AN EVALUATION OF PERFORMANCE MANAGEMENT IN THE PUBLIC SERVICE

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1 AN EVALUATION OF PERFORMANCE MANAGEMENT IN THE PUBLIC SERVICE By MOSITADI BERTHA LETSOALO Submitted in fulfillment of the requirement for MASTERS DEGREE in HUMAN RESOURCE DEVELOPMENT AND TRAINING in the FACULTY OF HUMAN RESOURCE MANAGEMENT at the UNIVERSITY OF JOHANNESBURG Supervisor: Dr Mark Bussin September 2007

2 ii STATEMENT I certify that the dissertation submitted by me for the Masters Degree in Human Resource Development and Training at the University of Johannesburg, is my independent work and has not been submitted by me for a degree at another faculty or university.. Mositadi Bertha Letsoalo September 2007

3 iii ACKNOWLEDGEMENT The successful completion of this study depended on the great effort and assistance of many people who I wish to acknowledge. I wish to acknowledge the following people who contributed significantly to this study: To my supervisor Dr. Mark Bussin for his wisdom, intellectual guidance, patience and encouragement throughout the course of this research To Professor Ntwampe for his support and significant contribution to this study To Anneli of UJ Statkon, for making the data more meaningful To my mother and sisters for their unfailing support To Grace Moagi for her assistance To my family and friends for their understanding and patience To my colleagues for their significant contribution and participation in this research To God my Creator, for His inspiration and grace during this study.

4 iv DEDICATION This work is dedicated to my son Tumelo Letsoalo and my late father Gerald Diapo Letsoalo ( ) who always believed in me.

5 v ABSTRACT AN EVALUATION OF PERFORMANCE MANAGEMENT IN THE PUBLIC SERVICE by Mositadi Bertha Letsoalo SUPERVISOR : Dr Mark Bussin DEPARTMENT : Department of Human Resource Management University of Johannesburg DEGREE : M Phil DATE : September 2007 The aim of the study The aim of this study is to evaluate performance management in the public service particularly within the Gauteng Department of Health. The researcher also intends to discover the attitude of employees towards performance management systems. A triangulation approach involving qualitative and quantitative analysis was adopted to ensure the validity of the constructs. Literature review Through literature review, focus group interviews and questionnaires, the understanding of whether employees have been trained on the Performance Management and Development Systems and know the purpose of performance management, is established. It is also hoped that the findings of this study will be interesting and suggest future ideas of inquiry. A review of literature outlined the major components / elements of performance management which are significant to every organisation s service delivery.

6 vi The empirical study The study was split into two phases; namely: a qualitative and quantitative phase. A qualitative study was undertaken to explore, identify and discover the perception and attitudes towards a Performance Management and Development System (Phase 1). The outcome of the qualitative phase formed the basis of the questionnaire (Phase 2). Data from two health care institutions, Natalspruit Hospital and Tambo Memorial Hospital, was analysed and subjected to scrupulous statistical analysis. Sense was made of the data resulting in answers to the research questions. The findings of this study highlighted the significance of performance management and provided insight into the perceptions and components of performance management. The way in which performance management is implemented at Natalspruit Hospital and Tambo Memorial Hospital is known. The attitude and perception of employees towards the Performance Management and Development System is also known. The results show that performance management is not effective and not properly implemented in the two hospitals. A strong correlation was found between the way a performance management system is implemented, and the attitude of employees towards it. The hospital to which the employees belong to, their positions and their salary level also play a role. This suggests that the more performance management is properly and fairly implemented, the greater the impact on service delivery as the employees will have a positive attitude towards it. Recommendations, contributions and limitations of the study Recommendations are made regarding the procedural and effective implementation of a performance management system in the public service. The main contribution of the study is that it is now known that performance management is not procedurally implemented in the public service irrespective of the availability of the policies regulating a performance management system. However, there is a need for continuous monitoring and evaluation of the policies and systems that are in place. Limitations of

7 vii the study were identified and outlined. The main limitation was the number of participants in the study which does not allow the findings of this study to be generalized. Recommendations for future research are made.

