EFFECT OF STRATEGIC LEADERSHIP ON PERFORMANCE OF INSURANCE FIRMS IN KENYA

Abstract

Effective strategic leadership is essential in development of organizational goals and is key in driving the firm to achieve these goals. Due to mixed performance of insurance companies linked to leadership issues, this study interrogated the effect of strategic leadership on the performance of insurance firms in Kenya focusing on strategic direction, employee involvement, communication and ethical practices. Anchoring on Path-goal, Upper Echelons and Institutional theories, the study conducted a descriptive survey of the 55 insurance firms operating within Kenya where strategy manager/risk/human resources managers and the financial managers were targeted. Yamane formula was used to determine a sample size of 142 respondents were sampled through stratified random methods. A structured questionnaire was used to collect the quantitative data which was analysed through Statistical Package for Social Sciences version 24. Descriptive and inferential statistics were used but before conducting inferential analysis, diagnostic tests were conducted. The findings showed that strategic direction, employee involvement and communication practices influence performance of Kenyan insurance firms positively and significantly. The adoption of ethical practices was however established to be weak to trigger a significant influence on performance of Kenyan insurance firms. The findings led to a recommendation for insurance firms to upscale adoption of strategic direction practices such as establishment of a clear communication of the mission, organization goals, and definition of the business model ; develop human resource policies aimed at increasing participation of employees, involvement of employees in decision making and increased teamwork and coordination ; adoption of communication practices such as development of a comprehensive communication structure and organizational feedback system which is specific and timely. There is also a need to advance adoption of ethical practices, revisit its modality, approach and policies in order to lead to a significant influence on performance.

Key Words: Strategic Direction, Employee Involvement, Communication, Ethical Practices, Performance of Insurance Firms in Kenya.