Effects of structural change on employee commitment in the Kenyan Banking industry: a case of mergers and acquisitions
Date
2019
Authors
Njeri, Kigera Susan
Journal Title
Journal ISSN
Volume Title
Publisher
Strathmore University
Abstract
Almost all organizations irrespective of their size or business type undergo some form of change. To muddle through emerging technologies, demographic and competitive forces, sector leaders must continue to find new techniques to help their firms attune to these circumstances and change their way of doing business. As a result of operating environment changes, several licensed institutions particularly commercial banks have had to change their structures. Since the year 1989, the Kenyan banking sector has experienced a wave of mergers and acquisitions that affect different aspects of the business such as employees, finances, and technology. Most bank employees view mergers and acquisitions as a threat to their jobs as shareholders often demand a reduction in the number of staff employed and this may affect their commitment. Several studies focus on structural changes but few explicitly seek to close the knowledge gap between organizational structural changes and employee commitment in the Kenyan Banking Sector for banks that have undergone mergers and acquisitions. This research, therefore, sought to address this knowledge gap by examining the effects of structural organizational change on employee commitment in the Kenyan banking sector in the context of Mergers and Acquisitions. The research was based on Systems theory which argues that a business is composed of organizations as systems of multiple internal relationships, as well as participants of the encompassing environments in which they operate. A change in one part of the system, for example, the organizational structure, affects another part of the system in this case employee commitment. The research used a descriptive research design. The population of the study is 913 employees from the 12 financial institutions that merged or underwent acquisition between 2008 and 2017. The sample size determined was 269 respondents from all 12 banks. Data was collected using a structured questionnaire and analyzed using different tools including regression analysis. The findings of the research revealed that structural changes specifically roles and responsibilities, reporting lines, and hierarchy levels have a significant impact on employee commitment. This research, therefore, recommends that banks should prioritize and concentrate on factors that boost employee commitment levels to remain competitive in the Kenyan banking industry. The research also showed that structural changes if not adequately comprehended can lead to a loss of morale and increased job dissatisfaction. This in turn leads to some employees looking for an exit strategy. It is therefore imperative that organizations put in place measures that address employees' concerns before, during, and after restructuring to facilitate minimum comfort and commitment.
Description
A thesis submitted to partial fulfillment for an award of a Master’s Degree at Strathmore University.