Abstract:

Public organizations globally and Kenya in particular, have become alive to the concept of Performance Contracting (PC) and the need to integrate it as a performance improvement strategy. The current problem facing PC in public enterprises has been attributed to the failure of organizations to cascade the concept to individual employee level, leading to a discrepancy between the results of PC and the reality on the ground. The purpose of this study was to examine the effect of performance target setting in performance contracting on Kenyan Public Enterprises Employees Performance. The study used the descriptive survey design to collect the views and opinions of respondents. The study area was KENGEN (Okaria) in Naivasha. The population of the study was all the employees of public enterprises in Kenya and the target population was 600 members of staff of KENGEN Olkaria, 235 respondents was the sample for the study. Stratified and simple random sampling was used to select the respondent for the study. Primary data was collected using a semi-structured questionnaire, which was accepted at reliability of Cronbach’s Alpha 0.923. Presentation of data used descriptive statistics such as frequencies, pie charts and bar graphs and inferential statistics used were using spearman’s rank correlation coefficient and multiple linear regression technique. Particularly, the correlation analysis was undertaken to test the hypotheses of the study. The findings established that there was a strong positive correlation between performance target setting and employee performance. The null hypothesis that there is no correlation between performance target setting and employee performance was rejected. The study concluded that performance contracting had a strong positive effect on employee performance in public enterprises in Kenya and thus need to ensure performance target setting is well organized and planned. From the findings the study recommended that performance target setting in performance contracting be expanded to cover all areas of the organization and be cascaded to all employees of the organization and that evaluation be linked to some incentive system so that performance can be sustained.