Employee Perception of Performance Contracting in State Corporations

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. Employees 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 employee perception 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 employee perception 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 study established that there was a significant perception gap between employee expectations and perceived performance of the strategy in all indicators measure. 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.