Ian Thomas Maina Mba 2019

STRATEGIC MANAGEMENT PRACTICES AND THE EFFECT ON THE
PERFORMANCE OF NON-GOVERNMENTAL ORGANIZATIONS IN KENYA
BY
IAN THOMAS MAINA
UNITED STATES INTERNATIONAL UNIVERSITY-AFRICA
SUMMER 2019
STRATEGIC MANAGEMENT PRACTICES AND THE EFFECT ON THE
PERFORMANCE OF NON-GOVERNMENTAL ORGANIZATIONS IN KENYA
BY
IAN THOMAS MAINA
A Research Project Report Submitted to the Chandaria School of Business in Partial

Fulfillment of the Requirement for the Degree of Masters in Business
Administration (MBA).
UNITED STATES INTERNATIONAL UNIVERSITY-AFRICA
SUMMER 2019
STUDENTS DECLARATION
I, the undersigned, declare that this is my original work and has not been submitted to any
other college, institution or university other than the United States International
University-Africa for academic credit.
Signed: _________________________ Date: _________________________

Ian T. (ID: 650223)
This project report has been presented for examination with my approval as the appointed
supervisor.
Signed: _________________________ Date: _________________________

Professor Maina Muchara
Signed: _________________________ Date: _________________________

Dean, Chandaria School of Business
ii
COPYRIGHT
All rights reserved. No part of this research report may be photocopied, documented,
stored in recovery system or transferred in any means without prior permission of United
States International University-A or the author.
© Copyright by Ian T. Maina, 2019.
iii
ABSTRACT
The general objective of this research was to investigate strategic management practices
and the effect on the performance of NGOs in Kenya. The research was governed by 4
specific research objectives which were: to investigate the effect of strategic planning on
the performance of NGOs in Kenya; to investigate the effect of governance on the
performance of NGOs in Kenya; to investigate the effect of strategic staffing on the
performance of NGOs in Kenya and, to investigate the effect of financial stability on the
performance of NGOs in Kenya.
The research employed a descriptive research technique focusing on a target population

of top, middle level and operations staff of 36 NGOs working in Siaya County. Stratified
random sampling technique was used to choose a particular sample for this research,
using a sample size of 108. In order to obtain both qualitative and quantitative data,
structured questionnaires containing open and closed ended questions were used in the
collection of data. Questionnaires were delivered through electronic mail and results
analyzed after completion. Data was analyzed using SPSS and presentation of the study
findings were through tables and figures for ease of interpretation and understanding.
The study established that there is positive and statistically significant relationships
between strategic planning, governance, strategic staffing, financial stability and the
performance of NGOs in Kenya. The study confirmed that strategic management
practices have an impact the performance of non-governmental organizations. Strategic
planning has an effect on performance, by putting an organization at the forefront in a
competitive business environment. This provides the organization with opportunities to
lead the market in making strategic decisions in an ever changing and complex
environment, thus more impact to the beneficiaries of the services provided. The study
established that there is a strong and positive correlation between governance and
performance of an organization. Governance recognizes the need and importance of
active employee engagement and participation, particularly in decision making thus
providing them with a platform to voice their opinions and actively participate in decision
making. The result of employees feeling that they have a voice is increased job
satisfaction, resulting into effective and enhanced organizational performance.
iv
The third finding was on the positive correlation between strategic staffing and
performance of non-governmental organizations. Strategic staffing helps an NGO achieve
organizational effectiveness. This factor also promotes governance, a sign that through
strategic staffing, organizational leadership and management becomes an easier task.
Moreover, the research established that financial stability is directly proportional to the
performance of an NGO and allows it to engage in diverse activities since it can allocate
resources based on their level of importance and priority. Through a stable financial base,
a non-governmental organization is favorably placed to compensate its staff effectively as
a way of motivating them to work effectively and improve on the organizational
performance.
The study concluded that strategic planning, governance, strategic staffing and financial
stability provide a much-needed competitive edge resulting in improved performance of
NGOs in Kenya. The research recommends that as part of governance, NGOs should
involve all stakeholders in decision making to provide the best ideas to trigger effective
performance. NGOs should be proactive and invest in strategic staffing to ensure that
their employees are suitable for the roles they occupy, and have the requisite leadership
skills and competencies for effective operations and management. The study recommends
that NGOs must prove financial stability to potential donors, partners and key
stakeholders through transparency and accountability. This will help in resource
mobilization to facilitate completion of the varied organization projects hence effective
performance. The researcher posits that there is need for further research to explore other
factors that affect performance of NGOs, to provide them with better resilient strategies to
enhance their performance.
v
ACKNOWLEDGEMENT
I would like to acknowledge the Almighty God for making it possible for me to undertake
this course and finish my research project. I acknowledge Professor Maina Muchara for
the supervision and continuous support while working on my research project. I am
grateful for the continuous support and encouragement from my family, colleagues and
friends.
vi
DEDICATION
I dedicate this research project to my wife, Cynthia Thomas who encouraged and
supported me throughout the research and to the management of sampled NGOs for their
support, openness and willingness to share information to aid the research.
vii
TABLE OF CONTENTS
STUDENTS DECLARATION…………………………………………………………..ii
COPYRIGHT…………………………………………………………………………… iii
ABSTRACT……………………………………………………………………………... iv
ACKNOWLEDGEMENT……………………………………………………………… vi
DEDICATION…………………………………………………………………………..vii
LIST OF TABLES……………………………………………………………………… xi
CHAPTER ONE………………………………………………………………………….1
1.0 INTRODUCTION…………………………………………………………………… 1
1.1 Background of the Study……………………………………………………………… 1
1.2 Statement of the Problem……………………………………………………………... 5
1.3 General Objective……………………………………………………………………... 7
1.4 Specific Objectives……………………………………………………………………. 7
1.5 Significance of the Study……………………………………………………………... 7
1.6 Scope of the Study……………………………………………………………………..8
1.7 Definition of Terms…………………………………………………………………… 8
1.8 Chapter Summary…………………………………………………………………... 10
CHAPTER TWO………………………………………………………………………..11
2.0 LITERATURE REVIEW………………………………………………………….. 11
2.1 Introduction………………………………………………………………………….. 11
2.2 Strategic Planning and Performance of NGOs………………………………………. 11
2.3 Governance and Performance of NGOs……………………………………………... 22
2.4 Strategic Staffing and Performance of NGOs……………………………………….. 36
2.5 Financial Stability and Performance of NGOs………………………………………. 40
2.6 Chapter Summary……………………………………………………………………. 46
viii
CHAPTER THREE……………………………………………………………………. 47
3.0 RESEARCH METHODOLOGY…………………………………………………..47
3.1 Introduction………………………………………………………………………….. 47
3.2 Research Design……………………………………………………………………... 47
3.3 Population and Sampling Frame…………………………………………………….. 48
3.4 Data Collection Methods……………………………………………………………..49
3.5 Research Procedures………………………………………………………………….50
3.6 Data Analysis Methods……………………………………………………………… 50
3.7 Chapter Summary……………………………………………………………………. 51
CHAPTER FOUR……………………………………………………………………… 52
4.0 RESULTS AND FINDINGS………………………………………………………..52
4.1 Introduction………………………………………………………………………….. 52
4.2 Response Rate……………………………………………………………………….. 52
4.3 Background Information…………………………………………………………….. 52
4.4 Descriptive Statistics………………………………………………………………… 54
4.5 Descriptive Statistics of Governance………………………………………………... 56
4.6 Descriptive Statistics of Strategic Staffing…………………………………………...59
4.7 Descriptive Statistics of Financial Stability…………………………………………. 61
4.8 Chapter Summary……………………………………………………………………. 67
CHAPTER FIVE……………………………………………………………………….. 68
5.0 DISCUSSION, CONCLUSION AND RECOMMENDATIONS………………... 68
5.1 Introduction………………………………………………………………………….. 68
5.2 Summary…………………………………………………………………………….. 68
5.3 Discussions…………………………………………………………………………... 69
5.4 Conclusion……………………………………………………………………………77
5.5 Recommendations…………………………………………………………………… 78
ix
REFERENCES…………………………………………………………………………. 80
APPENDICES………………………………………………………………………….. 87
APPENDIX 1: INTRODUCTION LETTER………………………………………….87
APPENDIX II: QUESTIONNAIRE………………………………………………….. 88
x
LIST OF TABLES
Table 4.1: Response Rate ................................................................................................... 52
Table 4.2: Age of Respondents .......................................................................................... 53
Table 4.3: Highest Level of Education .............................................................................. 53
Table 4.4: Number of Years Worked at the Organization. ................................................ 54
Table 4.5: Category of Employment .................................................................................. 54
Table 4.6: Descriptive Statistics of Strategic Planning ...................................................... 54
Table 4.7: Pearson’s Correlation Coefficients ................................................................... 55
Table 4.8: Pearson’s Correlation Coefficients ................................................................... 56
Table 4.9: Descriptive Statistics of Governance ................................................................ 57
Table 4.10: Pearson’s Correlation Coefficients ................................................................. 57
Table 4.11: Effect of Governance on Organizational Performance ................................... 58
Table 4.12: Governance and other Aspects of Organizational Performance ..................... 58
Table 4.13: Extent of Effect of Strategic Staffing on Organizational Performance .......... 59
Table 4.16: Descriptive Statistics of Financial Stability.................................................... 61
Table 4.18: Effect of Financial Stability Strategies on Organizational Performance ........ 62
Table 4.20: Strategic Management Practices and Performance of Non-Governmental
Organizations ..................................................................................................................... 64
Table 4.21: Model Summary of Strategic Management Practices and Performance of
Non-Governmental Organizations ..................................................................................... 65
Table 4.22: Anova Contribution of Strategic Management Practices and Performance ... 65
Table 4.23: Coefficients of Variables of Strategic Management Practices and
Performance of Non-Governmental Organizations ........................................................... 66
Table 4.24: Application of BSC......................................................................................... 66
xi
CHAPTER ONE
1.0 INTRODUCTION
1.1 Background of the Study
According to DeMars (2015), NGOs comprise of numerous groups and institutions that
are completely or to a great extent independent of the government, with a primary focus
on humanitarian efforts rather than commercial objectives (DeMars, 2015). Stoddard
(2006), opines that an NGO is best described as any organization, agency or institution
that is established on voluntarily basis to pursue selfless goals, with no profit making
intent and operates outside government influence (Stoddard, 2006).
To a large extent, NGOs are known to rely on donations or fees for services, and this
gives them the leeway operate autonomously from both the private and public sectors.
Others partner with and operate primarily under government contracts, while others
operate under some mix of the two (Green & Mathias, 2015). Another way to categorize
NGOs is by their level of operations, usually present on three levels. The first level
consists of NGOs that operate at the local level, and primarily focus on providing services
on a relatively small scale aimed at meeting local community needs and interests. The
second level consists of NGOs that operate on a national level, within one country, and
comprise of a consortium of larger organizations. The third level is characterized by
organizations that operate on international level and on a large scale, commonly referred
to as international non-governmental organizations (Brown & Korten, 2011).
NGOs can also be categorized by their type of activity. For example, those that act as
development catalysts, serve as public service contractors or people organizations, those
that operate as organizations that specialize either in service delivery, or provide sector
support and networking functions. Brown and Korten (2011), hold the opinion that, it is
reasonable to assume that many organizations hold more than one of these roles even
though it is important to identify the types of activities and behavior of NGOs (Brown &
Korten, 2011). NGOs can also be differentiated based on the focus of their work. Some
are classified according to the level at which they operate, whether they are themselves
self-help organizations, whether they collaborate with self-help organizations (i.e.
community-based organizations), or whether they are federations of these organizations
(Scholte, 2014).
1
The precise definition of NGOs may be debatable and variations are likely to exist
between countries and regions. For the purpose of this study, Green and Mathias (2015),
definition of NGOs provides a more suitable way of categorizing these organizations.
They opine that NGOs are formal organizations with business objectives concerned with
humanitarian goals, involving groups outside the organization, which are outside the
scope of government’s direct influence and which are non-profit making. As such, the
terms non-profit, CSO, voluntary organizations and NGO can be used interchangeably to
reference organizations operating in this way (Green & Mathias, 2015).
In Kenya, NGOs play an integral part in development sectors such as the economic
sphere. The population of Kenya outmatches the capacity of the government to
effectively provide altruistic services that are basic to humans. Ideally, NGOs provide
extra educational services, employment opportunities, healthcare services, technical
training and credit facilities. However trivial the services may seem, their importance in
international community development and economic empowerment is immense. Many
NGOs exist to fill the gaps that both the public and private sectors fail to particularly
during periods of economic recessions, disease outbreaks and other humanitarian
emergencies (Jillo & Kisinga, 2008).
Jillo and Kisinga (2008), agree that NGOs have been handy in promoting the economy,
environmental outcomes, health and education of Kenyans. A number of dilemmas and
common problems experienced by NGOs have been brought out by research into the
sector. One of the most highlighted is the process of decision-making. Often emanating
from the early stages of development of a strategic plan, staff of non-governmental
organizations have the expectation that they are equal partners in the decision-making
process, given that ultimately, they are the implementers of a given choice of strategy.
This apparent lack of inclusion in strategic planning often brings tension with senior
managers, and most critically, the founder of the organization, who is often the vision
bearer in most NGOs. Governance of NGOs and the relations between board members
and staff is also another common problem. These emanate largely from the boards’
unwillingness or inability to perform tasks of governing the organizations. Members of
the board often lack the expertise or the time to be able to effectively carry out these
responsibilities (Jillo & Kisinga, 2008).
2
Consequently, senior staff make policy decisions with little or no support from members
of the board (Mukasa, 2016). Moreover, many NGOs’ governance structure is quite
complex. Largely self-appointing and self-perpetuating boards of directors govern most
nonprofits as literature reveals (Lewis, 2015). These problems affect the effectiveness of
an organization in management, productivity and performance. The goal of each
organization, whether in the private or public sector is to attain set objectives; key of
which is investment outcomes. For this reason, it is crucial that a non-governmental
organization invests in effective strategic management practices that will ensure
attainment of short-term and long-term objectives (Franklin, 2011). Consequently,
successful non- governmental organizations must continue to invest in strategic
management practices that make these goals a reality.
According to Adieri (2010), strategic planning is the cornerstone of strategic management

practices. He opines that the process of strategic planning is vital in determining the
efficacy of strategic plans and how other strategic management practices will be shaped,
and eventually evolve (Adieri, 2010). The concept of strategic planning has been explored
by Wagner (2006), revealing that its importance can be perceived in three main
dimensions. First, strategic planning is paramount in environmental scanning in that it
aids in acquiring fundamental knowledge about the scope of the organization in terms of
strengths and weaknesses that fall within the internal environment and opportunities and
threats in the external environment (Adera, 2014). Having insights about environmental
factors enables the organization to adapt strategic management practices that optimize the
strengths, suppress the weaknesses, exploit the opportunities and neutralize threats.
The second aspect is strategy formulation which comes in after an analysis of the
environment. NGOs have limited resources and as such, it is essential that they exploit all
factors of production to ensure they not only work optimally, but also effectively. The
third importance of strategic planning is linking organization goals to the budgets
(Franklin, 2011). This aspect is crucial based on the fact that NGOs have limited funding
and that they do not gain from government funds; the most dependable source of funding
(Arasa & K'Obonyo, 2012). Strategic planning unifies all these three domains which
results in positive organizational performance.
3
With regards to governance, lack of coordination between staff and board members in an
NGO can lead to poor decisions on policy matters. Adieri (2010), argues that effective
governance requires willing involvement and commitment of all personnel regardless of
their roles and levels in the organization. In so doing, the organization will be better
placed to cope with inherent problems not only common among NGOs but also in the
public sector. Grant (2006), holds the opinion that the execution of vision and mission
statements by a firm’s top management team is a reflection of strategic governance
initiatives that pioneer debt-equity ratios and triggers cost saving. The outcome of these
initiatives results in enhanced organizational performance (Grant, 2006).
Through strategic staffing, an NGO is able to get the right people for the right roles,
consequently laying the foundation for other strategic phases such as implementation,
evaluation and control. During these phases, the different categories of staff append
different practices that can help in attainment of the organization’s strategic goals.
Attainment of these goals is a symbol of good organizational performance. Arasa and
K’Obonyo (2012), contend that culture and an internal environment are factors that must
prevail for strategic staffing to reap goals. A conducive internal environment leads to an
organizational commitment of its personnel due to job satisfaction. The outcome of
employee commitment is an optimal work input that fuels higher outputs. Moreover,
being in a highly volatile and unpredictable sector, NGOs’ environment change from time
to time necessitating for adoption of strategic management practices continuously as an
imperative resilience measure. Depending on the focus of the NGO, it is crucial that its
staffing practices are streamlined to fit the demands of their customers and beneficiaries
and, respond to new challenges as soon as they emanate (Franklin, 2011).
The impacts of strategic management practices on organizational performance is evident

both in the private and public sectors (Latif & Gohar, 2013). NGOs need to be at the
forefront of adopting these practices due to the evidence from other organizations that
strategic management is the way forward especially in fragile business environments
(Aldehyyat, 2011). Effort, focus and activity coordination in an NGO requires strategic
management. An organization is a diverse entity with people from different backgrounds
and different factors of production. It is therefore crucial that these people are organized
to ensure team working and collective action; critical factors that determine if an
organization is succeeding or failing (Bryson, 2018).
4
However, strategic management practices are more than just a documented set of goals to
be attained over given timelines. They involve deliberate planning, effective governance
that is open to suggestions in decision making, skilled human resources and stable
financial resources and facilities which transform inputs into outputs (Bryson, 2018).
Organizational performance is measured by the difference between the input and the
output based on how they connect with the goals, mission and vision. Therefore, for a
sustainable competitive advantage, organizations must embrace strategic management
practices. In Kenya, most NGOs start up as small-scale organizations. Their growth and
development is tied to the availability of a formal planning mode.
According to Adieri (2010), lack of strategic planning is among the main reasons for
failure of small-scale business other than just financial constraints. However, having the
know-how capacities of strategic planning, governance, strategic staffing and a stable
financial base without an acknowledgement of how important other strategic management
practices are can lead to business failure (Adieri, 2010). Through strategic management
practices, stakeholders who take part in processes of development such as community
leaders ensure that services offered to the public are quality and meet the needs of the
public. This is relevant to NGOs in that they need to familiarize with the needs, situations,
experiences and perceptions of the people they purpose to serve before planning on the
service structure and delivery (Arasa & K'Obonyo, 2012). The aftermath of this strategic
approach is coherent resilient strategies that result from collation of different thoughts. As
a result, NGOs are free to run projects independently and own programs an aspect that
provide organizational motivation hence communication of clear development intention
to the public. Moreover, strategic management practices link the NGO and the
community and the NGO’s governance board with other staff (Arasa & K'Obonyo, 2012).
1.2 Statement of the Problem

Different scholars have recently explored the concept of strategic management practices,
and the link to organizational performance. Strategic management practices involve
strategic planning concerned with linking plans to objectives & organizational resources,
governance that is open to employees’ suggestions and input in decision making and
policy affairs, strategic staffing that is concerned with getting the right people for the right
roles, and stability of financial resources and facilities which transform inputs into outputs
(Bryson, 2018).
5
According to Grant (2013), the correlation between strategic planning and performance of
an NGO is an issue of central focus. This relationship has not been quantified despite the
information being fundamental to the organizations especially in attainment of set goals.
Falshaw and Tatoglu (2006), carried out a research to establish the link between strategic
planning and organizational performance. However, the study was criticized due to lack
of certainty. Sarason and Tegarden (2003), argued that strategic planning impacts
positively on the performance of an organization. However, Fredrickson and Mitchell
(1984), found out that strategic planning can lead to a negative performance outcome.
These attempts have been a point of reference for criticism of the existence of a positive
link between strategic planning and organizational performance.
Governance is the process and structure used to direct and manage affairs of the
organization towards enhancing success with the objective of realizing stakeholder value.
In most cases, NGOs are run with no or nonfunctional boards. For those with boards, the
levels of wrangles over authority and decision making power are so high, making them
ineffective and undependable (Lekorwe & Mpabanga, 2009). Lekorwe and Mpabanga
(2009), contend that the operational sphere of NGOs makes it hard to monitor
accountability, not only of the organization but also that of its stakeholders. To further
compound this, limited studies exist on the link between governance and organizational
performance, particularly of NGOs.
According to Willet (2012), manpower is the most significant asset of any organization.
Yet, the extent to which non-governmental organizations are able to manage their daily
operations and ability to appraise effectively, implement programs and projects is limited
by lack of experienced and well-trained staff (Willet, 2012). Further, the issues of
competencies of the workforce also affects key managerial positions of NGOs. Lekorwe
(2009), is of the opinion that a considerable number of non-governmental organizations in
Africa do not have control over the quality of labor they obtain. Despite a myriad of
evidence of the benefits of strategic staffing on performance, there is limited research that
directly link strategic staffing to the performance of NGOs.
Financial stability provides NGOs with important assessment tools that can help evaluate
their financial positions, through comparing liabilities and assets. Therefore, an NGO has
the potential to determine its future financial position and stability both in a short and
long term perspective. Through financial and accounting analysis, an NGO is able to
6
examine it strengths and weaknesses to provide an insight on what an organization needs
so that it may operate effectively (Rosilyn, 2007). However, most NGOs in Kenya are
plagued with the challenge of limited financial resources needed to improve
organizational performance. The underlying issue is that there is limited empirical
evidence linking financial stability with NGO performance.
1.3 General Objective
The main objective of the study was to investigate strategic management practices and the
effects on the performance of non-governmental organizations in Kenya.
1.4 Specific Objectives
The following were the specific objectives of the study:
1.4.1 To investigate the effect of strategic planning on the performance of NGOs in

