THE MODERATING EFFECT OF LEADERSHIP STYLE ON THE MEDIATING EFFECT OF HUMAN RESOURCE MANAGEMENT PRACTICE ON THE RELATIONSHIP BETWEEN CORPORATE GOVERNANCE AND PERFORMANCE OF INSURANCE COMPANIES IN KENYA
Abstract
Background of the Study: The need for good corporate governance has gained attention both locally and globally due to the corporate crisis and collapses experienced in the recent past across the globe. Financial firms have previously collapsed due to serious malpractices and it has elicited the need to review corporate governance laws for adoption by firms.
Objective of the Study: The objective of the study was to establish moderating effect of leadership style on the mediating effect of human resource management practice on the relationship between corporate governance and performance of insurance companies in Kenya.
Research Methodology: Philosophical foundation of this study was positivism and cross-sectional survey design was adopted. The study population comprised of 52 insurance companies in Kenya as at December, 2017. Census method was used to obtain the number of senior management where a CEO and Human Resource Managers were used from each insurance company. Two general employees were selected from each of the 52 insurance company totaling to 104. Primary data was gathered using questionnaires.
Results and Findings: The study established that there is a significant moderating effect of leadership style on the mediating effect of human resource management practice on the relationship between corporate governance and performance of insurance companies in Kenya. The null hypothesis was rejected.
Conclusions and Recommendations: The study concluded that the moderated mediating effect of human resource management practice and leadership style on corporate governance influenced performance of insurance companies positively. The study recommends on creation of communication channels so that the benefits that come with the adoption of corporate governance can be clearly communicated to all the employees for easy adoption. The insurance firms can utilize the findings of this study to enrich the HRM practice, such as performance appraisal, service delivery, training programs, benefits and recruitment policies. Insurance companies’ performance improved through integrating human resource practice and leadership style on corporate governance.
Keywords: Corporate Governance, Human Resource Management Practice, Leadership Style, Performance, Insurance Companies & Kenya.
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