Challenges facing the implementation of performance contracts in state corporations in Kenya

Abstract

Performance contracts can be defined as a range of management instruments used to define responsibilities and expectations between parties to achieve mutually agreed results. Performance contracting is aimed at improving efficiency and effectiveness, service delivery to the public and reducing total costs OECD, (1995). The purpose of this study was to investigate the challenges facing the implementation of performance contracts in state corporations and in particular the sugar manufacturing industry. The specific objectives included, to establish the organizations’ structure of the corporation and the levels where the P.C applies, to find out the organizational change and development brought about by PCs and effect on the employees’ working styles attitude and work ethics. The purpose of this study is to be useful to the policy makers and management administrators who may use the study to design effective Human resource programs geared towards performance improvement and quality service, it will also form the basis upon which the management will plan and implement Human Resource policies and programs that would help to eliminate negative effects or positive effects of performance contracting and also form a basis for further research on the management development of state corporations by scholars and researchers. The research will be conducted specifically in Chemilli Sugar Company in Nyando District of Nyanza province. Nyando District covers an area of 1,168.4 Km2 and has five administrative divisions. The study is descriptive (both qualitative and quantitative) and data were obtained from the stake holders; the executive, line level managers, supervisors and support staff. The research instruments that were used to collect data included: questionnaires and the interview schedules. It was noted from the study 60% of the respondents were male and at the same time 60% of the respondents were married, the study also noted that performance contracts were introduced at the top level in the hierarchy of management. The study found out that the performance contracts increased the workers responsibilities, commitment and accountability and that the workers were enthusiastic about performance contracts. The study also noted that there were cases of resistance to change, some managers negotiated for easy targets than their ability. The study recommended that the company’s management should try and encourage the workers who are still opposed to the issue of performance contracts on its benefits to the company, the company should roll out performance contracts to other levels in the hierarchy of management and the company should also move with speed and have its workers undergo training and university education, up from the tertiary level.