AN EXAMINATION OF THE EFFECT OF WORK FORCE REDUCTION STRATEGY ON FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN NAKURU CENTRAL BUSINESS DISTRICT, KENYA

Abstract

The question that this study therefore seeks to address is whether the corporate downsizing has achieved its ultimate goal of improving on the profitability of the affected commercial banks. The specific problem that this study addresses has not been addressed in the available literature on the subject matter. This paper examines the influence of work force reduction strategy on financial performance of commercial banks in Nakuru Central Business District, Kenya. The study found that workforce reduction has reducing the wage bill, workforce reduction reducing the indirect costs associated with a bloated workforce, and layoffs as a work reduction strategy leads to poor organizational performance hence financial performance due to fewer staff doing the same work had the highest levels of consensus amongst the respondents on their influence on financial performance. The study recommends that while work force reduction strategy should be undertaken in order to enhance the financial performance of commercial banks, the strategy should be undertaken jointly with other strategies in order to enhance financial performance.