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DECLARATION
This thesis is my original work and has not been presented for a degree in any
other University or any other award.
Signature: Date
Kyamanywa Teopista Nalule
D86/15729/05
We confirm that the work reported in this thesis was carried out by the candidate
under our supervision:
Signature: ..
Dr Namusonge Mary Jabeya Date.
Department Of Business Administration
Signature: . Date..
Dr Kukunda Elizabeth Bacwayo
Faculty of Social Sciences
Uganda Christian University
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DEDICATION
This work is dedicated to my sons Joseph, Alexander and Kenneth Kyamanywa
who have been there for me through thick and thin.
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ACKNOWLEDGEMENT
I start by thanking the Almighty God for the gift of life and the favours He
granted me during my PhD studies.
My unreserved gratitude goes to my supervisors: Doctor Namusonge Mary
Jabeya and Dr Kukunda Elizabeth Bacwayo for the facilitation with study
materials, guidance and patience they both offered me throughout this study. I
am also very grateful to the Management of Kampala City Council and the
Ministry of Education and Sports for the permission they gave me to conduct the
research in the respective organizations. The key informants in both
organizations are also highly appreciated for their participation in the study.
The following people are also greatly appreciated for their invaluable
contribution to the study: Professor Jonathan Chege, Dr Soita Paschal, Dr Ntayi
Joseph, Mr Kambaza Stephen and Associate Professor Mucunguzi.
Lastly, I am grateful to Kyambogo University for financial support given to me
to pursue these studies.
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TABLE OF CONTENTS
Page
Title page..i
Declaration.. ii
Dedication. ..iii
Acknowledgement....iv
Table of Contents..v
List of Tables....xi
List of Figures.xiii
Abbreviations and Acronyms...xiv
Abstract.xv
CHAPTER ONE
INTRODUCTION
1.1 Background to the study..1
1.2 Statement of the Problem.6
1.3 Objective of the study.7
1.4 Specific objectives...7
1.5 Hypotheses...8
1.6 Significance of the Study9
1.7 Scope of the Study..10
1.7.1 Geographical Scope10
1.7.2 Time Frame.....11
1.7.3 Content Scope.....11
.
1.8 Chapter Summary....13
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CHAPTER TWO
LITERATURE REVIEW Page
2.1 Theoretical Framework ..14
2.2 Related Literature on the study variables.18
2.2.1 Relationship between Decision Rights and Employee Performance .18
2.2.2 The Relationship between Incentives and Employees Performance ..29
2.2.3 Relationship between Performance Contracts and Employee
Performance.38
2.2.4 Relationship between Organizational Resources and Employee
Performance 42
2.2.5 Relationship between Performance Measurement and Employee
Performance.47
2.3 Government Policy..57
2.4 Critical Review of Major Issues..58
2.5 Summary and Gaps Filled in by the Study.62
2.6 Conceptual Framework64
2.7 Chapter Summary....65
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Research Design...66
3.2 Target Population.67
3.3 Sample size determination...68
3.4 Sampling Design.69
3.4.1 Interview Sample.71
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Page
3.5 Sources of Data..72
3.6 Data Collection Procedure and Instruments...72
3.6.1 Procedure....72
3.6.2 Instruments..73
3.6.3 Questionnaire...74
3.6.4 Interview guides..78
3.7 Pre-testing the Instruments..79
3.7.1 Validity of the Questionnaire...79
3.7.2 Reliability of the Questionnaire...81
3.8 Data Management83
3.9 Data Analysis...83
3.9. Research Model...86
3.10 Chapter Summary....88
CHAPTER IV
PRESENTATION AND DISCUSSION OF THE FINDINGS
4.1 Sample characteristics..90
4.2 A Comparison between Performance Management Practices andEmployee Performance across Organizations 93
4.3 Factorial Analysis....96
4.3.1 Principal Components for Performance Management Practices.96
4.3.2 Performance Component Matrix101
4.3.3 Government Policy Component Matrix.104
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Page
4.4 Inferential Analysis107
4.4.0 Hypotheses Testing...108
4.4.1 Hypothesis 1: Relationship between Decision Rights and EmployeePerformance.108
.4.4.2 Hypothesis 2: Relationship between Incentives and Employee
performance...110
4.4.3 Hypothesis 3: Relationship between Performance Contracts and
Employee Performance in the Public Sector in Uganda..111
4.4.4 Hypothesis 4: Relationship between Organization Resources and
Employee Performance.113
4.4.5 Hypothesis 5: Relationship between Performance Measurement and
Employee Performance.....115
4.4.6 Hypothesis 6: The Interactive Effect among Performance
Management Practices, Government Policy and Employee
Performance......117
4.5 Conclusion120
4.6 Discussion of the Findings...121
4.6.1 Relationship between Decision Rights and employee performance.123
4.6.2 Relationship between Incentives and Employee Performance 128
4.6.3 Relationship between Performance Contract and Employee
Performance.133
4.6.4 Relationship between Organization Resources and Employee
Performance135
4.6.5 The Relationship between Performance Measurement and
Employee performance...139
4.7 Government Policy...145
4.8 Chapter Summary....................147
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CHAPTER VI
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
Page
5.1 Summary of the findings148
5.2 Conclusion..155
5.3 Recommendations..156
5.4 Areas for Further Research.158
5.5 Policy Implications..................159
5.6 Contribution to knowledge..160
5.7 Chapter Summary162
REFERENCES.163
APPENDICES
Appendix I Stratum sample size calculations for Kampala
City Council...182
Appendix II Stratum sample size calculations for ministry of
education and sports..184
Appendix III Questionnaire for Kampala City Council (KCC) and the
Ministry of Education and Sports (MoES) Middle
Managers, Supervisors and Operatives ...186
Appendix IV Interview Guide for Top Managers...195
Appendix V Interview Guide for Supervisors...196
Appendix VI Interview Guide for Operatives...197
Appendix VII Interview Coding Framework..198
Appendix VIII Interaction Analysis201
Appendix IX Chi-square Tests and Directional Measures206
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Page
Appendix X Partial Association of a 3-way Interaction (Relationship)Among Variables....210
Appendix XI Parameter Estimates of the Significant 3-way Interaction
(Relationship) Among Variables..212
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LIST OF TABLES
Page
Table 3.1 Employee Strata.70
Table 3.2 Summary of Study Variables and Their Operationalisation..72
Table 3.3 Showing Content Validity Index (CVI)..80
Table 3.4 Reliability Test Findings.82
Table 4.1 Showing Sample Characteristics of Respondents acrossKampala City Council and the Ministry of Education and
Sports...91
Table 4.2 Showing a Comparison between Performance Management
Practices and Employee Performance across Kampala City
Council and the Ministry of Education and Sport .....94
Table 4.3 Shows the Mann-Whitney (U) Test for the Mean Difference
between Kampala City Council and the Ministry of
Education and Sports in Terms of Performance
Management Practices and Employee Performance..95
Table 4.4 Showing Performance Management Practices Rotated
Component Matrix.97
Table 4.5 ShowingPerformance Rotated Component Matrix..101
Table 4.6 Government Policy Rotated Component Matrix..105
Table 4.7 Showing the Relationship between Decision Rights and
Employee Performance in the Public Sector in Uganda ..108
Table 4.8 Showing the Relationship between Incentives and
Employee Performance in Public Organizations
in Uganda .110
Table 4.9 Showing the relationship between Performance Contracts
and Employee Performance in the Public Sector
in Uganda .112
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Page
Table 4.10 The relationship between Organization Resources
and Employee Performance in Public Organizations
in Uganda ...114
Table 4.11 Showing the Relationship between Performance
Measurement and Employee Performance in the Public
Sector in Uganda..116
Table 4.12 A 3-way Interaction Effect (relationship) Among
Performance Management Practices, Government
Policy and Employee Performance in the Mode ...118
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LIST OF FIGURES
Page
Conceptual Framework64
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ABBREVIATIONS AND ACRONYMS
CFs Critical Success Factors
GDP Government Development Plan
IMF International Monetary Fund
KCC Kampala City Council
KPIs Key Performance Indicators
MoES Ministry of Education and Sports
PCA Pragmatic Content Analysis
PDM Participative decision making
PSRRC Public Service Review and Reorganization Commission
WB World Bank
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ABSTRACT
Uganda has witnessed persistent poor employee performance in publicorganizations since mid 60s, which scholars attribute to the 1966/67 crisis and
the political turmoil of the early 70s up to mid 80s. Despite governments effort
to avert the crisis by introducing reforms to improve employee performance, the
situation has not improved. The studys main objective was to investigate
whether there is a relationship between performance management practices
(decision rights, incentives, performance contracts, organization resources and
performance measurement) and employee performance in public organizations
in Uganda. The study was conducted at Kampala City Council and the Ministry
of Education and Sports. Data was collected from a stratified random sample of
517 participants and from a purposively selected sample of 32 respondents. A 5-
point Likert scale questionnaire and three interview guides were used to collectdata. The Principal component analysis was used to establish the number of
major components which accounted for most of the variance within the
performance management practices, government policy and employee
performance. The Mann-Whitney test was used to establish the mean difference
between the two organizations. Pearson chi-square test was used to establish the
relationship between the performance management practices and employee
performance. Log-Linear analysis was used to establish the interactive effect
among the performance management practices, government policy and employee
performance. Qualitative data was analyzed using pragmatic content analysis.
