ABSTRACT: Performance contracting is a management tool that states functions, responsibilities and terms of performance for the agreed firm`s target. It is crucial for organizations to put into consideration the idea of perception to be able to establish factors that affect peoples’ behaviour. The study investigated the perceived influence of performance contracting at Kenya Power Company. Descriptive research design was used. The entire 135 management (Senior and standard terms) employees of Kenya Power – Kisumu, drawn from all the departments were used as the target group. The entire population was interviewed thus this was a census survey. Semi – structured questionnaires were used to collect data. The study concluded that Performance contracting did affect organizational performance and it was deemed as a management instrument to be used to achieve the set objectives and target. The study findings showed that performance contracting and employees’ satisfaction had connection, since it ensured that employees have a set targeted for achieving organizational objectives and that getting employees on performance contracting process helped them understand the goals of the organization. This worked as a job satisfaction indicator to the employees. Finally the study concluded that performance contracting lead to motivation, positive work culture, work efficiency, reduced turn over. The study recommends that there is need for employee involvement in the performance contracting processes since it helps in eliminating possible resistance and ensuring commitment of the workforce. This research focused on Perceived Influence of Performance Contracting on Employee Satisfaction at Kenya Power Company – Kisumu Branch. The findings of this study was confined to management (Senior and standard terms) employees of Kenya Power – Kisumu, drawn from all the departments and did not generalize on the entire staff of KPC – Kisumu. The research suggests a further research on the Perceived Influence of Performance Contracting on Employee Satisfaction not only at Kenya Power Company – Kisumu Branch but also in the private firms.
Keywords: Performance Contacting, Perceived Influence, Employee Satisfaction, Kenya Power Company-Kisumu