Influence of Commitment as a Transformational Leadership Outcome on Staff Performance of Kenya Microfinance Institutions
Abstract
Kenya has a very elaborate and expansive financial market and microfinance sector has become a key player in economic growth. This is mainly because it targets the unbanked and marginalized people especially in the rural areas and thus has direct impact on poverty eradication. As a concept, microfinance has been accepted across the globe as a forum within which poverty can be eradicated and financial inclusion extended. However various challenges define microfinance today and present a leadership challenge that needs to be tackled for the sector to improve and deliver its mandate. The study specifically looked at influence of commitment outcome on transformational leadership. This research is key to Kenyan government as it supports to come up with a clear framework for regulation of microfinance sector and offer leadership in the entire financial sector. The study targeted institutions that were engaged in retail microfinance and that are members of Kenyan Firm of Microfinance Institutions (AMFI). Primary data was gathered from the respondents whereas secondary data was obtained from AMFI on performance of institutions. Analysis of unit was staff in microfinance institutions that were categorized in to three: the senior management with whom an in-depth interview was conducted, middle level manager and the other staff who participated in daily activities of microfinance who were involved in a self-administered questionnaire. Performance was assessed through the load that microfinance officers carry in terms of the outstanding loan balance, the number of customers that individuals in the organization have as well as the portfolio quality and turnover rates within the organizations. Stratified sampling technique was used to obtain sample and sample size determined using the Cochran's formula to be 385 which was large enough to allow generalization. Descriptive approach used the pragmatic approach. A pilot study was carried out in Embu County to test data reliability of the data gathering tools. Data analysis was done using SPSS. A simple linear regression model that reflects relationship between the variables was estimated to establish the relationship.. The findings revealed that commitment has a positive and significant relationship with staff performance in microfinance institution. The study rejected the null hypothesis and concluded that commitment influenced performance in micro-finance institutions in Kenya. The study concluded that staff commitment as an outcome of transformational leadership had a positive and significant relationship on staff performance in micro-finance institutions in Kenya. The study recommends that organization should focus on changing the motives, believes and values that bring about new capabilities of the staff of the organization. Staff should be engaged in decision making and thus improve the decision making abilities of the organization and enhance competitive advantage. There is need for organizations to embrace the convention of commitment as a leadership development practice.
Keywords: Staff commitment, Transformational Leadership, Staff Performance, Microfinance Institutions in Kenya.
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