| dc.description.abstract | In the present times many organizations have to operate in an increasingly turbulent
economic environment, due to increasing global competition. However in case of public
sector organizations they operate without market competition. That is why the
implementation performance measurement is actually a means of a substitute for market
pressures (Radnor 2004) in the public service organizations. The sum total of these
strategic actions has undermined the traditional employment relations, which is
increasingly conceptualized in terms of psychological contract (Shore and Tetrick, 1994).
Performance contracts are performance management processes, which play a key role in
creating a framework within which the psychological contracts between employer and
employees is determined (Philip Stiles et al., 2007). These two contracts are relational
contracts that involve broad, long-term and short term obligations, and as they reflect
socio-emotional elements such as trust, commitment, and loyalty (Greiling, 2005; Winter
and Jackson, 2006).
A Performance Contract is a freely negotiated performance agreement between
government, acting as the owner of a government agency or principal, and the agency
itself. The psychological contract is defined as the employee’s (agent) perception of
reciprocal obligations, that exist with their employer (principal). That is the employee has
beliefs regarding the organization’s obligations to them as well as their own obligations to
the organization (Rousseau, 1989). This is vital because a relationship that is balanced
and mutually supporting between the agent and the principal yields to a free exchange of
skills, effort and commitment by the employees (Winter and Jackson, 2006) which in
essence reduces principal agent problem and moral hazard inherent in performance
contracts. The three dimensions of psychological contract identified in the literature
review are relational, transactional and transitional. In so far as success of performance
contracts in the public service is concerned a positive state of psychological contract
translates to the agent giving skills, effort and commitment in return for desired monetary
and socio-emotional rewards provided by the principal.
Since state of psychological contract relate to mutual expectations based on perceived
employee-employer prom introduction of performance contract in the local authorities in Kenya, means that the relationship terms change and thus the psychological contract is open to re-evaluation.
This is the basis of the research which investigated the state of psychological contract as
result of introduction of performance contracts in a medium size local authority in Kenya.
The research considered the state of psychological contract for the managers who are
supposed to ensure that those below them are accountable for the performance contracts
(PCSC, 2005).
The findings of research were that global perceptions of managers, to a great extent have
met their obligations and promises to the organization, whereas the employer has
moderately met his obligations and promises. The level of satisfaction of employees is
moderate, and they perceive that their performance depends to a large extent with
management, organization and the boss and only slightly to the co-worker. Thus there are
slight work interactions among managers. The relational obligation by the employer in
dimensions of loyalty stability and balanced dynamic are moderately met. The employer
transitional obligation dimension on information transfer and flow is violated. There is
further transition erosion where perception is that, the employer demand more while
moderately giving less in return or more work less pay. In situation where there is
moderate violation of the contract, employees who perceived a contract breach are more
likely to demonstrate de viant behaviors against the organization and its members
(Restubog, et al., 2007). Comparative study is required to find if this state of
psychological contract does relate to the status of performance contract in the
organizationises and/or obligations (Winter and Jackson, 2006 | en |