The results of the study revealed that the selected performance management
practices explained 54% of employee performance while 46% was explained byother factors. Findings also indicated that the Ministry of Education and Sports
had better performance management practices than Kampala City Council. The
study findings also established that performance management practices had a
significant positive relationship with employee performance apart from
incentives that had an inverse relationship with employee performance. Findings
also revealed that there was a 3-way order interactive effect among performance
management practices. Performance measurement, government policy and
employee performance had the most critical interaction effect. On the basis of
the findings, it was recommended that public organization managers and policy
makers must ensure that the performance measurement tool used in public
organizations is modernized to spell out what it really intends to measure.
Measurement should be a continuous process with immediate feedback given to
employees. The performance gaps must be addressed in line with government
policy. Secondly, public sector managers must ensure that the incentive systems
in place are modernized by making them more attractive so as to induce
employees to perform optimally. Managers must exercise procedural and
distributive justice in the administration of the rewards. They should also ensure
that decisions are decentralized to allow full employee participation in the
decision making processes. Lastly public sector managers must see to it that
organization resources acquisition and development are available and accessed
by all their employees.
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CHAPTER ONE
INTRODUCTION
1.1 Background to the study
At independence in 1962, the Uganda government inherited a Public Service that
had recruited public servants through open competition regardless of class,
ethnicity, race, sex or religion (Apuki, 2007; DFIDEA-U, 2001). Promotion was
purely on merit and performance was determined through confidential annual
reports on all public servants (Langseth, & Mugaju, 1996). The Public Service
was small but efficient, motivated, well-paid with fully equipped offices (Apuki,
2007). Due to the political turmoil and economic decline that prevailed during
the 1970s however, the Public Service deteriorated sharply and these principles
were rapidly eroded. A number of factors were responsible. These factors
included inter-alia rapid africanization of the service, creation of amorphous
structures, administrative inexperience, political interference and sectarianism
(Apuki, 2007; Yahaya, 1999; Langseth, & Mugaju, 1996).
Even before the political upheavals of the 1970s, the seeds of inefficiency and
poor performance had taken root. The problems in the Public Service were
linked to the political crisis that strangled the country in 1966/67 when the semi
Federal Constitution was abrogated and powers that had been delegated to the
Public Service Commission (PSC) and the Local Government were centralized
(Apuki, 2007; Mitala). This marked the beginning of the collapse of the viable
institutions in delivering services, supervising ethical procedures and spreading
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development (Apuki, 2007). In order to overcome this stagnation in the delivery
of services by Public Organizations, the Public Sector came up with reforms or a
new approach to the management of performance also known as New Public
Management (NPM) (Mitala, 2006). However, the above concerns have not
been achieved by the Ugandan public sector (Apuki, 2007; Mitala, 2006).
The current public sector reforms in Uganda are linked to the Structural
Adjustment Programmes, (SAPs) that were designed and advocated for by the
World Bank (WB) and the International Monetary Fund (IMF) since the 1980s
(Mitala 2006; World Bank Report 1996). Structural Adjustment Programmes
(SAPs) were designed in the 1980s from private sector principles as a response
by the major international creditor agencies, the World Bank (WB) and the
International Monetary Fund (IMF) to improve service delivery. This was in
response to the growing economic crisis and balance of payments problems
encountered by many developing countries subsequent to the two major oil
shocks and poor governance of the 1970s (Shaw, 1991; Marobela, 2008). The
new reforms, also known as New Public Management (NPM) have become a
common phenomenon around the globe (Marobela, 2008; de Waal, 2007; Kobia
& Mohammed, 2006; Mitala 2006; Shaw, 1991).
NPM applies practices such as downsizing of the public sector while improving
economic efficiency, demands for public accountability and applies modern
human resource policies like motivating workers through attractive incentives.
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Incentives include things like paying employees basing on their performance,
training and developing workers to improve performance, setting attainable
performance standards with realistic performance goals. Other incentives include
contracting employees on clear and attractive terms. Establishing performance
standards and measures of performance are some of the incentives emphasized
(World Bank Report, 1996). With these initiatives, the Public Sector is expected
to offer value for money while being transparent in all its activities and is urged
to be fair to employees and clients. NPM urges the Public Sector to become
competitive, customer-focused and mindful of shareholders while demonstrating
profitability. It is also expected to increase efficiency and flexibility as it
improves workersincentives (Marobela, 2008; de Wall 2007; Verbeeten 2007,
Mitala, 2006; Shaw, 1991).
In Africa, Public Service reforms have been introduced at different periods
(World Bank, 1993; 1996; Ayeni, 2001; Marobela, 2008). In Botswana for
instance, public sector reforms were introduced over three decades ago
(Marobela, 2008). The main reason of such reforms was to modernize and
enhance efficiency in the Public Service. The reforms introduced in Botswana
are modeled around the New Performance Management (NPM) (Marobela
2008). A government report (Republic of Botswana, 2000a, b) identified four
new interrelated reforms which are now being implemented throughout the
Botswana Civil Service namely: performance management system;
decentralization; human resources development; and computerization of
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personnel management system. In addition these are accompanied by the
privatization policy that sought to commercialize government activities. This
was the general framework from which the current reforms that were radically
changing the public sector are unfolding (Ayeni 2001; Mitala, 2006; Marobela,
2008).
According to Kobia and Mohammed (2006), in Kenya the government started
implementing public sector reforms way back in 1993 with the aim of improving
service delivery. The implementation of different types of reform interventions
has been carried out in three phases. However, newer interventions have been
introduced in the last six years (Kobia & Mohammed 2006). One such
intervention relates to performance contracting in the state corporations and
government ministries (Kobia & Mohammed 2006). Performance contracting is
part of the broader public sector reforms aimed at improving efficiency and
effectiveness in the management of public affairs (Kobia & Mohammed 2006). .
