Old Wine in New Bottle: An Investigation of the Actual Use of Performance Contracting in the Philippine Public Sector

This research explores the potential of performance contracting as a management tool in the context of a developing country by examining its actual use in one of the executive departments in the Philippines. Using the managerialism beliefs and performance contracting literature, I deduced the benefits as well as issues and challenges of applying this tool in the public sector. As a management tool, performance contracting enables the specification of responsibilities of employees for more accountability and the measurability of performance for monitoring and evaluation purposes. Yet, in order to fully maximize its potential, supervisors and supervisees need to develop a partnership culture, which promotes innovation and support rather than hierarchy and control. This shift entails that the organization should pay more attention to processes of performance contracting, develop a functional incentive scheme, promote high level of trust, and cultivate a compliance culture to formal rules of the game.