

Abstract

Due to the current economic crisis of covid-19 pandemic many financial institutions like SACCOs have experienced poor performance and growth within their institutions thus creating a need for them to engage in turnaround strategies to survive. Despite the various studies conducted on turnaround strategies many have yielded inconsistent and conflicting empirical findings thus necessitating further empirical enquiries. This research study sought to determine the relationship of turnaround strategies and the performance of Savings and Credit Cooperative Societies in Kirinyaga County, Kenya. The key objectives were to find out the relationship between cost reduction strategies, revenue-generating strategy, managerial reorganization strategies, culture change strategy and the performance of Savings and Credit Cooperative Societies in Kirinyaga County, Kenya. The study were grounded on the following theories the Kurt Lewin theory, the resource-based theory, the contingency theory, the institutional theory and the balance score card. Similar studies carried out by other researchers were incorporated into the study to get the research gap. The study adopted the descriptive research design where a target population of all 128 SACCOs in Kirinyaga County, Kenya was used. Out of these a sample size of 117 SACCOSs was used. Stratified random sampling was used. The data was obtained by use of questionnaires. Pilot test was conducted to ensure content validity while Cronbach alpha was used to test the instrument reliability. The data results was sorted by the use of descriptive analysis, mean, multiple regression and correlation coefficient. The study findings were presented in the form of tables, charts, graphs, percentages and frequencies. The study established that cost reduction strategies, revenue generation strategies, managerial reorganization strategies and culture change strategies had a positive significant relationship with the performance of Savings and Credit Cooperative Societies in Kirinyaga County, Kenya. The study concluded that cost reduction causes a definite increase in margins. The saving in cost may also be passed to consumers in the form of lower prices or more quantity in the same price. Increasing revenues are a sign of good financial health of a business. A revenue strategy is a plan that focuses on increasing company income by maximizing both short- and long-term sales potential. When an organization eliminates layers of management during its restructuring, communication and decision-making often improve. Simplifying management reorders the organizational hierarchy of a company, opening the lines of communication and removing barriers to productivity. The organizational culture change brings about a better work environment. The right culture improves employees’ day-to-day interactions and helps create a smoother, more streamlined workplace. The study recommended that the organization should outsource non-core activities, such as payroll, call handling, and transaction processing; aggressively control of overheads and use their bargaining power to negotiate better pricing with suppliers. The organization should define its revenue goals in each stage of its business operations. Instead of spending resources trying to gain new customers, the organization should focus on upselling or cross-selling current customers. An organization reorganization process must be undertaken with sensitivity, strategy and foresight. This can be done by finding out the reason why the upper management wants to reorganize in the first place. The organization should define desired values and behaviors by articulating how those would translate into actionable behaviors at all levels.