In Uganda, the Idi Amin military regime which captured power in 1971 brought
a total collapse of the Civil Service (Mitala, 2006). The political instability that
followed later (Okello Lutwas Military takeover) aggravated the chaos (Public
Service Reform Commission Report, 1990). The Public Service was ruined,
leading to many cases of low quality output, disregard of procedures, lack of
guidance and direction. The expansion of the Public Service for purposes of
patronage, and job creation, was accompanied by the duplication of services,
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poor co-ordination and a general decline in performance standards (Apuki,
2007). According to Mitala, (2006), Public Service became inefficient,
ineffective, unresponsive, demoralized, over-bloated without justification and ill
equipped with poorly paid civil servants.
With the ascent of the National Resistance Movement (NRM) Government into
power in 1986, one of the institutions that needed reform was the Public Service.
In 1989, the Government constituted the Public Service Review and Re-
organization Commission (PSRRC 1989/90) to undertake a study with a view to
coming up with recommendations on how best service delivery could be
improved in Public Service (Mitala, 2006).
The PSRRC made 255 recommendations to the Government and Results
Oriented Management (ROM) was one of the recommendations that were made.
The others included: Rationalization of Government Ministries and
Departments, downsizing the service, divesture of non-core functions,
improvement in physical records management, pay reform, issuance of
performance contracts, inclusion of stakeholders in the decision making
processes on issues that affect their jobs, retraining and development of workers,
introduction of new staff performance appraisal scheme, setting of National
Service Delivery Survey Standards among others. All these reforms were
borrowed from New Public Management Principles (Mitala, 2006).
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The current study sought to establish the relationship between performance
management practices and employee performance in public organizations in
Uganda. Public organizations are divided into two: that is, the Local
Government organizations and the Central Government organizations. Kampala
City Council is a Local Government organization charged with the provision of
social services to Kampala City dwellers. Kampala City Council was picked to
represent all public organizations in the Local Government because of its size
measured in terms of the number of employees. The Ministry of Education and
Sports on the other hand is a public organization under the direct responsibility
of the Central Government in charge of implementation of education related
government policies. By comparison with other Government Ministries, the
Ministry of Education and Sports is the largest in terms of employee capacity
and size (it has the Headquarters, Constituency Departments, Institutions of
Higher Learning, Training Colleges and Schools) (Ministry of Education and
Sports Databank, 2009).
1.2 Statement of the Problem
Although the Uganda Government has spent a lot of resources on the civil
service reforms since their introduction in 1991, employee performance in public
organizations is not improving Apuki, 2007; Mitala, 2006). This appears to be a
big problem for both the Government and the civil service generally.
Government reports and scanty studies adduced so far point to poor salaries, job
insecurity and insufficient physical resources as the major causes of poor
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employee performance in public organizations in the country (Werikhe, 2002;
Namutebi, 2000; Kyewalabye, 2008; Kyewalabye, 2009). However these factors
have not been verified empirically. In light of the recent civil service reforms
which were introduced in public organizations in the country, there exists very
limited empirical evidence that suggests that any relationship exists between the
reforms and employee performance in the public sector in Uganda (Werikhe,
2002; Namutebi, 2000; Apuki, Kyewalabye, 2009). The purpose of this study
therefore, is to fill a gap by providing empirical evidence on the relationship
between performance management practices (decision rights, incentives,
performance contracts, organization resources and performance measurement)
introduced in the public sector and employee performance in public
organizations in Uganda. The study was also intended to examine the interaction
effect among performance management practices, government policy and
employee performance in public organizations in the country which past studies
have not done so far.
1.3 Objective of the study
The objective of this study was to establish the relationship between
performance management practices and employee performance in public
organizations in Uganda.
1.4 Specific objectives
The study sought to address the following specific objectives:
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i. To establish the relationship between decision rights and employee
performance in public organizations in Uganda.
ii. To assess the relationship between incentives and employee performance
in public organizations.
iii. To examine the relationship between performance contracts and
employee performance in public organizations.
iv.
To establish the relationship between organization resources and
employee performance in public organizations.
v.
To examine the relationship between performance measurement and
employee performance in public organizations.
vi. To determine the relationship (interaction effect) among performance
management practices (decision rights, incentives, performance contract,
organization resources, performance measurement), government policy
and employee performance in public organizations in Uganda.
1.5 Hypotheses
H1 There is a relationship between decision rights and employee
performance in public organizations.
H2 There is a relationship between incentives and employee performance in
public organizations.
H3 There is a relationship between performance contracts and employee
performance in the public organizations.
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H4 There is a relationship between organization resources and employee
performance in public organizations.
H5 There is a relationship between performance measurements and
employee performance in public organizations in Uganda.
H6 There is an interaction effect (relationship) among performance
management practices, government policy and employee performance in
public organizations in Uganda.
1.6 Significance of the Study
Information generated in the study on the best performance management
practices might assist policy makers, managers and supervisors when they are
drawing performance improvement policies. Secondly, managers and
supervisors could operate from informed positions when drawing work
improvement plans. The study was also intended to create awareness among
operatives so that they are aware of practices that can enhance their performance.
In addition, the study may yield useful practical applications for consultants and
advisors in the area of performance management practices and their applicability
in public organizations in Uganda and at Kampala City Council and the Ministry
of Education and Sports in particular. The study might contribute to the
literature of performance managment that could be of use to scholars and other
interested parties.
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1.7 Scope of the Study
1.7.1 Geographical Scope
The study was carried out at Kampala City Council and the Ministry of
Education and Sports. Currently, Kampala City Council is in Kampala City, in
Kampala District in Uganda. It covers an area of 195 square kilometers and has
a population of about three million (3,000,000) inhabitants with an annual
demographic growth rate of 3.9% and has an average density of 51 inhabitants
per hectare (Population and Housing Census, 2002). The City Council is divided
into five geographic Divisions of: Kampala Central, Makindye, Nakawa,
Lubaga and Kawempe. The Divisions are expected to ease administration by
ensuring effective delivery of social services (education, health care, safe water,
sewage disposal and garbage management among others) to the City dwellers
(Kampala City Handbook, 2000). The Ministry of Education and Sports
(MoES) is located in Kampala City on Parliament Avenue opposite the
Parliamentary Building. This Ministry is in charge of regulating and providing
formal primary, secondary, further and university education for people in
Uganda. The Ministry of Education and Sports also regulates education for pre-
primary, over age, children in pastoral areas, and fishing villages and those in
employment who are too old to return to school.The Ministry of Education and
Sports has a work force of 300 full-timeemployees and its mission is to provide,
support, guide, coordinate, regulate and promote quality education and sports for
all persons in Uganda for national integration, individual and national
development (Ministry of Education and Sports 2003/04: Education Annual
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Performance Report). This implies that the two organizations which were
studied have a significant influence on the lives of many people in Uganda. This
makes them truly public service organizations.
The purpose of this study was to establish whether there is a relationship
between performance management practices and employee performance in
public organizations in Uganda with particular reference to Kampala City
Council, a Local Government Unit and the Ministry of Education and Sports, a
Central Government Ministry.
1.7.2 Time Frame
The study considered the period from 2005 to 2009. The period was singled out
because this was the period when new performance management practices were
emphasized by governments globally and by Uganda in particular. In addition, it
was from the year 2005 to 2009 that the public was keenly interested in
employee performance in public organizations in the country.
