Employee performance management practices in Kenya Sugar Board

Master's Thesis, 2011

60 Pages








1.1 Background of the study
1.1.1. Performance Management
1.1.2. Employee Performance Management
1.1.3. Performance Management Practices
1.1.4. Kenya Sugar Board
1.2 Statement of the Problem
1.3 Research Objective
1.4 Significance of the study

2.1 Performance Management
2.2 Benefits of Performance Management
2.3 Employee Performance Management Practices
2.3.1. Performance Agreements
2.3.2. Reviewing performance
2.3.3. Rewards
2.3.4 Linking performance to rewards
2.3.5 Rewards and Performance Management
2.3.6. Training and Development
2.3.7 Employee Development
2.3.8 Career Planning
2.3.9 Development and Career Planning

3.1 Research Design
3.2. Data Collection
3.3. Data Analysis

4.1 Demographic Statistics
4.2. Employee performance management practices
4.2.1 Performance Agreements / Objectives
4.2.2. Performance Review
4.2.3 Employee feedback
4.2.4. Training and Development
4.2.5 Career Planning
4.2.6 Rewards

5.1. Summary of Findings
5.2 Conclusion
5.3 Recommendations
5.4. Limitations of the study
5.5 Suggestions for Further Research





I would like to express my sincere gratitude to the many people who in one way or another contributed to the development of this project. I am grateful to the Almighty God for the strength and having seen me through the course. I am forever indebted to my Project Supervisor Florence Muindi for guidance, devoted contribution, advice, inspiration and shaping my understanding of the subject matter. Special thanks go to the University of Nairobi panelist to whom I presented the project for their contribution and valuable suggestions.

Special thanks go to the management of Kenya Sugar Board, especially to Mr Peter Lukoye the HR Manager, and Lydia Mwatete, the Training Officer for availing themselves for interviews at short notice.

I am also grateful to my family for standing by me throughout the challenge and supporting me to the very dear end. Special thanks to my friend and dear wife Jennifer Jepkorir for typing the document, and precious gifts Michael, Gabriel and Joshua. My brothers Timothy, Aggrey, David, Hassan and Sisters Jennifer, Mable, Violet, Linet, Pamela, Evelyn and Mary for encouragement throughout the course.

I am grateful to my dear friends Richard Koech, Nyaga, Kathrine and Eliud- Thank you very much for your assistance. I am grateful to my classmates and colleagues at work place for inspiration and motivation during the MBA program. May God bless you for all the assistance.

Finally, I wish to register my sincere appreciation and gratitude to my father Hudson Lugalia and mother Ketsia Dores. I will always be grateful for your noble support in bringing me up to be who I am today – God bless you abundantly.


To God be the Glory

To my father and mother for inspiration and shaping of my life

To my wife and children for the unwavering support


The study sought to establish employee performance management practices in Kenya Sugar Board in Nairobi. Chapter one focused on the importance of performance management, performance management, and employee performance management. Further more an overview of employee performance management practices was outlined.

Chapter two outlined an in depth definition of performance management as well as benefits of performance management to an organization. Employee performance management practices such as performance agreements / objectives, reviewing performance, rewards, training and development, employee development, career planning as well as development and career planning were described in detail.

Chapter three elaborated research methodology used in this study. Descriptive case study was used to establish employee performance management practices in Kenya Sugar Board in Nairobi. It was used because the research problem required detailed investigation of the Kenya Sugar Board. Primary source of data was used in this study. Three departments were involved in this study namely planning, Agriculture and Human Resource. Data was collected using an interview guide. Data collected was analyzed using content analysis technique.

The results of this study revealed that employee performance management practices are used to enhance the performance of individual employees and teams. This ultimately improves the overall organization performance by attaining key strategic goals. Equally, the findings indicated that employees were involved in setting and owning objectives. Additionally, appraisals were done once a year, with training and development being used to address needs assessment. From this study, it was observed that career planning was being used to manage employee expectations. Rewards were used to encourage effort and desired behaviour, although they were mainly monetary.


