THE ROLE OF PERFORMANCE MANAGEMENT ON STRATEGY IMPLEMENTATION IN THE INSURANCE INDUSTRY IN KENYA

Abstract

Since performance management plays a vital role in strategy implementation, the extent to which an organization has been able to maintain a proper performance management system will have a direct impact on the success of implementing strategy. This study aimed to assess the role of performance management on strategy implementation. The general objective of this study is to determine the role of performance management on strategy implementation in the insurance industry in Kenya. The study was guided by the following research objectives performance contracting, performance monitoring, performance evaluation, performance related compensation, employee development plans and commitment of top level management. The study was limited to the Insurance companies in Kenya. This study adopted a descriptive survey design. To ensure fair representation and generalization of finding to the general population, stratified sampling methods were used; specifically random stratified sampling technique which will ensure different subgroups of the employees’ fraternity in the selected 5 insurance companies within Nairobi County are represented in the study. Primary data was collected through questionnaires which contained questions designed to elicit data in accordance with the research questions. The questionnaire contained both open and close ended questions. The regression model shows that, a goodness of fit as indicated by the coefficient of determination r² with value of 0.605. This implies that independent variables performance monitoring, performance evaluation; performance related compensation and employee development plans explain 60.5% of the variations as a result of the factors affecting the implementation of strategic plan   in insurance industry in Kenya. 39.5% of variations are brought about by factors not captured in the objectives. The data findings analyzed also shows that taking all other independent variables at zero, a unit increase in performance monitoring will lead to a 0.191 increase in effect on strategy implementation. A unit increase in performance evaluation will lead to a 0.466 increase in effect on strategy implementation; a unit increase in employee development plans will lead to a 0.063 increase in effect strategy implementation while a unit increase in performance related compensation will lead to a 0.233 increase in effect on implementation of strategy implementation.