Effect Of Performance Contracting On Performance Of The State Owned Sugar Companies In Westernkenya

ABSTRACT

Poor performance in the Kenya public sector consistently hindered the realization of

sustainable economic growth and development since the country attained her independence

in 1963. Among the noted factors that contributed to poor performance included: excessive

regulations and control, frequent political interference, poor management, outright

mismanagement of resources and poor guiding vision, unclear focus as to what is expected

from employees and poor or no methods of measuring performance has been the greatest

challenge. The Government elected in 2003 decided to manage public service through

performance contracting system to address the situation. The main objective of this study

was to determine the effect of PC on performance of state owned sugar companies in

Western Kenya. Specifically, the objectives ought to establish the effect of setting of

performance objectives on organizational performance in the state owned sugar companies,

to establish the effect of performance implementation on organizational performance in the

state owned sugar companies and to establish the effect of performance contract review on

organizational performance in the state owned sugar companies. The study adopted a crosssectional

descriptive research design in which qualitative and quantitative data were

collected. The target population was 999 managers and supervisors of the state owned sugar

companies in Western Kenya. A sample of 286 was identified for the study through

stratified sampling from the managers who sign performance contracts. Questionnaires were

utilized to collect primary data from respondents. Secondary data was gathered from firm’s

strategic plans and websites. Frequencies, percentages, mean scores were used to analyze the

data with the help of SPSS, correlation was used to establish the relationship between

variables and multiple regressions was used for prediction. A pilot study was done using

Chemelil sugar company .A reliability coefficient of (ἁ=0.833) was obtained and accepted

since it was above (ἁ>0.7) an acceptable value. Validity of research instruments was tested

using content validity. Pearson’s correlation analysis revealed that there was positive

significant correlation between Performance contract objectives and targets and organization

performance (r=0.445,p< 0.000).Similarly there was positive significant correlation between

Performance contract implementation and organization performance (r=0.623,p