INDIVIDUAL PERFORMANCE MANAGEMENT POLICY. For. Section 57 and Non-section 57 Senior Management of Ethekwini Municipality

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1 INDIVIDUAL PERFORMANCE MANAGEMENT POLICY For Section 57 and Non-section 57 Senior Management of Ethekwini Municipality Performance Monitoring and Evaluation (PME) Office of the City Manager

2 TABLE OF CONTENTS Contents Page 1. Introduction 3 2. Aims and Objectives 4 3. Legislative Requirement 5 4. Process Plan 7 5. Employment Contract 9 6. Performance Agreement The Performance Management System Evaluation Process The Evaluation Panels Performance Review Schedules Personal Development Plans Obligations of the Employer Performance Bonus Unacceptable Performance Dispute Resolutions Record Keeping General References 27

3 1. Introduction This document describes the process to be followed for individual performance management of senior managers including the Municipal Manager and managers reporting directly to the Municipal Manager at ethekwini Municipality. The framework outlines how Individual Performance Management is to be operated and managed from the planning stage through to the stages of performance review and reporting. Individual Performance Management is a strategic human resources process aimed at attaining multiple organizational objectives. It is a vital process of enhancing the contribution levels of individuals to be in line with, priorities, objectives, indicators and targets contained in the Municipality s Integrated Development Plan. This then serves as the catalyst for the continuous improvement of the performance of the ethekwini Municipality. The process requires that employees actively participate in identifying their own individual objectives which is derived from the operational and strategic plans of the municipality. Individual Performance Management therefore empowers employees to use their skills and knowledge to perform their jobs in a productive manner. It also provides management with an acceptable and agreed upon process to review and assess the individual s performance to ensure that the organisation achieves its goals. 2. Aims and Objectives In order to ensure that the municipality meets its organisational performance indicators and standards, it is appropriate to introduce a Performance Management Framework for the senior managers within the municipality.

4 Once organisational objectives have been set, it is possible to cascade these down to the relevant departments, and individuals. In turn, the individuals and departments, in achieving their targets and standards will contribute towards the municipality achieving its objectives as stated in the Integrated Development Plan and as operationalised in its Service Delivery and Budget Implementation Plan. The Department of Provincial and Local Government published the Local Government: Municipal Performance Regulations (the regulations) for the Municipal Manager and managers reporting directly to the municipal manager in In light of these regulations, this document will serve as a guideline to direct, monitor and improve performance of senior managers employed in terms of the performance based contracts. It will ensure that resources are utilized economically, efficiently and effectively, so that value for money may be obtained and the stated objectives of a municipality attained. The regulations outline key aspects of both the employment contract and the performance agreement which the municipal manager and the managers directly accountable to the municipal manager must conclude. Of vital importance in the process of individual performance management is the link between the organisation s objectives and the objectives set for its management team. The diagram below illustrates this link.

5 STRATEGIC OBJECTIVES OF THE MUNICIPALITY (IDP) The Strategic Business Plan and Organisational Performance Management Departmental Objectives and Departmental Performance Management (SDBIP) Individual Objectives and Individual Performance Management 3. Legislative Requirement Stemming from Section 152 of the South African Constitution, a municipal council must strive within its capacity to achieve the objectives set out in the constitution. In addition, a municipal council must annually review its overall performance in achieving the objectives To address this, the White Paper on Local Government (1998) (White Paper), introduced performance management systems nationally to local government, as a tool to ensure developmental local governance.

