Performance Management as a Leadership and Management Tool

Address by Prof S S Sangweni
Chairperson : Public Service Commission At
The 2nd Senior Management Service (SMS) Conference
ort Elizabeth
15 to 17 September 2003

INTRODUCTION

Many Commonwealth countries have made determined efforts over the past two decades to introduce reforms in their Public Administration Systems. As measures for administrative re-engineering or re-tooling, these reforms have been aimed at improving the performance of the public sector, especially the civil service, as a means to accelerate good governance and overall national development. The one particular aspect of this effort has been the attempt to address the issue of improving performance, with a view to enhancing service delivery to the satisfaction of the recipients, the tax payers. As a result the issue of performance management, encompassing the policies, values, strategies, structures, systems, processes and competencies to be applied in order to maximize the contribution of units, individuals and teams towards the achievement of organizational and national goals, has been pushed to the top of the public sector reform agenda in many countries during this period.

With the advent of a democratic South Africa in 1994, our South African public administration has also followed the same route in effecting reforms to improve government performance and service delivery. The need to improve service delivery was underpinned by the Government’ s acceptance of the challenge that delivery of public services to the citizens of South Africa and access to decent public services was no longer a privilege to be enjoyed by a few, but it was also the rightful expectation of all citizens, especially those previously disadvantaged. As stated in the White Paper on Transforming Service Delivery (1997) a transformed public service will be judged by one criterion above all: its effectiveness in delivering services that meet the needs of all.

The need for an effective system to manage and monitor the performance of managers within the context of a public service in transformation is self-evident. Managers have the most crucial role to play with regard to the achievement of institutional objectives. The effective monitoring of their performance and competency levels should therefore be accorded a very high priority. It is also by the very nature of their responsibilities that it is imperative to hold managers accountable for the achievement of predetermined objectives and goals. This is even more important in the case of heads or chief executives of institutions who have a vital leadership role in translating transformational goals and principles into meaningful and achievable strategies. Heads of department have the responsibility for the execution of agreed business plans. The effective monitoring of their performance should also provide valuable information on institutional successes or failures and draw attention to areas where urgent intervention is required.

The aim of this paper is to provide an overview of performance management as a leadership and management tool for senior managers. This will be achieved by sharing experiences on the implementation of the framework for the evaluation of heads of department in our new transforming public service. Lessons learnt from this process so far will be discussed and some conclusions drawn on the value of performance management as a leadership and a management tool.

DEFINING PERFORMANCE MANAGEMENT

In defining performance management it is important to first look at performance appraisal, which is part of performance management. According to Grobler (2002:260) performance appraisal is the ongoing process of evaluating and managing both the behavior and outcomes in the workplace. Organizations use various terms to describe this process. Performance review, annual appraisal, performance evaluation, employee evaluation and merit evaluation are some of the terms used.

Although many writers and consultants use the term performance management as a substitution for the traditional appraisal system, performance management is a broader term than performance appraisal. It became popular in the 1980s as total quality management (TQM) programmes emphasized using all the management tools, including performance appraisal to ensure achievement of performance goals. Performance management is the systematic process by which an agency involves its employees, as individuals and members of a group, in improving organizational effectiveness in the accomplishment of the agency’s mission and goals. It is therefore a comprehensive approach to performance that includes planning work and setting expectations, continually monitoring performance, developing the capacity to perform, periodically rating performance in a holistic fashion and rewarding good performance. Performance management involves tools such as reward systems, job design, and leadership training.

SOUTH AFRICAN PERFORMANCE MANAGEMENT AN OVERVIEW

Despite enthusiasm regarding performance management by various organizations, a comprehensive survey of nine leading South African organizations undertaken by the University of Stellenbosch Business School recently revealed a rather bleak picture of the way employees performance is managed and rewarded in South Africa. According to Joubert and Noah (2000) major problems that were identified during the survey included : the existence of a rather negative working culture; changes in corporate strategy did not result in corresponding behavior changes; and there was generally insufficient line management support for performance management. Regarding periodicity and formal performance reviews, the following became apparent: lack of follow-up of performance reviews; over emphasis on the appraisal aspect at the expense of development; inadequate performance information and objectivity.

