18 June 2008
Report on the Payment of Performance Incentives to Heads of Department
without Annual Performance Evaluations Conducted
BACKGROUND
The advent of democratic rule in South Africa has required that a number of
transformative initiatives be undertaken in the public service. These
initiatives were aimed at ensuring that the public service becomes accountable
in the manner in which it uses public resources and delivers services to
society. In this regard, performance management and development became one of
the vehicles through which such accountability could be fostered.
The Public Service Commission (PSC) has, however, been concerned that the
payment of performance incentives is not always preceded by structured
performance appraisal processes as provided for in the Performance Management
Development System. Recent studies conducted by the PSC established that there
were incidents where performance incentives were paid to members of Senior
Management Service (SMS) without any Annual Performance Evaluations having been
conducted. This raised concerns about the extent to which such irregular
practices could be prevalent in the public service and their implications for
public administration particularly at Heads of Department (HoDs) level as these
would have far-reaching implications for departments and for efforts to build an
accountable and effective public service.
Accordingly, the PSC conducted an analysis of the payment of performance
incentives to Heads of Department in order to establish the extent to which this
irregular practice is prevalent in the public service.
KEY FINDINGS
The study found that the irregular practice of paying performance incentives
without conducting annual performance evaluations is not prevalent in the public
service and that the payment of performance incentives is generally preceded by
performance evaluations.
Regardless, the study also established that there were instances where some HoDs
received performance incentives without performance evaluations being conducted.
There were three (3) HoDs in KwaZulu-Natal who according to the public service’s
Personnel and Salary Administration System (PERSAL) had been paid such
performance incentives without being subjected to the performance evaluation
process. Overall, the total amount paid to three HoDs according to the PERSAL
information amounted to R75 323 during the 2004/05 financial year. Despite two
letters being sent by the PSC to the three provincial departments regarding this
matter, no response was forthcoming to confirm whether the incentives paid were
preceded by performance appraisals as required by public service prescripts.
According to policy prescripts, there are only two categories of performance
under which a Head of Department would qualify for a cash bonus, namely,
“performance significantly above expectations” and “outstanding performance”.
This is a key requirement for determining the award of a performance incentive.
However, in order to arrive at the stage where a decision needs to be made on
the category under which the HoD’s performance falls, there are other critical
requirements that should be met. The first of these is that the HoD must have
entered into a Performance Agreement (PA) with the Executing Authority. Without
such a PA, there is no basis for conducting a performance assessment. Secondly,
the HoD must have completed a full financial year in his/her post. Thirdly, a
performance assessment must have been conducted. All these requirements are
contained in the Framework for the Evaluation of the Heads of Department.
The performance incentives that were paid without conducting performance
assessments were not within the provisions of the applicable policy prescripts
on performance management. These payments, therefore, constitute wrongfully
granted remuneration. The Public Service Act, 1994, provides that wrongfully
granted remuneration shall be recovered from an affected employee by way of a
deduction from their salary.
RECOMMENDATIONS
The following recommendations are addressed at the three (3) non-compliant departments discussed in the report. However, it is hoped that the rest of the public service will also take note of the recommendations to ensure that they continue to apply accountable performance management and development practices.
CONCLUSION
The study found that the irregular practice of paying performance incentives
without conducting annual performance evaluations is not prevalent in the public
service and that the payment of performance incentives is generally preceded by
performance evaluations. Regardless, it is the responsibility of Executing
Authorities to ensure that their Heads of Department are evaluated, and of
Legislatures to hold the Executive accountable for the effective implementation
of the Performance and Development System. Where irregularities are identified,
these irregularities should be addressed. Although such irregularities may be
few, they can in the long term erode the gains achieved towards building a high
performing and accountability driven public service.