Kenya.
1.4.2 To investigate the effect of governance on the performance of NGOs in Kenya.
1.4.3 To investigate the effect of strategic staffing on the performance of NGOs in Kenya
1.4.4 To investigate the effect of financial stability on the performance of NGOs in

Kenya.
1.5 Significance of the Study
The following roles and target beneficiaries were identified as per existing gaps in the
problem statement:
1.5.1 Academicians and Researchers
Academicians and other researchers can use the study as a reference for conducting
research on a similar field and utilize the findings as secondary data. This study
highlighted importance of other areas yet to be researched on.
7
1.5.2 Practitioners
Similar to other non-profit practitioners, it is evident that NGOs play an important role in
the promotion of citizen participation, improving communities and developing societies;
which is the epitome of CSOs. The study also showed that NGOs are in a notable position
and are able to network between other organizations doing similar work and also share
information horizontally. The study further illustrated how NGOs can develop training
capacity and a technical assistance and use this to assist both other non-governmental
agencies and CBOs.
1.5.3 Policy Makers
The study results are of great importance to relevant policy makers, especially the
government, national NGO bureau and council. The study findings will prove useful in
formulating policies that affect the management of non- governmental organization in
Kenya.
1.6 Scope of the Study
This research examined 36 non-governmental organizations operating in Siaya County

that are dedicated to promoting sustainable community development through provision of
capacity building initiatives. The study was limited to the fact that there were limited
studies previously done on the same topic. Therefore, the articulation of facts in the
literature review was drawn from limited research findings that sought to fill other gaps
related to the research topic. Moreover, the researcher had limited time for data collection
and relied on emails as a way of distributing questionnaires and collecting responses.
Further owing to time restrictions, the researcher had two weeks to collect and analyze
the data. The result of this was some of the respondents were unable to send back the
filled questionnaires within the two week timeframe.
1.7 Definition of Terms
1.7.1 Governance
Governance refers to the organizational leadership of a corporation (McGrath & Whitty,

2015), or the way in which organizations are controlled and directed in the interest of
shareholders and other stakeholders (Agyei-Mensah, 2016).
8
1.7.2 Organizational Performance
Are the outputs that an organization generates as the results of an input and is measured
either in financial and non-financial terms (Franken & Cook, 2013). In this study, a
balanced scorecard was used with both financial (ROA) and non-financial measures (for
example participation in decision making meetings, growth of the organization,
innovation etc.).
1.7.3 Strategic Planning
This is a systematic and comprehensive approach used to develop a firm’s overall

administration that helps the management in determining suitable strategic path for the
firm (Elbanna, 2010).
1.7.4 Strategic Management
Strategic management is the process of long-term projection of an organization. Managers

facilitate objective setting on a long-term perspective and breaks down the specific
objective into smaller attainable objectives to be attained in specified timelines.
Strategies to obtain these objectives are outlined depending on the environmental scope;
internal and external factors (Thompson & Strickland, 2006).
1.7.4 Strategic Management Practices
Strategic management practices are the routines, customs, methods and habits at an
organization as relates to strategic management. They are the underlying assumptions and
habits about strategy development and execution which directly influence the manner in
which the organization engages in strategy development and execution (Thompson &
Strickland, 2006).
1.7.5 Strategy
Strategy is a coordinated and integrated set of actions and commitments designed to make
use of main abilities and gain a competitive advantage (Hitt et al, 2003).
9
1.8 Chapter Summary
This chapter gave a brief global, regional and local overview of strategic management
practices and the effects on the performance of NGOs. Further, the chapter stated the
specific objectives, defined the study terms, significance of the study and discussed the
scope. By highlighting the desired outcomes on the intended impact, the introduction
sought to highlight the actual state of affairs, wherein lay the problem under investigation.
By focusing on the highlighted variables, the next chapter sought to provide an in-depth
review of literature on each, drawing attention to how each affects performance of NGOs
in Kenya with intent to obtain answers to the research objectives.
Chapter 3, concerned with research methodology, gave an overview of the methodology

employed to collect, analyze and report on data findings. Chapter 4 presented an analysis
of strategic management practices and their effects on the performance of non-
governmental organizations in Kenya. Chapter 5 brought forth discussions, conclusions
and recommendations regarding the study.
10
CHAPTER TWO
2.0 LITERATURE REVIEW
2.1 Introduction
This chapter presents a critical review of literature by other scholars and researchers on
strategic management practices and the effects on the performance of non-governmental
organizations. It provides the reader with a relevant literature on the stated objectives,
which were: to investigate the effect of strategic planning on the performance of NGOs in
Kenya; to investigate the effect of governance on the performance of NGOs in Kenya; to
investigate the effect of strategic staffing on the performance of NGOs in Kenya and, to
investigate the effect of financial stability on the performance of NGOs in Kenya. The
review of literature used the funnel approach to focus on the strategic management
concept, highlighting on identified strategic management practices and the effects on the
performance of non-governmental organizations. The following literature attempts to give
an in-depth analysis of the variables under study, as highlighted in the research
objectives.
2.2 Strategic Planning and Performance of NGOs
Strategic management practices are the underlying assumptions and habits about strategy
development and execution which directly influence the manner in which organizations
engage in strategy development and execution (Thompson & Strickland, 2006).
Generally, strategic management practices work to improve efficiency in various
organizations. The goal of strategic management practices is that firms obtain a sustained
competitive advantage by carrying out strategies that exploit their internal strengths,
through responding to environmental opportunities, while neutralizing external threats
and avoiding internal weaknesses (Reading, 2012). For the purpose of this study, the
strategic management practices under investigations are: strategic planning, governance,
strategic staffing, and financial stability. Each of these parameters will be discussed in
greater details as per the literature below, in relation to their effect on organizational
performance.
11
Strategic planning provides backbone support to the strategic management of any
organization. Wagner (2006), opines that strategic planning is significant in an
organization in four major aspects. These include: environmental scanning to assess the
scope of the organization, strategy formulation based on the scanning findings, goal tying
to the organizations budget and the actual process of planning. This nature of strategic
planning makes it somewhat complex and its attainment calls for commitment and active
involvement of all individuals within the organization. Ideally, strategic planning
discourages against discrimination based on position in the organization.
According to Grant (2006), an organization spells out its strategic initiatives through its
mission and vision statements Poor resource allocation strategies, poor leadership,
departmental rivalry and resistance to change can jeopardize the processes of strategic
planning, resulting in unmet goals and objectives. Recent years have seen the evolution of
the concept of strategic planning, gaining favor globally in both the private and the public
sectors owing to its undeniable contribution to organizational performance. Porter (1985),
notes that even in the face of criticism leveled against the concept during the 80’s, it is
useful, only needing recasting and improvement for enhanced sustainability and
competitive advantage of firms (Porter, 1985).
Greenly (2016), opines that the significance of strategic planning translates into
organizational performance in accordance to the advantages that the planning causes.
Strategic planning has intrinsic values that makes it an effective tool to foster
organizational performance (Greenly, 2016). Research studies provide arguments for
strategic planning as a process and as a content. In the perspective of a content, strategic
plans have unique elements that vary from one organization to the other. Strategic
planning as a process focuses on the mechanism and events that an organization
undergoes from plan formulation to implementation. According to Grants (2013),
strategic planning on an empirical research perspective has two categories. First, strategic
planning is evaluated as a tool that impacts on organizational performance. Secondly,
strategic planning is elementary in facilitating decision making processes (Grants, 2013).
According to Berry (2014), strategic planning is a management process that involves four
key features. They include the organization’s mission statement, the acknowledgement of
stakeholders’ inputs from the external environment, the revelation of organizational goals
and objectives in a 3-5 year timeline and the establishment of strategies to achieve them.
12
Reviewed literature lists a myriad of factors influencing strategic planning. For example,
environmental uncertainties could impede the development of long range plans; as could
scarcity of resources; legislative changes that introduce new dynamics in an industry; size
and complexity of an organization – as size and complexity of an organization increases,
so does the degree of formulation of planning activities; the extent of involvement in
operating issues compromises the attention paid to management functions; the
implementation gap i.e. the inability of the top management to effectively communicate
with the planners; the lifecycle of the organization – as organizations move through
different phases, the competitive environment changes and influences the way they plan
and implement strategy (Thompson & Strickland, 2007).
NGOs in third world countries in particular, need to plan strategically for a number of
reasons, primarily so as to be able to align the organization to the needs of the
communities they serve. Another serious consideration is that when top management
plans for expansion, a certain level of minimum standard must be observed. This helps to
guarantee a certain level of minimum quality performance. Effective strategic planning
initiatives can make non-governmental organizations more responsive and viable
instruments for socio-economic development (Pearce & Robinson, 2013).
2.2.1 Strategic Planning As a Process
Strategic planning is a process that does not end when a plan is agreed upon rather, it
must be implemented. Also, at any time during the implementation and control process,
plans may require modification to avoid becoming obsolete or even damaging, implying
that decisions must be made at many points in the planning process. For instance,
managers must decide which predictions in areas such as the economy, and the actions of
competitions are likely to be most accurate. They must also analyze organizational
resources and decide how to allocate them to achieve their goals most effectively
(Chukwuemeka & Olusanya, 2012). Koontz et al. (1980), introduce an issue known as the
nature of planning which can be highlighted by for aspects of planning. These aspects are
contributions to purpose and objectives ‟primacy of planning, pervasiveness of planning
and efficiency of plans’ (Koontz, O'Donnell, & Weibrich, 1980).
Two distinct approaches to strategy making have attracted the attention of practitioners
and researchers: the rational approach and the adaptive approach (Grant, 2013). The
adaptive approach, which is a process of making strategy based on intuition, creativity,
13
and learning (Mintzberg, 1994), is gaining more interest in today’s dynamic environment.
In contrast, rational strategic planning has been known since the 1950s through the work
of Selznick (Selznick, 1957). It is “a systematic process through which an organization
agrees on priorities that are essential to its mission and are responsive to the environment”
(Allison & Kaye, 2005). Indeed, rational strategic planning is based on the idea that
organizations adapt to changes in their environment by making rational decisions
(Chaffee, 1985). Rational strategic planning is a formal, logical, systematic, and
continuous process (Hough & White, 2003) with the following steps: definition of the
mission and long-term objectives of the organization, analysis of its environment,
generation and evaluation of strategic alternatives, implementation of the chosen strategy,
and finally, monitoring of the results (Crittenden & Crittenden, 2010).
Strategic planning is a normative and rational approach to strategy making (Hough &
White, 2003), even though it has been strongly criticized for its uncertain effects on
organizational performance (Pearce & Robinson, 2013). Indeed, proponents of the
adaptive approach to strategy making criticize rational strategic planning, arguing that it
hinders creativity and spontaneity, creates rigidity, and encourages excessive and
unnecessary bureaucracy (Mintzberg, 1994), therefore reducing the organization’s ability
to quickly adapt to change. Nonetheless, rational strategic planning has many proponents
including Ansoff (1991), and Pearce and Robinson (2013). According to them, rational
strategic planning is much more effective than an informal process because it involves the
collection and analysis of pertinent information allowing an organization to make more
informed and fact-based strategic decisions and therefore to be more aligned with its
environment (Pearce and Robinson, 2013).
Also, rational strategic planning enables an organization to determine its strategic

direction (Porter, 1996), identify relevant opportunities and effectively seize them (Hough
& White, 2003), and anticipate change and create strategic options to deal with change
(Beatson, Greenly, Ling & Rudd, 2008). More recently, Casey and Goldman (2010),
found that employee participation in organized strategic planning processes and
involvement in developing strategic plans enhances the effectiveness of strategic plans.
Also, Elbanna (2012), proved that a comprehensive strategic planning process is a vital
tool for improving performance.
14
The most important organizational decisions, such as entering a market, introducing a
new service, or acquiring a competitor, although based on information and analysis, are
essentially judgments. Decision consistency is central to strategy; when an organization
exhibits a consistent behavior, it has a strategy (Alisa, 2017). The requirements of
decision making consistency suggest that a strategy is the means an organization chooses
to move from its current position to a desired state in the future. Thus, strategy may be
viewed as a set of guidelines or a plan that will help assure consistency in decision
making and serve as a map to the future. Strategic planning indicates what types of
decisions are appropriate or inappropriate for an organization. Developing the road map
requires situational analysis, strategy formulation, and planning the implementation of the
strategy (Swayne, Duncan, & Ginter, 2006).
There has been an exploration of the strategic planning field as different scholars come up
with different conclusions. According to Grant (2013), the correlation between strategic
planning and the performance of an organization has been an issue of central focus. This
relationship has not been quantified despite the information being fundamental to the
organizations especially in planning. Falshaw, Glaister & Tatoglu (2006), conducted a
research study with the aim of finding out how this relationship exists. However, the
study was criticized because of lack of certainty. Moreover, the findings were
contradictory making it difficult for the researchers to elude quantifiable conclusions.
From previous research attempts, Sarason and Tegarden (2013), argue that strategic
planning has a positive impact on the performance of an organization. However,
Fredrickson and Mitchell (1984), found out that strategic management practices can lead
to a negative performance outcome. In another study by Pearce and Robinson (2013),
there exists no correlation between these two variables. These attempts have been a point
of reference for criticism of the existence of relationship between strategic management
practices and performance of an organization.
These mitigated results have led to high end criticisms on research studies that have
attempted to evaluate the relationship between strategic planning and organizational
performance. Organizations operate in different contexts and this is among the factors that
determine how an organization would operate. Therefore, strategic planning may work for
some organizations and similarly lead to negative performance outcomes in others (Child,
Elbanna & Rodrigues, 2010). Therefore, several contingency factors, such as the
15
organizational structure, the nature of the environment, and the size of the organization,
have been introduced in the study of the relationship between strategic planning and
organizational performance (Burke, Glick & Miller, 1998). It has equally been suggested
that some factors may have a mediating effect on this relationship (Rudd, Greenley,
Beatson & Lings, 2008).
2.2.2 Situational Analysis
Analyzing and understanding the situation is accomplished by three separate strategic

planning activities: external environmental analysis; internal environmental analysis; and
the development or refinement of the organization’s directional strategies. The interaction
and results of these activities form the basis for the development of strategy. These three
interrelated activities drive the strategy (Swayne, Duncan & Ginter, 2006).
A closer look at these three interrelated strategic thinking and planning activities is
presented in Figure 2.1 below. These influences must be understood before a strategy can
be formulated, as they represent the organization’s situation. Forces in the external
environment suggest “what the organization should do.” That is, success is a matter of
being effective in the environment – doing the “right” thing. Strategy is additionally
influenced by the internal resources, competencies, and capabilities of the organization
and represents “what the organization can do.”
Finally, strategy is driven by a common mission, common vision, and common set of
organizational values and goals – the directional strategies i.e. “what the organization
wants to do.” The directional strategies are the result of considerable thought and analysis
by top management and indicate “what the organization should do.” Together, these
forces are the essential input to strategy formulation. They are not completely distinct and
separate; they overlap, interact with, and influence one another (Swayne, Duncan &
Ginter, 2008).
16
Figure 2.1: Analyzing and Understanding the Situation
Source: Luthans, Hodgetts & Thompson (2010).
2.2.3 Strategy Formulation
Strategy formulation refers to the process through which an organization defines its
overall long-term direction and scope. It involves establishing the way an organization
creates value through the configuration of its activities and resources in the markets in
which it operates. Strategy formulation is a purposeful, deliberate exercise to develop a
company’s competitive advantage and thus enhance its performance (Gimbert et al.,
2010).
Organizations have different approaches to strategy formulation, an aspect that has led to
controversies. In the conventional approach (the ‘descriptive’ or ‘design’ school of
thought), strategy development is mainly the result of a systematic, rational process of
deliberate planning by a top management team, which is then communicated to the
organization for implementation. In large organizations, this process typically occurs
through formal strategic planning systems. An alternative approach, based on descriptive
studies of strategy formation, sees strategy as the result that emerges from a complex,
multi-level process of organizational decision-making. The realized strategy is thus the
outcome of two simultaneous processes: on the one hand, the execution of the strategy as
conceived by the top management team (deliberate strategy) and, on the other, the
cumulative effect of day-to-day decision-making in a changing environment which
eventually results in the formation of emergent strategies (Mintzberg & Waters, 1985).
17
Central to the continued survival of any organization is the ability to formulate and
execute an effective strategy despite the limitations of organizational resources and the
constraints of the external environment. Private-sector firms must plan to face challenges
from competitors, rulings of regulatory bodies, shifts in the commercial context including
changes in interest rates and economic activity, and shortages of personnel and supplies.
Public-sector organizations also face many of these challenges but in different forms, as
well as the additional considerations of an election cycle that may cause changes in
leadership, a wide variety of stakeholders with competing agendas, and the subjective
nature of success given these diverse perspectives (Rose & Cray, 2010).
2.2.4 Organizational Performance
Organizational performance refers to the actual output or results of an organization as

measured against its intended goals and objectives. For years, many organizations have
measured organizational performance using the balanced scorecard; by tracking and
measuring performance in multiple dimensions such as: social responsibility (community
outreach); employee stewardship, return on investment (ROI) among others (Thompson
& Strickland, 2013). For the purpose of this study, the variables tested to measure
organizational performance in relation to strategic planning were: effectiveness of
strategic plans in meeting organizational objectives, effectiveness of governance, staff
retention and management of financial resources.
In the management of both NGOs and commercial entities, the ultimate measure of
management’s performance is the metric of management effectiveness which includes:
execution, or how well management’s plans are carried out by the employees of the
organization; leadership, or how effectively management communicates the vision and
strategy of the organization to the employees; delegation, or how well management gives
assignments and communicates instructions to employees; return on investment, or how
well management utilizes the resources (financial, physical and human) of the
organization to bring an acceptable return to shareholders; conflict management, or how
well management is able to utilize confrontation and collaboration skills; management’s
ability to be flexible and appeal to common interests; motivation, how management
attempts to understand the needs of others and inspires them to perform (Bryson, 2018).
18
According to management guru Peter Drucker, there are two main ways to improve
organizational performance. These are: improving the measured attribute by using the
performance platform more effectively, or by improving the measured attribute by
modifying the performance platform, which in turn allows a given level of use to be more
effective in producing the desired output. Performance improvement can occur at
different levels: an individual, a team, a department, and the organization itself.
Organizational performance management and improvement can be thought of as a cycle:
Performance planning where goals and objectives are established, then, Performance
coaching where a manager intervenes to give feedback and adjust performance and
performance appraisal where individual performance is formally documented and
feedback delivered (Drucker, 1954).
Drucker further opines that organizational performance can be measured in terms of how
well it is governed and its inherent management processes. It implies that the effective
management of an organization’s resources should be done in a manner which is
transparent, accountable, equitable and responsive to the needs of the beneficiaries. Since
NGOs aim at becoming sustainable, then good governance is critical to their existence. In
many developing countries NGOs often lack the institutional capacity and resources to
operate. Also, funds from donors are sometimes poorly managed. Thus, in order to ensure
effective and proper management of resources, good governance becomes an important
aspect of every organization. (Drucker, 1954).
Economists further suggest that organizations can improve their performance by aligning
their governance practices with the strategic planning process; which can be done in a
number of ways including: stating their mission, values and objectives clearly and
ensuring that these strategies are followed; better human resources development and
training for their managers and staff including board members and volunteers; better
management processes as well as financial management systems (The Economist, 2010).
2.2.5 Relationship between Strategic Planning and Organizational Performance
The preceding literature brought forth the argument that organizations that have embraced
the concept of strategic planning in their daily practices have better performance
outcomes. In agreement with this argument David (2017), contends that the records of
organizations that used strategic planning in their activities showed better performance
19
results. Strategic planning enables an organization to make plans ranging from elementary
tasks to broader projects. Thus, strategic planning is a breakthrough in determining steps
that should be taken at different time frames to ensure completion of the tasks to realize
organizational effectiveness in the long run.
Employees act as the fuel of an organization. Based on this perspective, Bryson (2018),
contends that strategic planning provides the expectation of the organization to the
employees. This gives them a directional outlook of the organization and critically, when
to invest their efforts optimally. Strategic planning provides a guide since it defines the
core business of the organization and probable ways of reaching the set goals. According
to Dusenbury (2010), strategic planning shapes the structure of operations of an
organization. An organization with a strategic plan is at liberty of chooses the most
effective strategy.
The choice of strategy is driven by factors such as the logic, rationale and how systematic
an approach is. Strategic planning brings the future to the present to allow the
organization plan on how to deal with the probable opportunities and threats coming on
its way. This environmental clarity is critical in decision making processes. Moreover,
Dusenbury (2010), argues that strategic planning and performance are intertwined. This
argument is supported by the logic that performance is defined by the plan and the
strategic degree of a plan is measured by the performance outcome (Dusenbury, 2010).
According to Arasa and K’Obonyo (2012), an organization is system made up of