This situation is not different in the Public Service, particularly in the performance management of senior managers. A study conducted by the Public Service Commission (PSC) on the management of performance agreements of senior managers in 2002 revealed that a number of senior managers had not signed performance agreements and that performance reviews are not conducted regularly as required. The study found that 12% of the respondents were not informed by their departments how the system of performance agreements worked in practice. This raises serious concerns, particularly on the implementation of performance management at senior management level.

LINKING INDIVIDUAL PERFORMANCE TO ORGANISATIONAL PERFORMANCE

Modern practice in performance management has moved towards linking performance appraisal with the achievement of predetermined institutional objectives. Performance management in such cases becomes a systematic process through which institutions involve their employees as individuals or as members of a group in improving organizational effectiveness and in the accomplishment of institutional mission and goals. As indicated in the PSC’s Report (2002) on the management of Senior Managers’ Performance Agreements there is a definite need for an effective system to manage and monitor the performance of managers within the context of a public service in transformation. Such a system must enable government to assess the extent to which managers have succeeded in achieving the objectives they have been assigned.

Realizing the need to link objectives with the performance appraisal of senior managers the Minister for Public Service and Administration introduced a system of performance agreements in 1998 for senior managers in the public service, including heads of department (HoDs). This was very much influenced by the Malaysian model. The management of the system below the level of HoDs provided for constant feedback on performance between supervisors and their staff. However there was no systematic and coherent process in place through which the performance of heads of department could be assessed.

Ministries were not provided with assistance to manage the evaluation process in a meaningful way and in many instances Departments do not appear to have had the necessary capacity to deal with performance management. Many HoDs also indicated that they did not receive systematic and comprehensive feedback on the performance of their senior managers. In addition, there was no systematic way in which Government received feedback on the achievement of its priorities.

FRAMEWORK FOR THE EVALUATION OF HEADS OF DEPARTMENT

Given the problems experienced with the evaluation of HoDs’ performance, and the strategic role of HoDs in achieving organizational effectiveness and government objectives, the PSC was requested (2000) by Cabinet to develop an appropriate evaluation framework to assist executing authorities.

In the development of the framework, the PSC conducted research to determine how the evaluation of HoDs is dealt with in the public services of Australia, New Zealand, Canada, Singapore and the United Kingdom. Valuable lessons were drawn from the experiences of these countries and have informed the approach to the evaluation of HoDs in South Africa.

Emanating from these lessons as well as the inputs from the executing authorities (EAs) and the HoDs, a formal evaluation framework was developed and approved by Cabinet. The framework proposed uniform but flexible structures and processes according to which the performance of HoDs at the national and the provincial administration departments can be evaluated by EAs. It was designed to, ensure a holistic and objective evaluation of performance by the top senior leadership of the public service.

The following principles underpinned the PSC’s approach in crafting the emerging framework for the HoDs performance evaluation:-

An effective performance agreement system involving the Executing Authorities (EAs) and the HoDs should be the basis of the evaluation process particularly given the fact that one of the objectives of implementing the performance agreements is to ensure alignment of the performance objectives of senior managers with the strategic objectives of the department.
Whilst primarily aimed at the evaluation of the individual HoD, the evaluation process should facilitate assessment of institutional effectiveness. HoDs have the responsibility to ensure that their departments achieve what is expected of them and are accountable for the achievement of departmental outputs.

Participants in the evaluation process should wherever practicable involve independent role-players as well as peers of the HoD. EAs should, however, remain responsible for final decisions on the outcome of the evaluation.
The evaluation process should be premised on a comprehensive and credible procedural framework in order to ensure its integrity and consistency.
The evaluation framework should provide an appropriately calibrated mechanism to indicate the level of performance, identify areas of strength and weakness as well as developmental needs, and facilitate decisions on the granting of salary increases and cash bonuses to the HoDs.
The constitution of evaluation panels should be flexible to respond to the uniqueness of departments or sectors.
An integrated approach should be followed, aligned to planning and MTEF cycles.

