Performance contract as a tool for management:a case study of the state corporations sector

The Government of Kenya introduced Performance Contracting in the Public Service as one of the tools to improve service delivery. Since its introduction in 2004, when only a few State Corporations were participating, Performance Contracting is now being implemented in a majority of Ministries, Departments and Agencies (MDAs). The decision to extend its coverage to all MDAs was as a result of the benefits that were beginning to be manifest in participating institutions through improved administrative and financial performance as well as improved service delivery. Ministries were for the first time being required to work towards set targets, draw out service charters with their clients and compare their performance with the best in the world. The results of these efforts were so significant that they won international recognition with various African countries wishing to learn from Kenya’s experience. Over the last three periods of performance contracting, the public has raised dissatisfaction on the results as they do not relate to performance (service delivery) on the ground as perceived and received by the public. The dissatisfaction with the performance results was not only limited to members of the public. Ministries, Departments and Agencies have also challenged the announced results. Indeed, the public outcry over the results became so strong that the results for 2007 were never released. The Government recognizes the usefulness of Performance Contracting as a tool for improved service delivery. However, in view of the apparent mismatch between the results generated by the Performance Contracting tool and the reality on the ground, this study critically asses the performance contract legislation as a tool for management, taking a case study of the state corporations sector. The study recognizes performance contracting as a part of the wider performance management system. In undertaking the review of Performance Contracting in the Public Service, the study reaches the conclusion that the Performance Contract is now institutionalized and mainstreamed in Public Service Institutions, however the full benefits of Performance Contracting will be realized when all the state cooperation shall be obliged to mandatory embrace the system.