1.7.3 Content Scope
The study examined the relationship between performance management
practices and employee performance in public organizations in Uganda. It also
determined the interactive effect among performance management practices,
government policy and employee performance in public organizations. The
study was underpinned by the following theories: the Goal Setting theory of
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Locke, and Latham, (2002), which assumes that setting of performance goals
and involving employees in decision making processes on issues that concern
them and their jobs enhances workers performance. The Agent theory of
Bainman, (1990), that assumes that giving employees performance contracts
that are matched with adequate incentives increases workers performance. The
Resource Based View (RBV) of Barney, (1991) which assumes that when
employees are empowered with up-to-date organizational resources (knowledge,
skills and information technology) their performance increases.
The performance measurement theory, as proposed by de Waal, (2006) and
Kaplan, (2001) was a component of the study. According to de Waal, (2006)
and Kaplan, (2001), performance measurement system is a set of metrics used to
quantify both the efficiency and effectiveness of actions. Performance
measurement serves the purpose of monitoring performance, identifying the
areas that need attention, enhancing motivation, improving communication and
strengthening responsibility and accountability (de Waal, 2006; Kaplan, 2001).
The view was strongly supported by Schmitz et al in Busi, & Bititci, (2006) as
well.
In this study, the independent variables were: decision rights, incentives,
performance contracts, organization resources and performance measurement.
Government policy was the intervening variable while employee performance
was the dependent variable viewed in terms of quantity of work, efficiency,
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accuracy, quality and reputation of work, work excellence, innovation and
employee morale.
In conclusion, in order to assist the public organizations to improve performance,
it was necessary to establish whether there is a relationship between the
performance management practices (decision rights, incentives, performance
contract, organization resources, and performance measurement) in the public
sector. Public Organizations are regulated by government policy. For that
matter, it was imperative to establish the interaction effect among performance
management practices, government policy and employee performance in public
organizations.
1.8 Chapter Summary
This chapter was an introduction of the research and it explained the motivation
for the study. The statement of the problem, study objectives, research
hypotheses, significance and study scope were spelt out before the conclusion.
The following chapter presents a review of literature that is related to the study.
Chapter three explains how the supportive data was collected and analyzed. The
fourth chapter follows with the presentation and discussion of the study findings.
Finally, the study summary, conclusion, recommendations, policy implications
and areas for future studies appear in the last chapter.
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CHAPTER TWO
LITERATURE REVIEW
A number of prominent performance management scholars have advanced
theories in an attempt to explain underlying factors that affect employee
performance in work settings. This study has come up with specific theories that
explain the phenomenon of the possible underlying causes of poor employee
performance in public organizations. The literature addressed in this chapter has
a brief introduction of the theoretical framework. It then presents the study
variables preceded by their operational theories: decision rights and employee
performance; incentives and employee performance; performance contracts and
employee performance; organization resources and employee performance;
performance measurement and employee performance and government policy
respectively. Finally, a critical review of major issues is discussed followed by
the summary and an illustration of the conceptual framework.
2.1 Theoretical Framework
The study was underpinned by various performance management theories
advanced by a number of scholars who tried to explain the phenomenon
underlying employee performance in public organizations. Four theories were
used to operationalize the study.
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2.1.1 Goal Setting Theory
The goal setting theory which assumes that a direct relationship exists between
the definition of specific and measurable goals and performance was the first to
be applied in this study. If managers know what they are aiming at, they are
motivated to exert more effort, which increases performance (Locke & Latham,
2002). The theory was advanced by Latham & Locke, (2002) who emphasized
goal setting and encouragement of decision rights as a basis for employee
performance. de Waal, (2007) observes that taking responsibility for results
requires that organizational members are given the opportunity to influence their
results favorably and have the freedom to take action. This implies that people
have to be authorized by their managers to independently and swiftly take action
on problems without having to ask for permission first. Decision rights allow
greater involvement of employees in deciding on issues that affect their work
(Locke & Latham, 2002). This implies that workers have a say in defining the
right Key Performance Indicators (KPIs) and the mandate to establish Critical
Success Factors (CSFs) in relation to their job responsibilities. According to
Armstrong, (2006) employees are most likely to meet or exceed performance
goals when they are empowered with the authority to make decisions and solve
problems related to the results for which they are accountable.
The performance goals of an organization represent a shared responsibility
among all its employees each of whom has a stake in the organization's success.
A critical challenge for private and public organizations alike is ensuring that
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this shared responsibility does not become an unfulfilled responsibility.
Accountability helps organizations to meet this challenge. Underlying employee
empowerment is management's view of its employees as assets that are capable
of contributing to the growth of their respective organizations rather than costs to
be borne by the Organizations. The contributions of individuals and teams are a
starting point for enumerating the results for which they are accountable (Locke
& Latham, 2002; Armstrong, 2006). The goal setting theory was used to support
decision rights in the study.
2.1.2 The Agency Theory
Baiman, (1990), stresses that the agency theory assumes that a relationship exists
when one or more individuals (called principals) hire others (called agents) in
order to delegate responsibilities to them. The rights and responsibilities of the
principals and agents are specified in their mutually agreed-upon employment
relationship. Agency theory attempts to describe that relationship using the
metaphor of a contract. Agency theory assumes that individuals are fully
rational and have well-defined preferences and beliefs that conform to the
axioms of expected utility theory (Bonner & Sprinkle, 2002). Furthermore, each
individual is presumed to be motivated solely by self-interest (Baiman, 1990).
This self-interest can be described in a utility function that contains two
arguments: wealth (monetary and non-monetary incentives) and leisure.
Incentives are extrinsic motivators where pay, bonuses or career perspectives are
linked to performance (Bonner and Sprinkle, 2002). Incentives that are not
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contingent on performance generally do not satisfy this criterion; thus, the
agency theory suggests that incentives play a fundamental role in motivation and
the control of performance because individuals have utility for increases in
wealth (Bonner, & Sprinkle, 2002). The agency theory was used to explain the
importance of incentives and performance contracts in the study.
2.1.3 The Resource Based View
An alternative to the agency theory is the Resource Based View (RBV) as a
model of understanding strategic organization resources that can enhance
employee performance. According to Barney, (1991) key resources have been
identified as intangible assets (such as client trust and relationships) and
capabilities or tangible resources (such as skills and knowledge, technology and
information). The resource based view was used to support organization
resources in the form of knowledge, skills and information technology in the
study.
2.1.4 The Performance Measurement theory
Finally, de Waal, (2007) and Kaplan, (2001) observe that in order to assess the
success of a performance management system, there is need to measure the
structural side which deals with the structure implemented for performance
measurement. This usually includes critical success factors, key performance
indicators and often a balanced scorecard and the behavioural side whichdeals
with organizational members and their use of the performance management
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system (de Waal, 2007 and Kaplan, 2001). The performance measurement
theory was used to explain the importance of employee evaluation in the study.
The question arising here is whether there is a relationship between the
performance management practices (decision rights, incentives, performance
contracts, organization resources and performance measurement) as advocated
by the selected theories and views in the study.
2.2 Related Literature on the Study Variables
2.2.1 Relationship between Decision Rights and Employee Performance
The goal setting theory (Locke & Latham, 2002), was selected to guide this
aspect of the study. The literature below explains the linkage between decision
rights and employee performance.
Decision rights allow greater involvement of employees in deciding on issues
that affect their work. So workers have a say in defining the right Key
Performance Indicators (KPIs) and establish Critical Success Factors (CSFs)
concerning their job responsibilities. Armstrong, (2006) observes that employees
are most likely to meet or exceed performance goals when they are empowered
with the authority to make decisions and solve problems related to the results for
which they are accountable. This is in line with Hewitt, (2002) who argues that
the contributions of individuals and teams are a starting point for enumerating
the results for which workers are accountable.