The framework has been implemented for two financial years, namely, 2000/2001 and 2001/2002. As a first step the framework was made mandatory for the evaluation of heads of national departments. Notwithstanding this, seven out of the nine provinces (except the Western Cape and KwaZulu/Natal Provinces) decided to implement the framework immediately. The PSC has played a pivotal role in the evaluation of HoDs. As an independent role player, the PSC’s involvement is to ensure that the evaluation process is fair and that the same norms and standards are applied equitably during the evaluation process.

LESSONS LEARNT DURING IMPLEMENTATION

The practice of HoD evaluation in the South African public service is a new concept and has brought mixed feelings of excitement and uncertainties to those involved in the process. Initial reaction indicated the value of the exercise in providing feedback on the levels of performance of HoDs and in utilizing the uniform standards in evaluating them. The lessons learnt are not only of assistance in improving the evaluation of HoDs but should also contribute in assisting senior managers generally in using performance management as a leadership and management tool to achieve organizational effectiveness. The key lessons flow from the following aspects.

Use of evaluation panels

The framework for the evaluation of HoDs provides for the use of a panel system to assist with the evaluation. The panels are chaired by the PSC to ensure objectivity and consistency. The use of the panels is intended to provide objective advice to EAs on the performance of their HoDs. EAs, however, make the final decision on the outcome of the evaluation. Panel members ideally should have a background on the core functions of the department as well as the performance of the HoD.

Evaluation panels appointed for the evaluation of HoDs both nationally and provincially have comprised of Ministers (MECs in the case of provinces), other HoDs, external stakeholders familiar with the work of the department and in some instances members of the relevant portfolio committees. The involvement of Ministers and MECs on the evaluation panels have provided invaluable contribution emanating from their political insight and by providing feedback on the achievement of intersectoral objectives. There is no doubt that collaboration and interaction of departments within the cabinet clusters is becoming a critical dimension of modern leadership in public service delivery.

The use of panels is an international good practice as we found recently during a study tour to Canada and New Zealand. Panels comprising different stakeholders like central agencies, peers, the Public Service Commission and the Center for Canadian Development (equivalent to SAMDI), in the case of Canada, are also used in the evaluation of HoDs.
Although the use of Ministers and MECs as panel members is regarded as invaluable, it should be noted that their heavy schedules create problems in convening the evaluation sessions on dates suitable for all panel members.

Sources of information used for evaluation

In terms of the framework the following information for the relevant financial year is normally used in the evaluation of each HoD:-

The performance agreement.
The department’s business and strategic plan
The budget and expenditure reports
The department’s annual report incorporating the
Auditor-General’s report.
A verification statement completed by the executing authority and the HoD, detailing the achievement of targets and outcomes provided for in the performance agreement.

The key problems experienced during the evaluation process can be attributed to the quality of documentation submitted for the purpose. Documents submitted have not always conformed to the requirements of the framework. Problems were specifically encountered with regard to the quality of performance agreements and verification statements. The verification statement is expected to provide a concise account of achievements by an HoD against the contents of his/her performance agreement and it constitutes the most important evidence to be used by the evaluation panel members in deciding on the level of performance.

The regulatory framework in the Public Service emphasizes the integration of planning processes with performance management. As such the importance of aligning individual performance objectives of senior managers with the departmental strategic plans is undeniable. This does not only ensure consistent monitoring of individual performance but also ensures evaluation of organizational achievements over a given period. Notwithstanding this requirement, there were performance agreements that did not seem based on the strategic plans of their departments. In some cases there was no synergy between the key performance areas articulated in the performance agreements and the key achievements outlined in annual reports.

Annual reports do not always discuss the achievements by departments in sufficient detail. This made it difficult to link the departmental achievements to the key individual achievements of the HoDs. There appears to be a gap between the reporting requirements prescribed by National Treasury and the manner in which departments comply with these requirements. Instead of reporting on the achievement of key departmental objectives, departments tend to report on their activities.

