Linkage between Target Setting in Performance Contracting and Employee Performance. A Kenyan Perspective

Abstract

The current problem facing Performance Contracting (PC) in Kenyan public enterprises has been attributed to the failure of organizations to cascade the concept to individual employee level, leading to a discrepancy between the results of PC and the reality on the ground. The purpose of this study was to examine the effect of performance target setting in performance contracting on Kenyan Public Enterprises Employees Performance. The study used the descriptive survey design to collect the views and opinions of respondents working in KENGEN (Okaria) in Naivasha. The target population was 600 in which 235 respondents was the sample for the study. Presentation of data used descriptive statistics such as frequencies and percentages and inferential statistics used were using Pearson correlation coefficient and linear regression technique. Particularly, the correlation analysis was undertaken to test the hypotheses of the study. The findings established that there was a strong positive correlation between performance target setting and employee performance. The null hypothesis that there is no correlation between performance target setting and employee performance was rejected. The study concluded that performance contracting had a strong positive effect on employee performance in public enterprises in Kenya and thus need to ensure performance target setting is well organized and planned. From the findings the study recommended that performance target setting in performance contracting be expanded to cover all areas of the organization and be cascaded to all employees of the organization and that evaluation be linked to some incentive system so that performance can be sustained. Keywords: Performance target setting, Performance Contracting, Kenyan Public Enterprises,Employee Performance.