Organisational Factors Influencing Financial Performance Of Private Companies In Kenya: A Case Of KTDA Factories In Aberdare Ranges Regions

Abstract

Financial performance is an important measure of the productivity and effectiveness of an organization. This is because it is an indicator of the ability of an organization in using its resources to generate wealth, profits and returns for stake holders. There are several determinants of financial performance including the resource use, employee productivity, leadership in the organizations. The purpose of this study was to identify and examine how organizational factors which include top management and support team, organizational structure and the corporate governance influence the financial performance of KTDA factories. The aim of the study was to get data on these organizational factors and analyze them with a view of finding out their relationship with financial performance of the of KTDA factories that were sampled. The study used the quantitative research method. A census was done on 9 factory managers and their assistants, finance officers and human resources managers. The total population comprised of 18 factory managers and their assistants, 9 finance officers and 9 human resources managers all totaling 36 target respondents. The study solely relied on primary data for research information. Questionnaires were used to collect primary data from the participants. Regression analysis was done to find the correlation between each organizational factor and tea factories financial performance. The data was analyzed using SPSS software. The study found out that: Most of the respondents rated the organizational structures of the tea factories as highly layered and having occasional opportunities of impairing and negatively affecting the decision making processes. Most of the respondents had the feeling that the members of the top management cadres merited their positions but situations of challenges occasioned by poor employee performance attributed to unqualified personnel in top management positions were confirmed. All the respondents confirmed the tea factories had code of ethics that guided the interactions between the shareholders and the institutions. The ability of the codes of ethics to assure harmonious interactions by the membership was confirmed. All the respondents confirmed there had been instances of strained internal relations which they attributed to the inadequacies of the codes of ethics in use. The study recommended that: organizations should strive to ensure that they have lean organizational structures as a measure of reducing operational costs and enhancing efficiency. In the situation of the tea factories, conferring them with independence from the KTDA parent company may greatly enhance their positions in terms of freeing them from obligations to the parent company. The top management in private companies should equally be implored on to carry out its activities diligently as a measure of ensuring that the ideals of the organizations are met. The organizations should ensure that the recruitment of the top managers is driven by merit and ascension in the organizational hierarchy is meritorious. Private companies should work towards enhancing their corporate governance thresholds to earn industry respect and elicit attention from peers. The tea factories should seek to ensure that the prescribed tenets guiding corporate governance expectations are adhered to as a measure of assuring them confidence from peers and other partners collaborating with them in different lines of business.