Another problem experienced with regard to the performance agreements of the HoDs has been around the achievement of key result areas. In most cases the performance criteria has tended to emphasize outputs rather than outcomes. The performance criteria used have in the majority of cases been limited to target dates and have seldom provided qualitative criteria for the measurement of performance. Planning employee’s performance includes establishing the elements and standards of their performance. These should be measurable, understandable, verifiable, equitable and achievable.

Evaluation periods and Performance reviews

In view of the fact that evaluation of HoDs is aligned to the planning and the Medium Term Expenditure Framework cycles, the framework provided flexibility on the number of years to be covered by each evaluation. As a result nine EAs decided to combine evaluations for 2000/1 with those of 2001/2.

Whilst this decision was in line with the provisions of the framework, the lesson learnt was that this is not a sound practice for several reasons. The principle of regular evaluation and performance feedback is ignored by this approach. Agreeing on an evaluation period that spans more than one financial year creates practical difficulties particularly when EAs change portfolios or resign and then a new EA has to review performance of more than one financial year. The task of panel members also becomes difficult if they have to review performance of more than one financial year. One of the key principles underpinning the effective performance management is that performance management processes shall be developmental and allow for effective response to consistent inadequate performance. In cases where the evaluation period spans more than one financial year, it means non-performance will not be dealt with timeously. This will definitely have a negative impact on the effectiveness of the organization.

Signing of Performance Agreements

A number of HoDs both nationally and provincially were not evaluated for a variety of reasons. Some of the HoDs had not signed performance agreements with their EAs. Chapter 4 of the Public Service Regulations, 2001 requires that the performance of all members of the SMS (including the HoDs) be managed through a performance agreement, which should be linked to the department’s strategic plan. It further requires that the performance agreement defines key responsibilities and priorities to be achieved by the SMS member and encourages improved communication. It also requires the supervisor to assess the work of the member of the SMS.

It is self evident that, as in the case of those HoDs who were not evaluated, that without a performance agreement, no communication with regard to the achievement of objectives takes place. Performance management is about having everyone succeed and improve. In order for that to happen, the manager and the employee have to work together in a communication process to identify barriers to success and to build plans to overcome those barriers. In the case of HoDs and other senior managers this communication and process is imperative to ensure that the whole department achieves what it is expected to achieve. The US Department of Commerce Guide on performance management (1999) states that, of all the ingredients needed for successful performance management, effective communication is probably the most important. Internal communication helps ensure accomplishment of organizational goals and builds confidence in the minds of employees if the results are favorable. External communication is important in strengthening partnerships with the community and eliciting favorable support from stakeholders. It is clear therefore that non-compliance with signing of performance agreements denies heads of department the opportunity to continually monitor their progress on the achievement of departmental objectives. This will invariably impact negatively on the outcomes that the government expects to achieve.

CRITICAL ISSUES TO CONSIDER

Performance evaluation should not be seen as an isolated activity that only takes place at the end of the financial year, but should be viewed within the broader context of performance management.

Major lessons drawn from the evaluation of HoDs over the two financial periods (2001/2002 and 2002/2003) clearly indicate the following:

In all organizations, whatever the nature of the work, a manager achieves results through the performance of other people. Recognition of their abilities and efforts is a positive step in motivating them to perform well. The efficiency of staff, their commitment to the aims of the organization and the skills and attitudes they bring to achieve the quality of service offered are fostered by good human relations. Research shows that the `image at the top’ has a more profound impact on job attitudes than any other single factor in the working setting. Intellectual strategies alone will not motivate people (John Naisbitt and Patricia Aburdene). Leaders must have people’s hearts to inspire the hard work required to realize a vision.

There is no doubt, that the human resource is the organization’s most valuable asset and if managed and motivated effectively, employees will make a key contribution towards the achievement of overall Public Sector objectives. As such, individual employees make or break the best-laid down organizational plans and thus performance management can ensure that employees serve major public service goals rather than subvert them.

