Application of performance contracting as a strategic management tool in Kenya Post Office Savings Bank

Abstract

The key priority of the Kenyan government in the implementation of the public sector reforms was the need to improve service delivery and business growth in the state corporations. It also creates transparency in the management and accountability of public resources. The problems that had inhibited the performance of this sector were largely common and identified as excessive controls, multiplicity of roles, frequent political interference, poor management, and outright mismanagement. The purpose of the study was to determine how Post bank is applying performance contracting in strategic management and to establish the challenges faced by Post bank in applying performance contracting as a strategic management tool. The study adopted a case study design. The research utilized both primary and secondary sources of data which was obtained for information of the study. This was guided by a pre-planned, unstructured question collected through conducting personal interviews. The data collected was analyzed using content analysis. The study found that over the years the bank has been improving in its service delivery and this is attributed to the embracing of performance contracting. The study concludes that there are a number of challenges in the administration and implementation of performance contracting including inadequate resources, frequent transfers of staff midyear, lack of adequate skills and lack of cooperation from staff in the measuring of performance. The bank should embark on an extensive and continuous training of employees on the core aspects of performance contracting. Training should be frequent, content oriented and adequate enough. Target setting for performance contracting should be discussed and set by all the concerned employees. All stakeholders should be involved in target setting in order to understand the various aspects of the activities involved. This should be discussed and agreed upon by all involved parties. The study recommends that a similar study should be carried out in all the commercial banks so as to establish how they are applying performance contracting in strategic management and the challenges they encounter in the implementation.