8 viii TABLE OF CONTENTS Statement...ii Acknowledgement iii Dedication.iv Abstract..v Table of contents viii CHAPTER 1: INTRODUCTION 1.1 Introduction Background to the problem The South African Performance Management Dilemma Gauteng Provincial Government Performance Management Policy Problem definition The research question and hypothesis The objective of the study Motivation for the study Proposed value of the study Summary..12 CHAPTER 2: LITERATURE REVIEW 2.1 Introduction The importance of performance management Definitions of terms Performance management The elements performance management The perspectives on performance management Performance management subsystems.30

9 ix 2.8 Performance management as an ongoing process Performance management as s core business process The link of performance management to HRM Performance measurement Performance appraisal Approaches of performance appraisal Techniques for performance appraisal The appraisal process Sources of error in performance appraisal Performance Related Pay Improving the performance of poor performers Summary..57 CHAPTER 3: RESEARCH METHODOLOGY 3.1 Introduction Research design Research approach Unit of analysis Population and sampling Data gathering method Research process Statistical analysis Summary..67 CHAPTER 4: DATA ANALYSIS AND RESULTS 4.1 Introduction Organisation profiles Analysis of research propositions Summary..92

10 x CHAPTER 5: INTERPRETATION 5.1 Introduction Interpretation Summary CHAPTER 6: CONCLUSION AND RECOMMENDATIONS 6.1 Introduction Motivation for the study, aims and contributions Recommendations Proposed value of the research Limitations of this study Future research Conclusion

11 xi FIGURES Figure 1 The cyclic nature of a performance management process..34 Figure 2 The appraisal process 53 Figure 3 Summary of the frequencies..71 TABLES Table 1 Spangenberg s integrated model of performance management...29 Table 2 Characteristics of performance management and its HR functions...38 Table 3 Characteristic 2: Name of the hospital..69 Table 4 Characteristic 3: Rank / position.70 Table 5 Characteristic 4: Salary level..70 Table 6 Summary table of the frequencies. 71 Table 7 The employees knowledge of PMD..73 Table 8 Training element...74 Table 9 PMD as an HR process Table 10 PMD is a line managers responsibility...77 Table 11 Performance management should be done continuously 78 Table 12 Communication element 80 Table 13 Attitude of employees towards PMD...80 Table 14 Feedback element..81 Table 15 Purpose of PMD.83 Table 16 Reward element.. 84 Table 17 Implementation of PMD.85 Table 18 A need for training..86 Table 19 Favouritism..87 Table 20 Attitude of employees towards PMD... 90

12 xii List of references Appendix 1 Focus group / Qualitative study questionnaire Appendix 2 Main study questionnaire

13 1.1 Introduction CHAPTER 1 A convergence of economic and political forces is driving a systematic search for greater effectiveness, efficiency and accountability in both public and private sector (Kates, Marconi & Mannle, 2001). Virtually, every organisation has a performance management system that is expected to accomplish a number of important objectives with respect to human capital management (Lawler III, 2003). Performance management has long been considered significant for strategies of business firms (Nilsson & Kald, 2002). Even the Minister of Public Service and Administration, Geraldine Fraser-Moleketi and the Minister of Provincial and Local Government, Minister Sydney Mofamadi promised to strengthen local government by introducing a project to consolidate and improve performance management of municipal staff in various municipalities (Sunday Times, 2006). In the health care sector, Gauteng MEC Dr. Gwen Ramokgopa, when addressing the guests at the clinical audit seminar on the 28/02/2002, indicated that 69% of the complaints received in the health care sector are related to customer care aspect. Therefore, there is a need for improved quality care as it is a priority of the government. The Premier of Gauteng, Mbazima Shilowa also introduced the service excellence awards to help enhance performance by identifying and celebrating the best winning team that inspire others to perform better (www.gpg.gov.za). This study is contextualised in the Gauteng Department of Health particularly at Natalspruit Hospital (NSH) and Tambo Memorial Hospital (TMH) as public service health care institutions within the Republic of South Africa. The decision to research on performance management in the above mentioned health care institutions was practically and theoretically informed by the Gauteng Department of Health Strategic Plan which is guided by documents such as the Public Service Regulation of 2001 and the White Paper on the Transformation of the Public Service. 1

14 There is a need for managing performance in the public service in a consultative, supportive and non-discriminatory manner in order to enhance organisational efficiency and effectiveness, accountability and the achievement of results (Public Service Regulations, 2001). The Gauteng Department of Health considers performance management to be very significant for motivating its employees (Gauteng Department of Health Annual Report, 2003/2004). Becoming a leader in human resource management and development for health, is one of the Gauteng Department of Health s strategic objectives. In achieving the objective, the health care institutions should implement performance management and development systems effectively (Gauteng Provincial Government Strategic Objectives, 2004). Performance management in both the public and private sectors has been under the spotlight because it is important for the productivity of any organisation. The Gauteng Department of Health, like any other department has developed its own performance management and development system for managing and measuring performance of its employees. Gauteng is one of nine provinces in South Africa, which has 28 hospitals and two of which were chosen by the researcher to be under study. The two health care institutions, Natalspruit Hospital and Tambo Memorial Hospital, are situated at Ekurhuleni which is one of the areas of the Gauteng province. The purpose of this chapter is to outline the research problem of this study. It includes the outline of Gauteng Department of Health Performance Management and Development policy and the aim of this research. This chapter concludes with the significance, motivation and value of this study. 2