Successful management of people is influenced by the philosophy of top management and their attitudes, which affect their relationships with staff, and the problems that affect them. Since the formulation of human resource policies emanates from the top of the organization, it is justified to argue that the implementation of human resource practices and procedures should be based on viable underlying philosophies of managerial behavior and employee relationships. Such philosophies should embrace, amongst others, the recognition of people’s needs and expectations at work, respect for the individual, justice in treatment and equitable reward systems and opportunities for personal development and career progression.

These are a concoction of processes which forge forward looking performance management systems underpinned by a clear and precise objective setting to enhance everyday management activities that encourage learning and development in order to overcome obstacles and evaluate results. But the crucial issue is not only about the development of these philosophies, rather the challenge is how can leadership effectively gather information, prepare the organization, communicate its objectives, motivate its staff to achieve objectives and above all, execute these factors successfully.

Performance management therefore has emerged as a key fundamental and comprehensive tool to developing and managing the public sector. As a means of getting better results from the organization, teams and individuals, performance management facilitates an integrated system of human resource management within an agreed framework of planned goals, objectives and standards.

Visionary performance management establishes a process of shared understanding about what the organization intends to achieve, how the people should be managed and developed in a manner, which increases the probability that both short and long-term objectives of the organization can be attained. The fundamental usefulness of performance management is the facilitation of communication and reinforcement of organizational strategies, culture and standards hence this creates a marriage of individual with corporate objectives. In this context Michael Armstrong and Helen Murlis (1994), writing about reward management, argue that performance management establishes a culture in which managers, individuals and groups take responsibility for the continuous improvement of business processes and of their own skills competencies and contributions.

It is indeed evident that performance management is concerned with the interrelated processes of work, management, and personal development and at the bottom end performance reward. This approach provides a powerful integrating force, which ensures that these processes are linked. Therefore, performance management should be regarded as a series of managerial activities that focus on input, processing, intervention and the measurement of the eventual output and outcome.

The evaluation of HoDs and other senior managers should not be seen as a once off activity at the end of a financial year, but should be seen within the broader context of performance management. This is one major lesson learnt in the Canadian and the New Zealand study tours where it was established that performance management of senior executives is underpinned by a continuous monitoring and evaluation of the achievement of outputs on a monthly or quarterly basis. Heads of department should therefore ensure that their performance agreements and those of other senior managers are concluded early enough to enable communication of responsibilities and objectives and continuous monitoring of performance against these. A large number of non-compliance with regard to the signing of performance agreements as revealed in the management of performance agreement study conducted by the PSC and during the HoD evaluation, is a matter of concern. An effective implementation of performance management will assist HoDs in communicating their vision, mission and objectives but more so in motivating staff to realize the vision.

CONCLUSION

The importance of performance management as a leadership and management tool is undeniable. Performance management is important for providing accountability to the taxpayer for the use of public funds as well as for demonstrating better and more effective public services. The success of performance management therefore, lies in the effective implementation from the top. Senior managers need to play an active role in ensuring that national policy frameworks on performance management are implemented in order to yield the required results. The public service will continue to see performance appraisal as punitive and necessary evil if it is not seen within the broader context of performance management. Senior managers need to begin to walk the talk and lead by example particularly in implementing initiatives, which are geared at improving public service performance.

BIBLIOGRAPHY

Armstrong, M and Murlis, H (1994) Reward Management, Institute of Personnel and Development, London, UK

Glanz, Barbara A. (1993) The creative communicator, Mc Graw-Hill

Grobler, PA et al (2002) Human Resource Management in South Africa 2nd ed, Thomson Learning, South Africa.

Joubert Danie and Noah Gord Blueprint for Performance Management: A key to a better life for all, People Dynamics 18, No 2 (February 2000): pp 16-20

Mupazviriho, P (2002) Understanding Performance Management in the Public Service, 24th AAPAM Annual Round Table Conference

Public Service Commission (2002) Report on the Management of Senior Managers’ performance agreements

Public Service Commission (2002) Report on the implementation of the framework for the evaluation of HoDs