Report on the Audit into the Granting of Performance Rewards in the
Departments of Education and Social Development at both the National and
Provincial Levels
BACKGROUND
An audit conducted by the Public Service Commission during 2006 at the
request of the Standing Committee on Public Accounts into the granting of
performance rewards in the National Departments of Correctional Services, Home
Affairs and Labour, revealed startling levels of non-compliance with the
applicable prescripts. The Public Service Commission (PSC) was concerned that if
this is the example set by such national departments, the problem could be
endemic to the public service as a whole. As such, it has conducted a further
audit that seeks to bring to the fore shortcomings in the implementation of the
Performance Management and Development System (PMDS) in the Departments of
Education and Social Development at national and provincial levels with a view
to propose measures to improve the management of the system.
KEY FINDINGS
The key findings in both the Departments of Education and Social Development
at national level and in all the provinces as far as the management of
performance rewards is concerned over the financial years 2003/2004, 2004/2005
and 2005/2006, are as follows:
Performance agreements are not concluded by the majority of managers
A total of 54,6% (917 out of 1679) of Senior Management Service (SMS) members in
both the Departments of Education and Social Development have been performing
their duties without having concluded Performance Agreements (PAs), meaning that
they go about their duties without committing themselves to achieving the
objectives of their components and departments. The conclusion of PAs is
considered to be of paramount importance as the contents thereof are
intrinsically linked and geared towards achieving the service delivery
objectives as contained in the strategic management plans of departments. The
absence of PAs raises a question on which criteria employees are appraised
against in terms of their work performance.
Delays in concluding performance agreements
There appears to be no regard for the due date by which PAs should be
concluded. In terms of the SMS Handbook, all SMS members shall enter into PAs by
no later than 31 March annually. Only 38 out of the 762 PAs (5%) in both the
Departments of Education and Social Development were concluded before 31 March
of the three financial years audited as required in terms of the SMS Handbook.
The late conclusion of PAs is a transgression of the regulatory requirements.
Performance reviews and appraisals are not held
No mid-term performance reviews were conducted in the majority of departments
for all three financial years. On average 77% of performance appraisals were not
undertaken over the three years. In this regard, managers are denied feedback on
their performance and departments cannot identify poor performers and deal with
their deficiencies.
Performance rewards were in some instances granted by departments without
undertaking performance appraisals. These payments were thus not made on merit.
Furthermore, rewards were granted in some instances without the existence of PAs.
The basis on which the performance appraisals were undertaken in the absence of
PAs becomes questionable. In certain departments approval for the granting of
performance rewards was made by the Head of Department (HoD). Such approval is
contrary to the SMS Handbook which provides that the final decision on the
granting of performance rewards must be taken by the Executing Authority (EA)
personally, who shall act on the advice of a moderating committee. Certain
departments could not provide evidence of the approval by the EA for the
granting of performance rewards.
RECOMMENDATIONS
Some of the generic recommendations outlined in the report include:
CONCLUSION
This report has shown that the ineptness of the management of performance by
departments and non-compliance with the PM&D system which emerged from the
findings of the audit conducted at the request of SCOPA are serious problems in
the public service. The findings confirm that performance management is not
being given the necessary priority attention by departments. It is in the
interest of both the State as employer and the senior managers of the public
service that departments begin to accord performance management the due
attention it deserves. In this regard, the KRAs in PAs should be linked to the
KRAs as contained in the Strategic Management Plans of departments. Performance
appraisals should then be undertaken. Moderating committees must assess the
extent to which the KRAs have been achieved by the senior managers. When
departments place emphasis on the strict management of the PM&D system, senior
managers will commit themselves to delivering on the key service delivery
objectives of the departments.
The PSC will continue to monitor the performance of the South African public
service and through its reporting generate a broader discussion and debate in
the good governance and service delivery discourse. These and other reports can
be accessed on the PSC website www.psc.gov.za
. Acts of possible corruption can be reported to the National Anti-Corruption
Hotline - 0800 701 701.
Issued by the Public Service Commission
For enquiries, please contact
Humphrey Ramafoko
Director: Communication and Information Services
Tel: 012 352 1196
Cell: 082 782 1730
Email: ramafokoh@opsc.gov.za
Or
Kabelo Ledwaba
Deputy Director: External Communication
Tel: 012 352 1070
Cell: 079 879 2025
Email: kabelol@opsc.gov.za