Figure 1: Performance Management Circle


Abbildung in dieser Leseprobe nicht enthalten


1.1 Background of the study

Most business organizations report the use of formal systems of performance management and appraisal. However, a number of them express considerable dissatisfaction with performance management. Raters, ratees, and administrators have all expressed dissatisfaction with their appraisal systems. There is the view that most effective performance management systems recognize that appraisal is not an end in itself, rather it is a critical component of a much broader set of human resource practices that are linked to business objectives, personal and organizational development and corporate strategy (Bernardin, 2007). Business organizations aim at achieving sustained competitive advantage over their rivals. This may be manifested in areas such as profitability, maximization of shareholders value, increase in sales volume, market share, creating trust, empowering employees, embracing change, building team work and being customer oriented. When business conditions appear to decline, top level managers often seek to remedy the situation by revitalizing the company, by instituting numerous change initiatives. One of the initiatives used is by creating a business wide performance management process with two or more components; performance appraisal, training and career development, alongside motivation.

An integrated approach is used to communicate behaviors needed for the business organization’s profitability. Performance management help organizations define clear performance goals and measures, conduct performance appraisals and provide on going performance feed back. It also helps link performance results to rewards and consequences, and providing employees with opportunities for career planning and development. Attention of employees is directed towards the most important tasks and behaviors. Employees are informed about what is valued and information provided whether employee’s behavior and results meet expectations of managers, colleagues, and customers. Performance management is essential for organizations as it can enhance employee motivation and productivity, it can support the achievement of the organization’s strategic goals and facilitate strategic planning and change (Jackson, 2009).

1.1.1. Performance Management

According to Michael Armstrong (2006), performance management is a systematic process of improving organizational performance by developing the performance of individuals and teams. Jackson (2009) defines performance management as a formal structured process used to measure, evaluate and influence employees job related attitudes, behaviours, and performance results. Performance management means getting better results by understanding and managing performance within an agreed frame work of planned goals, standards and competency requirements. Processes exist for establishing shared understanding about what is to be achieved in the short and long term. Performance management helps direct and motivate employees to maximize their efforts on behalf of the organization. It is owned and driven by line management. Beardwell (2007) views performance management as a control mechanism, and that reward management is managerial attempts to gain control over the efforts side of the wage / effort bargain which mirrors their unilateral control of the wage side.

Kandula (2006) observes that organization policies can if properly configured; provide a direct and economically significant contribution to a firm’s performance. An organization’s long term success in meeting its strategic objectives rests with its ability to manage employees’ performance and ensure that performance measures are consistent with the organization’s needs. Consequently, performance management has become more of a strategic issue for organizations than in the past. Effective performance management systems require employees and supervisors to work together to set performance expectations, review results, assess organizational and individual needs, and plan for the future. The most important concern in designing performance management system is, it fits with the origination’s strategic objectives.

1.1.2. Employee Performance Management

Performance management should be a shared process between managers, individuals and teams in which objectives are agreed and jointly reviewed, in which corporate, individual and team objectives are integrated. All should feel ownership of the process and share complete understanding of the system. It should clearly be linked to broad issues and establishing long term goals. To achieve these things, managers must ensure that the people or teams they manage know and understand what is expected of them, have the skills necessary to deliver on this expectations: are supported by the organization to develop the capacity to meet these expectations; are given feed back on performance and have the opportunity to discuss and contribute to individual and team objectives (Foot and Caroline, 2008).

Tools used in performance management include: performance and development reviews, leaning and development, coaching, objectives and performance standards, competences and competencies, pay, teams, 360 degrees feed back and performance problems solving Bevan and Thompson (1992) suggest that a view is emerging of performance management which centres on dialogue, shared understanding, agreement and mutual commitment, rather than rating for pay purposes. Organizations are increasing suggesting that workers take more ownership of performance management (Scott, 2006) and become more involved in collecting self assessment evidence through out the year.

1.1.3. Performance Management Practices

According to Jackson (2009), and Beadwell (2007), performance management involves a number of practices such as defining of goals and their measures, performance appraisal, providing feed back, performance based incentives, development, career planning, motivation, training and development. All these are geared towards getting better results by understanding and managing employee performance within the frame work of agreed goals.