integrated subsystems, each with specific functions. Therefore, the rationale of strategic
planning approaches in organization using this system approach is to enable the
management monitor the organization as a whole and the relationship between each
subsystem. This is an effective tool to improve performance of an organization because
the management is able to evaluate what subsystem causes what outcome and how to
ensure they are exploited optimally through controlling. Strategic planning therefore
suffices decision making processes and enables an organization to set its objectives in
compliance with the SMART approach (Arasa & K ‘Obonyo, 2012).
Kotter (2016), postulates that the development of an organization may reach its peak and
begin to deteriorate due to external factors that are often uncontrollable. Strategic
planning is a preparedness measure that ensures an organization is repositioned and
20
transformed in a manner that correlates with environmental changes. Negative factors that
impede on development of an organization can only be avoided to block them from
affecting the organization. According Thompson and Gamble (2017), the ultimate goal of
strategic planning in an organization is to secure a market niche, not necessarily as the
leader but as the biggest marker shareholder. Such a strong market position protects the
organization against the negative impacts of changes and competition, making an
organization’s performance effective (Thompson & Gamble, 2017).
According to Analoui and Samour (2012), the success of non-governmental organizations

often depends on the formulation of suitable strategies meant to confront the realities
within the competitive environment in which the organization operates. This argument is
supported by an earlier study by Estallo (2006), which found that though these
organizations do have a mission, strategy, and goals different from their corporate
counterparts, surviving and flourishing in the current environment requires adjusting and
responding to the existing changes in social, economic and political factors. Hence the
conclusion is that strategic planning is important for all organizational entities whether
NGOs, government, CBOs, political, business or academic institutions; since the
objective of the strategic planning process is to develop core competencies that enable the
organizations to find an advantageous position in their current environment and to go
beyond perceptions of the current situation to continue to differentiate the organization
into the future (Estallo, 2006).
Research by Analoui and Samour (2007), suggests that there exists a profiling of strategic
planning processes in NGOs characterized by a series of operations that include; the
scrutiny of the current situation of the organizations in relation to the services, needs,
clients, their unique core competencies, the personal objectives of the stakeholders
followed by defining the services and the activities in terms of mission and values for
meeting specified client needs which means the organization continues to meet its
missions objectives (Analoui & Samour, 2007). The external environment plays a crucial
role in the process of strategic planning in NGOs. To emphasize the impact the
environment has in strategic planning, Mufudza, Jengeta and Hove (2013), found it
crucial that organizations should clearly strategize in times of great economic turbulence,
but recognize that it is however difficult to formulate and implement the plan in such
times (Mufudza et al., 2013).
21
2.3 Governance and Performance of NGOs
One of the major issues that organizations in the worldwide scope have been facing is
controversies with the shareholders. Shareholders expect the organization to meet their
expectations despite other limitations that the organization faces. Businesses obtain
starting capital from outside parties in form of grants, loans or donations. These sources
of funding often become business owners through shareholding. Within this thinking,
Chandler (1977), claimed that increasing capital needs associated with growth of an
enterprise leads to separation of ownership and control and the dispersal of ownership.
During development of the business, authority and control of the organization is
transferred from the founders to managers who give the organization a professional
sphere. Despite the contentment it brings, growth puts an end to some of the benefits and
systems that an organization has. The increase in complexity snatches away internal
control from the business owners and reduces financial support from funders (Chandler,
1977). This organizational independence leads to interest networking by the organization
and transformation of shareholders to stakeholders.
Consequently, the concern of all stakeholders’ interests takes center stage, both the
insiders and outsiders (Shahid, 2011). These issues border on the subject of corporate
governance, which has received close attention after the entry of professional managers
who wielded power over investors’ resources (King Commission, 2002). The concept of
corporate governance has been accorded various definitions mostly by corporate
regulatory agencies and/or commissions. The Cadbury committee (1992), defined
corporate governance as a system by which companies are directed and controlled. A
broader view of Corporate Governance is given by the Organization for Economic
Cooperation and Development (OECD) (1999, 2004) which define corporate governance
as the system by which business corporations are directed and controlled.
The OECD (2004), provides a regulation on corporate governance structure in

organizations. It mandates that an organization must satisfy the distribution rights through
responsibility sharing to all stakeholders of an organization. This regulation necessitates
the creation of corporation structures such as the management, boards and shareholders. It
is mandatory that organizations document the different roles of these structures. Critical
to governance, this regulation confers that an organization should provide a scope on how
these structures can participate in decision making practices. Consequently, the
22
organization is able to set out its objectives, highlight the practices that would be involved
to ensure attainment of the objectives and how the organization would monitor
performance outcomes. The King Commission on Corporate Governance (2002), in South
Africa backed the adoption of an integrated approach that can facilitate effective
governance by taking into concern the specific needs of each stakeholder in relation to the
fundamental principles of good financial, social, ethical and environmental practice.
According to Kenya Private Sector Governance Trust (1999), governance is a method that
an organization takes in exercising power in economic and social resource management to
foster sustainability. The underpinning of this definition is that an organization’s
governance is channeled to ensure the realization of the desired results. Through
governance, organizations both in the for-profit and nonprofit organizations are able to set
organizational goals them and pursue them to the latter. This is ensured through effective
resource allocation. The business environment is diverse and dynamic and has its
complexities (Onyango, 2009). This mandates that an organization must have complex
structure to fit the nature of the business environment. However, these systems must be
flexible to adapt to changes that may arise from the environment. An ideal governance
ensures that the organization is prepared to adapt to changes in legal and financial
systems, culture, corporate ownership structures and economic conditions. Onyango
(2009), acknowledges that each organization has a unique context thus there is no single
system of governance that can fit them inclusively (Onyango, 2009).
According Jensen & Meckling (2016), most shareholders incur costs of agency, which
consists of residual losses, bonding and monitoring suitable for controlling managerial
activities. The agencies therefore are able to give financial rewards based on performance
thus encouraging managers to perform well in their shareholders’ interests. According to
several research studies, in boards and in non-profits, the assembly of members are rarely
functional. Donors together with the government also incur some costs to make sure that
good governance and performance is paramount. Tools employed for enforcing
accountability consist of self-regulation, laws, reporting requirements, evaluation, and
performance assessment.
23
At the core of good governance are the governance structures, which are important for the
realization of an organization’s mission and accountability to its stakeholders. They also
specify the distribution of rights and responsibilities among different participants in the
organization including the board, managers, shareholders and other stakeholders, and the
rules and procedures for making decisions on corporate affairs (Kingoro & Bujra, 2009).
Governance provides the structure through which the organization’s objectives are set, the
means of attaining those objectives and monitoring performance. Organizations must
have a governing body accountable to owners or shareholders in for profits and the public
for non-profits (OECD, 2004). Good governance practice demands a separation of roles
between the board and the management to enhance appropriate oversight and supervision
(Kingoro & Bujra, 2009). This separation of roles is critical to avoid conflict and ensures
clear accountability of an organization's performance.
Organizational effectiveness is related to achievement of intended outcomes while

organizational performance is the use of outcome based finance indicators to reflect the
fulfillment of the economic goals of the firm. The performance of an organization
originates on what the firm does, in its activities or routines. According to Meyer (2012),
these activities give rise to costs, but they also generate revenues in excess of costs to the
extent that the products and services add value for customers (Meyer, 2012).
With scarce resources, NGOs require an effective governance plan. This can be regarded
as a foundation from which organizations base their performance expectations. Lekorwe
& Mpabanga (2009), argue that good governance in an organization is elementary in
promoting the functionality of an NGO. To govern an NGO effectively, it is vital that the
management focuses on accountability transparency, equity and the specific, ever-
changing needs of the beneficiaries. With good governance, ensuring sustainability is an
easy task for the NGO’s since there is no room for misuse of resources. In many
developing countries NGOs often lack the institutional capacity and resources to operate.
Also, funds from donors are sometimes poorly managed. Consequently, effective
resource management, during the processes of resource mobilization and allocation,
requires an effective management with strategic strategies that ensure that the
organization is developing according to the plan (Lekorwe & Mpabanga, 2009).
24
2.3.1 Management and Leadership
Non-governmental organizations have a diverse selection of approaches that they can

implement to ameliorate their operations in management and leadership. These
methodologies include an effective mission statement that provides organizational values
and objectives. Moreover, effective HRM strategies through training of personnel and
other management approaches such as finance, accounting and budget system are among
these approaches (Chimainikire, 2012).
Lekorwe and Mpabanga (2009), opine that these systems can be implemented only if the
NGO has a committed leadership structure and motivated staff. In Kenya, this issue has
been controversial amongst many NGOs due to poor and weak governance structures.
Many NGOs lack boards and the majority of those with boards face never ending
leadership wrangles that compromise their effectiveness. Some boards are also not
competent enough to provide necessary leadership (KNGOP, 2004).
2.3.2 Accountability
Lekorwe and Mpabanga (2009), explain that accountability is a key factor that gauges the
effectiveness of organizational governance. Non-governmental organizations might seem
autonomous without being answerable to anyone. This is contrary to the fact that NGOs
are accountable to the beneficiaries of their services and their donors. In line with this
fiduciary responsibility, scholars have been debating on how NGOs can ensure they are
accountable. This is an indication that there lacks a specified system in regulating the
accountability of these organizations. This debate is based on the fact that the NGO
workforce is voluntary thus not bounded by ordinary people to be accountable. This is
unlike other public organizations whose members are elected. Despite the absolute
authority of the members of NGOs over resources, there is need for a close monitoring to
ensure an effective use of resources that will lead to high productivity and performance
(Lekorwe & Mpabanga, 2009).
Participative governance is defined as the capability of the leaders of an organization

participating in the development of a value creating corporate strategy (Eddleston et al.,
2010), on the one hand, and the access that the shareholders and members have a role to
participate in decision-making (Bijman et al., 2013). It also refers to the processes by
which the shareholders voice their views, receive timely communication and information,
and are involved in important decision-making fora (Achua & Lussier, 2013).
25
Participation is about power and how power shapes the boundaries of participatory
spaces, which are either invited or claimed. Participation in governance is access to not
only information but also the opportunity to express preferences and contribute to
decision-making (Pettit, 2012). According to Chaundhuri (2016), invited spaces are those
controlled by planners and policy-makers and which preclude alternative perspectives and
thus reinforce existing privileges. On the other hand, claimed spaces are demanded,
created or chosen by communities and social movements. Participation by itself does not
guarantee real empowerment due to power imbalances in a given context. Emancipatory
participation requires the fostering of critical consciousness within dominated groups as a
precondition to effective participation. Participation is purely symbolic if the stakeholders
are invited to collaborate but underlying interests do not serve democracy and a balanced
power between the leaders and participants. This study reviewed literature on
participative governance from three perspectives, namely: members have equal rights;
shareholders participate in decision-making; and board and management share timely
information (Chaundhuri, 2016).
2.3.3 Equal Voting Rights
Having a voice and choice is a condition for participation in decision-making in any

organization (Hendriks & Ewijk, 2016). Voice is a broad rubric that encompasses
everything from information and consultation to organized unions and work-based
mechanisms like quality teams and financial participation schemes (Hendriks & Ewijk,
2016). The usage of the terms ‘voice’ and ‘participation’ overlaps and is sometimes used
interchangeably with words such as involvement, shareholder democracy, empowerment
and citizenship, among others (Wilkinson, 2010).
Temkins (2016), observes that the ideal of equality of opportunity, which equal voting
rights exemplifies, plays an important part in contemporary social and political discourse.
Temkins (2016), argues that although the ideal of equal opportunity would rule out
discrimination on the basis of race, religion, gender, social or economic class, in reality
the poorly educated and the poor do not have the same opportunity in social and political
life as those well-educated and connected. Democratic member control is one of the
seven principles of co-operatives. According to the International Co-operative Alliance
(ICA, 2016), ‘co-operatives are democratic organizations controlled by their members,
who actively participate in setting their policies and making decisions. Men and women
26
serving as elected representatives are accountable to the membership. In primary
cooperatives members have equal voting rights (one member, one vote) and co-operatives
at other levels are also organized in a democratic manner’. The concept of participative
governance, earthed in social and political sciences, is gaining traction in public
administration and public action due to the move from hierarchy and bureaucracy towards
markets and networks (Bevir, 2011).
Co-operatives are patron-owned organizations with a defining feature in their governance

of strong democratic member control. There is now strong empirical evidence that shared
ownership of means of production by all workers in a co-operative model, accompanied
by high levels of participation, has positive effects on working environment and
relationships (Cheney et al., 2014). In co-operative thought and ideology, it is now
recognized that democratic principles are applicable to economic activities and can be
superior to autocratic practices in running businesses (MacPherson, 2012). However,
research into agricultural co-operatives in North and South America, North and South
Europe and Oceania by Chaddad and Iliopoulos (2013), shows that there is a continuum
of integration from full member control or integration where principals retain formal and
real authority, to the other extreme of a complete loss of member control. In between,
there is the traditional or quasi-integration model, through to a separation model where
principals delegate authority to a board of directors, to a managerial and corporate model
where principals delegate to management both formal and real authority.
According to Yermack (2010), the rights of shareholders to choose members of the board
of directors, approve strategy, as well as amend the constitution of their organization lies
at the heart of corporate governance protections. Shareholders are the providers of risk
capital for their firms and as such they need to be able to protect their investment by
ensuring good governance practices and strategy are in place for the company’s overall
performance and sustainability (Mallin & Melis, 2010). Hamlin and Jennings (2011),
show that voting can be either expressive or instrumental. Instrumental voting focuses on
the expected benefits associated with the outcome of the election. On the other hand,
expressive voting is motivated, not by the outcomes expected, but by just making a point
or to express some aspect of the voter’s beliefs, values, ideology or personality regardless
of any impact the vote has on the election outcome (Blankart & Margraf, 2011).
27
The John Lewis Partnership (JLP) in the United Kingdom is one of the most celebrated
successes in organizational democracy. JLP was founded by John Spendan Lewis with a
vision of a co-owned business based on the principle of sharing knowledge, gain and
power. The workers of the JLP participate in the decision-making of the business and
have equal rights irrespective of status, although the interpretation of voice and power in
decision-making has not always been unanimous between the managers and the workers.
In a study to explore the practice of employee involvement and participation at the JLP,
Cathcart (2013), found that democracy in co-operative-like organizations needs to be
understood as a contested terrain and yet an important pillar in organizational
effectiveness and performance. The study found that organizational democracy was a
moving target subject to constant challenge and reinterpretation and so required vigilance
and protection from potential degeneration.
Set in a different context in Sri Lanka, a study by Adikaram (2016), arrived at similar
conclusions as Cathcart (2013), that democracy and giving voice in an organization is a
moving target. The study by Adikaram targeted 180 employees of an IT company and
whose responses indicated that they were not properly heard and also not happy with the
communication from senior managers. A decision had been made to establish a Joint
Consultative Council (JCC) at the company to promote communication and employee
involvement at the company. The study found that at first the JCC was concerned only
about the ‘tea, towels, toilets’ issues as the employees believed that all they had was a
‘voice without muscle’ (Gollan & Patmore, 2013) devoid of any decision-making power.
Only after enhancing and institutionalizing the joint decision-making processes and
improving communication did the management regain the trust of the employees. The
benefits of voice by followers has also been underlined by the research of Gollan and
Patmore (2013), who observed that only by establishing mechanism that enable followers
to have legitimate voice will managers be able to obtain productive outcomes for their
organizations. While some scholars have argued that shareholder voting is potentially the
most powerful instrument that they can use to secure their residual claims on the firm
(Mallin & Melis, 2010), the available evidence has been mixed. On the affirmative side,
Yermack (2010), argues that shareholders can vote down any proposal that they consider
value decreasing, which he describes as shareholder dissent or expressive shareholder
democracy.
28
Hillman et al. (2011), amplify this point further by noting that voting rights provide
shareholders with the ultimate weapon to refuse election or re-election of directors who
may be favoured by the incumbent board. However, other scholars have observed that
shareholder dissent, expressed through voting and participation, is simply a ‘paper tiger’
rather than an effective corporate governance practice (Cai, Garner & Walkling, 2013). In
practice, shareholders may submit proposals for consideration by their assemblies, but
these typically hardly fare better than board sponsored proposals (Renneboog & Szilagyi,
2010).
The role of dialogue and open communication in fostering democracy in organizations

has been shown to be a sign of a gradual shift from earlier traditional forms of
communication in which heated arguments and debates settled differences (Akella, 2016).
Dialogue visualizes communication as a two-way process where participants think
together and create new perceptions or realities, build connections and relationships, and
which may lead to emerging ideas and consequences (Ganesh & Zoller, 2012). Dialogue
and voice by employees to express opinions have also been linked to organizational
identification (Atouba, Carlson, & Lammers, 2016).
However, dialogue does not guarantee followers’ voices being heard or participation in
decision-making as it can turn out to be a façade in which the more powerful can use as
an empty rhetoric intended to impose their preferences over the less powerful (Akella,
2016). Dialogue can also be fragile and vulnerable to manipulation by more by more
powerful agents, especially in the context of inequality (Ganesh & Zoller, 2012).
Employees are especially suspicious of management-led process of dialogue as they are
seen as inducement to reveal their feelings and opinions in order to avoid conflicts and
indoctrinate them to management’s way of thinking (Akella, 2016).
In a review of the Mondragon system of co-operatives, Cheney et al. (2014), noted how
members have ultimate control over the management through the general assembly which
is based on the one member one vote principle. In addition, the Mondragon cooperatives
had developed social councils whose aims were to balance managerial direction with
members’ concerns. The principal of one member one vote in the co-operatives is
contrasted with the ‘plutocracy’ in investor owned firms in which large shareholders have
more voting rights than small shareholders, which is also at odds with the foundational
principle of shareholder democracy (Sauerwald, Van Oosterhout & Essen, 2016).
29
In an empirical study to survey co-operatives in China’s Zhejiang province, Liang, et al.
(2015), investigated four characteristics of participative governance, namely: democratic
decision-making procedures, participation in decision-making, member exit, and profit
allocation. The study found that the distribution of ownership rights, and even profits, in
the farmer cooperatives were skewed towards a small proportion of core members to the
exclusion of the majority (Liang, et al., 2015). For example, while Chinese Law allows
for one member one vote, the practice was that members delegated their voting rights to
core members. Similarly, member participation in decision-making was only nominal as
most decisions (over ninety percent) were made by the board members and management,
who were part of the small core group who controlled the co-operatives (Liang, et al.,
2015).
2.3.4 Shareholders Participate in Decision-Making
Defining participation is not a straightforward enquiry and it is easier to describe it with