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According to Michelle, (2007) and Helmut, (2002), the most important decisions
in an organization affect not only the decision maker but also other members of
the organization. The allocation of decision rights according to Helmut (2002);
Jensen and Mechelle (2007) can resolve the problem of externalities that may
have impact on other stakeholders when important decisions concerning them
are made without their participation. According to Osterman, (1994), around
45% of workers decide the mode of doing their job. Aghion, and Tirole, (1997)
support the view when they observe that as interests between management and
employees become more aligned, delegation of decision-making rights motivates
employees to improve their performance without causing severe disruption to the
decision-making process. Juliette and Jeff (2005) however argue that there are
certain circumstances (such as sensitivity and nature of the matter) under which
the employer may reserve authority over decision rights.
Michelle, (2007) observes that employee involvement in decision making
sometimes referred to as participative decision-making (PDM) is concerned with
shared decision making in the work situation. In support of the argument, Hewitt
(2002) notes that there are certain individual contingency factors which may
support participative decision-making. For example, when the sets of choices
are clear and employees show greater desire for job involvements, it is healthier
to let them participate in the decision making process. Participative decision-
making in organizations may also be necessary when developing greater
individual job responsibility.
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In agreement with Hewitt, (2002), Locke and Schweiger, (1979) stress that
decision making should be a joint process betweenmanagers and subordinates.
A democraticemployer sits with the employees to decide on the future course
of his business (Michelle & Lori, 2007). The observation assumes that
employees are partial owners of the business. Thus participating in deciding on
what should be done simply determines the future course of their business
through objectives.
On the other hand employees in public organizations are only hired to achieve
the vision(s) of their employer (government). The assumption would therefore
not hold in case of public organization workers (Lock & Schweiger, 1979).
Public organizations are there to serve public interests and hence their out look
should hinge on the interests of the public (Jensen & Meckling, 1992).
However, Aghion and Tirole (1997); Ghosh, (2009) argue that participative
approach to decision making is inappropriate when choices are complex,
difficult to define and varied in nature. This is a situation where task
interdependence is very high; the environmental change is rapid thus hindering
employee participation in decision making. This complexity can be resolved
through delegation. Julliette & Jeff (2005) contend that that employee
participation in the decision making process can also be realized through
delegation in which the subordinates gain greater control, greater freedom of
choice with respect to bridging the communication gap between management
and the workers. Supporting Julliette & Jeffs (2005) observation, Bonner and
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Sprinkle, (2002) stress that employee involvement in the decision making
process is the employees chance to participate in an organizations strategic
planning activities. In support of Bonner and Sprinkles (2002); Julliette and
Jeff, (2005) argue that the future direction (goals and objectives) of an
organization is determined by the employer when he/she promotes employee
involvement in deciding the course of action to take in order to achieve the
already established objectives. This improves workerscommitment (Julliette &
Jeff 2005). However, Ghosh, (2009) on the other hand observes that public
goals and objectives are in most cases determined by the government and then
communicated to the responsible public organizations for implementation. For
that matter, it is up to the concerned public organizations to ensure appropriate
development of the strategic plans for the achievement of public goals and
objectives by selecting expert and knowledgeable employees to handle the
process. However what would be most appropriate is to involve employees in
the strategic planning of activities before implementation (Michelle, 2007). This
is likely to motivate workers because they would only be implementing their
own decisions (Locke & Schweiger 1979; Helmut 2002; Michelle, 2007).
Barringer and Bleudorn (1999) argue that full employee involvement in decision
making allows for the decentralization of decision rights. That is, the concerns
of the subordinates are catered for during planning. Similarly, the empirical
studies by different researchers: Wagner (1994); Cindy (2002); Cappelli and
Neumark (2001); Awolabi and Adeola (2011) revealed that decentralizing
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decision rights alleviates the burden on top management as well as cutting
unnecessary communication up and down the hierarchy and reduces the agency
costs.
Partial employee involvement in decision making (centralization of decision
rights) on the other hand ignores the concerns of the frontline employees (Cindy,
2002). Barringer and Bleudorn, (1999); Li et al., (2006) advocate for full
employee involvement in decision making because frontline employees are
people closest to the customer and are knowledgeable about market needs and its
dissatisfaction. Frontline workers also know how to address the dissatisfaction -
which is a central element in the success of any organization. On the contrary,
an empirical study by Kazuyuki and Kanamori, (2008) suggests that with
advancement of information communication technology (ICT), centralization of
decision rights can still capture the concerns of the floor employees in an
organization which would have only been possible through decentralization of
decision rights. This can be through the interaction between centralized and
decentralized decision making enabled by the ICT, where employees feed all the
necessary information about their customers and their decisions into the
computer system (Kazuyuki & Kanamori, 2008). This information is then
accessed by top management, screened and evaluated, decisions made by the top
management and then communicated to the concerned employees via ICT
systems (Kazuyuki & Kazuyuki, 2008).
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Spreitzer and Mishra (1999) argued that having high performing employees is a
desire for all organizations in order to remain competitive. However, having a
high performing organization requires committed employees who appreciate the
factors that influence employee performance (Kazuyuki and Kanamori 2008).
An organization's ability to create and be innovative is the most important source
of its competitive edge (Kazuyuki & Kanamori, 2008). However, creativeness
and innovativeness partly hinge on an employees ability to make decisions
concerning how best to do his or her work and its future course. Employees who
cannot make decisions concerning their work are in most cases not creative and
innovative. This is so because it is not up to them to decide what to do, how to
do it, when and what to improve or change because such decision matters are
centralized at the management level (Takahito & Kazuyuki, 2008).
Markey, (2006) argued that the participation of employees in the decision
making significantly improves employees performance and hence
organizations increased ability to meet its objectives. According to Black,
(2001), the expected benefits of employees involvement result in quality
improvement, better information flow, clear tasks goals, and quality decisions.
Increase in employees commitment and acceptance of decisions fosters a sense
of decision ownershipdue to having been involved in decision-making. This
increases the chances of effective implementation of the organizational
objectives.
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Empirical evidence further suggests that employeesbetter performance hinges
to a great extent on workers involvement in the decision making processes
(Arthur, 1994; Carter, 1995). These scholars stressed that employee
involvement in the decision making process contributes to efficiency because
they gain the capacity to enhance the quality of decision making by increasing
the inputs and promotes commitment to the outcome of the decision making
process in the workplace.
According to Spreitzer and Mishra (1999), employees who have made decisions
concerning their own work and how best to do it were very satisfied with what
they were doing. Their performance was found to be significantly high
compared to the employees who lacked influence in their own work and how to
handle it. In support of Spreitzer and Mishra (1999), Chang & Lorenzis (1983)
research findings revealed that a significant relationship exists between
frequency of employees consultation and organization commitment. The study
further established that if organizations are to realize any significant increase in
employees performance, workers involvement in decision making processes
should be considered as a crucial aspect of their performance. Wagner (1994)
similarly measured and discussed the benefits accruing to the organizations due
to employees involvement in the decision making processes. Findings of his
study revealed that when employees are adequately informed about matters
concerning them and are afforded the opportunity to make decisions relevant to
their work, organizations are likely to benefit through improved employee
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performance. Individual employees are also likely to benefit through job
satisfaction. These findings are supported by Williamsons (2008) later study
that established that employee involvement in the decision making on issues
concerning their jobs increases workers performance.
