Target Setting, Performance Appraisal Systems and Employee Productivity among Government Regulatory Agencies in Nairobi City County, Kenya

Titus Lusopio Makhanu, Dr. Scholastica Wamwayi

Abstract


Performance contracting has been widely adopted in the Kenyan public sector as a strategic tool for enhancing accountability, efficiency, and service delivery, yet government regulatory agencies continue to record low employee productivity, unmet performance targets, and inconsistent service delivery. The Government of Kenya's 2024/2025 performance evaluation report shows that only 56.13% of state corporations met their annual performance targets, underscoring a persistent gap between performance contracting frameworks and actual productivity outcomes. This study examined the effect of two core dimensions of performance contracting, target setting and performance appraisal systems, on employee productivity among government regulatory agencies in Nairobi City County, Kenya. The study was anchored on Goal-Setting Theory, Expectancy Theory, and Equity Theory. A descriptive correlational research design was adopted, targeting 693 employees drawn from 77 government regulatory agencies. Using Yamane's formula, a sample of 257 respondents was selected through stratified random sampling, and structured questionnaires were administered, yielding a response rate of 82.9% (n = 213). Data were analysed using descriptive statistics, Pearson correlation, and multiple linear regression in SPSS version 27. The findings revealed that target setting (r = 0.824, ? = 0.451, p < 0.001) and performance appraisal systems (r = 0.819, ? = 0.353, p < 0.001) each had a strong, positive, and statistically significant effect on employee productivity. The study concludes that clearly defined, measurable, and timely performance targets, together with regular, objective, and well-implemented appraisal processes, are critical levers for improving employee productivity in public regulatory institutions. The study recommends that government regulatory agencies strengthen the cascading of strategic targets to managerial levels and reinforce the practical follow-through of appraisal feedback into development and recognition actions.

Keywords: Performance Contracting; Target Setting; Performance Appraisal Systems; Employee Productivity; Government Regulatory Agencies; Kenya


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