United Nations Public Service Awards Case Studies

We are honored at being nominated for this prestigious award. While we always felt that we were part of a major innovation in the Kenyan context, we are thrilled to discover that we are also on the forefront of performance management in public sector worldwide.

Performance contracts in the management of the public service were introduced to improve efficiency in service delivery, instill transparency in the management of public resources and create accountability for results. As the secretariat of PCSC (Performance Contract Steering Committee), we have been privileged TO witness history in the making. For the first time in this country, the public service;
 Has developed strategic plans
 Is organizing its activities into measurable performance indicators
 Is subjected to rigorous and objective evaluation
 Public effort is being focused on satisfying customer needs
 Public service managers are focusing on the most important and critical aspects in the management of public resources
 Changing attitudes to work as public officials become more transparent, accountable for results and adopt strategic focus.

 The critical attribute of the performance contract is that performance targets should always be growth oriented. Each contract year should accordingly demonstrate significant growth in the performance of each criterion over the previous year. In the case of the sectors that generate revenue, this growth orientation, when supported by equally growth oriented service delivery targets, should be reflected in higher economic growth rates.

What is the initiative about? (the solution)
A Performance Contract is an agreement between a government and a public agency which establishes general goals for the agency, sets targets for measuring performance and provides incentives for achieving these targets. Kenya has implemented one of the most extensive system of performance Contracts (PCs). The scope, speed and magnitude of its quantitative achievements in this area are matched by its qualitative achievements. Kenyan PCs are the finest example of international best practice. As someone who has been a student PCs for more than two decades, I can say without any hesitation that this is the most impressive government-wide system for ensuring delivery of results. The fact that this effort is entirely indigenous, makes it even more impressive. The Kenyan PCs embody the key concepts of the new public management literature. Conceptually, in fact, they are ahead of similar systems in New Zealand, Malaysia, India, USA, and UK. At an international workshop where Kenyans were presenting their case study on PCs, one of the participants from India remarked that: “What Kenya has done in two years, India has not been able to achieve in 10 years.” To appreciate the significance of this statement, we need to remember that, as far as Performance Contracts are concerned, India is considered a leader. That is, until Kenya arrived on the scene. Since independence, performance of the Kenyan public service has been deteriorating. This state of affairs resulted largely from a system of management in the public sector which put emphasis on compliance with processes rather than results. Performance contracts were thus implemented to reverse this tread. The Secretariat of the Performance Contracts Steering Committee (PCSC), in the President’s Office, has provided excellent leadership in devising appropriate methodology and guidelines for implementing PCs. The Secretariat has published an information booklet demystifying performance contracts both to the public officers and the public at large. To prepare the public officers for the implementation of the process, massive training and sensitization workshops have been carried out. So far, over 4000 public officers have been trained on the process. Training has been carried out starting with the political body that is the ministers in order to get political support for the system and to ensure long-term sustainability of the process. This has helped in not only entrenching the process in the system but ensured ability to cascade both the process and the targets throughout the hierarchy of the institution. The process has been extended to all 38 government ministries, 130 state corporations (including 6 public universities) and 175 local authorities. The process was first introduced through piloting in 2004 with 16 commercial state corporations. The performance of the pilot SOES was remarkable and unprecedented. They recorded an increase of 282% in pretax profits over the previous year and 13 % increase over the targets. These results encouraged the Kenyan government to introduce PCs in all public agencies.

Who proposed the solution, who implemented it and who were the stakeholders?
 January 2003-blueprint containing policy direction on introduction of performance contracts issued (Economic Recovery Strategy for Wealth and Employment Creation 2003-2005)  April 2003-the Ministry of State for Public Service is directed to place all public institutions on performance contracts by 30th June 2004  August 2003-Performance Contracts Steering Committee (PCSC) established  May 2004- 16 pilot SOEs selected  June 2004, workshop held to train ministers, permanent secretaries directors and CEOs of the pilot SOEs  October 2004, signing PCs by the pilot SOEs  November 2004, training of core PCSC staff by BOSTON iNSTITUTE FOR dEVELOPING eCONOMIS (BIDE)  February –April 2005 training of all top officials in public service on performance contracts  June2005-signing of PCs by all ministries and SOEs  September 2005 signing of PCs by five pilot local authorities  January 2006-training of top public officials by BIDE  March-June 2006, trained all top public servants including local authorities  June 2006- signing of PCs by all public institutions  September 2006, evaluation of performance of all ministries and SOEs  October 2006- more public officials trained by BIDE