15 1.2 Background to the problem In the last fifteen years or so, performance management has been seen to occupy the minds of academics in an ever-increasing number of fields (Folan & Browne, 2005). It is estimated that between 1994 and 1996, about 3615 articles on performance measurement were published alongside the statistic that, in 1996 books on the subject of performance management appeared at a rate of one every week in the United States of America alone ( Neely, 1999). Performance culture dominated public service in Europe, New Zealand and Australia during the 1990s. By 1996 an increasing emphasis on performance management across Europe was identified, emanating from a study conducted on seven European countries. It was observed that there have been attempts to redirect managerial efforts from conformity to performance which necessitated changes in the way organisations have worked (Hood, 1991; Flynn & Strehl, 1996). Service delivery imperatives and the quest for improved public service led to the requirement that Departments in the national and provincial spheres of government had to have new performance and development systems (PMDS) in place by the 1 st April Another factor that impacted on performance management in the Public Service was the development of proposals for a new pay progression system (PPS), which was intended to be based on performance (Unpublished Report on PMDS, 2001). A performance management system was officially introduced in the Gauteng Department of Health as in other departments in April 2001 after a failure of Rank and Leg Promotion policy, which was characterised by a high degree of inconsistency, favouritism and dishonesty. A task team was appointed for implementation. The team embarked on a train-the-trainer project whereby all Gauteng Provincial Government Departments forwarded individuals for training and those individuals were expected to train the employees in return. The team formulated performance management and development policy and conducted surveys during the process of implementation. 3

16 Even though the PMD system is currently in use, there are still problems experienced in the health care institutions with regard to performance management whereby it is viewed as a once-off thing rather than a continuous process. It is also, according to Stenzel and Stenzel (2003), a sure-fire setup for magnificent failure, a certain waste of valuable resources and demoralises personnel. There have been vocal and written complaints as well as dissatisfaction from the employees regarding the performance management and development system within the Gauteng Department of Health. This is reflected in the Labour Relations grievance statistics compiled monthly from various institutions to the Gauteng Department of Health s Head Office. These statistics escalate towards the end of the financial year when some employees are about to receive performance bonuses (Unpublished Departmental Labour Relations reports, 2005). A well designed and well implemented performance management and development system increases the probability of retaining, motivating and promoting productive people. It helps an organisation to better define its priorities and allocate people and resources accordingly. It can improve performance, motivation and the delivery of services (Hale, 2004; Weiss & Hartle, 1997). It is hoped that this study will shed light on making organisations to take seriously the importance of effective performance management. In its worst form, performance appraisal can have the effect of demotivating employees and generally lowering the morale throughout the organisation. In the case of unprofessionally implemented performance appraisal, the effects could indeed include feelings of low self-esteem, disgruntlement, unfair treatment and victimisation. However, if appropriately designed and carefully implemented, performance appraisal schemes offer massive potential at both the organisational and individual level (Hale & Whitlam, 1999). 4

17 1.2.1 South African Performance Management Dilemma Despite the determination regarding performance management by various companies, a survey of nine leading South African organisations undertaken by the University of Stellenbosh Business School revealed a bleak picture of the way employee performance is managed and rewarded in South Africa (Joubert & Noah, 2000). The major problems identified during the survey included among others, the existence of a negative working culture and insufficient line management support for performance management. Lack of follow-up on performance reviews, overemphasis on the appraisal aspect at the expense of development, inadequate performance information and inadequately maintained objectivity have also been raised with regard to periodic and formal performance reviews. The study undertaken by Renton (2000) among South African companies revealed that more than 60% of the organisations interviewed did not have a formal performance management system. Despite the problems identified in various studies, the existence of a good performance review system is of great value to the organisation, the department and the individual (Grobler, Warnich, Carrel, Elbert & Hatfield, 2001) Gauteng Provincial Government (GPG) s Performance Management and Development Policy This policy was developed after benchmarking in other countries. It is a system that integrates valuable work already done with international best practice (Gauteng Provincial Government Performance Management and Development Policy, 2001). Most of the performance management systems developed in companies are a collection of best practices that have been grafted onto various performance measurement frameworks and are found to work anywhere between very well to very badly (Folan & Browne, 2005). 5