other words such as collaboration, deliberation, involvement, engagement and co-
management (Carr, 2015). Nevertheless, the “World Bank Participation Sourcebook”
(1996), defines participation as a ‘process through which stakeholders’ influence and
share control over development initiatives and decisions and resources which affect
them’. The goal of participation is shareholder empowerment, which Goranova and Ryan
(2015), define as shift in the allocation of power from corporate officers and directors to
shareholders.
The shift in power, especially in emerging economies where minority shareholders do not
get sufficient protection, renders managers and directors more accountable as
shareholders’ interests receive greater attention and protection than in purely board-
centric models of governance (Goranova & Ryan, 2015). Participatory development has
been widely touted as necessary in making aid more effective, pro-poor, domestically-
driven, relevant and sustainable (O'Meally, 2014). The World Bank has been an
intellectual and financial leader in participatory development, noting that ‘involving local
communities in decisions that affect their lives is central to making development more
effective, and it has the potential to transform the role that poor people play in
development by giving them voice and agency’ (World Bank, 2012).
30
Focusing on the role of participatory development in combating extreme poverty, the
World Bank noted that ‘citizen voice can be pivotal in providing the demand side
pressure that is needed to encourage full and swift response to citizen needs (Kim, 2013).
The democratic participation of the members is predicated on trust as it explains their
favorable behavior and commitment towards the co-operative. Trust is dependent on the
cooperative’s capacity to act competently, reliably and to take the right decisions while
still showing goodwill and closeness to members. In a study of 259 members of French
agricultural co-operatives, Barraud-Didier, Henninger and El Akremi (2012), showed that
there is a positive link between trust, commitment and participation. Members participate
in the governance of their co-operative when they are attached to it effectively and this is
enhanced by better communication and sharing of information. In a study to analyze the
factors of farmers’ participation in the management of co-operatives in Finland, Sumelius
(2010), concluded that equality, fairness, trust, and managers’ personal charisma can
improve members’ willingness and participatory behaviour in co-operative management.
Additionally, the study found that members’ education level also affects their frequency
of interaction with the more educated and likely to understand and communicate more.
One of the criticisms of the notion that good corporate governance, and in particular
prescriptions to ensure oversight over management lead to firm performance, is that these
assumptions may not hold during a time of crisis. Using a large sample of 1,197 firms
across 26 European countries, Essen, Engelen and Carney (2013), showed that managerial
discretion and CEO duality might be required during a time of crisis.
They concluded that the efficacy of governance mechanisms, including member control,
may be contingent upon organizational and environmental circumstances. Shareholder
participation in the decision-making processes of a firm, especially voting, has also been
shown to lead to short-termism, profit maximization, and to favor capital over labor
(Talbot, 2013). Another criticism of co-operative democracy and participation is that it
clashes with efficiency demands and economies of scale. In order to examine this
dilemma, Jones & Kalmi (2012), studied the Mondragon Co-operative in Spain and Co-
operatives in Finland and showed that the evidence for the trade-off between efficiency
and economies of scale was not sustained.
31
Several theoretical frameworks conceptualize participation according to the degree of
participant involvement, position and power in decision-making. Arnstein’s ladder
(Arnstein, 1969), of participation has eight rungs which can be divided into three levels.
The bottom rungs of the ladder are manipulation and therapy which comprise ‘non-
participation’ that is contrived to substitute for genuine participation. The real objective of
this level is to enable the power holders to ‘educate’ or ‘cure’ the participants into silence.
The middle rungs comprise informing, consultation and placation, which comprise the
‘tokenism’ level. The main objective for this level is to allow the ‘have nots’ to hear but
not to have a voice. Even when people at this level are informed or consulted, they may
indeed hear and be heard, but they lack the power to ensure that their views will be
heeded by the powerful as they have no ‘muscle’. Only at the highest rungs of
partnership, delegated power and citizen control, comprising citizen power does the
decision-making clout increase and participants can negotiate and engage in trade-offs
with traditional power holders (Carr, 2015).
Similar to Arnstein’s Citizen’s Ladder of Participation is Pretty’s typology (Pretty, 1995),

which was aimed at participatory methods in agriculture. According to Pretty,
participation ranges from manipulation and passive participation at the lowest levels;
consultation, material incentives and functional at the middle levels; and interactive and
self-mobilization, at the highest levels. The various levels in Pretty’s typology refer to the
extent of involvement in activities and the control participants have over outcomes.
Another typology of participation is by Michener (1998), which classifies participation
from two extremes: whether it is planner centered or people centered. Michener’s work
was based on rural communities in Burkina Faso and highlights the apathy and reluctance
of sections of the community to get involved in participatory processes (Ng’ombe,
Keivani, Stubbs & Mattingly, 2012). The debate on participation has been shifting away
from representative democracies where stakeholders are represented by intermediary
stakeholders to participatory models where there is a direct link between the community
and the state or organization (Cornwall, 2011). This shift is what some scholars refer to as
“participatory governance” (Fung, 2012), “post participation” (Reed, 2008), and
“empowered deliberative democracy” (Gaventa, 2012). The shift to participatory
democracy is informed by the growing loss of confidence in state institutions and public
organizations as a result of widespread reports of lack of accountability and
responsiveness (Ganuza, Nez & Morales, 2014; Ng’ombe et al., 2012).
32
The appeal to participative governance in community engagement lies in the ability to
create a governance system that supports actively engaged and responsible citizens on the
one hand, and inclusive, open and responsive institutions, on the other (Commonwealth
Foundation, 1999). Participation can help develop credibility and trust among the
stakeholders in an organization (Cornwall, 2011). Participation in decision-making has
been shown to enhance quality working relationships, less conflict, better interpersonal
communication and ultimately resulting in higher organizational performance (Bernardes,
et al, 2015). Yermack (2010) notes that shareholder wealth increases with shareholder
democracy expressed by voting. In addition to director elections, shareholders also vote
on other important issues such as the strategic direction the firm is taking, as well as
amendments to the corporate charter or bylaws. Participation suggests a balanced
distribution of ownership (Belle, 2016), codetermination (Kristiansen & Bloch-Poulsen,
2011), and co-construction (Bossche & Dochy, 2015).
Participation in itself does not necessarily lead to equal participation as the legitimacy of
partnerships can be undermined by power imbalance, lack of accountability and resource
differentials between the various partners (Bell & Stockdale, 2016). Equally, and as Belle
(2015), posits, mere presence does not equal participation and neither does representation,
but participation must be intentional, experiential and motivational. Meaningful
engagement and participation characterizes learning organizations as they engage in
critical reflection (Matsuo, 2015).
In a study of 30 rural and community banks in Ghana, Aboagye and Otieku (2010), found
that when ownership incentive to monitor and control management is weak, the
association between the banks’ state of corporate governance and their organizational
performance was weak. The study found that the regulation by the Ghana Central Bank
that ownership of rural and community bank be limited to 30 percent as not being enough
incentive for the cost of management monitoring and control. In a similar study of eight
co-operatives in Ethiopia targeting a sample of 125 members, Dayanandan (2013), found
out that lack of members’ involvement in business participation, lack of transparency and
accountability led to a weak performance. In order of importance, the top three factors
that respondents identified for hindering good governance were lack of participation, lack
of accountability and lack of transparency. In the same study, the top three reasons the
respondents gave for the above factors hindering good governance were lack of
33
knowledge on co-operative values and principles, poor service delivery to the members
and negligence of the members by the directors. A similar study in Ethiopia comparing
individual farmers with those in dairy co-operatives showed that co-operative
membership had a positive impact on productivity (Francesconi & Ruben, 2012).
Shareholder empowerment and activism arising out of a changing external environment

can also motivate participative governance (Brown et al., 2016). A case in point is the
changing regulation as a result of corporate scandals in North America that led to the
enactment of the Sarbanes-Oxley Act of 2002 (SOX, 2002) which resulted to the
increased shareholder power over boards and demand for vigilance and accountability
(Dah, Frye & Hurst, 2014). Drawing on the social cognitive theory, which describes how
groups acquire certain behavioral patterns due to environmental influences.
Brown et al. (2016), examined how directors reacted to increased pressures to be more
accountable and vigilant in the wake of SOX (Pugliese, Minichilli & Zatton, 2014). Their
study comprised of 60 board chairpersons drawn from US publicly held companies
selected from the Investor Responsibility Research Center and ExecuComp databases and
who served before and after the enactment of SOX. Results revealed that increased
shareholder empowerment and participation led to improvement of director oversight,
activism in influencing favorable legislation and regulation (Ryan et al., 2010), and
provision of advice and counsel to management (Joseph, Ocasio & McDonnell, 2014).
However, while participation in decision-making is well intentioned, its practice has

mixed results for many co-operatives. Cathcart (2013), notes that while participation was
intentioned by the management of John Lewis Partnership as a means of facilitating high
employee involvement for sustained competitiveness, in practice it turned out to be a
means of cultural control of employees. In a similar study of governance of co-operatives,
Liang et al., (2015), collected data from 37 fruit and vegetable co-operatives in the
Zhejiang Province of China. The study found that the co-operatives had merged the
management and boards, thus creating a core group of members who made all the
decisions and shared most of the profits. Ribot (2011), has also cautioned that
participation can be manipulated into an indirect rule when it uses organizations or
processes to carry out externally conceived commercial projects. This kind of
participation is what Williams (2011), calls “the new tyranny of development”, which
Ribot (2011), argues that it amounts to forced labor as it is implemented without adequate
34
representation. In a critique of the World Bank’s practice of participatory development,
O’Meally (2014), proffers three main arguments to show the contradictions of the pro-
poor and empowerment credentials of the approach. First, O’Meally suggests that
participation is a guise, a buzzword, one-size-fits-all development recipe, and a vacuous
rhetoric that masks ulterior motives of promoting neo-liberalism (Golooba-Mutebi &
Hickey, 2010).
O’Meally’s second argument is that participation is disciplinary in that the bank’s

participatory development model seeks to discipline behavior and regulate social and
political action down to the grassroots. This argument perceives the bank to be a vehicle
for deepening and socializing the neo-liberal agenda by pushing the participatory
budgeting approach (Goldfrank, 2012). The third argument, “participation as
incongruent”, suggests that the Bank’s participatory initiatives can have ameliorative and
transformative effects. According to this argument, whatever the Bank’s other credentials,
its participatory approach may have some fluid, ambiguous and progressive impact
particularly through opening up spaces for debate and practice (Hickey, 2010).
2.3.4 Board and Management Share Timely Information
According to the UNCTAD (2010) report on “Corporate Governance in the Wake of the
Financial Crisis”, weak shareholder rights limit the ability of shareholders to hold boards
to account, while fairness and transparency in financial markets inspire confidence and
facilitate increased investment. A similar report released the same year by the European
Association of the Co-operative Banks (EACB, 2010), restated the need for a stronger
customer focus, greater integrity and ethics and improved transparency if co-operative
banks were to continue weathering the financial crisis of the late 2000s. Transparency and
disclosure have been shown to have a positive relationship to organizational performance.
On the other hand, the G20/OECD “Principles of Corporate Governance” (OECD, 2015),
state that the corporate governance framework should protect and facilitate the exercise of
shareholders’ rights, which include: the right to relevant and regular information of the
company; the right to participate and vote in shareholder meetings; the right to elect and
remove members of the board; and the right to share in the company’s profits.
35
The OECD (2015), principles support stakeholders’ access to information on a timely
and regular basis and their rights to obtain redress for violations of their rights. The
disclosure and transparency that the OECD principles call for include key areas such as
financial and operating results, company objectives, major share ownership,
remuneration, risk factors, among others. The notion of transparency refers to openness,
disclosure, and access of information either unsolicited or on demand (Niforou, 2014). In
order to promote shareholder participation and counter capture of decision-making by
narrow interests in an organization, accessibility of information is critical (OECD, 2014).
Some studies that have shown importance of transparency in accessing information
include a Canadian study using panel data from 289 firms over a four-year period. The
results of the study suggested that publishing corporate governance rankings was related
to the firms’ market value and accounting results (Bethelot, Morris & Morill, 2010). In a
another study of UAE banks to investigate the importance of disclosure transparency,
executive compensation and relationship with shareholders, Al-Tamini (2012), found a
positive relationship of disclosure transparency, shareholder interests and the role of
board of directors.
In a study of agricultural co-operatives, Choi et al. (2014), surveyed 52 primary

cooperatives and collected questionnaires from 220 directors in order to study the effect
of democratic participation and economic participation on firm performance. The results
showed that the Board of Directors’ communication with the members had positive effect
on democratic participation and organizational performance of a co-operative.
Additionally, economic participation also had a positive effect on the organizational
performance of the co-operatives. The study concluded that focusing on member
participation is more than a good value for co-operatives but also tied to improved
organizational performance.
2.4 Strategic Staffing and Performance of NGOs
Strategic staffing, synonymous with human resource management (HRM), refers to the
strategic and coherent approach to the management of an organization’s most valued
assets – the people working there who individually and collectively contribute to the
achievement of set goals and objectives. Its functions include organizational management,
personnel administration, personnel management, manpower management and industrial
management (Kitonga, 2016).
36
In a theoretical sphere, Lekorwe et al. (2009), assume that human resource management is
more than managing manpower in an organization. This assumption perceives employees
as diverse in that each individual has unique goals and personal needs. Having this
assumption in mind prevents an organization from treating employees and basic business
assets but as an investment each with personal expectations. This approach views workers
in a positive angle and that they are all determined to help in maximizing growth and
development of the organization despite the lack of knowledge and poor processes they
experience (Legge, 2014). Therefore, holding onto this perspective can help an NGO
empower its employees through effective training to help them deliver their best, leading
to enhanced performance.
2.4.1 Strategic Staffing and Organizational Performance
Strategic staffing is primarily focused with helping an organization meet its strategic
goals by attracting and maintain the right employees in addition to managing them
effectively (Willet, 2012). Willet further explores four fields belonging to the HRM
function. These are: staffing, change management, employee development and retention.
He points out that many HR functions these days struggle to get beyond the roles of
administration and employee advocacy and are seen rather more reactive than
strategically proactive partners for the top management. In addition, HR departments
usually have difficulty in demonstrating how their activities and processes add values to
the organization (Willet, 2012).
According to Kitonga (2016), human resource can be considered as the most important
asset an organization can have (Kitonga, 2016). Despite the existence of other
competitive sources in an organization, strategic staffing uses other organizational assets
to ensure attainment of objectives and an edge of competitiveness. Cakar, Bititci and
MacBryde (2013), insist that strategic staffing can be perceived as a strategic entity rather
than a conventional support function to maximize on competitiveness. According to
Cakar, Bititci and MacBryde (2013), total quality management provides evidence that
focusing on the internal business process alongside the welfare of human capital is
strategic to garnering a competitive advantage. Therefore, other than the basic functions
of the HR department in an NGO such as recruitment and training, an organization should
let the HR department to be in charge of planning objectives, goals and activities of the
NGO (Cakar, Bititci & MacBryde, 2013).
37
Franklin (2011), argues that NGOs must have an insight of what its personnel is
expecting to have the desired performance. The rationale behind this argument is that an
understanding of the expectations helps in molding a desired behavior amongst the
employees. HRM is therefore elementary in shaping the competence, employee-employee
relationship and employee-management relationship. Having these factors on the positive
edge triggers satisfaction, commitment and motivation amongst employees leading to
better performance outcomes (Franklin, 2011).
2.4.2 Staff Development and Organizational Performance
Stiles and Kulvisaechana (2013), observed a positive relationship between the

development of human resources and organizational performance. They hold the opinion
that human resource management is an independent and intangible variable, rightfully so,
because market value depends on intangible variables. Shih, Chiang and Hsu (2016),
observed that a crucial part of human resource management is retaining and recruiting
skilled employees.
The cooperative goals of organizations can be shared and applied through knowledge,
capacity and competence of employees in the organization, reinforced through training
and an encouraging environment. Increase in productivity and organizational performance
expands future returns. Future returns depend on the employees’ skills and abilities.
Hardre (2013), studied the impact of resourcing and growth on employees’ attitudes
which include motivation, satisfaction and commitment. Personnel training and
development and organizational development contribute to enhanced performance
(Swanson, 2015).
Organizational performance and productivity is positively related to comprehensive

training activities (Lee, 2013). The effectiveness and efficiency of the NGO sector
depends on the positive future oriented employee development (Solkhe, 2011).
Organizational performance depends on the training and development of staff and
organizations have been known to spend millions of money for this purpose.
Organizational performance depends on employee development because employee
development improves the knowledge base of the organization (Nwuche & Awa, 2011).
38
There is a positive relationship between organizational performance and employee
development. Performance management programs have a significant impact on this
relationship. Performance management programs include the incentives plans, feedback
mechanism. Reviewed literature suggests that low level of performance management
programs and low employee development decreases organizational performance
(Mcdonald, 2015). Staff development depends on two important measures: promotion and
training. There is a significant relationship between investment in employee development
and organizational performance. The factors affecting staff development include the
selection strategies, recruitment, evaluation of performance and planning procedure
(Koch & McGrath, 2016).
There are four approaches used for staff development which include: laissez-faire,
autocracy, meritocracy and co-determination. Management behaviors directly or
indirectly related to staff development and organizational outcomes (Washington, 2016).
Organizational performance and staff development are affected by tuition assistance
programs. Tuition assistance programs are a method that non-governmental organizations
use to invest their resources in the human resource with the aim to develop a more
knowledgeable and educated workforce. Swanson (2015), indicates that the independent
variable is employee development which directly affects the organizational performance.
Organizational performance is positively affected by employee development because of
effective use of employee empowerment practices (Swanson, 2015).
2.4.3 Relationship between Strategic Staffing and Organizational Performance
Strategic staffing ensures that an organization models its organization culture in a manner
that it will be sustainable through providing desirable outcomes. NGOs are not different.
Strategic staffing in an organization involves the use of overarching methodologies that
are best exploited when interacted with the organizational strategy vertically and with
each other in a horizontal manner (Franklin, 2011). These strategic staffing practices are a
reflection of the entire organizational considerations that are well tailored to stand out
from its competitors (Franklin, 2011).
Lekorwe (2009), is of the opinion that a considerable number of NGOs in Africa have no
authority or the autonomy to choose the type and number of employees they want. Their
staffing levels are determined by those who volunteer their services and whether or not
they have time. As a result, the NGOs cannot set standards on levels of experience, skill
39
sets and competencies of its employees. However, these NGOs can conduct training
programs that will acquaint the employees with the required skills (Lekorwe, 2009).
Further, the issues of competencies of the workforce also affects key managerial positions
of the NGOs. This problem results due to lack of strict recruiting processes and training
programs due to limited financial resources. A poorly trained management and operations
staff may compromise the capacity of an NGO to manage their daily duties and routines
effectively. It is the role of the HR manager to ensure that the labor is capacitated with the
desirable skills that would be applicable in attainment of organizational goals (Dimba,
2010).
An effectively planned, appraised, implemented and monitored project has a higher

chance of delivering positive performance outcomes. Another prevailing issue in strategic
staffing in NGOs is the government regulation that volunteers are at liberty to work to a
limited extent. Therefore, despite having an experienced and knowledgeable taskforce,
such an NGO cannot dedicate itself 100%. Moreover, these volunteers only deliver when
they have time a factor that may impede on performance when they have less contact with
the NGOs (Adera, 2014). Despite the myriad of evidence of the benefits of a right
workforce on the impact on performance, there seems to no study directly linking
strategic staffing to the performance of NGOs especially in Kenya. As one of the specific
objectives, this study intended to address this gap by investigating the effect of strategic
staffing on the performance of non-governmental organizations in Kenya.
2.5 Financial Stability and Performance of NGOs
In a study by Lekorwe and Mpabanga (2009), a major impediment to the effective

management and sustainability of NGOs is their dependability on donor funding
(Lekorwe & Mpabanga, 2009). Most NGOs in developing countries are funded by donors
from developed countries and multilateral organizations. In some instances, the
government contributes indirectly to these NGOs through these multilateral organizations.
Despite the source of funding, NGOs are obliged to deliver services that are satisfactory
to the donors to ensure a continuous funding stream even when their budgets are
stretched. This challenge calls for strategic financial measures that ensures an NGO
spends as little as it can whilst maintaining quality of the services provided so as the
outcomes surpass the inputs to affirm effective performance.
40
2.5.1 Effective Financial Management and Performance of NGOs
According to Kitonga (2016), effective financial management helps an NGO in diverse