Describe how and when the initiative was implemented by answering these questions
a. What were the strategies used to implement the initiative? In no more than 500 words, provide a summary of the main objectives and strategies of the initiative, how they were established and by whom.
The government is increasingly faced with the challenge of improving on service delivery and using fewer resources to deliver services. Performance contracting is part of broader public sector reforms aimed at improving efficiency and effectiveness in the management of the public service. Problems inhibiting the performance of government agencies are generally similar to those found in other countries and have been identified as follows: - excessive controls; multiplicity of principals, frequent political interference, poor management; and outright mismanagement. Over time, the government has implemented different strategies to address this challenge. These strategies include: structural adjustments, privatization, commercialization, contracting out new budgeting and planning systems. Even with these strategies being implemented, performance of the public service did not improve. Government subsequently changed tact, and in the Economic Recovery Strategy (ERS) it was decided that performance contracting process be adopted as a management tool in the management of public resources. In addition all permanent secretaries and chief executives of public owed enterprises be place on performance contracts.

b. What were the key development and implementation steps and the chronology? No more than 500 words
The priorities of the process are to ensure that officers are trained/sensitized on the process to ensure ownership and smooth implementation. Since the process is now entrenched administratively in public service, and to cushion it against political changes, the secretariat is in the process of developing legislation expected to be enacted next year to  ensure full integration and comprehensive cascading of the performance contracting process in all government institutions;  ensure ministries fully facilitate agencies under their purview to achieve their performance contract commitments;  finalize a system to reward excellent performance and sanction poor performance;  extend the process to include all other public agencies that are not on performance contract;  develop and strengthen systems to internalize and sustain performance contracting as the key public sector management accountability framework;  roll out a comprehensive communication strategy to empower Kenyans to demand accountability for results by public servants, including the judiciary, and elected representatives;  facilitate enactment of a legislation to entrench the culture of performance and accountability for results. The purpose of introducing this management process is to improve service delivery to the public by ensuring that top-level managers are accountable for results, and in turn hold those below them accountable; reverse the decline in efficiency and ensuring that resources are focused on attainment of the key national policy priorities of the Government; Institutionalizing performance oriented culture in the Public Service through introduction of an objective performance appraisal system; measuring and evaluating performance; Linking reward to measurable performance;and Strengthen and clarify the obligations required of the Government and its employees in order to achieve agreed targets

c. What were the main obstacles encountered? How were they overcome? No more than 500 words
The strategies adopted to ensure success of the programme is first and foremost, to solicit and obtain political and bureaucratic support and ownership at the highest levels. The President and the Secretary to the Cabinet have given the process their personal support as part of the public sector reform agenda. To ensure identification with the process the political leadership in the ministries (cabinet Ministers) counter-sign performance contracts signed by their permanent secretaries. The Secretariat has finalised and is implementing a communication strategy which in essence seeks to involve partnership with the private sector, the academia, business executives and members of the public in various stages of implementation. The performance contracts for all institutions are made public and are posted in the internet. The institutions conduct, every year, a customer satisfaction survey to determine the extent to which consumers of various government services are satisfied with those services. The performance of the public institutions is announced publicly and the best performing institutions recognised and awarded awards by the president. This promotes health competition by institutions. Institutions are required to be ISO certified within the next 2-3 years. The fundamental aspect of the performance targets is to ensure growth orientation. Each year, performance targets have to demonstrate remarkable improvement by the management over the previous periods. To ensure objectivity of the process, experts drawn from the academia, private sector and various professionals negotiate performance targets with ministries. Evaluation is also carried out by people drawn from the private sector. This alone has achieved accountability levels never seen before in the public service as the performance of officers, including management of public resources, is now subject to review by the private sector.

