Effect of Performance Contracting on Performance In Kajiado Public Service Board

CHAPTER ONE

INTRODUCTION

This chapter explores the historical background of performance contracting, the evolution,

benefits and challenges of performance contracting. The study then defines the problem

statement, objectives of the study, research questions, justification, the scope and the

limitations of the study.

1.1 Background of the Study

Jenkins (2007) states that a performance contract is defined as a management tool for

measuring performance that establishes operational and management autonomy between

government and public agencies. It reduces quantity of controls and enhances the quality of

service. The performance contract privatizes the style of public sector management by

focusing on results and not processes. It also measures performance and enables recognition

and reward of good performance and sanction bad performance.

According to England (2000) a performance contract addresses economic, social or other

tasks that an agency has to discharge for economic performance or for other desired results. It

organizes and defines tasks so that management can perform them systematically,

purposefully, and with reasonable probability of accomplishment. It also assists in developing

points of view, concepts and approaches for determining what should be done and how to go

about it. Performance contracts comprise determination of mutually agreed performance

targets and review and evaluation of periodic and terminal performance. Performance

contracting is a freely negotiated agreement between government acting as the owner of a

public enterprise itself in which the intentions ,obligations and responsibilities of the two are

freely negotiated and then clearly set it out (GOK 2010).

Performance contracting has been widely used in the public sector by the developed countries

such as France, the Netherlands and New Zealand among others with marled success (Shirley

& Xu, 2001). The experiences in developing countries though, citing case studies in China,

India, Morocco, South Africa, Cote D’ Vore and Gambia among others have shown mixed

results (Gao, 2010). Selden (2007) argues that all public sector reform initiatives, whether

they be aimed at enhancing financial management, or promoting greater accountability, or

enhancing policy development and capacity building within government, or driving forward

ethics reform, or ensuring greater service delivery to citizens, are contingent upon a

government possessing skilled and talented public servants(Mau, 2009).

Traditionally, the shortcomings of the public sector were seen as organizational problems

capable of solution by appropriate application of political will, powerful ideas and managerial

will. The overriding concern with economic growth has led to a refocusing (Fernandez,

2010). Over the years, poor performance of the public sector, especially in the management

of public resources has hindered the realization of sustainable economic growth (Spivey,

2005).Some of the factors adversely affecting performance include: excessive regulations and

controls, frequent political interference, poor management, outright mismanagement and

bloated staff establishment. To improve performance, the Government has been undertaking

a number of reform measures (Trivedi, 2009).

1.1.2 Performance Contracting in Kenya

All governments would like to be more efficient, more cost effective, more accountable and

more responsive (Kobia and Muhamed, 2006; Muganda-Ochara and Van Belle, 2008). The

difficulty is that, although failure flaunts itself and is easily spotted, success is more modest.

It is easier to identify what the public service must escape from than to point out exactly

where it must go. In 1990, the Government approved the introduction of Performance
Contracts in the management of public agencies. A few state corporations attempted to

develop variants of performance contracts that were however, not implemented (Muganda-

Ochara and Van Belle, 2008).

In 2003, the Government made a commitment to introduce performance contracts strategy as

a management tool to ensure accountability for results and transparency in the management

of public resources. To that end a Performance Contracts Steering Committee (PCSC) was

established in August 2003 and gazetted on 8th April, 2005 with a mandate to spearhead the

introduction and implementation in the entire public sector (Trivedi,2009; Kobia &

Muhamed, 2006). To arrive at the measuring of the raw scores the evaluation of the

performance of public agencies entailed the rating of actual achievements against

performance targets negotiated and agreed upon at the beginning of the financial year. The

resultant differences were resolved into raw scores, weighted scores and ultimately

denominated into Composite Scores. The performance rating of the institutions was based on

the following attributes and criteria: Excellent - Achievement between 30% and 100% above

target; Very Good -- Achievement of up to 129.99% of the target; Good - Achievement

between 70% and 99.99% of the set target; Fair - Achievement between 50% and 69.99% of

the target, Poor - Achievement between 0% and 49.99% of the target (GOK, 2011).

