Attitudes of Local Authorities Employees towards Performance Contracting and its Effect on Performance of Local Authorities

Performance contracting is a freely negotiated performance agreement between a government, acting as the owner of a public agency and the management of the agency. It is used in the Kenyan public to measure performance. Local authorities face pressure to improve service delivery, lower costs become more accountable, customer focused and responsive to stakeholder needs. They need a system of determining performance in relation to objectives. This research sought to evaluate performance contracting as a tool for improving performance in local authorities in Kenya. A survey was conducted in five local authorities in Kenya. A stratified random sample of 120 employees was drawn from a population of 43800 starting with two-stage sampling. Questionnaires, interviews and document analysis were used for data collection. The study established that a significant majority of respondents support performance contract and agreed that their local authorities should continue using it to measure performance. The study found that customer satisfaction, employee satisfaction, work environment and revenue generation were growing. A chi-square (2) test showed that customer satisfaction has increased significantly since the introduction of performance contracting in the local authorities. The study concluded that the council employees generally have a positive attitude towards performance contracting and they believe that it contributes to enhanced service delivery. Employees of local authorities have knowledge and understanding of administration of performance contracting process. Performance contracting has enhanced performance of local authorities in the areas of customer satisfaction, employee satisfaction, work environment and revenue generation. It is, therefore, recommended that performance contracting should be retained in local authorities as a tool for improving performance.