ways. First, it makes it possible for an NGO to obtain funding from donors and other
stakeholders due to the proof of investment and accountability. It also fosters employee
contentment that one is working in an enabling environment and builds a trust that they
will receive their remunerations after they offer their skills, time and efforts to the
organization. Moreover, effective financial management ensures that the quality of
services rendered to the beneficiaries matches their needs and expectations.
In addition, clean financial records provides a better environment to deal with suppliers
who include financial institutions and creditors through payments as agreed or committed.
These factors improve the welfare on an NGO not only internally but also externally. As a
result, more investors are attracted to the NGO, attributing to development due to an
effective performance. To attain these goals, an organization must have a strategic
financial plan that enables them to allocate the available resources bearing in mind the
most fragile projects and those that can be sacrificed through opportunity costs
(Kiggundu, 2016).
Financial management involves a number of practices and processes that might fall in
conflict with the goals of an organization (Kiggundu, 2016). This conflict may occur
when an NGO is striving for a stronger financial position may mean reducing employee
welfare or delivering less service to beneficiaries. Satisfying beneficiaries may require
more expenditure, leaving less money available for improving the organization’s financial
position and employee welfare. Prompt payments to creditors sometimes may lead to
liquidity problems, which affect employees and may lead to failure in satisfying
beneficiaries. Ensuring compliance, especially as pertains tax laws, may oppress
employees (Kiggundu, 2016).
However, strategic accounting can help organizations achieve their goals in many ways
including providing figures for planning compromising positions, facilitating controls,
providing information on the financial standing, providing information on the funding
trends and provides information on expenditure trends. Financial information is used by
the management of the organization, the board, debtors, clients, creditors, suppliers,
development partners, donors, government, employees, financial lending institutions and
the general public (Molomo & Somolekae, 1999).
41
2.5.2 Financial Performance and the Balanced Scorecard
Financial performance is among the facets captured in the Balanced Scorecard (BSC)
system of performance evaluation. In past centuries, performance was measured based on
the efficiency and economy. The BSC incorporates the concept of operational control and
cost saving as additional factors that can signify financial performance (Kaplan & Norton,
2012). Niven (2013), confers that for NGOs, the mission is central to the BSC since it is
what drives the strategy formulation and planning. Moreover, Rhodes and Keogan (2015),
elude that the vigor of an NGO that provide an organizational direction is derived from
the mission. On a financial perspective, the BSC is imperative in boosting performance.
Kathama (2012), argues that the BSC provides crucial information on how efficient an
NGO uses its resources and donor funds to green-light quality services despite the
resources being scarce. The aftermath of this financial information is the good will form
the public who will be open to support the organization in case of fund raising. Basically,
this is due to a positive accountability status that an NGO attains when using strategic
financial practices. With the BSC financial perspective, an NGO is at an edge of
providing quality services that meet the value of the customers or beneficiaries despite the
budget constraints.
According to Lekorwe and Mpabanga (2009), most NGOs in Kenya lack clearly defined
structures in terms of organizational charts, buildings, facilities, equipment and human
resources. The major contributory factor to this is the constraint that limited financial
resources places on the ability of NGOs to plan, organize and design clearly defined
structures as well as equip their offices with adequate equipment and facilities. As noted
by Molomo & Somolekae (1999), the key weakness of NGOs in Kenya is the
inappropriate organizational structures which impact the manner in which NGOs carry
out their core business (Molomo & Somolekae, 1999). Financial stability provides non-
governmental organizations with important assessment tools that can help in evaluation of
their financial positions, through comparing between liabilities and assets. Therefore, an
NGO has the potential to determine the future financial position and stability both in a
short and long term perspective. Through accounting and financial analysis, an NGO is
able to assess it strengths and weaknesses to provide an insight on what an organization
needs so that it may run efficiently. Through budgeting, managers and board members of
an NGO are able to plan effectively, weigh different choices, and make the best decisions
that reflects the direction and the mission of the organization (Rosilyn, 2007).
42
2.5.3 Relationship between Financial Stability and Organizational Performance
Strategic management practices involve a number of practices that brings together and
integrates different business elements. However, resource allocation is the most
significant element among all others since it is through a sound financial base that an
NGO can be able to implement any plans or strategies. Consequently, an organization's
budget, which embodies its resource allocations decisions, is one of the more visible
manifestation of an organization’s strategic process. Other visible tools include work
plans, a human resources database and accompanying payroll, standard operational
procedures that guide all the organization’s processes and procedures (Willoughby &
Julia, 2011).
Financial stability is critical to the success of any organization. It provides the strategic
plan with rigor, by confirming that the objectives set are achievable from a financial point
of view. It also helps the CEO to set financial targets for the organization, and reward
staff for meeting objectives within the budget set (Rubin, 2010). Financial stability allows
managers to assess the financial resources that will be required to implement the
programs and activities to achieve the goals and targets of the plan, to ensure that funding
is available and as when needed, and to monitor the efficient use of resources and of
progress toward reaching the goals and targets (Rosilyn, 2007).
Financial stability helps to focus the attention of the managers and subordinates towards
organizational objectives. It predetermines the objectives and defines line of action to
complete the work (organizational work plans). Thus, good financial management is
management by objectives. Financial stability serves as the blueprint for the chosen
course of action and eliminates unnecessary and useless activities. It focuses on priorities
and facilitates to take right decision at the right time (Kathryn et al., 2012).
The process employed in the allocation of resources serves as a means for dealing with
complex and competing objectives in a manner that ensures organizational success and
growth (Finkler, 2015). Of all the procedures used to make organizational decisions,
those employed in the allocation of resources are perhaps the most powerful; whether in
the private or the public sectors, the processes used for the allocation of resources deal
comprehensively with the organization as a whole, its component units, and the
organizations and people it serves (Finkler, 2015).
43
Whilst plans and strategies could be stated in a number of elements, resource allocation
remains the principal means of implementation (Ellingson & Jaco, 2011). Consequently,
an NGO’s budget, which embodies its resource allocation decisions, has become the only
visible manifestation of its strategic planning process (Hendrick, 2010). The budget
embodies a plan articulated in financial terms or allocation of funds for execution of
projects and programs of organizations within a given time frame in order to achieve
predetermined program objectives (Willoughby & Julia, 2011).
Budgets establish the amount of resources that are available for a specific activity (Rubin,
2000). As managers manipulate monies to accomplish specific goals, they are declaring
where the values of the organization lie. Denhardt (2016), argues that in NGOs, the
budget is essentially, a measure of support (or lack of support) for specific programs.
They reflect choices about what organizations will and will not do. They reflect general
public consensus about what kinds of services organizations should provide and what
citizens are entitled to as members of society (Stillman, 2010). An organization runs
effectively with the consideration of ideas and suggestions of each stakeholder. However,
the manager is the principle decision maker tasked with ensuring that all the decisions
made are geared at improving the performance of the organization. In an NGO with a
stable financial record, the manager is best placed to incorporate new knowledge,
thoughts, approaches and strategies that will ensure each objective is completed within
the budgetary and time limitations (Dimba, 2010).
Therefore, other than the standardized organizational modules, an NGO with a firm
financial base can operate effectively under a better and well-engineered course of action.
As a result, an organization undergoes progressive developments through attainment of
different short term goals that will add up to the long-term strategic goal (Dimba, 2010).
Financial stability is the basis of control and defines the minimum standard of work to be
achieved and the time required to complete the job. It is helpful to compare the actual
performance achieved with that of predetermined or standard fixed. The manager
evaluates the actual achievement of interval of time. This is helpful to identify the
deviation, if any, between actual and planned performances (Awino et al., 2011).
44
Risk monitoring and control is the process of keeping track of the identified risks,
monitoring the residual risks and identifying new risks. This process should ensure the
execution of the risk plan and continually evaluate the plan’s effectiveness in reducing
risk (Finkler, 2015). Resource allocations can also be monitored as these too will have
been pre-planned and, where appropriate, allocated to the agreed actions (Hendrick,
2010). Fiscal measures embodied in financial stability enable organizations by means of
its aggregate expenditures and taxation to influence and shape incomes, production and
employment in desired directions (Rahaman, 2010).
The financial plan can indeed have far reaching economic and development implications
and so has come to be used as a tool for economic planning, regulating aggregate
expenditure and taxation levels, volume of production, income levels, and consequently
savings and investment levels and employment. Organizations can, and often do use a
well-coordinate revenue, expenditure and debt programs to influence not only the national
economy but also to stimulate development (Rubin, 2010). The overall business
environment is prone to changes in trends within the environment. This requires that an
organization stays focused and flexible in order to adapt to the new trends when they
emanate to keep up with competition.
Akong’o Dimba, (2010), argues that an NGO must take risks in all the operations it
participates in. This argument means that preparedness to cope with any problems and
changes in information needs are part of financial stability (Akong’o Dimba, 2010). This
flexibility helps an organization make better choices without necessarily undertaking a
trial-and-error attempt in any solution it seeks to accomplish. In addition, financial
stability involves managing resource supply depending on the rates of demands (Akong’o
Dimba, 2010).
NGOs face a number of challenges as the competitive environment changes. Sometimes,

the changes affect the organization and its operation mildly while in other situations the
changes are adverse. The management of an NGO must be able to distinguish between
these two conditions and only respond to the changes when there is need. Inappropriate
focus of attention and efforts in a mild change is costly to the organization causing
financial instability (Willoughby & Julia, 2011). Organizational goals are sometimes
broad especially those attainable in the long-term perspective. These goals must be
simplified into smaller units and tasks to improve their attainability. Financial planning
45
breaks the broader goals into manageable smaller goals that can be attained with the
financial position of the organization. Financial planning also ensures that the NGO
focuses on the primary goal of the founder and the different timetables on the length of
projects.
2.6 Chapter Summary
This chapter presented the literature review based on research objectives. The foregone
discussion affirmed strategic planning, governance, strategic staffing, and financial
stability as backbone support to strategic management practices. The effect of strategic
management practices on the performance of NGOs has been explained, linking the
variables under study to organizational performance. Chapter three discusses the research
methodology that was employed by the study to collect data. Additionally, it looks at
study area, study design, target and study populations, sampling frame & techniques,
research instruments, ethical considerations, data collection, data quality control, data
management and analysis.
46
CHAPTER THREE
3.0 RESEARCH METHODOLOGY
3.1 Introduction
This chapter describes the methodology that was applied while conducting the research,
i.e. strategic management practices and the effect on the performance of non-
governmental organizations in Kenya. It is divided into key sections including the
research design, the population and sampling design, data collection methods, research
procedures and instruments, and data аnаlysis methods. The adopted research methods
proved appropriate in terms of cost effectiveness, time, and information reliability and
validity.
3.2 Research Design
Research design refers to a framework which acts as the blueprint for data collection,
measurement, and analysis which explains the procedure necessary for obtaining the
information needed to solve a research problem (Cooper & Schindler, 2014). Hence,
research design is a layout of the research project which determines the most suitable
method of investigation, nature of instruments, sampling plan and different data types
(Saunders, Lewis & Thornhill, 2015). There exists a number of research designs but the
main ones are descriptive, exploratory, correlation design and causal (Collis & Hussey,
2009).
Descriptive research is usually used in obtaining information in regards to the current

status of the phenomena and explains what exists with respect to variables or conditions
in a situation. The major objective of a descriptive research is to provide a valid and
accurate representation of the variables that are relevant to the research questions and
objectives (Creswell, 2014). This research adopted this design since the study aimed to
collect information on strategic management practices (independent variable) and the
effect on performance (dependent variable) of NGOs in Kenya. The descriptive approach
was applied since it enabled the researcher to use quantitative data so as to find common
characteristics about the population or phenomena being studied (Zikmund, Babin, Carr
& Griffin, 2010). In addition, the study adopted the correlation approach to describe the
dependent and independent variables relationship.
47
Correlation research represents a general approach to research that focuses on examining
the co-variation among natural occurring variables (Creswell, 2014). The major objective
of correlation research is mainly to identify predictive relations using correlations or other
statistical techniques (Cooper & Schindler, 2014). Furthermore, the study employed a
quantitative research approach. Quantitative approach entails the use of tools such as
questionnaires, or data analysis procedure including graphs, that use numerical data
(Saunders, Lewis & Thornhill, 2015).
3.3 Population and Sampling Frame
3.3.1 Population
Population is described as the total collection of elements about which the researcher
wishes to make reference (Cooper & Schindler, 2014). It is basically the universe of
people, place or things to be investigated (Saunders, Lewis & Thornhill, 2016). The
target population for this study was top, middle and operational staff across 36 non-
governmental organizations in Siaya County as highlighted in the list of organizations in
Appendix III.
3.3.2 Sampling Design

Sampling design is described as that part of research plan that indicates how cases are to
be carefully chosen for observation (Cooper & Schindler, 2014). Hence, the design gives
a blueprint of the process to be followed to draw the study’s sample based on the sample
size (Saunders, Lewis & Thornhill, 2016). To ensure full representation, stratified random
sampling was used to collect data from the various strata of the respondents
3.3.2.1 Sampling Frame

Sampling frame is described as the physical representation of all the elements of the
population from which the sample size is drawn (Sekaran & Bougie, 2013). Other studies
posit that sampling frame is the detailed presentation of population of study outlined in a
table or figure (Oladipo, Ikamari & Kiplang'at, 2015). According to Cooper and Schindler
(2008), sampling frame has been defined as a list of elements from which the sample is
drawn and closely related to the population. The sample of the study mainly constituted
the top management, middle level management and operations staff at aforementioned
NGO sites.
48
3.3.3.2 Sampling Technique
Sampling technique entails the method that is used to select the members of a sample
(Cooper & Schindler, 2011). A study by Sekaran and Bougie (2013), explains the various
sampling designs types which include; probability and nonprobability. The study findings
are assumed to be a true representative of the study population (Cooper & Schindler,
2014). Since the population was divided into the various categories of top management,
middle level management and operational staff, stratified random sampling was used to
collect data from the various strata of the respondents. This technique was aimed at
ensuring full representation of all respondents and eliminating the aspect of biasness.
Stratifying the entire population helped to ensure a sample that accurately reflects the
population under study (Zinkmund et al., 2012).
3.3 Sample Size

Sample size is described as the number of items to be selected from the universe to
constitute a sample (Oladipo, Ikamari & Kiplang'at, 2015). The sample size is an
important element of any empirical study in which the objective is to make inferences
about a given population from a sample. Basically the sample size utilized in a study is
determined based on the expense of data collection and needs to have sufficient statistical
power (Creswell, 2014). A good sample should be accurate, precise, ensure to have a
good representation of the population, and be at least 20% of the population (Cooper &
Schindler, 2011). The study used stratified random sampling and a quota of 50% was
drawn from each stratum.
3.4 Data Collection Methods
This study used а structured questionnaire as data collection tool to collect both
qualitative and quantitative data. The questionnaires issued consisted of both closed and
open ended questions. The decision to use а questionnaire was based on the fact that the
tool is considerably easy to understand and use for the respondents (Burns & Ryman,
2008). Furthermore, it offers а high rate of response as it is less tasking compared to other
tools such as focus group discussions. Additionally, а likertscаle was used with options
ranging from strongly agree to strongly disagree on а 5 point scale. This scale was used
because it has proven to be effective in other studies (Bryman & Bell, 2011). The
questionnaire was divided into five main segments. The first section of the questionnaire
comprised of questions on the respondents’ general information. The second, third, fourth
49
and fifth parts entailed questions based on the research objectives. The researcher
obtained a letter of permission from Chаndаriа School of Business to facilitate the
аuthorizаtion to collect data from the target organizations.
3.5 Research Procedures

The research utilized an adopted questionnaire as the data collection tool to ensure that
the questions were аppropriаte for the study. The questionnaire was developed in
аccordаnce to the research objectives. Using a small population size of two NGOs, a
pretest was conducted before administering the questionnaire to the wider study
population. А study by Cooper and Schindler (2014), posits that pretests did in
improvement of instrumentation and design. Pretest is helpful in refining information
contained in the questionnaire which in turn increases efficiency and identifies any
shortcomings in the questionnaire (Bryman & Bell, 2011). The pretest enabled the
researcher to make changes based on suggestion from the pretest participants and
eliminate errors and improve validity.
The researcher obtained permission from Chandaria School of Business to facilitate the
data collection process. Time was given for respondents to fill in the questionnaires and
phone calls and email reminders were used as a measure to follow up. The researcher
emailed the questionnaires and feedback from respondents was treated with highest
degree of confidentiality.
3.6 Data Analysis Methods

Data аnаlysis entails the process of analyzing, cleaning, transforming, and modeling data
collected in а research with the objective of identifying useful information (Cooper &
Schindler, 2014). The information collected will be used to make decisions. The data
collected was edited and keyed into SPSS tool for аnаlysis. The main purpose of the
аnаlysis was to consolidate the observations so as to provide solutions to the research
objectives. Quantitative and qualitative data аnаlysis tools were used, which comprised of
descriptive аnаlysis and in particular, a cross-sectionаl аnаlysis. А cross-sectional
аnаlysis basically entails а study carried out once and represents а snapshot of one point
in time (Bryman & Bell, 2011). Finally, the data collected was presented in form of tables
and figures aimed at facilitating interpretation of information obtained.
50
3.7 Chapter Summary
The chapter managed to clearly describe the methodology that the study used to meet the
objectives of the study. The research methodology was explained in sections including;
research design, population, sampling frame, sampling technique, sample size, data
collection and data analysis. Chapter four gives an analysis and presentation of study
findings.
51
CHAPTER FOUR
4.0 RESULTS AND FINDINGS
4.1 Introduction
This chapter presents the analysis of study findings on strategic management practices
and the effects on the performance of non-governmental organizations in Kenya. This
chapter analyzed the variables identified in the study and estimates of the model
presented in the previous chapter.
4.2 Response Rate

Out of the 108 emailed questionnaires, 85 questionnaires representing 78.7% of the total
questionnaires distributed were returned fully completed, while 23 questionnaires were
not emailed back, representing 21.3% of the total questionnaires distributed to the
respondents. It can be inferred that the response rate was good. According to Mugenda
and Mugenda (2003), a response rate of 70% and over is excellent for analysis and
reporting on the opinion of the entire population.
Table 4.1: Response Rate
Response Frequency Percentage %

Filled in questionnaires 85 78.7
Unreturned questionnaires 23 21.3
Total 108 100
4.3 Background Information

This section gives an analysis on demographic factors of the respondents who participated
in the study.
4.3.1 Age of Respondents

Based on the study, 7% of respondents indicated that they were less than 25 years, 37.2%
were between 26-35 years, 50% were between 36-45 years, and 4.7% were 46 and over as
shown in Table 4.2.
52
Table 4.2: Age of Respondents
Frequency Percent
a) Less than 25 6 7.0
b) 26-35 32 37.2
c) 36-45 43 50.
a) d) 46 and over 4 4.7
Total 85 100.0
4.3.2 Highest Level of Education

Table 4.3 represents the level of study of the respondents. 42 respondents have a
university degree representing 48.8% of the total population, 14 respondents have a
diploma representing 16.3% of the population. 3 respondents have secondary education,
representing 3.5% of the total population, 2.3% have certificate education representing of
the population and 23 respondents have a master’s degree representing 26.7% of the total
population.
Table 4.3: Highest Level of Education
Frequency Percent
a) Diploma 14 16.3
b) Degree 42 48.8
c) Master 23 26.7
b) d) Certificate 1 1.2
c) e) Certificate 2 2.3
d) f) Secondary 3 3.5
Total 85 100.0
4.3.3 Number of Years Worked at The Organization

Table 4.4 represents the number of years respondents had worked in the organization.
26.7% indicated that they had worked for less than 5 years, 33% for between 5-10 years,
19.8% for between 10-15 years, 16.3% for between 15-20 years and 6% for more than 20
years.
53
Table 4.4: Number of Years Worked at the Organization
Frequency Percent
a) Less than 5 23 26.7
b) 5-10 29 33.7
c) 10-15 17 19.8
b) d) 15-20 14 16.3
e) More than 20 2 2.3
Total 85 100.0
4.3.4 Category of Employment

Based on the study, (45.3%), (25.6%) and (27.9%) of respondents indicated that they
were between top management, middle level management and operations staff
respectively as shown in Table 4.5.
Table 4.5: Category of Employment
Frequency Percent
a) Top Management 39 45.3
b) Middle level 22 25.6
c) Operations staff 24 27.9
c) Total 85 100.0
4.4 Descriptive Statistics

4.4.1 Descriptive Statistics of Strategic Planning
The findings on Table 4.6 below show the extent to which strategic planning affects
organizational performance.
Table 4.6: Descriptive Statistics of Strategic Planning
Strategic planning n = 85
N MEAN S.D
Meeting organizational objectives 85 2.09 1.030
Governance effectiveness 85 2.43 0.925
Strategic staffing 85 1.98 0.952
Financial stability 85 2.23 0.961
54
4.4.2 Strategic Planning and Organizational Performance
The findings on Table 4.6 above show the extent to which strategic planning affects
organizational performance. The results were skewed towards most effect with
governance effectiveness being represented by a mean of 2.43 and standard deviation of
0.925 while strategic staffing had a mean of 1.98 and standard deviation of 0.952.
4.4.3 Correlation between Strategic Planning and Organizational Performance
The analysis sought to illustrate the correlation between strategic planning and
performance of NGOs. Study findings were based on correlation coefficient (r) value at
between plus and minus one (-1.00 and +1.0); significance level of .05. (95%) and two-
tailed test. The findings indicate correlation coefficient (r) = (.338) for strategic planning;
(.332) for governance; (.450) for strategic staffing; and (.450) for financial stability. This
shows that there is a positive relationship between performance of NGOs and
achievement of organizational objectives; governance; strategic staffing and financial
stability.
The study results also show coefficient of determination (r2) =. (.114), (.110), (.203) and
(.104) respectively indicating that: 11.4%, 11.0%, 20.3%, and 10.4%, of performance of
NGOs is influenced by strategic planning; governance; strategic staffing and financial
stability respectively.
Table 4.7: Pearson’s Correlation Coefficients
Strategic planning Performance of NGOs

r r2 df .sig
Pearson Correlation Constant 0 0 0 0
Meeting organizational 0.338a 0.114 5 0.025
objectives 0.332a 0.110 5 0.028
Governance effectiveness 0.450a 0.203 5 0.002
Staff retention 0.323a 0.104 5 0.033
Financial stability
**significance level of: 0.005 * 2 tailed Test
55
4.4.4 Correlation between Strategic Planning and other Factors of Organizational
Performance
The analysis shown on Table 4.8 below involved correlation of strategic planning and
other factors of performance of NGOs. The results indicate that Correlation coefficient (r)
= (.421) for effective governance; (.472) for strategic staffing and (.363) for financial
stability respectively. This shows that there is a positive relationship between
performance of NGOs and governance; strategic staffing and financial stability. In
addition coefficient of determination (r2) = (.177) for governance; (.222) for strategic
staffing and (.132) for financial stability indicating that 17.7%, 22.2% and 13.2% of
performance of NGOs is influenced by governance, strategic staffing and financial
stability.
Strategic planning Performance of NGOs

r r2 df .sig
Governance a 0.177 5 0.01
0.421
Strategic staffing 0.472a 0.222 5 0.25

a 0.132 5 0.16
0.363
Financial stability
4.5 Descriptive Statistics of Governance
Governance refers to the organizational governance of a corporation or the way in which

entities are directed and controlled in the interest of shareholders and other stakeholders.
The study sought to establish to what extent governance affects the performance of
NGOs. From the results most of the respondents leaned towards agreeing that governance
affects financial stability with a mean of 2.20 and standard deviation of .002, while least
respondents agreed that governance affects strategic staffing with a mean of 1.80 and
standard deviation of 0.904.
56
Table 4.9: Descriptive Statistics of Governance
Governance n = 85
N MEAN S.D
Strategic planning 85 2.14 0.795
The study also sought to establish the correlation between governance and performance of
NGOs. The findings shown on Table 4.10 below indicate, correlation coefficient (r) =
(.679=meeting objectives); (.519=leadership effectiveness); (.321=staff retention) and
(.363= financial stability). This shows that there is a positive relationship between
performance of NGOs and governance evidenced by the positive correlation coefficients
of achievement of organizational objectives; leadership effectiveness; staff retention; and
financial stability.
In addition the findings indicate the coefficient of determination (r2) =. (.461), (.269),
(.103) and (.132) respectively for achievement of organizational objectives; leadership
effectiveness; staff retention and financial stability indicating that (46.1%), (26.9%),
(10.3%), and (13.2%) of performance of NGOs is influence by governance supported by
achievement of organizational objectives; leadership effectiveness; staff retention and
financial stability.
Governance Performance of NGOs

r r2 df .sig
Meeting organizational objectives a 0.461 5 0.01
0.679
Leadership effectiveness 0.519a 0.269 5 0.003

