Role of Performance Contracting in Strategy Implementation in Commercial State Corporations in Kenya

Abstract

The purpose of this study was to look at the role of performance contracting in strategy implementation in commercial state corporations in Kenya. Strategy development and execution is key in enhancing organizational competitiveness. Among the strategy implementation tools, performance contracting plays a key role in engaging organizational staff. Problems in performance contracting and strategy implementation in state corporations led the researcher to formulate a research problem which guided the research process. The results will be used to solve strategy implementation problems thus improving performance. The general objective of this study was to analyze the role of performance contracting in strategy implementation in commercial state corporations in Kenya. The study used descriptive research design. The strategy implementation (dependent) variable was measured by Resource allocation and deployment; and Performance Contracting (Independent) variables include Performance Target Setting, Performance Planning, and Performance Monitoring and Reporting. The study was based on the Resource-Based theory and the Goal Setting theory. The target population for this study was the 32 Commercial State Corporations in Kenya as listed in the State Corporations Advisory Committee (SCAC) website (2016). Primary data were collected using structured questionnaires. The data were analyzed using descriptive statistics; regression analysis was computed to determine the degree of association between performance contracting and strategy implementation. The study established that performance target setting has no significant influence on strategy implementation. Performance planning; performance monitoring and reporting; and, policy and regulations have a significant influence on strategy implementation. The study concluded that performance contracting has a positive role in strategy implementation in state corporations in Kenya. The study recommends that In performance planning: There should be consideration of organizational capabilities and competencies, ensure staff are trained on performance planning to enhance their capabilities and competencies, and develop standardized work plans when planning for performance as this assists in strategy implementation. In performance monitoring and reporting: State corporations should have an adequate performance measurement system for strategy implementation. Enhance automation of strategy implementation performance monitoring and reporting through performance contracting. Ensure strategy implementation monitoring and reporting is carried out in performance contracting and enhance measurement and analysis of utilization of strategy implementation resources in performance contracting. On government policies and regulations compliance: State corporations should have a mechanism of updating themselves on policies and regulations from the government that affects their operations and strategy implementation, analyze their effects and develop mitigation measures, including revising the strategic objectives.