EFFECTS OF PERFORMANCE CONTRACTING ON EMPLOYEES’ PERFORMANCE IN COMMERCIAL BANKS: A CASE OF FAMILY BANK WESTERN REGION BRANCHES, KENYA

Abstract

The objective of performance contracting is the control and enhancement of employees’
performance and thus the performance of the whole institution. Performance contracting is a freely
negotiated performance agreement between the employers and employees. It is the latest strategy
used in the banking sector to enhance employee’s performance. The purpose of the study was to
assess influence of performance contracting effect on employees’ performance in Family Bank.
The study employed a descriptive research design. The study targeted 301 employees from 15
branches of Family Bank in Western region, from which a sample size of 45 respondents was
obtained. Stratified random sampling and simple random sampling were used. The research
instruments used included both closed-ended questionnaire and focus group discussion besides the
interview schedules. Results revealed positive and significant associations between setting of
performance targets, monitoring and evaluation, performance contracting process and
implementation of performance contracting on employee performance in Family Bank branches
in Western region of Kenya.