Staff retention a 0.103 5 0.014
0.321
a 0.132 5 0.011
Financial stability 0.363
57
4.5.1 Effect of Governance on Organizational Performance
Majority of the respondents were in agreement that governance affects strategic planning
with a mean of 2.48 and 0.936 standard deviation while they least agreed that governance
affects strategic staffing with a mean of 2.09 and standard deviation of 1.044.
Table 4.11: Impact of Governance on Organizational Performance
Governance n = 85
N Mean S.D
4.5.2 Correlation between Governance and other Factors of Organizational

Performance
Results of the study indicated, correlation coefficient (r) of: (Strategic planning = .557),
(Strategic staffing=.650), and (Financial stability =.509) respectively. Since the
correlation of coefficient is positive it can be concluded that there is a positive
relationship between performance of NGOs and governance as supported by strategic
planning effectiveness, effective staff management and financial stability. The results also
show the coefficient of determination (r2) of: (Strategic planning =. 310), (Strategic
staffing=.423) and (Financial stability=.259), respectively indicating that (31.0%), 42.3%
and 25.9%, of performance of NGOs is influenced by other factors (strategic planning,
strategic staffing and financial stability respectively.
Table 12: Governance and other Factors of Organizational Performance
Governance Performance of NGOs

r r2 df .sig
Pearson Correlation 0 0 0 0
Constant a 0.310 5 0.12
0.557
Strategic planning
0.650a 0.423 5 0.003
Strategic staffing a 0.259 5 0.007
0.508
Financial stability
58
4.6 Descriptive Statistics of Strategic Staffing
The core contribution of strategic staffing is to attract, recruit and retain employees to
perform jobs in line with an organization's overall goals. With a clearly defined staffing
strategy, organizations can address existing, new / emerging needs and gaps. The extent
of the effect of strategic staffing on aspects of organizational performance is discussed
below.
Table 13: Extent of Effect of Strategic Staffing on Organizational Performance
Strategic staffing n = 85
N Mean S.D
Meeting organizational effectiveness 85 2.11 0.813
Staff retention 85 1.84 0.987
4.6.1 Correlation between Strategic Staffing and Organizational Performance

Results of the study indicated, correlation coefficient (r): (achievement of organizational
objectives= .510), (governance effectiveness; =.413), (staff retention =.490); and
(financial stability=.407) respectively. Since the correlation of coefficient is positive it
can be concluded that there is a positive relationship between performance of NGOs and
strategic staffing aspects relating to the achievement of organizational objectives;
governance effectiveness; staff retention and financial stability.
The coefficient of determination (r2) (Achievement of organizational objectives=. 260),

(governance effectiveness=.170), (staff retention=.240), and (financial stability=.166)
respectively indicating that (26.0%), 17.0%, 24.0% and 16.6% of performance of NGOs
is influenced by strategic staffing aspects such as: achievement of organizational
objectives; board and management effectiveness; staff retention and financial stability.
59
Strategic staffing Performance of NGOs

r r2 df .sig
0.510
Leadership effectiveness 0.413a 0.170 5 0.03

0.490
a 0.166 5 0.004
Financial stability 0.407
4.6.2 Correlation between Staffing and other Factors of Organizational Performance

The analysis shown on Table 4.15 below involved correlation of other measures of NGOs
performance and strategic staffing. The findings indicate correlation coefficient (r) of
(.572= strategic planning); (.443= governance) and (.521= financial stability). Since the
relationship between performance of NGOs and other organizational factors as relates to
strategic planning, governance and financial stability. The study results also shows
coefficient of determination (r2) of: (.327), (.196) and (.271) respectively for strategic
planning, governance and financial stability indicating that (32.7%), (19.6%) and (27.1%)
of performance of NGOs is influenced by the other organization factors relating to
strategic planning, governance and financial stability.
Strategic staffing Performance of NGOs

r r2 df .sig
Strategic planning a 0.327 5 0.03
0.572
0.443a 0.196 5 0.01

Governance
Financial stability a 0.271 5 0.02
0.521
60
4.7 Descriptive Statistics of Financial Stability
Financial stability is a state in which the financial systems, i.e. the key financial markets
and the financial institutional system is resistant to economic shocks and is fit to smoothly
meet its basic functions: the intermediation of financial funds, management of risks and
the arrangement of payments. The results shown on Table 4.16 below indicate the extent
of effect of financial stability on organizational performance means and standard
deviation of governance effectiveness and meeting organizational objectives represented
by (mean) 1.95, (SD.) 0.97 and mean), (SD) 0.800 respectively.
Table 4.16: Descriptive Statistics of Financial Stability
Measures n = 85
N Mean S.D
Meeting organizational effectiveness 85 2.32 0.800
Staff retention 85 1.98 0.821
4.7.1 Correlation between Financial Stability and Organizational Performance

The analysis shown on Table 4.17 below involved correlation between measures of
NGOs performance and financial stability. Results of the study indicated, positive
correlation of coefficients (r) hence it can be concluded that there is a positive
relationship between performance of NGOs and financial stability as shown by the
coefficients of correlation coefficient (r) of (achievement of organizational objectives =
.629), (governance effectiveness =.683), (staff retention=.735) and (financial stability
=.572) respectively.
The results also shows coefficient of determination (r2) of: (achievement of

organizational objectives =. 396), (governance effectiveness =.466), (staff retention=.540)
and (financial stability=.327) respectively. This implies that: 39.6%), 46.6%, 54.0% and
32.7% of performance of NGOs is influenced by: financial stability as evidenced by
coefficients of achievement of organizational objectives; governance effectiveness; staff
retention and financial stability.
61
Financial stability Performance of NGOs

r r2 df .sig
0.619
0.481a 0.231 5 0.15

Leadership effectiveness
0.469
Financial stability
a 0.171 5 0.002
0.417
4.7.2 Effect of Financial Stability Strategies on Organizational Performance

Findings on Table 4.18 indicate that financial stability affects other factors of
organizational performance. The results indicate that most respondent agree with this,
evidenced by findings below.
Table 4.18: Effect of Financial Stability Strategies on Organizational Performance
Measures n = 85
N Mean S.D
Governance 85 2.57 1.087
4.7.3 Correlation between Financial Stability and other Aspects of Organizational

Performance
The analysis shown on Table 4.19 below involved correlation of financial stability and
other measures of NGOs Performance. The findings indicate, correlation coefficient (r) of
(.483= strategic planning); (.527= governance) and (.503= strategic staffing). Since the
relationship between performance of NGOs and other organizational factors relating to
strategic planning, governance and strategic staffing. The coefficient of determination
(r2) =. (.233), (.278) and (.253) respectively for strategic planning, governance and
62
strategic staffing indicating that (23.3%), (27.8%) and (25.3%) of performance of NGOs
is influence by other organizational factors (strategic planning, governance and strategic
staffing).
Other factors Performance of NGOs

r r2 df .sig
Strategic planning a 0.233 5 0.001
0.483
Governance 0.527a 0.278 5 0.13

Strategic staffing a 0.253 5 0.006
0.503
4.7.4 Correlation between Strategic Management Practices and Performance of

Non-Governmental Organizations
The study undertook a correlation analysis to investigate the relationship between
Strategic Management Practices and Performance of Non-Governmental Organizations. It
was revealed that a strong positive correlation between Performance of NGOs and:
Strategic planning (r=0.410, p<0.00), Governance (r=0.540, p<0.00), and financial
stability and strategic staffing (0.372, p<0.00) as shown in Table 4.20.
63
Table 4.20: Strategic Management Practices and Performance of Non-
Governmental Organizations
Performance Strategic Governance Strategic

planning staffing
Performance Pearson 1 .410** .540** .372**
Correlation
Sig. (2-tailed) .000 .000 .001
Strategic Pearson .410** 1 .614** .443**
planning Correlation
Sig. (2-tailed) .000 .000 .000
** **
Governance Pearson .540 .614 1 .412**
Correlation
Sig. (2-tailed) .000 .000 .000
Strategic Pearson .372** .443** .412 **
1
staffing Correlation
Sig. (2-tailed) .001 .000 .000
**. Correlation is significant at the 0.01 level (2-tailed).
4.7.5 Regression Analysis of Strategic Management Practices and Performance of

Non-Governmental Organizations in Kenya
The analysis additionally sought to establish the significance of the relationship between
dependent and independent variables, hence a regression analysis between Performance
of Non-Governmental Organizations (PNGO) as dependent variable against Strategic
Planning (SP), 58 Governance (GN), Staffing Strategies (SS) and Financial Stability (FS)
as independent variables, using the model below
Y = α + β1X1 + β2X2 + β3X3 + β4X4 + ε
Where: α= constant term
β1-4 = Regression Coefficients
e= Error Term.
X1 = Variables
The results of the study equation became: PNGO = α + β1SP+ β2 GN + β3 SS+ β4FS+ ε
Hence: PNGO =2.132 + 1.204 SP + 1.019 GN + 1.109SS + 1.033FS+ ε
64
Findings on Table 4.10 above shows the significance of the relationship between strategic
planning, governance, staffing strategies and financial stability and performance of non-
governmental organizations.
4.7.6 Model Summary
The results established that the R2 was 0. 331 which indicates that 33% of performance is
determined by contribution of the executive as shown in Table 4.21.
Table 4.21: Model Summary of Strategic Management Practices and Performance

of Non-Governmental Organizations
Model Summary
Model R R Adjusted R Std. Error of Change Statistics
Square Square the Estimate R F df df Sig. F
Square Change 1 2 Change
Change
1 .575a .331 .302 .75054 .331 11.545 81 84 .000
a. Predictors: (Constant), Strategic planning, Governance, Strategic staffing and
Financial stability
4.7.8 ANOVA
An ANOVA analysis was done on the independent and dependent variables at 95%
confidence level, the F value=8.26, P<0.000) therefore it is established that strategic
management practices have a significant effect on performance of NGOs. The results are
shown in Table 4.22.
Table 4.22: Anova Contribution of Strategic Management Practices and

Performance
Model Sum of df Mean F Sig.

Square Square
1 Regression 19.511 1 6.504 11.545 .000b
Residual 39.432 81 .563
Total 58.943 84
a. Dependent Variable: Performance
b. Predictors: (Constant), Strategic planning, Governance, Strategic staffing and
Financial stability.
65
4.7.9 Strategic Management Practices and Performance of Non-Governmental
Organizations
The findings in Table 4.23 indicates that strategic planning had a significant positive
effect on performances of non-governmental organizations (β= 0.615, p<0.004), as do
governance (β=0.415 p> 0.079) strategic staffing and financial stability β= 0.180,
p>0.246 as shown below.
Table 4.23: Coefficients of Variables of Strategic Management Practices and
Performance of Non-Governmental Organizations
Model Unstandardized Standardized t Sig.

Coefficients Coefficients
B Std. Error Beta
1 (Constant) -.783 .685 - .257
1.143
Strategic planning .415 .233 .215 1.783 .079
Governance .615 .208 .351 2.954 .004
Financial stability .180 .154 .131 1.170 .246
4.7.9.1 Application of Balance Scorecard

The respondents were asked to state if they were familiar with the use of the balanced
score card to measure their performance. The results showed that all of them agreed that
they were aware of the same. This suggests that there was a high level of awareness
among the respondents and therefore the entire third sector on the existence of the balance
scorecard as a tool to measure performance.
Table 4.24: Application of BSC
VARIABLE MEAN SD
To what extent does BSC contribute to your organization’s 4.375 0.704

performance?
To what extent do BSC measures help you deal appropriately with 4.123 0.335
these stakeholders to improve performance:
To what extent does Financial Perspective Measures on BSC help 4.001 0.877
you to improve your performance on:
66
Table 5.12 shows the results on the methods of performance measurement used by the
organizations under study. 87.5% of the respondents agreed that they were sufficiently
engaged in performance measurement setting. The mean of 4.37 also confirms that there
is high level of agreement on this. This high number can be attributed to the fact that most
of the respondents were employees at supervisory level and therefore had interacted with
performance measurement settings in their organizations. The results show that all the
respondents agreed that their current performance measurement tool was comprehensive
with respect to measurement of performance. The mean of 4.12 suggests that most of the
respondents were in agreement with this statement. This fact can be attributed to the fact
that most of these organizations use the balanced scorecard method to measure
performance and therefore felt that the measure was very comprehensive in addressing all
parameters of performance measurement.
4.8 Chapter Summary

The foregone chapter gave an overview of study findings. Data analysis was done by
editing and coding with the goal of highlighting useful information, suggesting
conclusions, and supporting interpretations. It involved breaking down factors identified
through the data collected into simpler coherent parts in line with the objectives of the
study in order to derive meanings. The tabulated data was analyzed quantitatively and the
data analysis established statistically positive relationship between strategic management
practices and performance of non-governmental organizations in Kenya.
67
CHAPTER FIVE
5.0 DISCUSSION, CONCLUSION AND RECOMMENDATIONS

5.1 Introduction
This chapter brought out discussions, conclusions and recommendations regarding the
study. The chapter was subdivided into five parts. The first part described methodology,
the summary of the findings from the field of study, and results. Part two contained a
discussion with regards to the specific objectives that formed the basis of the study. There
was a discussion on the effect of strategic planning on the performance of NGOs in
Kenya, the effect of governance on the performance of NGOs in Kenya, the effect of
strategic staffing on the performance of NGOs in Kenya and the effect of financial
stability strategies on the performance of NGOs in Kenya. Part three followed with
conclusions drawn from the study using the findings and results that were obtained in
chapter four. Recommendations arising from the study specific objectives were
enumerated in the last section of this chapter.
5.2 Summary
The purpose of this study was to investigate strategic management practices and the effect
on the performance of non-governmental organizations in Kenya. The following research
objectives guided the study - to investigate: the effect of strategic planning on the
performance of NGOs in Kenya, the effect of governance on the performance of NGOs in
Kenya, the effect of staffing strategies on performance of NGOs in Kenya and the impact
of financial stability strategies on the performance of NGOs in Kenya.
The researcher used a descriptive research design to examine the correlation between
research variables in relation to the study objectives. A sample size of 36 NGOs in Siaya
County was selected to represent the larger Kenyan NGO population. A stratified random
sampling technique was applied to ensure that the participants are chosen from all levels
of an organization; top management, middle level management and operations staff.
Structured questionnaires with both close ended and open-ended questions were used to
collect both qualitative and quantitative data and analysis was done using SPSS software
to interpret the findings.
68
The study found that strategic management practices affect the performance of NGOs in
different ways. Strategic planning puts an organization at the forefront in the competitive
business environment. This provides an organization with opportunities to lead the
market in making strategic decisions in an ever changing and complex environment, thus
more impact to the beneficiaries of the services provided.
The study found a strong and positive correlation between governance and organizational
performance. Governance not only enhances effective decision making in an
organization, but also provides satisfaction and motivation to the employees that compel
them to focus on achieving organizational goals. Proper governance understands the
private and humanity needs of the employees thus providing them with an environment
that fulfills these desires. Their satisfaction reciprocates into an effective and enhanced
organizational performance. The study found that strategic staffing helps an organization
meet organizational effectiveness. This factor also promotes governance, a sign that
through strategic staffing, organizational leadership and management becomes an easier
task. Moreover, an NGO with strategic staffing practices has the potential to retain its
staff due to the contentment and commitment that the staff have.
Finally, the study found that the financial stability of an NGO is directly proportional to
its performance. A good financial position allows an organization engage in diverse
activities since it can allocate resources based depending on their level of importance and
priority. Moreover, through a stable financial ability, an NGO has the capacity to
compensate its staff effectively as a way of motivating them to work effectively and
improve on the organizational performance.
5.3 Discussions
5.3.1 The Effect of Strategic Planning on the Performance of NGOs in Kenya
The study findings agree that for superior competitive performance, strategic planning
must be a process that does not end when a plan is agreed upon rather, it must be
implemented. It also confirms that it is a systematic process through which an
organization agrees on priorities that are essential to its mission and are responsive to the
environment. The study indicated that indeed, rational strategic planning is based on the
idea that organizations adapt to changes in their environment by making rational
decisions.
69
The research findings agree with the study by Alisa (2017), that opines that rational
strategic planning is much more effective than an informal process because it involves the
collection and analysis of pertinent information allowing an organization to make more
informed and fact-based strategic decisions and therefore to be more aligned with its
environment. Strategic planning indicates what type of decisions are appropriate or
inappropriate for an organization, consequently helping to shape performance.
The study holds that understanding and analyzing the situation is accomplished by three
separate strategic thinking activities: external environmental analysis; internal
environmental analysis; and the development or refinement of the organization’s
directional strategies. From the study emerged a common understanding that strategy is
driven by a common mission, common vision, and common set of organizational values
and goals – the directional strategies. The directional strategies are the result of
considerable thought and analysis by top management.
The study agrees with David (2017), as he contends that the records of organizations that
used strategic planning in their activities showed better performance results. Strategic
planning enables an organization to make plans ranging from elementary tasks to broader
projects. Thus, strategic planning is a breakthrough to determine steps that should be
taken at different time frames to ensure completion of the tasks to realize organizational
effectiveness in the long run.
The study affirms that employees act as the fuel of an organization, and agrees with
Bryson (2009), that strategic planning provides the expectation of the organization to the
employees, and vice versa. Through this vertical and horizontal relationship, strategic
planning gives employees a directional outlook of the organization and critically, when to
invest their efforts optimally.
Similarly, the study agrees with Dusenbury (2010), that strategic planning shapes the
structure of operations of an organization. An organization with a strategic plan is at
liberty to choose the most effective strategy. The choice of strategy is driven by factors
such as the logic, rationale and how systematic an approach is. Strategic planning brings
the future to the present to allow the organization plan on how to deal with the probable
opportunities and threats coming on its way.
70
Moreover, the study found a positive correlation between strategic planning and
performance. This agrees with Dusenbury’s (2010), argument that strategic planning and
performance are intertwined. This argument is supported by the logic that performance is
defined by the plan and the strategic degree of a plan is measured by the performance
outcome.
According to Arasa and K’Obonyo (2012), an organization is a system made up of

integrated subsystems, each with specific functions. Therefore, the concept of strategic
planning approaches an organization using this system approach to enable the
management monitor the organization as a whole and the relationship between each
subsystem. This is an effective tool to improve performance of an organization because
the management is able to evaluate what subsystem causes what outcome and how to
ensure they are exploited optimally through controlling. Strategic planning therefore
suffices decision making processes and enables an organization to set its objectives in
compliance with the SMART approach (Arasa & K ‘Obonyo, 2012).
According to Analoui and Samour (2012), the success of non-governmental organizations