d. What resources were used for the initiative and what were its key benefits? In no more than 500 words, specify what were the financial, technical and human resources’ costs associated with this initiative. Describe how resources were mobilized
PCs promote transparency Performance Contract documents list the obligations of all public agencies (Chief Executives of SOEs, Permanent Secretaries and head of other public agencies such as universities and municipalities). PCs also include specific criteria and targets to evaluate success. In addition, they prioritize the success indicators to clearly covey government’s priorities to its managers. These documents are put on the internet for all to see and hold the agencies accountable. PCs promote accountability At the end of the year, the performance of all government agencies is assessed against the commitment made by them in their respective PCs. The state-of-the-art methodology used by the Kenyan PCs allows the President’s office to rank all public agencies on a scale of 1 through 5. Thus, the evaluation is not descriptive but precise and quantitative. It allows the President of Kenya to rank al public agencies in a descending order. The top three performers are recognized publicly by the President. It is in this regard that Kenyan PCs are ahead of similar systems used by New Zealand, US, UK and Malaysia. Another key aspect of Kenyan system is that its focus is on holding the top echelons accountability. It is base don the assumption that accountability for results trickles down (but does not trickle up). PCs promote responsiveness Many countries talk of improving their delivery of services. But they do not put any accountability mechanism behind their good intentions ensure that their rhetoric is converted into reality. Kenyan PCs require each public agency to design its Service Delivery Charters and then hold them accountable for implementing their charters. This is a major innovation and is likely to a trend setter. PCs are transforming administration PCs are revolutionizing the administration of public agencies in the following ways:  Each public agency is required to have a strategic plan to specify the correct direction (doing the right thing).  In addition, each agency is required to get an ISO certification. This is a revolutionary concept in government and this alone qualifies for a public service award. How many governments do we know that insist that every public agency will have to ensure that its processes are consistent with international best practice? PCs introduce a new evaluation technique (concept) The basic concept of a PC is not new either in Kenya or the region. However, the uniqueness of Kenyan concept lies in introducing a methodology that allows all public agencies to be ranked on a scale of 1 – 5. Absence of such a measurable scale explains the failure of previous attempts. In previous attempts the government could not do a proper evaluation. This inability to form a precise judgment sounded the death knell for previous attempts.

Is the initiative sustainable and transferable?
The following mechanism is being used to ensure sustainability of the process: i) Entrench PCs in the law to avoid political interference ii) Training of officers to ensure understanding of the PC process iii) Home-grown; this is a government initiative being implemented by officers drawn from the public service. It is therefore identified with the country and not a donor conditionality hence no much resistance iv) The process has been integrated as a management tool for purposes of planning and budgeting. v) Every public institution has developed a three-five strategic plan on which performance contracts are anchored. vi) Release of results of performance to the public every year, the public therefore demands that government demonstrate how tax shillings were converted to taxes vii) This is linked to the process of taxation. Government urges public to pay taxes and in return get good services.

What are the impact of your initiative and the lessons learned?
• Acceptance & success of PCs is dependent on the will and support at the highest political & bureaucratic levels; • the support of the public and other key stakeholders, such as trade unions is also critical in the long term; • A high level institutional framework to coordinate the process is required; • The need to induct and sensitize all key players is also critical; • The process is more readily accepted when internally driven, not imposed as a donor conditionality; • Strong and workable PCs should be founded on Strategic Plans; • Evaluation should include continuous dialogue to minimise disputes; • Feedback on quarterly performance reports is crucial; • Transfer of key personnel in the middle of the contract year caused temporary disruption; • Cascading of the PC process to all levels must be ensured; • Performance targets must be linked not only to national planning instruments but also to budgetary resources • Involvement of outside experts gives objectivity and credibility to both development of targets and evaluation results; • Service Delivery Charter is of particular importance because it addresses the customer value proposition directly; • PCs introduce competition in government agencies; they also compel the agencies to develop work plans to achieve targets; • Need for clear definition of mandates and responsibilities between ministries and agencies under them to avoid micro-management of the agencies; • Capacity to achieve negotiated targets calls for competitive recruitment at top and all management levels.


Institution Name:		Performance Contracts Steering Committee Secretariat
Institution Type:		Government Agency
Contact Person:		Richard Ndubai
Title:		Secretary, PCSC
Telephone/ Fax:		+254-20-249009
Institution's / Project's Website:		254-20-210192
E-mail:		endubai@yahoo.com
Address:		(Room 1611, Floor 16), Harambee House
Postal Code:
City:		Nairobi
State/Province:
Country:		Kenya

The Problem

Solution and Key Benefits

Actors and Stakeholders

(a) Strategies

(b) Implementation

(c) Overcoming Obstacles

(d) Use of Resources

Sustainability and Transferability

Lessons Learned

Contact Information