18 The Purpose of the policy The purpose of this policy is to provide a uniform performance management and development system for the Gauteng Provincial Government (GPG). It is also intended to ensure that employees are equipped with the required skills, knowledge and competencies needed to meet the ever-changing roles and tasks within an organisation. The policy also aims to ensure that performance is managed on a continuous and consistent basis in order to ensure that objectives are met by reviewing past performance, assessing current performance, setting performance objectives, improving current performance and assisting in career planning (GPG Performance Management and Development Policy, 2001) Principles of Performance Management and Development Policy The policy on Performance Management and Development (PMD) shall be directly linked to the organisation s strategic plans in the sense that it provides for the translation of the strategic plans into focus areas. The policy allows for organisational objectives to be cascaded and aligned throughout the organisation. The management of performance shall be the responsibility of every supervisor in a non-discriminatory manner. Personal development is an enabler and an integral part of the performance management process. Performance assessment should be objective and consistent. 6

19 Training for managers and officials shall be a prerequisite for the implementation of the policy. Performance management shall not be used as a tool to unfairly favour or prejudice any staff member. Every official shall be responsible for his / her own performance. Each supervisor shall strive to promote productivity, whilst at the same time providing his/her staff with the opportunity to experience job satisfaction. The policy shall be driven by both the Unions and the Employer. Performance standards are communicated to all stakeholders. The purpose of GPG Performance Management and Development Policy is clear. The principles of the policy indicated above cover the key elements of performance management. Therefore, if this policy can be procedurally implemented, performance of the employees will be effectively managed which will lead to its mission of excellent service delivery. 1.3 Problem definition The world is filled with unresolved problems and unanswered questions. Everywhere we look, we see things that make us wonder, speculate and also to ask questions. With questions, we strike the first spark that ignites and creates a chain of reactions that trigger the research process (Leady & Armrod, 2001). There have been negative media news reports on the radio and television about poor service delivery on various health care institutions in the television and newspaper articles. These reports including the 7

20 newspaper vacant posts advertisement in various health care institutions was meant for recruitment of various health care professionals, including the retired nurses (Sunday Times, 2005) raises questions such as; what is the cause of the Department s high staff turnover rate; why is it failing to attract and retain staff; how desperate is the department for professional nurses in such a way that it recruits the retired nurses? The questions raised also include whether or not policies and systems in place favourable to employees. It is due to the above that the researcher decided to conduct research on the evaluation of performance management in the public service, focusing on the health care institutions. It can also be speculated that the performance management system that is currently in use contributes to the high staff turnover rate, affects and influences the general employees performance as well as the quality of the service delivery. The researcher argues that employees should be trained in order for them to understand the process of performance management. This might change their attitude towards a performance management and development system. If they are trained, even the supervisors may be able to implement it procedurally, so that they will be able to contribute effectively towards the attainment of the department s strategic objectives. 1.4 The research question and hypothesis The research question that the study will attempt to answer will be: Whether employees are satisfied with the way a performance management and development system is implemented in the Public Sector? The hypothesis of this study is that the employees attitude to performance management depends on the way performance management is implemented per hospital, position and salary level. The hypothesis statements about the problem outlined above which this study will attempt to clarify are: 8

21 The attitude and assumptions held by managers and employees that performance management is a Human Resource Department s responsibility. The fact that performance management and development evaluation is done once a year. There is favouritism in the way in which managers evaluate the employees performance. The performance management and development system currently in use is implemented uniformly within the Gauteng Department of Health. It will therefore be interesting to discover how the performance management and development system is implemented within the Gauteng Department of Health, i.e. if there are differences in the way performance management is implemented between the two health care institutions, whether or not employees have been trained about the system and also to find out if the employees are happy with the way their performance is managed. The research question referred to above will be addressed through analysis of both primary and secondary data as well as through the use of focus group interviews and questionnaires. 1.5 Objective of the study Having outlined the background to the problem of performance management and among others the principles of performance management, it remains imperative to set out the objectives of this study. The objective of the research is to evaluate the 9