often depends on the formulation of suitable strategies meant to confront the realities
within the competitive environment in which the organization operates. This argument is
supported by the study findings which established that though sampled organizations
have a mission, strategy and goals; surviving and flourishing in the current environment
requires adjusting and responding to the existing social, economic and political factors
and the changes. Hence the conclusion is that strategic planning is important for all
organizational entities whether NGOs, government, CBOs, political, business or
academic institutions; since the objective of the strategic planning process is to develop
core competencies that enable organizations find an advantageous position in their current
environment and to go beyond perceptions of the current situation to continue to
differentiate the organizations into the future (Porter, 1998).
5.3.2 The Effect of Governance on the Performance of NGOs in Kenya
From the analysis, the research findings concur with Drucker (2007), that organizational
performance can be measured in terms of how well it is governed and its inherent
management processes. It implies that the effective management of an organization’s
resources should be done in a manner which is transparent, accountable, equitable and
responsive to the needs of the beneficiaries. Since NGOs aim at becoming sustainable,
71
then good governance is critical to their existence. The study further holds that in order to
ensure effective and proper management of resources, good governance is an important
aspect of every organization. Non-governmental organizations can improve their
performance by improving their governance practices; which can be done in a number of
ways including: stating their mission, values and objectives clearly and ensuring that
these strategies are followed; better human resources development and training for their
managers and staff including board members and volunteers; better management
processes as well as financial management systems.
The study posits that NGOs can improve their performance by stating their mission,
values and objectives clearly ensuring that these strategies are followed; better human
resources development and training for their managers and staff including board members
and volunteers; better management processes as well as financial management,
accounting, and budget systems. The study agrees with Lekorwe and Mpabanga (2009),
which in order for the systems to be implemented, committed staff and leadership within
the NGOs themselves are required. Sometimes NGOs lack effective governance
structures. The study findings also agree with the KNGOP (2004), study that some NGOs
do not have boards or have boards that do not function properly or have wrangles. Some
boards are also not competent enough to provide necessary leadership.
From the research conducted, NGOs themselves see the need to take this issue seriously
as there is a growing emphasis on the need for proper monitoring. The research findings
concur with the study by Eddleston et al. (2010), which opines that participative
governance is the capability of the leaders of an organization participating in the
development of a value creating corporate strategy, on the one hand, and the opportunity
that the shareholders and members have when it comes to decision-making. It also refers
to the processes by which the shareholders voice their views, receive timely
communication and information, and are actively involved in important decision-making.
According to the findings, the rights of shareholders to choose members of the board of
directors, approve strategy, as well as amend the constitution of their organization lies at
the heart of proper governance. It further agrees with the findings of Yermack (2010),
which hold that shareholders are the providers of risk capital for their firms and as such,
they need to be able to protect their investment by ensuring good governance practices
and strategy are in place for the company’s overall performance and sustainability.
72
5.3.3 The Effect of Strategic Staffing on Performance of NGOs in Kenya
From the finding analysis of the study, strategic staffing is primarily focused with helping
an organization meet its strategic goals by attracting and maintaining the right employees
in the right roles, in addition to managing them effectively. This is the ultimate goal of the
HR function in an organization as further concluded by Chang (2005).
Similar to organizations in the public sector, NGOs in Kenya need to adopt the
investment in a human resource department as one of the foundational pillars of strategic
management. This department fosters a positive and collaborative organizational culture
that motivate the staff to work collaboratively with a common interest and shared vision;
to attain the organizational goals (Musyula, 2014). With the healthy staff relations that a
HR department is capable of providing, an NGO establishes a niche of exemplary
performance. These findings agree with Willet’s (2002), findings that strategic staffing is
responsible for ensuring than an organization makes strategic business decisions that
trigger good performance.
Further, the study found that management personnel of NGOs in Kenya who are not well
trained to effectively carry out their duties limits the extent to which NGOs are able to
manage their daily affairs and their capacity to effectively plan appraise, implement, and
monitor their projects and programs. The research findings agree with Lekorwe’s (2009),
findings that employees through the Human Resource department provide the direction
that an NGO takes in terms of business and financial outcomes, staff retention and
meeting objectives of the organization.
From the study findings, staffing and NGO performance correlate positively. However, in
a normal NGO business environment, there are staffing constraints that may limit the
organizations from getting the best from human resources. First, majority of NGOs in
Kenya operate for nonprofit purposes, attributing to limited resources to compensate the
staff. In most cases, staff members in these organizations come as volunteers. Secondly,
government policies do not allow NGOs to source employees with too much experience
and expertise. This compromises the productivity of the NGO staff due to limited skill
sets and lack of enough compensation to increase their motivation.
73
These findings are in support of the study findings by Lekorwe (2009), which contend
that NGOs have no capacity and freedom to source labor that matches up their quality
expectations. Critical to NGOs performance levels, the levels of staffing are determined
by the number of volunteers and never by how many employees an NGO needs.
Moreover, these volunteers are available depending on their timelines making it hard for
NGOs to structure working hours and working conditions that would encourage effective
performance. In some incidences, these staff lack relevant experience and education to
manage some top positions in the NGOs but the conditions do not allow for independent
sourcing. The implications of having a labor that is not well trained results in substandard
planning processes, decision making, poor appraisal and gambled implementation and
monitoring of key projects.
The aftermath of these factors is consistent poor performance of NGOs in Kenya, and
worst of all, inability to compete with other organizations. The researcher found out that
most employees in the sampled NGOs have worked for a period between five to ten
years. Moreover, most of the employees have a good educational background with at least
secondary school certificate. However the majority had bachelor’s degree and masters.
This is an indication that the staff are somewhat satisfied with the working environment
making them retain their jobs for years. Through these years, it is expected that the NGOs
train the staff to acquaint them with desirable skills while others train on the job and as
they gain experience. Higher levels of education correlates with adequate levels of skills
which is a prerequisite for an effective performance (Kathama, 2012).
Adequate levels of skill makes it possible for NGOs in Kenya to invest in strategic
planning. Significantly, innovativeness can be useful in countering the impacts of
financial constraints of NGOs to planning. With an innovative workforce, an organization
is at an edge of providing satisfactory services and meeting the value demands in a
sustainable approach. Musyula (2014), opines that an innovative staffing practice is a
linkage between the HR support activities and the objectives of the organization.
Therefore, this study provides an argument that through strategic staffing, an NGO can
gain control of its labor contrary to the previous research study findings by Lekorwe
(2009).
74
As the study found, lack of enough and skilled employees are among the key factors that
limit the development and the performance of NGOs in Kenya. In comparison with other
organizations in the public sector, the process of development is slower for NGOs than
for for-profit organizations. However, this research holds that strategic staffing can help
overcome these constraints. Through effective human resource management, NGOs in
Kenya have the capacity to compete with private and public sector organizations in terms
of performance output.
5.3.4 The Impact of Financial Stability on the Performance of NGOs in Kenya
The study found that the major impediment to the effective management and
sustainability of NGOs is their dependability on donor funding. The study findings agree
with Kigundu (2006), in his work which suggests that financial stability serves non-
governmental organizations in the following ways: obtaining funding for programs as a
result of enhanced accountability and improved donor confidence; allowing an
organization to engage in diverse activities since it can allocate resources based on their
level of importance and priority; increased capacity to compensate its staff effectively as
a way of motivating them to work effectively and improve on the organizational
performance.
In order to meet the requirements of the organizations, the management teams of NGOs
in Kenya must have a strategic approach of resource allocation to ensure each demand is
fulfilled without impeding on the other demands. Ideally, sufficiently met organizational
needs and demands triggers better service quality and delivery due to overall
organizational commitment. Other than satisfying the needs of the customers and other
beneficiaries, high commitment levels result in motivated workforces, enhanced
governance structures and enhanced implementation of strategic plans (Dimba, 2010).
A financially stable NGO is more effective in performance because its management and
staff focus on performance having every resource available. Significantly, all the attention
is channeled to pursuing objectives that ensure better performance. Having adequate
resources ensures that other priorities and practices within the organization are facilitated
without impeding on performance focus as an opportunity cost. The state of financial
stability is however warranted through strategic financial management. A stable financial
scope of an NGO therefore allows an organization to predetermine attainable objectives
during planning. With the financial freedom, board members of NGOs are at liberty to
75
think outside the box to come up with more knowledgeable ideas, operational techniques
and better approaches of completing work. Dimba (2010), refers to this as the minimum
work standard that leads to effective organizational performance.
In agreement with Lekorwe and Mpabanga (2009), the study found that the sampled
NGOs lacked clearly defined structures in terms of organizational charts, buildings,
facilities, equipment and human resources. These structures are basic in production and
service delivery. The major contributory factor to this is the constraint that limited
financial resources places on the ability of NGOs to plan, organize and design clearly
defined structures as well as equip their offices with adequate equipment and facilities.
An organization is a diverse domain with different business units that work

independently. Each unit has designated roles that add up cumulatively to form the
organization. Having these structures enables an NGO plan strategically and the lowest
levels possible to ensure that the whole organization has a focus on a specific and
common objective. The key weakness of NGOs in Kenya is the inappropriate
organizational structures which impact the manner in which NGOs carry out their core
business.
The study found that financial stability is critical to the success of any organization. It
provides the strategic plan with rigor, by confirming that the objectives set are achievable
from a financial point of view. It also helps the CEO to set financial targets for the
organization, and reward staff for meeting objectives within the budget set just as it was
noted by Rubin’s (2010), study. It further found that the process employed in the
allocation of resources serves as a means for dealing with complex, competing objectives
in a manner that ensures organizational success and growth. Of all the procedures used to
make organizational decisions, those employed in the allocation of resources are perhaps
the most powerful; whether in the private or the public sectors.
The processes used for the allocation of resources deal comprehensively with the
organization as a whole, its component units, and the organizations and people it serves.
The research thus concurs with Dimba’s (2010), findings that during resource allocation,
the NGO boards must ensure that timelines are appended on each tasks to ensure they are
completed as planned. Moreover, through financial planning, the founder of an NGO has
an opportunity to express his or her vision. The ultimate success of performance of an
organization is gauged on how the organization fulfills the primary vision of the
76
organization. The findings of the study are in agreement with Willoughby and Julia
(2011), study that the budget embodies a plan articulated in financial terms or allocation
of funds for execution of projects and programs of organizations within a given time
frame in order to achieve predetermined program objectives. Significantly, financial
stability is attainable when decisions are evaluated on a cost-benefit perspective to ensure
that the expenses of the NGO do not overwhelm the revenues, in this case, benefits to the
beneficiaries. Effectively financial stability encourages managers to think about new
knowledge, ideas, procedures and strategy for the completion of work. It also helps to
create new modified course of action. This is essential for the growth and expansion of
working areas of the organization (Dimba, 2010).
5.4 Conclusion
5.4.1 The Effect of Strategic Planning on the Performance of NGOs
The empirical findings and analysis conducted in NGOs in Kenya shows that strategic
planning directly affects organizational performance. The significant correlation between
different strategic planning steps and effectiveness, measured by using management
perception of strategic planning effectiveness was found in the relationship between the
formality of strategic planning, management, employee and stakeholder participation in
strategic planning. Regarding the second approach to measuring the strategic planning
effectiveness and organizational performance (financial and non-financial) a significant
correlation was found in the relationship between the strategic planning and the
implementation of a chosen strategy, resulting in improved performance.
5.4.2 The Effect of Governance on the Performance of NGOs in Kenya
Governance, which entails proper articulation of organizational mission and vision,

governing body, management planning, capability and legal status; has a major role to
play as far as performance is concerned. Sustainability is an important practice in
enhancing performance among NGOs, stakeholder involvement as well as instilling a
sense of ownership on programs among community members are among the most prudent
sustainability measures that NGOs can take in enhancing their performance.
77
5.4.3 The Effect of Staffing Strategies on Performance of NGOs in Kenya
There is a significant positive relationship between strategic staffing and performance of

NGOs in Kenya. Strategic staffing promotes healthy staff relations resulting in high
productivity. Staff management positively influences aspects of NGOs performance such
as meeting organizational objectives, board and management effectiveness, staff
retention, and beneficiaries reached. Furthermore, NGOs that have adequate skills level
required for effective organization performance have put in place innovative human
resource management strategy that links organization objectives and HR support activities
thereby creating value and customer satisfaction.
5.4.4 The Effect of Financial Stability on the Performance of NGOs in Kenya
NGOs that experience financial stability arising from effective financial management
practices enjoy enhanced overall organizational performance. Financial stability in NGOs
in Kenya positively influences other aspects of performance such as meeting
organizational objectives, board and management effectiveness, staff retention and
beneficiaries reached. More specifically, financial stability had a strong relationship with
board and management effectiveness and meeting organizational objectives.
5.5 Recommendations
5.5.1 Recommendations for Improvement
5.5.1.1 Strategic Planning and Performance of NGOs in Kenya
The study recommends that all stakeholders of an NGO be involved in decision making
processes to ensure inclusive participation in strategic planning and management. This
can be made possible through strategic consultations and effective communication
channels that ensure information sharing. The rationale of this approach is to foster
awareness coverage amongst the NGO stakeholders and to ensure that every party is
focused on the same specific goal. Moreover, consistent scanning of the environment
should be done by the NGOs to ensure that they understand the changing needs of the
beneficiaries and crucial to performance improvement, to involve them in strategic
planning.
78
5.5.1.2 Governance and Performance of NGOs in Kenya
This study recommends that the responsible parties within NGOs should put up a board
charter to govern different elements of NGO management. These elements include the
responsibilities, composition, leadership, member selection, meeting procedures,
committees, performance levels, and compensation structures. In so doing, NGOs in
Kenya will have better directives that regulate the management to ensure utmost
performance.
5.5.1.3 Staffing Strategies and Performance of NGOs in Kenya
Staffing in NGOs faces a lot of challenges including the lack of authority to recruit on the
terms of an organization. Therefore, the researcher recommends that NGOs in Kenya
should exploit their task forces optimally and sustainably. This is attainable through
exploiting competitive advantage through integration of skills and competencies with
innovation and technology. This can help the organization to respond to change swiftly
whilst monitoring opportunities to effect on performance.
5.5.1.4 Financial Stability and Performance of NGOs in Kenya
The study holds that regular assessment of NGOs’ performance is necessary to address
the question of “upwards accountability to donors or governments, or others with power
over them, and downwards accountability to those affected by them”. Thus the
performance assessments of such organizations determines their ability to attract new
funding and continued funding and support from sponsors and development partners.
Failure to account for and assess performance results in less efficient programs, and
consequently, diminished performance.
5.5.2 Recommendation for Further Research
Due to the limiting factors mentioned earlier in this study, it was not possible to carry out
a comprehensive research on other factors affecting performance of NGOs, hence there is
need to undertake further study in this area by including other factors and widening the
study sample by including more non-governmental organizations, across multiple
counties in Kenya.
79
REFERENCES
Adera, P. (2014). Factors affecting the performance of non-governmental organizations in
Kenya: A case of Action AID International. Unpublished MBA Project, USIU,
Nairobi, Kenya.
Adieri, B. (2010). A survey of strategic change management practices within non-
governmental Organizations (NGOs) in Kenya. Unpublished MBA Project,
University of Nairobi.
Akong'o, D.B. (2010). Strategic human resource management practices: Effect on
Performance. African Journal of Economic and Management Studies, 1(2), 128-
137.
Aldehayyat, J. S. (2011). Organisational characteristics and the practice of strategic

planning in Jordanian hotels. International Journal of Hospitality
Management, 30(1), 192-199.
Anheier, H., Helmut K., Hawkes, E., & Amber, G. (2009). “Accountability in a
globalising world: International non-governmental organizations and foundations.
In: Eurich, Johannes; Brink, Alexander (2009): Leadership in NGOs. Wiesbaden:
VS Verlag pp. 193-212.
Ansoff, H. I. (1991). Critique of Henry Mintzberg’s The Design Cchool: Reconsidering the
Basic Premises of Strategic Management: Strategic Management Journal (12(6),
i449-461.
Arasa, R., & K'Obonyo, P. (2012). The relationship between strategic planning and firm
performance. International Journal of Humanities and Social Science, 2(22), 201-
213.
Benjamin, L. M. (2009). Account space: How accountability requirements shape non-
profit practice in: Nonprofit and voluntary sector quarterly. DOI:
0.1177/0899764007301288.
Besley, T. (2006). Principled agents: The political economy of good government. Oxford
University Press.
Bryman, A., & Bell, E. (2011). Business research methods. Oxford: Oxford University
Press.
80
Brown, E., David, F., & Korten, J. (2011).Working more effectively with non-
governmental organizations. In Paul, S. and Israel, A. (eds) Non-governmental
organizations and the World Bank: Cooperation for development; 44-92.
Burke, R. (2013). Management: Planning & control techniques 4th ed: Burke Publishing.
Cape Town.
Burns, B., & Ryman, A. (2008). Business research methods and statistics using SPSS.
Los Angeles: Sage.
Bryson, J. M. (2018). Strategic planning for public and nonprofit organizations: A guide
to strengthening and sustaining organizational achievement. John Wiley & Sons.
Cakar, F., Bititci, U., & MacBryde, J. (2013). A business process approach to human
resource management. Business process management journal, 9, (2), 190-207.
Chang, W. J., & Chun Huang, T. (2015). Relationship between strategic human resource
management and firm performance: A contingency perspective. International journal
of manpower, 26(5), 434-449.
Carlos, M. (2015). Non-governmental organizations in global governance: NGOs and

governance in the Arab World. Ed. Sarah Ben Néfissa and NebilAbd al-Fattah
(New York: University of Cairo Press, 2015) 21.
Collis, J., & Hussey, R. (2009). Business Research: A Practical Guide for Undergraduate
& Postgraduate Students. New York: Palgrave Macmillan.
Cooper, D., & Schindler, P. (2011). Business research methods (7th Ed). USA: Mconal-
Graw Hill International.
Cooper, D., & Schindler, P. (2014). Business research methods. New York: McGraw
Hill.
Creswell, J. (2014). Research design: qualitative, quantitative and mixed methods

approaches. Los Angeles: SAGE Publication.
Drucker, P. (1954). The practice of management: Management by objectives. Retrieved

from: https://www.economist.com/news/2009/10/21/management-by-objectives.
81
Franklin, P. W. (2011). Relationship between strategic planning and nonprofit
organizational performance. ProQuest LLC, USA.
Forbes, D. P. (2018). “Measuring the Unmeasurable: Empirical Studies of Nonprofit
Organization Effectiveness from 2000 to 2018”. Nonprofit and Voluntary Sector
Quarterly, Vol. 27, No. 2: 183-202.
Fowler, A. (2015). Participatory self-assessment of NGO capacity”, INTRAC Papers

Series, Number 10.
Gellert, G. (2016). Non-governmental organizations in international health: Past

successes, future challenges. International Journal of Health Planning
Management 11(1):19-31.
Green, A., & Matthias, A. (2015). Non-governmental organizations and health in

developing Countries. St, Martin’s Press, New York.
Gimbert, X., Bisbe, J., & Mendoza, X. (2010). The role of performance measurement
systems in strategy formulation. Long range planning 43: 477/497.
Harrison, M. I., & Shirom, A. (1999). Organizational diagnosis and assessment. Sage
Publications, London.
Herman, R. D., & David O. R. (1999). Theses on nonprofit organizational effectiveness.

