Management Awareness of Performance Contracting in State Corporations

Abstract

Purpose: Drastic and fundamental changes are increasingly occurring in the environment in which organizations operate.  An obvious manifestation of the responses towards this turbulent environment is the introduction of performance contracting as part of the broader public sector reforms aimed at improving efficiency and effectiveness in the management of the services. Managers form a major stakeholder group in an enterprise.  However, their productivity and performance is dependent on their degree of motivation.  This can be influenced by how they perceive and interpret various initiatives that may be introduced by the organization; a critical one in this regard being introduction of performance contracting. Performance contracting is a devolved management by outcome rather than management by processes. It provides a range of management instruments used within the public sector to define responsibilities and expectations between parties to achieve mutually agreed result.  This research work sought to investigate the disconnect that may arise between management awareness of performance contracting in state corporations, based on their initial expectations from such a plan. The main objectives investigated during the study were to establish management’s level of awareness of the performance contracts adopted by the state corporations.

Methodology: A sample of 160 respondents was used in the study.   The data collected was presented using tables and analyzed using descriptive statistics i.e. frequencies, percentages, mean scores and standard deviations. 

Findings: The major findings were:  There is a very high level of awareness of performance contracting in the organizations and that the organization’s capacity to achieve its objectives has greatly improved.  To a moderate extent, the managers felt that there was mutual support and trust at all levels of the organization and empowerment of employees in their jobs. General conclusions drawn are that the organizations were very successful in implementing performance contracting, and that to a moderate extent, the organizations have developed a reasonable sense of direction. 

Unique contributions to theory, practice and policy: Recommendations made were that, all employees need to be stakeholders in the future direction of the organization, even if it be in varying degrees.  Their daily performance and activities should be measured along the specific milestones and core values identified by the contract, since what cannot be measured cannot be managed.