CHAPTER ONE
INTRODUCTION
1.1. Background to the study
Employment contract (EC) is part of the broader public sector reforms aimed at improving efficiency and effectiveness in the management of the public services. Peterson (2005) defines performance contract as a freely negotiated performance agreement between the government, acting as the owner of a government agency and the management of the agency. The author asserts that performance contract clearly specifies the intentions; obligations and responsibilities of the two contracting parties (Peterson, 2005). Kobia and Mohammed (2006) argue that EC is a management tool for ensuring accountability for results by public officials as it measures the extent to which they achieve targeted results. In essence, signing a performance contract commits public officials to perform to the set standards or beyond, the specified levels. This holds public officials accountable for results and therefore, helps in converting tax paid into goods and services effectively and efficiently. Employment contract also creates transparency in the management of public resources (Kobia & Mohammed, 2006).
Performance contracts have been widely used in the public sector by the developed countries such as France, the Netherlands and New Zealand among other countries with outstanding success. Performance contract was first introduced in France after the famous Nora Report on the reform of state owned enterprises in France (Organization for Economic Corporation for Development (OECD), 1994). Kusek and Rist (2004) depict and say how today, almost all OECD countries use some form of performance contracts in managing their public sector. In New Zealand, performance contract were introduced and adopted as part of the countries pioneering public sector reforms (Kusek & Rist, 2004). Performance contract gained more strength when they were introduced in the
United States as part of Government Performance and Results Act (GPRA) of
1993.Performance contracts in the United Kingdom were introduced by Margaret Thatcher as part of the creation of Next Step Agencies.