In the implementation of performance contracts, an Ad-hoc Negotiations and Evaluation Task

Forces whose members were drawn from outside the public service assist the steering

committee (Trivedi, 2009). The ad-hoc task forces are responsible for negotiating and

evaluating performance contracts of ministries/departments, state corporations and County

governments on behalf of the Permanent Secretary, Secretary to the Cabinet and Head of the

Public Service. The task forces are independent and comprises of eminent private sector

practitioners, retired public servants with track records, business executives and academia.

This ensures independence in the entire process of setting performance targets and in their

evaluation (Kobia and Muhamed, 2006; Muganda-Ochara and Van Belle, 2008)
Kenya’s Vision 2030 has recognized performance contracting among the key strategies to

strengthen public administration and service delivery. The strategies will in this regard focus

on deepening the use of citizen service delivery charters as accountability tools, and

entrenching performance as a culture in the Public Service (Obongo, 2009). The challenge of

securing commitment for results is profound,particularly at this time when the rhetoric of

public service performance improvement is as prevalent as the reality. This commitment

takes willingness to commit before hand, taking responsibility for, as well as owning and

accepting praise and blame for delivery of services agreed upon in a performance contract

(Akaranga, 2008; Obongo, 2009).

The expected outcomes of the introduction of Performance Contracts include improved

efficiency in service delivery to the public (Akaranga, 2010). This is made possible through

ensuring that holders of public office are held accountable for results and improvement in

performance (Kobia & Muhamed, 2006). In addition, it ensures efficiency in resource

utilization and that public resources are focused on attainment of the key national policy

priorities. Other expected outcomes include: ability to link reward for work to measurable

performance, instilling accountability for results at all levels in the government and ensuring

that the culture of accountability pervades all levels of Government (Muganda-Ochara & Van

Belle, 2008). Perfomance contracting also has other outcomes such as the reduction or

elimination of reliance on Exchequer funding by Public Agencies, ability to strategize the

management of public resources and recreating a culture of results-oriented management in

the Public Service (Aycan, Kanungo, Mendonca, Yu, Deller, Stahl, & Kurshid, 2000;

Mittullah & Waema, 2007,).

1.1.3 Implementation of Performance Contracting in County Governments in Kenya

County Governments is the part of government, which deals with matters concerning the

inhabitants of a particular area or form usually, financed at least in part by local taxes
(Hutclison Encyclopaedia, 2004). The County Governments is the closest government to the

people hence it is often referred to as grass roots government. Bearuaster (2002) believes that

the County Governments holds a unique position within the system.

The Republic of Kenya recognized the need to enhance efficient service delivery in county

governments. The need was expressed through the policy paper on Economic Recovery

Strategy for Wealth and Employment Creation (ERS 2003 - 2007) which envisaged efficient

service delivery by county governments as a necessity to growth and development (GOK,

2010). Statistics shows that the performance of County Governments as evaluated by public

sector reforms and performance contracting and compared to other public institutions is

wanting (GOK, 2011). Findings of the Kenya Round 4 Afrobarometer survey reveal that

citizens remain discontented with the performance of County Governments due to poor

service provision and inability to follow procedures (Afro Barometer Briefing Paper, 2010).

1.2 Statement of the Problem

Public outcry on quality of services is not uncommon in public sector county

governments included. Despite the resources of national government, inputs and introduction

of performance contracting, performance of county governments on service delivery has been

far below expectation (Afro Barometer Briefing Paper, 2018).According to the evaluation of

performance contracting rankings (GOK,2011), the state corporation ranked 10 had a

composite score of 2.0121 better than the best performing local authority which scored

2.2876. This was a drop from the previous two years 2008/9 score of 2.2601 and 2009/10

score of 2.0892.

Based on the lower performance ranking of county governments in Kenya and the continued

drop in rank for county governments, there is a justifiable need for a study to establish the

determinants of effectiveness of performance contracting in improving service delivery in

Kenyan county governments. Mitullah (2004) brings out the deteriorating performance of
Kenyan county governments while the Afrobarometer survey of 2018 decries the poor

service delivery of county governments.

