The Relationship Between Human Resource Competencies and Firm Performance: The Case of Financial Institutions in Tanzania

Abstract

This paper sought to identify human resource competencies that influence the performance of financial institutions in Tanzania. The competencies were assessed based on five domains: strategic contribution, personal credibility, business knowledge, human resource delivery, and internal consultation skills. Otherwise, business growth, financial and market performance were used to assess business performance. The standardised multiple regression coefficients were used to determine the position of competencies in influencing the performance of financial institutions based on data collected from 118 respondents. The results show that strategic contribution is the most important competency influencing the performance of financial institutions. Internal consulting competency was the least important of the five competencies. Human resource delivery was more important than business knowledge and personal credibility in order of importance. The results suggest that recruiting and developing people who can make a strategic contribution to a business is important for growth, followed by the ability to ensure better human resource delivery, business knowledge and personal credibility in order of importance. The study extends the theoretical framework to the effect that while organisations or companies are man-made entities that rely on people to achieve their goals, the contribution of human resources consists of a set of competencies that are specific to a particular business environment. Based on the findings, we propose a model of human resource competencies that shows the range of human resource competencies and their impact on overall performance, and on specific performance indicators. In doing so, we find that competencies are not mutually exclusive, but rather mutually reinforcing, and that this interaction is the basis for economic rent, competitive advantage and performance.