As a result of incorporating workers ideas and information in the decisions
made by organizations (organizational flexibility), product/service quality, may
improve Williamson, (2008). This is because employee involvement in the
decision making process contributes to greater trust and a sense of control on the
part of the workers. Through employee involvement, resources required in
monitoring employee compliance like supervision and following the work rules
are minimized. Reduced costs and the saved money can be spent on the
development of further employees decisions (Arthur, 1994; Spreitzer and
Mishra, 1999). Similarly, Kemelgor, (2002), observed that when employees are
given the opportunity to contribute their ideas and suggestions during decision
making, increased organizations performance is likely to be realized. This is
because greater employee involvement in decision making maximizes divergent
view points and perspectives. Empirical findings by Owolabi and Adeola,
(2011), too found that in order for an employee to perform well, she/he must first
feel good about what she/he is engaged in (job satisfaction). On the contrary,
Jensen and Meckling, (1990), argue that involving employees in the decision
making in ways that maximize their/organizationsperformance is an extremely
difficult and controversial management task. This is because organizations may
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be indifferent about employees effectivenessin the making of quality decisions
that are consistent with the organization mission and objectives.
Jensen and Meckling, (1990), however observes that there are costs to be
considered before involving employees in the decision making process. The first
one rotates around delegating decision rights to employees who have the relevant
information but whose motivation and goals do not align with those of the
organization. The second aspect is the difficulty of transferring the relevant
information from the source to the decision maker because of arch of distortion.
Public organizations in Uganda seem to suffer from poor performance due to the
two costs identified (Jensen & Meckling 1990).
Poor performance of public organizations in Uganda has continued to be
witnessed despite the effort taken by the Public Service Commission to employ
well qualified and adequately informed public servants. High cost of gross
negligence of duty coupled with organizations inability to transfer the relevant
information from the source (the public) to the decision and policy makers in
public organizations, has led to poor performance. This situation results in gross
errors arising out of taking uninformed decisions and policies by the decision
makers. Cindy, (2002) argues that by involving employees in the decision
making process at levels where these combined costs are minimized, public
organizations can get optimal decision-making efficiency and therefore better
performance.
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Williamson, 2008); Jacobs (2005), argue that finding an organizational spot
where decision costs are minimal is only part of the battle. Public organizations
must still deal with the fact that employees who are charged with decision
authority are inevitably motivated by their own personal and professional goals,
some of which are inconsistent with those of the organization. In order to
overcome these complexities in decision making, Jacobs (2005) recommends the
following steps: routine review and update on how decision authority is
distributed across employees inpublic organizations. What employees do, and
the environment in which they operate continually changes, hence decision-
rights updates must become routine. A review should carefully assess where
various types of decisions are being made in the organization and whether those
particular points are still the most crucial in achieving organizations objectives.
In a study by Lee, (2008) about the effect of decision rights and noise pollution
control that was conducted at the Southern Methodist University, findings
revealed that workers who were involved in the decision making processes
exhibited excellent performance compared to their counterparts who were denied
decision rights regarding the option to control noise pollution. Lee (2008)
reported that the experiment involved two groups with one group being
subjected to loud noise and in the middle of the exercise participants were denied
the right either to stop the loud music or let it continue. The second group was
subjected to the same loud noise and half-way the exercise, participants were
given the option of either stopping the noise or let it continue. The experiment
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had differing implications on employee performance. Participants who were
denied decision rights demonstrated significant deterioration in their
performance. Their thinking became emotional, unimaginative, and dull. The
group that was given choices exhibited better performance. Much as the group
that was accorded decision rights experienced the same amount of unpleasant
noise as the group which had no option, its participants thought process
remained unaffected. The group with decision rights engaged in deep reflective,
creative thought and their performance was high. Thus, it was not the negative
external situation, but the perceived lack of involvement in the decision making
process for the group without decision rights, that caused the participants
diminished thinking capacity and thus poor performance.
In conclusion, the above literature on decision rights emphasizes the need for
involvement of employees in the decision making processes on issues that
concern them, their jobs and their work places if increased performance is to be
realized. It has also been argued that participative decision making gives
workers a feeling of belonging (psychological safety) and makes them
responsible and accountable for their actions. In the process performance
improves. It remains to be seen whether there is a relationship between decision
rights and employee performance in public organizations in Uganda.
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2.2.2The Relationship between Incentives and Employees Performance
The Agency theory asserts that a relationship exists between incentives and
employee performance (Bainman, 1990 in Smith & Hitt, 2007). This is in
agreement with other scholars who assert that incentives are rewards for a
specific behaviour, and they are intended to encourage and sustain good efforts
(Banda, 2007; Armstrong, 2006; Ivancevich, 2004). Similarly, Adams & Hicks,
(2000) view incentives as inducements or supplement rewards that serve as
motivational devices for a desired action or behaviour. Ivancevich, (2004)
contends that motivating employees through incentives is crucial for morale
boosting in order to perform the seemingly challenging responsibilities and solve
problems thus achieving organizational objectives. Beardwell & Holden, (2001)
explain that incentives are either direct and extrinsic in nature or indirect and
extrinsic. According to the two scholars, examples of direct incentives are
financial benefits such as pay, salaries, salary top ups, subsidies, commissions
and bonuses, pension, illness/health/life insurance; over-time, clothing and
housing allowances. Ivancevich, (2004) and Banda, (2007) observe that gain
sharing is another direct incentive that can induce the commitment of employees
to perform. Indirect incentives (intrinsic in nature) may include such benefits as
subsidized meals, clothing, accommodation, transport, gifts, travel, scholarships
for workers and their children and tax breaks.
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Adam and Hicks, (2000), contend that indirect incentives may also include
flexible schedules, part-time or temporary work; sabbatical, study leaves,
holidays and vacation. Improving the work environment conditions for example
by putting in place occupational health and safety measures, putting in place
recreational facilities for workers to relax in, extending school access for
employeeschildren; having proper infrastructure such as path and walk ways,
ventilated offices, and transport are motivating facilities that should be available
in work places if high employee performance is to be realized (Adam & Hicks,
2000).
In a study by Rajesh and Samwick, (2003) that sought to prove whether
incentives were aligned with employee responsibilities, it was established that
managers with explicit divisional responsibilities had lower pay-performance
than managers with broad oversight authority. Managers with broad oversight
authority in turn had lower pay-performance (incentives) than Chief Executive
Officers. Rajesh and Samwick, (2003) confirmed that incentives differ across
job classifications. The observation is important because of two reasons. First
of all it is evident that the internal structure of an organization aligns incentives
according to responsibilities among the various management levels. In addition,
pay-performance incentives differ across the managerial levels because of the
way organizations are structured. Thus incentives are simply meant to induce
the various employees especially managers, to take optimal actions. If incentives
are aligned to each employees responsibilities in the organization, it motivates
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them to increase their efforts in relation to the incentives given to them (Murphy
& Oyer, 2001; Harold, 2003).
In contrast to the argument by (Harold, 2003; Murphy and Oyer), Rajesh and
Samwick (2003) noted that focusing on the incentives of the top ranking officers
only in public organizations may be an effective short term strategy but with
disastrous long term consequences. This is so because ordinarily, objectives get
accomplished through the activities of the lower employees. In agreement with
Murphy and Oyer, (2001), Barron and Glen, (2003) contend that without the
lower employees being motivated to do their work well, however much the top
ranking officials are motivated; objectives will not be satisfactorily
accomplished. Therefore, public organizations should motivate all their
employees regardless of their rank in the organization hierarchy (Harold, 2003).
An empirical study by Harold, (2003), proved that incentives increase the value
people attach to work goals. Rewarding people for exceeding targets motivates
them to spend more time on the rewarded tasks which leads to heightened
interest and satisfaction. It also appears to strengthen self-confidence and
employee loyalty. Well-designed and implemented incentive systems increase
employee motivation, commitment, cost effectiveness and congruence (Harold
2003). In support of the above findings, empirical evidence adduced by Werikhe,
(2002), confirmed that 95% of the workers who participated in his study
confirmed that adequate rewards can induce employees to attain the desired
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results. In contrast, Verbeeten, (2007), found that incentives only improve
quantity but not quality performance.
