Outsourcing services, Leadership and employee Productivity: A Case of Kenya Power and Lighting Company Limited, Nakuru County

Abstract

Employee productivity is essential in any organization. Higher employee productivity provides numerous benefits to both the organization and its workforce. Increased productivity results in significant profitability, favorable economic growth, and improved social progress. Nonetheless, despite the potential of outsourcing tactics to enhance organizational efficiency, they have not received significant support or attention in Kenya. Research is deficient regarding the effect of outsourcing on organizational performance in Kenya, and existing studies from various countries yield inconsistent findings. Therefore, this study sought to examine the moderating effect of leadership on outsourcing services and employee productivity at KPLC, Nakuru County. The study aimed to determine the effect of compensation, workforce administration, external recruitment, and benefits administration on employee productivity at Kenya Power and Lightning Company, Nakuru County. In addition, the study sought to determine the moderating effect of leadership on the relationship between outsourcing services and employee productivity. The research was based on theories of leader-member exchange theory agency theory and social exchange theory. The study employed an explanatory research design and targeted 291 managers, middle managers, and support staff as respondents. Using census methodology, 291 participants were chosen to provide data for the study. The questionnaire served as the instrument for data collection. Using descriptive and inferential statistics, quantitative data was analyzed and presented using frequencies, percentages, means, inferential statistics, correlation analysis, and hierarchical regression analysis. The study discovered a positive and significant correlation between compensation (β= .378, ρ-value = 0.000), workforce administration (β = 0207, ρ-value = 0.000), and external recruitment (β = 0.128, ρ-value = 0.011) and employee productivity, as well as a positive correlation between benefits administration (β = 0.307, ρ-value = 0.000) and employee productivity. In addition, the findings demonstrated that the moderating effect of leadership on the relationship between compensation and employee productivity was insignificant (β = 0.054, ρ-value =0.392). In addition, the study found that the moderating effect of leadership on the relationship between workforce administration and employee productivity (β =0.127, ρ-value = 0.042) was positive and significant. Additionally, the study found that the moderating effect of leadership on the relationship between external recruitment (β = 0.119; ρ-value = 0.026) and employee productivity was positive and significant. The study found that the moderating effect of leadership on the association between benefits administration and employee productivity was negative and significant (β = -0.301; ρ-value = 0.000). These findings were the most significant contributions to this study and the study suggests that Kenya power develop compensation strategies that will increase employee productivity. The administration of benefits contributes to an increase in the overall workforce productivity. The study concludes that leadership moderates the relationship between outsourcing service and employee productivity. Future researchers should use these findings to investigate additional economic sectors and subsectors.