The perceived link between strategic planning and performance contracting in Kenyan state corporations

Abstract

This research sought to achieve the objective of determining the perceived link between strategic planning and performance contracting among state corporations in Kenya. To achieve this objective, the study was carried out through a survey design. A total of 32 state corporations were sampled and studied and data was collected using a semi structured questionnaire with both open ended and closed ended questions and which was administered by mail. To determine the perceived link between strategic planning and performance contracting in the sampled state corporations, the study drew respondents from top level management. They include the Managing Directors (MDs) or Chief Executive Officers (CEOs) and any other Authority Officers of the state corporations whose positions require the signing of performance contracts. They were required to indicate how they perceive the link between strategic planning and performance contracting by scoring on statements describing such a link that were presented in a 1-5 point likert scale on the extent to which they agree or disagree with the statements. A '1' represented total disagreement while a '5' represented total agreement with the statement. The collected data was then analyzed using descriptive statistics (frequencies and percentages). To determine the perceived link, the study adopted the use of perception indices as were used by Kweyu (1998) in a similar study that involved the measurement of perception. The findings of the study were presented in tables. The findings of the study showed that of the 24 corporations that participated in the study, 79.2% of them are fully state-owned while the rest 20.8% are partially state owned. It was further established that of those that are fully state-owned, 4S.8% are for profit while 33.4% are not for profit. The study also found out that all the 24 corporations have clearly written mission statements, objectives, and strategic plans. It was established that 66.7% of the corporations develop strategic plans that cover a period of 3-S years while 8.3% have theirs each covering more than S years and between 1-3 years. 91.7% of the corporations indicated successful implementation of the developed plans. On general administrative issues, the study found out that 87.S% of the corporations advertise senior management positions and that 66.7% of the corporations have a planning department. It was also established that 91.7% of the corporations have their planning assigned to specific managers. The above findings set the basis on which the study sought to achieve the objective of study. Regarding the perceived link ''1Jetween strategic planning and performance contracting, it was found out that most of the statements describing such a link had a perception index that was above so. This indicated that in general, there exists a strong link between strategic planning and performance contracting as was perceived by most of the respondents. The statements with perception indices above so include: importance attached to performance contracts; hope of achieving major objectives by signing performance contracts; performance contracting has effectively improved performance; implementation of performance contracts has been successful; Ttop managements' commitment in the implementation of performance contracts; effective communication by top managements to staffs on performance contracts; effective and adequate feedback mechanism in the administration of performance contracts; positive attitudes of staff toward strategic change in the organizations; existence of close link between performance contracting and strategic planning; alignment of performance contracting and strategic planning; improved capacity to achieve objectives; organizational members well prepared to implement performance contracts; design of performance contracts mutually done and not imposed on managers; and further improvements necessary to enhance effectiveness of performance contracts Statements with perception indices that were below 50 include: autonomy in the performance of duties in the corporations due to the introduction of performance contracts; adequate budgetary allocations; budgetary allocation under managers' control; and varied stakeholder interests override strategic objectives and goals when designing performance contracts. In conclusion, it is deduced that, in general, the link between strategic planning and performance contracting in the state corporation was found to be a strong one as perceived by the respondents.