Burgess & Ratto, (2003) in their study established that there were four major
types of incentive systems. In order to induce and sustain employee effectiveness
and efficiency, the appropriate incentives are: quota-based (performance goals);
piece rate-based (produce more units); tournament-based (competition); fixed-
rate based (specified amount for specified work). Similarly, other empirical
studies on pay for performance (performance goals) as an incentive: Namutebi,
(2000); Adams and Hicks, (2000); & Baker, (2004), confirmed that pay for
performance as an incentive system is effective and can be adopted by public
organizations as an incentive system to motivate their employees.
According to Sean, (2008), pay for performance is effective in motivating
employees since their rewards and exact pay hinges on their actual performance.
In line with Abraham Maslows hierarchy of needs theory, Armstrong, (2006)
suggests that man will always want to satisfy his physiological needs first.
Assuming that man can only satisfy his basic needs from his own pay and if his
pay is realized from his own performance, then he will increase his effort in
order to perform well and get higher pay so as to satisfy more basic needs. So,
in this case, pay for performance would have acted as an inducement to motivate
man (employees) to perform better.
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In support of Seans (2008) observation, Harold, (2003) in an extensive survey
he carried out in 1,000 United States organizations, it was also established that
various forms of incentive systems greatly increased employees performance.
The study indicated that tangible incentives (money, gifts, travel) increase
performance by an average of 22%. Individual-based incentives resulted in a
27% gain while team-based incentives improved performance by 45%. The
study also confirmed that incentive systems work best when current performance
is inadequate, and that the cause of inadequate performance is motivational and
that desired performance can be quantified (how much; how often; how many)
(Harold, 2003).
Harold, (2003) further argues that for incentives to increase performance, goals
must be challenging and achievable. In terms of effectiveness of the incentive -
monetary or gift/travel - the study ascertained that monetary incentives yield a
27% increase in performance and gifts and travel incentives provided a 13%
increase. Findings of this study established further that goal achievement
incentive systems have a positive impact on employee performance too. The
study revealed that 57% of the survey respondents surpassed their organizations
performance objectives and 92% met partial performance objectives for which
the incentive systems had been designed.
Sprinkle, (2000); Li, (2002) and Locke (2004), argue that sustaining
administration of adequate incentives to individual employees as their effort is
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measured with immediate feedback increases workers effort. Individual
employee performance in the long run improves due to the experience gained
through learning arising out of increased effort on a particular task. Sprinkle,
(2000), carried out a repeated measurement experiment between two groups (one
group was given incentives and the other was a control group) over different
periods on a cognitive task. The results suggested that performance is likely to
become more incentive sensitive over time. With incentives in place, employees
are likely to increase their effort especially on tasks involving reasoning in order
to find optimal solutions. Through task repetitions and feedback by management
regarding the outcome of an employees efforts, experience is gained and this
helps employees to eliminate many reasoning errors. Similarly, Namutebi,
(2000) in her empirical study, found that with respect to timeframe and
effectiveness of incentive systems, long-term incentive programs had the
strongest effect (44% performance gain) compared to intermediate term (30%
increase in performance) and short-term incentives (20% performance gain)
respectively.
In agreement with Namutebi, (2000), Kyewalabye (2008) noted that there will
always be an increase in performance when employees receive incentive-based
contracts. Workers on an incentive-based contract continually exert more effort
than employees receiving the flat-wage contract. Therefore Sprinkle, (2000);
Kyewalabye (2008) conclude that employees receiving the incentive-based
contract spend more time on a task which results in higher performance than
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workers who receive the flat-wage contract.Sprinkle, (2000) further argues that
performance in terms of effort is just a function of the amount of time spent
along with the incentives attached to the accomplishment of a particular task.
Taking a cognitive example used by Sprinkle, (2000), as time goes on, an
individual given incentives should spend less time on a particular task than
individuals without incentives. Sprinkle, (2002) gives conditions necessary for
individuals receiving incentive-based contract to perform better compared to
individuals receiving a flat-wage contract: the form of the incentive contract
should motivate effort maximization. He recommends that public organizations
should design attractive incentive programs and implement them efficiently.
McGuire, et al., (2003), suggest that it is good to reward employees basing on
their social performance since public organizations to a large extent have a social
responsibility towards the public. A lot of literature advocates for an executive
incentive system (Burgess & Rotto, 2003; Rajesh & Samwick, 2003;
Kyewalabye, 2008; and McGuire, et al., 2003) to be established in public
organizations if public goods and services are to improve. They argue that
executive incentives are a visible and potentially important mechanism through
which Directors of public organizations direct managerial attention to specific
objectives having both financial and social implications to the public. Incentives
can therefore be a potentially important mechanism for directing managerial
attention to public social objectives.
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McGuire, et al., (2003), further argues that executive compensation can be
manipulated by the board of directors of public organizations to reward
managers for pursuing specific objectives which are in public interest. Thus in
developing executive compensation plans and awarding executive incentives, the
Boards of Directors can encourage management to pursue social, as well as
financial objectives. In this case, the financial rewards and other forms of
incentives given to executives may signal the public organizationscommitment
to social performance, and may provide motivation for the achievement of social
policies (Johnsen, 2005; Rajesh & Samwick, 2003). According to Dixit, (2002)
and Lawler, (1992), performance improvement and productivity enhancement is
necessary in public organizations. In order to achieve this, public organizations
can embrace incentives in order to motivate their employees to use resources
more effectively and efficiently (Shaw; et al. 2002; Johnsen, 2005). In
agreement with scholars who advocate for the importance of giving equitable
incentives to public employees, McGuire, et al., (2003) contend that the public
sector should increasingly link their employee incentives to their performance as
a motivating factor.
This is in line with Prendergasts (1999), earlier view when he argued that
performance should be the basis for awarding incentives to public officials. Pay
for performance is a very good incentive in motivating employees to perform
better since their earnings are based on individual performance. Thus the higher
the output, the higher should be the pay. This method of awarding incentives can
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best work where individual performance can be measured, or where a teams
performance can be measured so that when rewarded, it can maximize its
members potential. This can also act as a solution where work interdependence
is rampant so that employees interdependence in performance can easily be
monitored, measured and rewarded accordingly (Prendergast, 1999).
In conclusion, most of the reviewed literature on incentives supports a view that
there is a relationship betweenincentives and employee performance. Scholars
argue that when performance is matched with meaningful incentives, employees
morale is boosted and in the process their job satisfaction and commitment to
performance increases. Incentives are also said to enhance workers loyalty to
their organization thus positively and strongly influencing workplace
performance (quantity and quality). However, public organizations must boost
incentives only when there is a motivation gap and during situations of
challenging goals. It is essential to involve targeted recipients in the selection of
incentives where possible and to ensure equity and fairness to all employees. To
achieve incentive system success, the literature proposes that public organization
should focus on implementation, communication and continuous monitoring of
the incentive system and performance. The issue arising is whether there is a
relationship between incentives and employee performance in public
organizations in Uganda and thus the need for this study.
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2.2.3 Relationship between Performance Contracts and Employee
Performance
The Agency theory assumes that relationship exists between performance
contracts and employee performance (Bainman, 1990 in Smith & Hitt, (2007).
Other scholars (Kobia and Mohammed, 2006) argue too, that governments all
over the world, view performance contracting as a useful managerial tool for
articulating clearer definitions of public objectives and supporting new
management monitoring and control methods. Performance contracting
organizes and defines tasks so that management can perform them
systematically, purposefully and with reasonable probability of achievement
(Kobia & Mohammed, 2006).