The purpose of setting objectives/goals is to direct, monitor, motivate and audit individual performance they must fulfill: otherwise the process will result in opposite effects being secured. This encourages the selection of appropriate goals which are specific, attainable and owned by the individual. The process as a management tool is established on the basis that organizational objectives can be broken down and translated into individual goals, the attainment of which can be measured (Armstrong, 2008).

Performance appraisal is used to identify individual’s current level of jobs performance, employee strengths and weakness, to enable employee improve the performance, provide basis for rewarding employees in relation to their contributions to the organizational goals, to motivate individuals, identify potential performance, identify training and development needs as well as providing information on succession planning. Rewards are used to appreciate individuals or team’s desired behaviour or business result that support the organization’s goals and values. The rewards tend to be modest but are likely to include a public acknowledgement of some achievement. They include merit pay, incentive pay and earnings at risk (Jackson, 2009 and Nzuve, 1992).

Training refers to the process of imparting proficiency and knowledge relating to narrow areas of employment. Development refers to individual growth and self realization in a broad area. Training helps people adapt to a role behaviour that will be useful to an organization. A well designed career development programme will ensure needed talent is available. Working with individual employees will help them align their needs and aspirations with those of the organization, increasing the probability that the right people will be available to meet the organization’s changing staff requirements. It improves the organization’s ability to attract and retain high talent employment (Nzuve, 1992, 2007)

1.1.4. Kenya Sugar Board

The sugar sector is one of the significant contributors to the marketed production for Agricultural crops. It plays a critical socio- economic role among the sugar cane farming communities. The government aims at converting the sugar Industry into a vibrant commercial enterprise in line with the National Vision 2030. In this regard several sugar factories have been established, both private and public owned. Despite these investments, self sufficiency in sugar industry has remained illusive over the years as consumption continues to outstrip supply. There however exists potential for Kenya to become and retain self sufficiency in sugar production and also produce surplus for export (Kenya Sugar Board Strategic Plan, 2009 - 2014).

The Kenya sugar Board is a regulatory body of the Kenya sugar industry established in 1st of April 2002 under the sugar Act 2001, succeeding the defunct Kenya sugar authority. It is charged with the responsibility of regulating, developing and promoting the Kenya Sugar Industry. Development covers research, cane development, factory rehabilitation and infrastructure development. Regulation concerns ensuring optimum availability of sugar in the country, licensing of millers, licensing of importers and exporters, issuing of molasses permits, formulating and implementation of overall policies and plans for the development of the industry, facilitating the arbitrations of disputes among interested parties, promotion and encouraging the use of environment friendly technologies in the industry. The Board also oversees the formulation of standard provisions governing mutual rights and obligations of growers and millers. It monitors domestic market in order to identify and advise on any distortions in the sugar market, and facilitate equitable mechanism for the pricing of sugar cane and appropriation of proceeds from the disposal of by products of sugar production between growers and millers. In promoting the sugar industry, the Board acts as intermediary between the government and the industry, identifies potential for investment in the industry, market investment opportunities in the industry both locally and internationally in collaboration with industry institutions and government (Kenya Sugar Board Service Charter and Strategic Plan, 2009 – 2014)

It formulates and implements overall policies that provide a favourable environment for investment, as well as representing, promoting, articulating and lobbying for the interests of the industry in local, regional and international institutions, e.g. EAC, COMESA, ACP – EU among others. Kenya Sugar board is run by a board of directors, which consist of a non executive chairman elected by the board from among the grower representatives on the Board, seven representatives elected by the growers, three representatives elected by millers, the permanent secretary ministry of Agriculture, the permanent secretary Treasury, the Director of agriculture, and the Chief Executive of the Board. The board has a staff of over 93 employees, and over 40,000 employees in the wider sugar industry (Year of book statistics, 2007). The sugar industry supports over 6 Million Kenyans, and is a source of income for over 250,000 small scale farmers who account for over 85% of cane supply (Sugar Act, 2001).

1.2 Statement of the Problem

Due to cut throat competition, most business organizations have been forced to rethink employee performance management. In order to develop a sustained competitive advantage over rivals, business organizations have embarked on building the capacities of employees which cannot be replaced easily. Generally, employee performance management practices entail: performance agreements, rewards, training and development, and appraisal as a way of effecting changes in organizations with regard to improving performance. Armstrong (2006) views performance management system as the improvement of organization performance by developing individual employees and teams. Additionally, he sees performance management as a continuous and much wider, more comprehensive and more natural process of management that clarifies expectations, emphasizes the support role of managers, who are expected to act as coaches rather than judges and focused on the future.

