Factors Influencing Implementation of Performance Contracts in Local Authorities in Kenya

Abstract

Performance contracting applies to organizations with recurrent activities that establish organizational goals, monitor progress towards the goals, and make adjustments to achieve those goals more effectively and efficiently. Performance Contracting practices ensure that successful organization realize their performance goals as a critical business tool to ensure that strategy is translated into results at the least cost. The objective of the study was to establish the factors influencing implementation of performance contract in local authorities in Kenya. The methodology employed was a cross-sectional survey. Out of the 81 sampled respondents, 51 responded representing a response rate of 63%. The data was collected through structured questionnaire. The data was analyzed using both descriptive analysis and factor analysis techniques. The findings indicated that employees from all local authorities highly rated involvement of employees to ensure acceptability of a performance contracting system. The study found out that the least factor exhibited was the use of negative sections to encourage managers efforts. The study therefore concludes that there are various factors that influence implementation of performance contracts in Local authorities in Kenya. It is recommended that managers of local authorities seeking to see the successful implementation of performance contracts need to focus on involving users in creating performance targets, linking rewards to performance and providing effective leadership in ensuring employees personal development especially in terms of motivation and communications.