Performance contracts are based on the assumption that what gets agreed on,
gets done; if you cannot set and measure performance, you cannot reward it. If
you cannot recognize failure, you cannot correct it and if you can set targets and
show results, you can win public support. Kobia & Mohammed, (2006) observe
that performance contracts originated from the perception that the performance
in the public sector has been consistently falling below the expectations of the
public. Thus performance contracting is part of broader public sector reforms
aimed at improving efficiency and effectiveness in the management of Public
Services. Supporting the view held by Kobia and Mohammed, (2006),
Kyewalabye, (2008), recommended that clearly specified performance contracts
are some of the factors that help to enhance employee performance in public
organizations because of their motivational drive. Proper design of performance
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contracts is very essential and should be a major concern to public organizations.
In the design of performance contracts, public organizations should concentrate
on the selection of appropriate performance indicators (parameters) if
performance contracts are to be effective. According to Poppo and Zenger
(2002), if performance contract parameters are not properly chosen or if they
contain some ambiguities, they may act as a basis for misusing public resources
by the civil servants. This state of affairs may prevail under the disguise of
responding to public needs through using wrong strategies which benefit the
employees and using improper ways to react to uncertainties. Thus performance
contracts must be designed after carefully examining and adapting to particular
public needs.
Yadong, (2002), suggests that the expected performance by the employer (the
principal) from the employee (the agent) should be primarily governed by the
performance contract that helps obviate moral hazards and attenuate the leeway
for opportunism. It establishes the condition and guidelines for the process of
carrying out the duties and responsibilities by public employees. A performance
contract provides an expected performance bound and an institutional framework
in which an employees rights, duties, and responsibilities are codified and the
goals, policies, and strategies underlying the anticipated contingencies are
specified. In the public sector, employees performance has to be governed by a
complete contract specifying what an employee is expected to do in order to
achieve expected performance. Yadong, (2002), further suggests that for
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contracts to be effective, cooperation among the employees and between the
employer and the employee has to be nurtured. This is however a dimension that
is often neglected in the designing of performance contracts yet it is an aspect
which is capable of influencing the feasibility and effectiveness of performance
engagements.
Yadong, (2002), continues to observe that performance contracts should be
drawn to indicate job responsibilities, flexible clauses and the attached rewards.
This is because when contract are clearly drawn, it reduces the uncertainty
faced by public organization decision makers and the risks stemming from
opportunism on the part of employees. It provides a safeguard against ex-post
performance problems by restraining employees abilityto pursue private goals
at the expense of organization goals and objectives. On the contrary, Bernheim
and Whinston, (1998) suggest that incomplete contracts may be optimal in
situations where some elements of enforcement are unverifiable. However, what
is unverifiable is based on the assumption of the uncertain environment but this
can be verified by properly adopting contingent plans in the performance
contracts which cater for the uncertain environment, thus there is no need to
adopt incomplete contracts basing on the suggestion by Bernheim and Whinston,
(1998).
When public organizations adopt incomplete performance contracts, ambiguity
may result which creates a breeding ground for shirking responsibility, non
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performance and shifting of blame. It further raises the likelihood of conflict
through authority overlaps, and hinders the ability to coordinate activities,
utilization of resources, and implementation of effective strategies. Thus public
organizations when designing employee performance contracts should clearly
highlight each employees responsibilities, authorityboundaries, and the chain of
command in order to avoid ambiguities (Yadong, 2002; Wu, & Roe, 2005).
Grinblatt and Titman, (2002), suggest that through performance contracts, it is
easy for employee performance to be screened in order to establish a match or
any deviations between the contractual performance and the actual performance.
If deviations are present, an account can easily be given, so as to find out
whether the performance mismatch has its roots in the way performance
contracts were designed or from the ineffectiveness of the employee. Whichever
way, the problem can be identified and rectified thus performance contracts can
be a useful managerial instrument in influencing employee performance in
public organizations.
In conclusion, public organizations should realize the importance of performance
contracts and their ability to stimulate employee performance especially when
they are matched with the desired incentives. Establishing a relationship
between performance contracts and employee performance was among the
objectives of this study.
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2.2.4 Relationship between Organizational Resources and Employee
Performance
The Resource Based View (RBV) of the firm assumes that a relationship exists
between the organizations key resources (knowledge, skills and information
technology). Possession and identification of key resources embodying these
essential features, along with their effective development and deployment,
allows the firm to achieve and sustain competitive advantage. Much as superior
performance is usually measured in financial terms such as higher profits,
increased sales or market share in private concerns, in public organizations,
performance measured through efficiency and effectiveness of social service
delivery. Whether it is in the private or public sector, superior performance
needs competence driven personnel equipped with adequate knowledge and
skills. These have to be backed by up-to-date ICT in order to drive organizations
to greater heights. Priem and Butler, (2001) observe that the intangible assets
and capabilities could be appropriated by the firm because the unique
combination of company philosophy, employee knowledge, and skills and other
idiosyncratic capabilities are difficult to separate or transfer.
Competence can be defined as an employees/organizations capability to
perform a specific task (Ivancevich, 2004). This definition recognizes that
competence is a precursor to public organizations viability and ability to
achieve public goals and objectives. According to Genevive, et al., (2001)
competence is simply a fitbetween an employee and the task. The focus on a
fit between an employee and a specific task can be useful when a public
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organization tries to hire someone or when it attempts to create an effective
training plan.
Gold, (2001) observes that the same organizational resources that have
historically provided public organizations with competencies can also create
competency traps when environmental conditions change. He notes that
competence traps may occur largely because of the general tendency of public
organizations to engage in exploitation (that is, the use and development of
things already known) at the expense of exploration(that is, the pursuit of new
knowledge) (Hansen, 2002). This is because the returns from exploiting existing
resources (knowledge, skills and information technology) are generally more
certain than those from exploration, the former often drives out the latter. Thus,
the very possession of valuable resources paradoxically leads resource-rich
organizations to focus on increasing attention on applying and improving them,
at the expense of exploring and developing the new resources which are often
required for strategic change (Argote & Ingram, 2000).
2.2.4.1 Training and Human Resource Capacity Building
Any framework for reshaping attitudes of public organization employees must
involve staff training and development. Amoako, (2003) observes that
traditionally, training programmes have had a skills-based focus, but recent
trends in customer-oriented Civil Service require an attitudinal-focused training.
This has led to the need for a pragmatic approach to training and development so
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as to develop the capacity of public servants for improved service delivery. The
government has to invest in public servants in order to: equip managers with the
necessary skills to handle new responsibilities; develop skills for customer
oriented Civil Service; improve the standards of service delivery; adapt to new
technologies and new working techniques (Amoako, 2003). The public service
plays a central role in enabling the achievement of development goals.
Governments should therefore continuously seek new and better ways to build
service institutions that have the capacity to champion and advance the course of
development (Amoako, 2003).
2.2.4.2 Combination of knowledge, Skills and Information Communication
Technology (ICT) Competence
Accessing information communication technology-borne data requires a whole
range of overt resources. These resources include a telecommunications
infrastructure to provide network access, an electrical infrastructure to make the
information communication technologies work and skills infrastructure to keep
all the technology working. In addition, money to buy or access the information
communication technologies, usage skills to use the information communication
technologies, and literacy skills to read the content are also required. Most
African countries simply do not have these resources. In a world where 80 per
cent of the population has no access to reliable telecommunication, and one-third
does not have access to electricity it is not a surprise that the introduction of e-
government and its various applications have been slow in Africa (Panos, 1998).
The global evolution of the information age and the worldwide technological
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