Human Resource Planning Subsystem and Firm Performance of Listed Companies at the Nairobi Securities Exchange in Kenya

Abstract

Globally, information systems have revolutionized various sectors of the economy, and their significance is particularly pronounced in developed countries. Human Resource planning subsystem has emerged as a time-saving and cost-effective solution in managing human resources. The study aims to explore whether there is a significant link between Human Resource planning subsystem utilization and the performance of listed companies at NSE. This study examines the relationship between Human Resource planning subsystem and firm performance of listed companies at the NSE in Kenya. Human Resource planning subsystem is a crucial tool adopted globally to streamline human resource management practices, including HR planning and performance management. The study analyzes the effect of Human Resource planning subsystem components, such as HR planning and firm performance, particularly focusing on the financial perspective, using the return on assets ratio. The study adopts an explanatory research design to identify causal links between Human Resource planning subsystem factors and firm performance. Both primary and secondary data are utilized in this research. Secondary data from financial statements provided by the Capital Markets Authority is combined with primary data collected from questionnaires and interviews conducted with HR managers of thirty listed companies. The study establishes that Human Resource planning subsystem components have a positive influence on the performance of companies listed at NSE. Human Resource planning subsystem facilitates the Workforce Demand Forecasting, Workforce Supply Forecasting, Skills Inventory and Analysis, Succession Planning leading to enhanced performance. Moreover, Human Resource planning subsystem aids in decision-making related to salary increments, promotions, retention, recognition of performance, layoffs, and identification of underperforming employees. The study further reveals that Human Resource planning subsystem effectively manages external information outside the organization, contributing to improved performance. Additionally, Human Resource planning subsystem enables employees to access their payroll information offsite, promoting convenience and reducing payroll administration expenses. Based on the findings, the study concludes that Human Resource planning subsystem, particularly the recruitment and selection subsystem, significantly affects firm performance among NSE-listed companies. Additionally, HR planning subsystem also plays a crucial role in influencing firm performance. To enhance firm performance, the study recommends the implementation and improvement of the Human Resource planning subsystem. Furthermore, it suggests investing in the enhancement of the Human Resource planning subsystem, as it has a direct impact on a firm's performance.