Business organizations in the sugar industry in Kenya are sensitive to making losses and being heavily indebted. The Sugar Industry has faced formidable challenges ranging from the closure of some factories due to adverse trading environment, leading to massive unemployment and loan defaults. Yet other firms are under receivership for instance Muhoroni and Miwani. Punitive tax regime has also lead to uncompetitive pricing, indebtedness and cost inefficiency in the industry. Lack of strategic direction and mismanagement of some of the industry institutions has led to inability to meet set targets. Additionally, there has been weak out grower institutions, poor roads infrastructure, and poor cane transport system. There has been low priced sugar imports arising out of the EU reforms and Economic Partnership Agreements (EPAs) leading to incapacitation of the local industry as well as government bureaucracy (slow process of addressing sensitive matters pertaining to sugar industry).

Studies conducted in this area include: Kiboi (2006) focused on management perception of performance contracts in State Corporation. Tuitoek (2008) studied performance appraisal practices among mass media in Nairobi Lang’at (2006) evaluated factors that are necessary for the design of good performance contracts in state corporations. Obare (2006) focused on implementation of strategic plans in the public sector with reference to personnel Management of the Government of Kenya.

These studies have not considered employee performance management practices. It is important to conduct a study to determine employee performance management practices in Kenya Sugar Board. For any business organization to have a sustained competitive advantage, an effective performance management system needs to be put in place. Infusion of employee performance management practices is vital to improve performance.

1.3 Research Objective

The objective of this study was to establish employee performance management practices in Kenya sugar board.

1.4 Significance of the study

This study will be useful to Chief Executive Officers (CEOs) of State corporations. They will be able to use the information to evaluate and implement effective performance management practices. Heads of research functions will gain more knowledge in this area and therefore sensitize various stake holders in the industry.

This study will be useful to the government, especially the office of the Prime Minister charged with coordinating function of ministries. The information will be useful in assessing best performed state corporations with view to effecting performance based pay incentives.

This study will also be useful to State Corporations and employees of who will be able to analyze the feed back of appraisal, and undertake successful implementation of their goals/objectives.


2.1 Performance Management

Graham and Bennet (1998) define performance management as the integration of employee development with results based assessment. It involves performance appraisal, objective setting for individuals and departments, appropriate training programmes and performance related pay. Appraising of functional heads by their juniors, peers, employees in other departments, and customers are also incorporated in the system.

Torrington (2008) states that performance management is used to imply organizational targets, frameworks like balanced score card, measurements and metrics with individual measures derived from these. Houldsworth (2004) describes performance management as a harder performance ‘improvement’ approach compared with the soft developmental and motivational approaches to aligning the individual and the organization which she suggests equates to good management practice. While many appraisal systems are still in existence and continue to be updated, performance management systems are increasingly seen as the way to manage employee performance and have incorporated the appraisal / review process into this. Clark (2005) defines performance management as establishing a framework in which performance by human resources can be directed, monitored, motivated and refined, and that links in the cycle can be audited.

Performance management is the process that unites goal setting, performance appraisal and development into a single, common system whose aim is to ensure that the employee’s performance is supporting the company’s strategic aims. It explicitly measures the employees training, standards- setting, appraisal and feed back relative to how his or her performance should be and is contributing to achieving the company’s goal. Performance management is not an annual exercise. It is a daily or weekly interaction to ensure continuous improvement in the employee’s capacity and performance. It means ensuring that the employee has the training he or she needs to perform the job. Performance appraisal on the other hand is a year end event- the completion of the appraisal form. Performance management is a process that starts the year with performance planning and is integral to the way people are managed throughout the year (Dessler, 2008)

Armstrong (2006) defines performance management as a systematic process of improving organizational performance by developing the performance of individuals and teams. It means getting better results by understanding and managing performance within an agreed framework of planned goals, standards and competency requirements. Processes exists for establishing shared understanding about what is to be achieved and for managing and developing people in a way that increases the probability that it will be achieved in the short and in the long term. It focuses people on doing the right thing by clarifying their goals. It is owned and driven by the line management.

