THE use of Performance Contracts has been acclaimed as an effective and promising means of improving the performance of public enterprises as well as Government departments. Essentially, 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. They include a variety of incentive-based mechanisms for controlling public agencies—controlling the outcome rather than the process. The success of Performance Contracts in such diverse countries as France, Pakistan, South Korea, Malaysia, India, and Kenya has sparked a great deal of interest in this policy around the world.A large number of Governments and international organisations are currently implementing policies using this method to improve the performance of public enterprises in their countries. Performance Contracts represent a state-of-the-art tool for improving public sector performance. They are now considered an essential tool for enhancing good governance and accountability for results in the public sector. However, performance contracting has not worked well among the academic staff at basic and higher education levels. Critics of the contracts argue that it is intimidating to teachers and dons. Teachers in primary and secondary schools argue that they cannot sign performance contracts when they are still handling classes way beyond the standard student- teacher ratio.It appears the main fear among the teaching staff is unfavourable appraisal especially when they feel that standard conditions are not provided. Here are some of the benefits of performance contracting;1.Weakness Identification: Well-designed performance feedback measures can help people identify their specific weaknesses. Knowing exactly where they have trouble with a particular task can help pinpoint areas that need improvement.2.Strength Identification: Feedback measures can also help workers identify areas of strength. A worker may be unaware that co-workers and supervisors highly appreciate their skills. Letting a worker know that their problem-solving skills or math abilities are above average can lead the employee to work on those areas even more and push her to achieve even loftier goals.3. Fair Measurement: Any performance feedback measurement should be as fair as possible. All criteria should apply to each member who completes a set of tasks. Use of a rubric or set of written standards can be an ideal way to determine how to measure a person’s performance. Fair assessment shields staff from subjective and emotional judgments by supervisors.4. Promotional Opportunities: One of the most common uses of performance feedback is to help identify candidates for promotion. An employee who has consistently earned high marks for completion of tasks steadily and accurately should be considered for promotion. Keeping written records of performance measurements can aid this process.With the above in mind, performance contracting can work well both for the academic staff and employers if it is objectively implemented.