Reviewed local studies (Akaranga, 2014, Kobia and Muhamed, 2016, Muganda-Ochara and

Van Belle, (2018) and Mittullah and Waema, 2017) did not critically address the

determinants of performance contracting on service delivery of County governments. Studies

by Mitullah and Waema (2017), Muganda-Ochara and Van Belle (2019) were narrow and

suffered from conceptual gaps since they only addressed the role of Information and

Communication Technology (ICT) in county governments service delivery. The study by

Kobia and Mohamed (2016) suffered from a contextual gap since it concentrated on the

Kenya Institute of Administration while the focus of the current study is on County

governments. The study by Akaranga (2020) also faced methodological issues since it was a

desk-based study in addition to exploring a different contextual area (the general public

sector). It is due to these conceptual and contextual gaps that the current study investigated

the effect of performance contracting on performance in Kajiado public service board.

1.3 Objectives

1.3.1 General Objective

The general objective of this study was to establish effect of performance contracting on
performance in Kajiado public service board.
1.3.2 Specific Objectives

The objectives of the study were:

i. To assess whether leadership style influences performance contracting results

of Kajiado public service board.

ii. To establish whether financial management practices has an influence in

performance contracting results of Kajiado public service board.

contracting results of Kajiado public service board.

iv. To evaluate whether human resource management practices have an

influence in performance contracting results of Kajiado public service board.

v. To determine the role of governance practices in performance contracting

results of Kajiado public service board.

1.4 Justification

This may offer value to the following stakeholders. The specific stakeholders include

the Government of Kenya, county governments in Kenya and Africa, county

governments, scholars and researchers.

1.4.1 Government of Kenya

The government is very crucial in service delivery to its citizens and such services

are delivered via government agencies like county governments. This study informs

government policy on the factors inhibiting the effectiveness of performance

contracting, an important tool for better performance of county governments and

inform them on the best strategies to employ in making turnaround management of

county governments. This study finally came up with policy recommendations,

which can be used by the management of county governments to improve

performance.

1.4.2 County governments in Kenya and Africa

County governments play a very pivotal role in service delivery to the Kenya

citizens within their areas of jurisdiction. Every person in Kenya at any minute is

within the jurisdiction of a county government. Service delivery is the core activity
of county governments. The study may assist the Kenya Government in identifying

the critical bottlenecks in county governments’ service delivery. It assists the county

governments in understanding the critical factors affecting their service delivery and

how they need to improve on the same. It can help the Kenyan public in receiving

improved services from the county governments. It can help the attraction of

investors in both the urban and rural areas who can create employment and hence

reduce poverty.

1.4.3 County Governments

The county governments, which took effect with the new constitutional dispensation may

benefit a lot from the study findings primarily because the study addresses the causes of poor

performance in relation to service delivery in county governments. The county governments

are expected to play similar roles to the county governments.

1.4.4 Scholars and researchers

This study is of value to researchers and policy makers as it adds knowledge to the existing

research. It explored the various gaps and trigger further research by scholars and other

stakeholders. Experts of the research published in renowned journals making it accessible to

students, scholars, government agencies and county governments as the policy makers in

performance contract related issues.

1.5 Scope of the Study

The conceptual scope of the study will be on the employee perceptions regarding the

determinants of performance contracting results in Kajiado county governments.

1.6 Limitations of the Study

Although this study covers Kajiado County in Kenya, it only used a sample to draw

conclusions and inferences, which was as per the result design. Time factor will be a

limitation as the respondents are anticipated to take longer time than expected. Several
limitations will be experienced in this study, for example resistance from respondents

primarily because they were suspicious of the study intentions although they were assured of

their anonymity and the findings were to be used purely for academic purposes. The accuracy

of the results depended on the honesty of the respondents, though with the assurance given to

officers it was the hope of the researcher that honest responses were given.