Performance management systems grew in popularity in 1980’s, due to the belief that facilitate rigorous specification of performance standards and measures, and increase the likelihood of attaining business goals at a time when organizations need to respond to the increasing competitive business condition. This was also a move from collectivism towards greater individualization of the employment relationship (Pennington and Edwards, 2000)

Jackson (2009) argues that performance management is a formal, structured process used to measure, evaluate, and influence employees, job related attitudes, behaviours and performance results. In essence, high performance organization whether public or private, must be keen in developing and deploying effective performance management systems, so that through such systems they can remain high performing and competitive organizations (National performance review for reinventing Government, 1997)

According to Armstrong (2006), performance management is a continuous and much wider, more comprehensive and more natural process of management that clarifies mutual expectations, emphasizes the support role of managers who are expected to act as coaches rather than judges and focused on the future. He defines performance management as a strategic and integrated approach to delivering sustained success to organizations by improving the performance of the people who work in them and by developing the capabilities of teams and individual contributors. Performance management is an integrated process of defining, assessing and reinforcing employee work behaviours and out comes. It includes practices and methods for goal setting, performance appraisal and reward system, which influence the performance of individual and work groups (Cummings and Worley, 2005). Wilson (2005) defines performance management as a systematic approach to improving individual and team performance in order to achieve organizational goals. It is a practice through which work is defined and achieved.

Performance management is about aligning individual objectives to organizational objectives and ensuring the individual upholds corporate core values. It provides for expectations to be defined and agreed in terms of role responsibilities and accountabilities (expected to do), skills (expected to have) and behaviours (expected to be). The aim is to develop the capacity of people to meet and exceed expectations and to achieve their full potential to the benefit of themselves and the organizations. It is also concerned with ensuring that the support and guidance people need to develop and improve are readily available (Beardwell, 2007)

Procurement executives Association (1999) defines performance management as: the use of performance measurement information to effect positive change in organization culture, systems and processes, by helping to set agreed- upon performance goals, allocating and prioritizing resources, informing managers to either confirm or change current policy or programme direction, to meet those goals, and sharing results of performance in pursuing those goals. Organizations which do not integrate into their management development programmes, tend to experience lower than expected performance improvements and higher dissatisfaction (Longenecker and Fink, 2001)

It must also be possible to anticipate needed changes in the strategic direction of the organization and have a methodology in place for effecting strategic change. Successful accomplishment of these two tasks represents the foundations of good performance management. In essence, performance management provides organizations with the opportunity to refine their development activities. Performance management programmes provide feed back based on specific, rather than generalizations and one based on specific objectives derived from the desired outcome of performance measurement results.

Sink (1991) suggests that performance measurement is a mystery, complex, frustrating, and difficult, challenging, important, abused and misused function. The level of performance a business attains is a function of the efficiency and effectiveness of the actions it undertakes, and thus performance measurement can be defined as the process of quantifying the efficiency and effectiveness of an action. Zairi (1994) identifies that performance measurement has been the systematic assignment of a number of activities. He further suggested that the function of measurement is to develop a method generating a class of information that will be useful in a wide variety of problems and situations.

Successful organizations seek to create an efficient and effective performance management system, to translate organizational vision into clear measurable outcomes that define success, and which are shared throughout the organization and with customers and stakeholders; provide a tool for assessing, managing, and improving the overall health and success of facility management system; continue to shift from prescriptive, audit- and compliance- based oversight to an on going, forward looking strategic partnership; include measures of quality, cost, speed, customer service and employee alignment, motivation and skills to provide an in depth, predictive performance management system; and replace existing assessment models with a consistent approach to performance management (adapted from Procurement Executives’ Association, 1999).


Excerpt out of 60 pages


Employee performance management practices in Kenya Sugar Board
University of Nairobi
Master of Business Administration-Human Resource Managent
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ISBN (eBook)
ISBN (Book)
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employee, kenya, sugar, board
Quote paper
Nebert Lugalia (Author), 2011, Employee performance management practices in Kenya Sugar Board, Munich, GRIN Verlag, https://www.grin.com/document/301546


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