22 performance management and development system in the public service particularly within the Gauteng Department of Health. The researcher intends to achieve this objective by establishing the way in which the performance management and development system is implemented as well as the attitude of employees towards the system. The Gauteng Department of Health, as an entity of the public service, strives for excellent service delivery. It has been unable to neither attract and retain its staff especially the health care professionals (Gauteng Department of Health Annual Report, 2003/2004), nor keep up the morale of its employees probably because of lack of performance management which is perceived by some employees as a punitive measure. It is also not applied uniformly nor on a continuous basis. The system currently in place makes employees demoralised, demotivated, and thus, affects and influences the general performance and quality of service delivery. Hence, the researcher aims to bring up the following: - Firstly, the need to revisit the existing approach to service delivery and performance management which is more often than not viewed by managers as a once-off event rather than a joint effort by managers and employees, as well as an ongoing business process. - Secondly, the fact that there is no sense of ownership and accountability on the part of the manager as well as the employee because most of the managers perceive performance management as the Human Resource Department process, which requires them to fill out some forms and do paperwork. This becomes a problem at the end of the term where you may find that employees are not properly evaluated for incentives. - Thirdly, the researcher seeks to make a comparison on the implementation of the performance management and development system between the two targeted 10

23 health care institutions, i.e., Natalspruit Hospital and Tambo Memorial Hospital. - Finally, the existing perception of performance management by most managers makes it ineffective and at the same time, employees end up not realizing their individual contribution to the organisation s objectives. It is due to lack of an effective performance management system that the researcher intends to evaluate the impact of performance management on service delivery within the public service. 1.6 Motivation for the study The high staff turnover rate and bad publicity about mismanagement of hospitals created an impression that there is something wrong with regard to health care service delivery particularly performance management of employees. There is a need to know whether or not employees performance is properly managed; whether employees and managers have been trained on the performance management and development system; whether a policy on performance management exists; and if there are differences in the way performance management is implemented within the two health care institutions of the same province. 1.7 Proposed value of the study This study will be of great significance as it will outline the vitality of effective performance management within any organisation and not only the public sector. It is significant to note that organisations that lack a performance culture and a reliable system of managing performance often find it difficult to reward excellent performers accordingly. It is also important for the managers to differentiate the excellent performers from the non performers and reward them accordingly. Kaplan & Norton (1996) and Viedge & Conidaris (2000) indicated that what gets measured gets done and 11

24 if you can t measure it you can t manage it. Therefore, managers should give themselves time to evaluate employees performance continuously. This will assist managers to identify employees with lack of skills to be trained, developed and to reward them accordingly. Employees do not always perform the way the organisation wants them to, and telling them the truth about their ineffective performance is difficult and therefore avoided (Schuler, 1981). This study will enlighten managers about the importance of taking responsibility of managing performance of their employees for the achievement of the organisation s objectives. Through literature review, focus group interview and questionnaires, the understanding of whether employees have been trained on a performance management and development system or know the purpose of performance management is established. It is also hoped that the findings of this study will be interesting and suggest future ideas of inquiry. 1.8 Summary This chapter has covered the background to the problem which includes the South African performance management dilemma and a brief outline of the Gauteng Provincial Government s Performance Management and Development policy. It also depicted the problem statement, the research question and hypothesis followed by the objective and the proposed value of the study. The understanding of whether or not the two healthcare institutions implement performance management similarly or differently will enhance the significance of this study. The next chapter provides literature review to ascertain the current knowledge of the subject and to advance the research question. 12

25 CHAPTER 2: LITERATURE REVIEW 2.1 Introduction The previous chapter outlined the basis and objectives of the study. This chapter deals with literature review pertaining to the performance management and development systems. The review of literature begins with the importance of performance management and then followed by the definition of the terms performance management and performance appraisal. The perspectives of performance management are outlined followed by the steps of performance management process, performance measurement and performance appraisal. 2.2 The importance of performance management Whether it is known as performance management, performance measurement or performance appraisal, all of them are of enhancing performance of both the organisation and the individual. The present body of knowledge is widely diverse and needs to be continually developed into a cohesive body in order to be more effective. The reason for this wide diversity in the performance management and measurement literature must be examined further. As a discipline, performance measurement can be seen to be growing in depth as it has been over the last fifteen years (Folan & Browne, 2005; Marr & Schuima, 2003). Performance management supports the overall business goals by linking the work of every individual employee and the manager to the overall mission of his or her work unit. Thus, all employees play a key role in the success of their organisation. The way in which employee s performance is managed does not only affect the individual employee and his/her work unit, but it also affects the performance of the entire organisation. When employees are clear about what is expected of them and have the necessary 13

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