Nonprofit and Voluntary Sector Quarterly, Vol. 28, No. 2: 107- 126.
Hormazd, S. (2013). The role of non-governmental organizations in HIV/AIDS

prevention and care. Department of Public Health Spring, 2013: 1.
Hull, C. E., & Lio, B.H. (2006). Innovation in non-profit and for-profit organizations:
visionary, strategic and financial considerations. Journal of Change Management,
Vol. 6, No. 1: 53-65.
Hulme, D., & Edwards, M. (2007). Too close for comfort? NGOs, states and donors.
London: Macmillan.
Jillo, R. A., & Kisingo, F. (2008). NGO law in Kenya. Int'l J. Not-for-Profit L., 11, 39.
Kaplan, R. S. (2011). ”Strategic Performance Measurement and Management in
Nonprofit Organizations”. Nonprofit Management & Leadership Vol. 11, No. 3:
353- 370.
82
Kaplan, R. S., & Norton D. P. (2012). The balanced scorecard – measures that drive
performance. Harvard business review, January-February: 71-79.
Kathama, L. K. (2012). Strategic planning practices and performance of state

corporations in Kenya (Doctoral dissertation, University of Nairobi).
Kendall, J., & Martin K. (2010). Measuring the performance of voluntary organizations.
Public management, Vol. 2, No. 1: 105-132.
Koch, M., & McGrath, G. (2016). Improving labor productivity: Human resource
management policies do matter. Strategic management journal 17: 335-354.
Korten, D., (2010). Getting to the 21st century: Voluntary action and the global agenda.
West Hartford, CT: Kumarian Press.
Latif, B., Gohar, F. R., Hussain, A., & Kashif, M. M. (2013). Barriers to effective
strategic planning. Stud, 1(2), 16-21.
Lee, C., & Bruvold, N. (2013). Creating value for employees: Investment in employee
development. The international journal of human resource management 14: 981-
1000.
Lekorwe, M., & Mpabanga, D. (2009). Managing non-governmental organizations in
Botswana. The public sector innovation journal, 12(3), 1-18.
Lewis, D. (2011). The management of non-governmental development organizations: An
Introduction, London: Routledge.
Likert, R. (1957). Applications of Behavioral Research. Paris: UNESCO.
Luthans, F., Hodgetts, R.M., & Thompson, K.R. (2010). Social issues in business.
London: Sage Publishers.
Macdonald, L. (2015). Supporting civil society: The political role of non-governmental

organizations in Central America. Macmillian: London.
Mcdonald, D., & Smith, A. (2015). A Proven connection performance management and
business results. Compensation & benefits review 27: 59-64.
Meyer, C. (2007). The political economy of NGOs and information sharing. World
Development 25:7.
83
Mintzberg, H. (1994). The fall and rise of strategic planning. Harvard Business Review,
pp107 – 14.
Molomo, M., & Somolekae, G. (1999). Making a difference: NGOs, good governance
and service delivery. Public Administration and Policy in Botswana, Juta & Co.
Ltd, Kenwyn Cape Town.
Mukasa, S. (2016) “Are expatriate staff necessary in international development NGOs? A

case study of an international NGO in Uganda”, CVO International Working
Paper (Accessed July 2018).
Musyula, A. (2014). Factors affecting the performance of non-governmental

organizations in Kenya: A case of Action Aid International (Doctoral dissertation,
United States International University-Africa).
Niven, P. (2013). Adapting the scorecard to fit public and non-profit organizations. In N.
Paul, Balanced scorecard step by step governments and non-profits (pp. 27-44).
Hoboken, New Jersey, USA: John Wiley and Sons, Inc.
Nwuche, C., & Awa, H. (2011). Career planning and development: The realities in
Nigerian organizations. International business and management 2: 117-127.
Pearce, A., & Robinson, B.R. (2013). The impact of formalized strategic planning on
financial performance in small organizations. Strategic management journal
4(3):197 – 207.
Rhodes, M. L., and Keogan, J. E. (2015). Strategic choice in the non-profit sector:
modeling the dimensions of strategy. Irish Journal of Management, 26(1), 122-
135.
Rosilyn, H. (2007). Empirical study of financial planning theory and practice: ―Value of
financial planning‖ longitudinal study: London. Financial Planning Standards
Council (FPSC).
Saunders, M., Lewis, P., & Thornhill, A. (2015). Research methods for business students
11th Ed. Harlow, UK: Pearson.
Saunders, M., Lewis, P., & Thornhill, A. (2016). Research methods for business students.
London: Prentice Hall.
84
Schein, E. (2007). The corporate culture survival guide. Santa Fe, CA: Jossey-Bass.
Schein, E. (2010). Organizational culture and leadership. San Francisco, CA: John Wiley
& Sons.
Schmenner, R., & Vastag, G. (2007). Revisiting the theory of production competence
extensions and cross-validations. Journal of operations management, 24(6):893-
909.
Sekaran, U., & Bougie, R. (2013). Research methods for business. Chennai: Wiley &
Sons Press.
Shih. H. A., Chiang Y.H., & Hsu C.C. (2006). Can high performance work systems really
lead to better performance? International journal of manpower 27: 741-763.
Stiles, P., & Kulvisaechana, S. (2013). Human capital and performance: A literature
review.
Swanson, R.A. (2015). Human Resource Development: Performance Is the Key. Human
Resource Development Quarterly6: 207-213.
Swayne, E.L., Duncun, J.W., & Ginter, M.P. (2008). Strategic management of healthcare
organizations. San Francisco, Calif.: Jossey-Bass.
Solkhe, A., & Chaudhary, N. (2011). HRD climate and job satisfaction: An empirical
investigation. International Journal of Computing and Business Research 2: 1-20.
Tansky, J. (2011). An effective employee development discussion: The causes and

consequences.
Thompson, T., & Strickland, F. (2007). The International Journal of Business

Management, 27(5): 701-705.
UNDP (1998). Capacity assessment and development. Technical Advisory Paper No.3.
Wagner, R. J. (2006). Conversation on planning: Investigating the relationship between

strategies, actions and performance. (Doctoral dissertation, University of
Minnesota).
85
Washington, C. (2016). A proposed model of approaches to front-line employee
development. In proceedings of the Annual Conference of the Academy of Human
Resource Development.
Willoughby, K. G., & Julia, E. M. (2011). Performance budgeting in the States in quicker,
better, cheaper, managing performance in American government, edited by Dall
Forsythe.
Zikmund, W., Babin, B., Carr, J., & Griffin, M. (2010). Business research methods.
Australia: South-Western Press.
86
APPENDICES
APPENDIX 1: INTRODUCTION LETTER
Ian T. Maina
United States International University
P.O. BOX 14634-00800
Nairobi, Kenya.
Date: 24/07/2018.
Dear Respondent,
RE: PERMISSION TO CONDUCT RESEARCH
I am a graduate student at United States International University pursuing a Master’s

degree in Business Administration (MBA) with a concentration in Strategic Management.
In partial fulfillment of the requirements for the degree, I am conducting an investigation
on STRATEGIC MANAGEMENT PRACTICES AND THE EFFECT ON THE
PERFORMANCE OF NON-GOVERNMENTAL ORGANIZATIONS IN KENYA.
As an employee in an organization operating in this sector, your participation is of great

importance for the accomplishment of this study and it will be highly appreciated. The
information provided by you will be protected by the principle of confidentiality and a
high degree of anonymity will be maintained. Should you have any questions or concerns
with regards to the questionnaire, kindly do not hesitate to get in touch with me through
the contacts provided below. I would like to express my sincere gratitude and
appreciation for your cooperation in advance.
Thank you in advance.
Yours Sincerely,
Ian Thomas Maina.
Tel: +254-725 693 643
Email: thomasianmaina@gmail.com
87
APPENDIX II: QUESTIONNAIRE
SECTION A: GENERAL INFORMATION

Kindly Respond to the questions below by ticking in the boxes provided
1. What is your age range in years?
a) Less than 25 ☐
b) 26-35 ☐
c) 36-45 ☐
d) 46 and over ☐
2. What is your highest level of education?
a) Diploma ☐
b) Degree ☐
c) Master ☐
d) Other …………..
3. Number of years worked at the organization?
a) Less than 5 ☐
b) 5-10 ☐
c) 10-15 ☐
d) 15-20 ☐
e) More than 20 ☐
4. Management Level
a) Top Management ☐
b) Middle level Management ☐
c) Operations Staff ☐
88
SECTION B:
The main objective of this section is to collect your views on strategic management
practices and how they affect the performance in your organization. The specific strategic
management practices under investigation include:
i. Strategic planning.
ii. Governance.
iii. Strategic staffing.
iv. Financial stability.
STRATEGIC PLANNING
Strategic planning is a comprehensive and systematic approach used to develop an
organization’s overall direction which facilitates the management in determining right
and proper strategic path for the firm as a whole. Based on a rating of five; (1) Strongly
Disagree, (2) Disagree, (3) Not Sure, (4) Agree and (5) Strongly Agree,
Please give your opinion by placing a tick
Statement 1 2 3 4 5
SP 1 In my organization, the strategy initiatives and1 2 3 4 5

directions are set by management in the form of
mission and vision.
SP 2 Employees in the organization typically do not

know what the content of our core strategy
should be, until we engage in some trial and
error actions.
SP 3 Our organizational strategy is carefully planned1 2 3 4 5

and well understood before any significant
Competitive actions are taken.
SP 4 Our organizational strategy is planned 1in 2 3 4 5

advance.
SP 5 Rather than planned in advance, our 1 2 3 4 5

organizational strategy emerges over time.
89
SP 6 Our organization applies a formal planning
1 2 3 4 5
process before engaging in competitive
activities.
SP 7 The organization’s strategic decisions result

1 2 3 4 5
from consensus-oriented team decision making.
SP 8 The organization periodically gathers and 1 2 3 4 5

analyzes data about the sector and other external
factors which affect the industry.
SP 9 The organization identifies key threats &

opportunities during market analysis.
SP 10 The organization compares its performance and

1 2 3 4 5
operational characteristics with those of
competitors.
SP 11 The organization analyzes demographic,1 2 3 4 5

behavioral and other emerging trends.
What other strategic planning practices result in improved performance in your

organization?_____________________________________________________________
________________________________________________________________________
_______________________________________________________________________
90
SECTION C: GOVERNANCE
Governance refers to the organizational governance of a corporation or the way in which

entities are directed and controlled in the interest of shareholders and other stakeholders.
Based on the rating of five; (1) Strongly Disagree, (2) Disagree, (3) Not Sure, (4) Agree
and (5) Strongly Agree, share your opinion by placing a tick.
Statement 1 2 3 4 5
GV1 All employees in the organization have decision making

1 2 3 4 5
opportunities.
GV 2 All employees participate actively in the decision making

1 2 3 4 5
process.
GV 3 All employees receive timely information from the board

1 2 3 4 5
and management.
GV 4 Good governance provides a solid platform for setting

1 2 3 4 5
performance measures.
GV 5 Having decision opportunities for employees affects

1 2 3 4 5
performance in the organization.
GV 6 Active participation in decision making by employees

1 2 3 4 5
affect performance in the organization.
GV 7 Receiving timely information by employees from the

1 2 3 4 5
board and management affects performance in the
organization.
GV 8 Having a voice in decision making by employees affects

1 2 3 4 5
ROA.
GV 9 Active participation in meetings by employees affects

1 2 3 4 5
product innovation.
GV 10 Good system implementation requires a committed

1 2 3 4 5
workforce and leadership.
GV 11 Accountability is a key requirement for good governance.

1 2 3 4 5
What other governance factors affects performance in your organization?
________________________________________________________________________
________________________________________________________________________
91
SECTION D: STRATEGIC STAFFING
The core contribution of strategic staffing is to attract, recruit and retain employees to
perform jobs in line with an organization's overall goals. With a clearly defined staffing
strategy, organizations can address existing, new / emerging needs and gaps. By
identifying needs before recruiting, developing and retaining employees, an organization
is prepared to break status quo and weather growth, resulting in improvements in
performance.
Based on the rating of five; (1) Strongly Disagree, (2) Disagree, (3) Not Sure, (4) Agree
and (5) Strongly Agree, share your opinion by placing a tick.
Statement 1 2 3 4 5
SS1 Before joining the organization I was very impressed

1 2 3 4 5
by its brand.
SS2 The recruitment process was highly satisfactory. 1 2 3 4 5
SS3 Before joining the organization, I was very impressed

1 2 3 4 5
by its culture and values.
SS4 Before joining the organization, I was very impressed

1 2 3 4 5
by its reward procedures.
Before joining the organization I was very impressed

1 2 3 4 5
SS5 by its training procedures.
With qualified human resource managers, the

1 2 3 4 5
SS6 organization attracts and retains qualified staffs.
SS7 It is difficult to control the quality of labor the

1 2 3 4 5
organization obtains.
SS8 Inadequately trained staff limits the organization’s

1 2 3 4 5
daily affairs.
Human resources have limited impact on performance

1 2 3 4 5
SS9 in my organization.
What other strategic staffing practices affects performance in your organization?
______________________________________________________________________
_______________________________________________________________________
92
SECTION E: FINANCIAL STABILITY
Financial stability is a state in which the financial systems, i.e. the key financial markets
and the financial institutional system is resistant to economic shocks and is fit to smoothly
meet its basic functions: the intermediation of financial funds, management of risks and
the arrangement of payments. Based on the rating of five; (1) Strongly Disagree, (2)
Disagree, (3) Not Sure, (4) Agree and (5) Strongly Agree, share your opinion by placing a
tick.
Statement 1 2 3 4 5
FS1 Lack of donors is a major challenge facing most 5

NGOs.
FS2 Financial management policies can conflict with 5

NGOs goals.
FS3 Most NGOs lacks clear defined financial structures 5
and systems.
FS4 Financial stability offers an important tool that can 5

help most NGOs determine its current conditions and
better plan for the future.
FS5 Financial stability is critical for the successful

performance of my organization.
FS6 Financial stability helps to focus the attention of

managers and operations staff in NGOs toward
meeting organizational objectives.
FS7 In most NGOs, the process employed in allocating

resources serves as a means of dealing with complex,
competing objectives.
FS8 Managers in most NGOs manipulate monies to 5

accomplish specific activities
FS9 Effective financial stability enables managers in most 5
NGOs to think about new knowledge and ideas.
FS10 Financial stability in NGOs entails anticipating 5

problems.
How else does financial stability affect performance in your organization?
_____________________________________________________________________
______________________________________________________________________
93
SECTION F: ORGANIZATIONAL PERFOMANCE
This section seeks to investigate the application of the Balance Score Card (BSC) in
improving organizational performance. The balance score card is a performance
management framework that links strategy with day–day operations. It provides a holistic
view of the organization based on its core objectives. This approach supplements
traditional financial measures with non-financial measures focused on at least three other
perspectives- customers, internal business processes, and learning and growth.
Based on the rating of five; (1) Very Important, (2) Fairly Important, (3) Slightly
Important, (4) Not Very Important and (5) Unimportant, please indicate how important
each of the following types of performance measures are to your organization.
Statement 1 2 3 4 5
PC1 Financial Measures
PC 2 Non-Financial Measures
Does your organization formally measure performance in the following business areas?
Statement Yes No
PC3 Customers
PC4 Internal business
PC5 Innovation and learning
PC6 Financial
Others, please specify?
________________________________________________________________________
________________________________________________________________________
94
Which of the following key performance indicators, (if any), does your organization use
to evaluate its performance?
Statement Used Used Never

regularly rarely used
PC7 Measure of the customers’ satisfaction

through surveys etc.
PC8 Market share of a specific type of

customer or market.
PC9 Number of new products / services.
PC10 On–time deliveries.
PC11 Employee satisfaction rates.
PC12 Revenue growth.
PC13 Revenue from new products / services.
PC14 Environmental and social responsibility.
Others. Please specify any other KPI’s your organization may use?
________________________________________________________________________
________________________________________________________________________
95
Based on the rating of five; (1) Very Important, (2) Fairly Important, (3) Slightly
Important, (4) Not Very Important and (5) Unimportant, please indicate how important
each of the following factors is to your organization.
State the importance of the following 1 2 3 4 5

objectives for your organization.
PC 15 Increase revenue
PC 16 Customer satisfaction
PC 17 Increase market share
PC 18 Increase productivity
PC 19 Improve the employees’ skills
PC 20 Increase employees’ satisfaction
PC 21 Improve the quality of products and

services
96
The Balanced Scorecard is a strategic performance management system separated into
four perspectives: customer perspective, internal business perspective, innovation and
learning perspective and financial perspective. Based on the rating of five; (1) Very Little
Extent, (2) Little Extent, (3) Not Sure, (4) Great Extent and (5) Very Great Extent, share
your opinion by placing a tick.
Questions 1 2 3 4 5
PC22 To what extent does BSC contribute to your
performance?
To what extent do BSC measures help you
deal appropriately with these stakeholders to
improve performance:
1. Shareholders
2. Customers
3. Debtors
4. Competitors
5. Colleagues
6. Suppliers
7. Management
PC 24 To what extent does Financial Perspective

Measures on BSC help you to improve your
performance on:
1. Revenue Growth
2. Cost Management
3. Market Share Growth
PC25 4. Cash Flow Management
To what extent does Customer Perspective
Measures on BSC help you to improve your
performance on enhancing:-
1. Customer Loyalty
2. Customer Retention
3. Customer Satisfaction
4. New Customers Acquisition
5. Time Taken to serve customers
97
PC26 To what extent does Internal Process
Measures on BSC help you to adopt and
efficiently deal with matters related to:-
1. Leverage on Existing and Emerging ICT
2. Risk Management
3. Efficient and Effective Systems and

Procedures
4. Data Integrity
PC29 To what extent does Learning and Growth
Measures and scores on BSC help the
company to:
1. Develop a Homogenous culture
2. Improve performance management
3. Improve skills
4. Enhance Leadership
THE END.
Sincere gratitude for completing the survey!
98
APPENDIX 1II: LIST OF ORGANIZATIONS
1. Center for Health Solutions

2. AMREF
3. Kenya Female Advisory Organization
4. Compassion
5. RUMA Women Development
6. Family Support Community Based Initiative
7. USALAMA
8. Impact Pool Organization
9. Kenya Conference of Catholic Bishops
10. PATH
11. PLAN International
12. American International Health Alliance
13. Women in Modern Agriculture
14. African Youths and Adolescents Associates
15. Impact Research Development Organization
16. World Vision
17. UNBOUND
18. Double Joy
19. Rafiki Wa Maendeleo Trust
20. International Center for Aids Care and Treatment Program
21. Ananda Marga Universal Relief Team
22. Victoria Health Family Association
23. Sustainable Projects and Allied Development Organization (SPRADO
24. Siaya Community Oriented Development Programme
25. Kenya Society for People with Aids (KESPA),
26. Future Life Christianity
27. Cross Style Peace Proclamation Ministries,
28. African World Development Organization
29. Hope for Victoria Children
30. Investing in Children and Their Societies
31. Ogra Foundation
32. Agrics
99
33. ICAP
34. SCORE
35. NIGEE - Nyanza Initiative for Girls Education and Empowerment
36. Family Health Options.
100

Ian Thomas Maina Mba 2019

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Ian Thomas Maina Mba 2019

Uploaded by

Copyright:

Available Formats

STRATEGIC MANAGEMENT PRACTICES AND THE EFFECT ON THE

PERFORMANCE OF NON-GOVERNMENTAL ORGANIZATIONS IN KENYA

IAN THOMAS MAINA

UNITED STATES INTERNATIONAL UNIVERSITY-AFRICA

IAN THOMAS MAINA

A Research Project Report Submitted to the Chandaria School of Business in Partial

UNITED STATES INTERNATIONAL UNIVERSITY-AFRICA

Signed: _________________________ Date: _________________________

Signed: _________________________ Date: _________________________

Signed: _________________________ Date: _________________________

The research employed a descriptive research technique focusing on a target population

1.1 Background of the Study

According to Adieri (2010), strategic planning is the cornerstone of strategic management

The impacts of strategic management practices on organizational performance is evident

1.2 Statement of the Problem

1.3 General Objective

1.4 Specific Objectives

The following were the specific objectives of the study:

1.4.1 To investigate the effect of strategic planning on the performance of NGOs in

1.4.2 To investigate the effect of governance on the performance of NGOs in Kenya.

1.4.4 To investigate the effect of financial stability on the performance of NGOs in

1.5 Significance of the Study

1.5.1 Academicians and Researchers

1.5.3 Policy Makers

1.6 Scope of the Study

This research examined 36 non-governmental organizations operating in Siaya County

1.7 Definition of Terms

Governance refers to the organizational leadership of a corporation (McGrath & Whitty,

1.7.3 Strategic Planning

This is a systematic and comprehensive approach used to develop a firm’s overall

1.7.4 Strategic Management

Strategic management is the process of long-term projection of an organization. Managers

1.7.4 Strategic Management Practices

Chapter 3, concerned with research methodology, gave an overview of the methodology

2.0 LITERATURE REVIEW

2.2 Strategic Planning and Performance of NGOs

2.2.1 Strategic Planning As a Process

Also, rational strategic planning enables an organization to determine its strategic

2.2.2 Situational Analysis

Analyzing and understanding the situation is accomplished by three separate strategic

2.2.3 Strategy Formulation

2.2.4 Organizational Performance

Organizational performance refers to the actual output or results of an organization as

2.2.5 Relationship between Strategic Planning and Organizational Performance

According to Arasa and K’Obonyo (2012), an organization is system made up of

According to Analoui and Samour (2012), the success of non-governmental organizations

The OECD (2004), provides a regulation on corporate governance structure in

Organizational effectiveness is related to achievement of intended outcomes while

Non-governmental organizations have a diverse selection of approaches that they can

Participative governance is defined as the capability of the leaders of an organization

2.3.3 Equal Voting Rights

Having a voice and choice is a condition for participation in decision-making in any

Co-operatives are patron-owned organizations with a defining feature in their governance

The role of dialogue and open communication in fostering democracy in organizations

2.3.4 Shareholders Participate in Decision-Making

Defining participation is not a straightforward enquiry and it is easier to describe it with

Similar to Arnstein’s Citizen’s Ladder of Participation is Pretty’s typology (Pretty, 1995),

Shareholder empowerment and activism arising out of a changing external environment

However, while participation in decision-making is well intentioned, its practice has

O’Meally’s second argument is that participation is disciplinary in that the bank’s

2.3.4 Board and Management Share Timely Information

In a study of agricultural co-operatives, Choi et al. (2014), surveyed 52 primary

2.4 Strategic Staffing and Performance of NGOs

Signed: _ Date: _

Signed: _ Date: _

Signed: _ Date: _