6 This is dealt with further in Chapters 5 and 6 of The Local Government Municipal Systems Act, 2000 (Act No. 32 of 2000), which requires local government to develop an organisational performance framework. In addition, section 57 of the Municipal Systems Act, details the employment and performance requirements for Municipal Managers and managers directly accountable to the Municipal Manager, with respect to the employment contract, the performance agreements as well as the performance objectives and targets which must set, met and evaluated. To enhance section 57 of the Systems Act, the Local Government: Municipal Performance Regulations for Municipal Managers and managers directly accountable to Municipal Managers were issued in The regulations address matters related to Section 57 managers (viz, the Municipal Manager and managers directly accountable to the Municipal Manager), as follows: Employment contracts of municipal managers and managers reporting directly to Municipal managers. Performance agreements of the relevant officials setting out key performance indicators and core competency requirements and Job description of the municipal manager with an indication of the main accountabilities and inherent job requirements. Further, the Code of Conduct of Municipal Staff members, contained in Schedule 2 of the Systems Act, requires staff members of a municipality to participate in an overall performance management system for the municipality, as well as the staff member s individual performance appraisal and reward system, in order to maximize the ability of the municipality as a whole to achieve its objectives and improve the quality of life of its residents.

7 These and other legislative requirements have spearheaded the need to develop a framework for effective performance management of the management and staff of the municipality. To establish a standard system of performance, many of the principles for Section 57 managers have been cascaded to all other Senior Management in order to synergise the processes and deliverables between the various levels of management. This framework aims to fully comply with the Local Government: Municipal Performance Regulations for Municipal Managers and managers directly accountable to Municipal Managers, 2006, and therefore specific sections and paragraphs of the regulations are referenced. 4. Process Plan The process plan demonstrates how the individual performance management process will be managed from the planning stage to the stages of performance review and reporting. It provides details of an effective and efficient annual implementation process. The Process Plan reflects the fit of Individual Performance into the other critical processes of the Municipality Once the process plan and framework has been reviewed and approved by all stakeholders, implementation will be effective immediately thereafter. An annual review process will take place during subsequent years.

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9 The first stage in the performance process is the employment contract which is detailed in the chapter two of the municipal performance regulations. 5. Employment Contract The employment contract sets out specific elements which must be adhered to during the employment period of the employee, which includes the performance management process. Section 4, Paragraph 4 of the regulations states the following: - Establishment of contract: -Employment in terms of the employment contract must be subject to compliance with the following terms and conditions- (a) the signing of a separate performance agreement within ninety (90) calendar days after assumption of duty and annually within one month after the commencement of the new financial year; (d) disclosure of financial interests on the date of assumption of duty and on an annual basis within one month after the commencement of the financial year, which shall be lodged with the municipal council. The performance agreement is attached as Annexure A-1 for Section 57 employees and Annexure A-2 for Non-section 57 employees and further details are provided in Section 6 hereunder. The Disclosure of interest is dealt with separately. Paragraph 5: The employment contract and performance agreement must be submitted to the MEC responsible for local government in the relevant province as well as the national minister responsible for local government within fourteen (14) days after concluding the employment contract and performance agreement. NB: Only Performance Agreements for Section 57 employees are required to be submitted to the MEC and National Minister.

10 6. Performance Agreements Chapter 3 of the regulations, state the following: Paragraph 23. Purpose of Performance Agreements is to: 1) comply with the provisions of Section 57(1)(b), (4A), (4B)and(5) of the Systems Act as well as the employment contract entered into between the parties; 2) specify objectives and targets defined and agreed with the employee and to communicate to the employee the employer's expectations of the employee's performance and accountabilities in alignment with the Integrated Development Plan, Service Delivery and Budget Implementation Plan (SDBIP) and the Budget of the municipality; 3) specify accountabilities as set out in a performance plan, which forms an annexure to the performance agreement; 4) monitor and measure performance against set targeted outputs; 5) use the performance agreement as the basis for assessing whether the employee has met the performance expectations applicable to his or her job; 6) in the event of outstanding performance, to appropriately reward the employee; and 7) give effect to the employer's commitment to a performance-orientated relationship with its employee in attaining equitable and improved service delivery. Paragraph 24. Commencement and duration 1) The performance agreement must be entered into for each financial year of the municipality, or part thereof. 2) The parties must review the provisions of this agreement during June each year and must conclude a new performance agreement that replaces the previous agreement at least once a year within one month after the commencement of the new financial year. 3) The agreement will terminate on the termination of the employee's contract of employment for any reason. 4) If at any time during the validity of the agreement the work environment alters to the extent that the contents of the agreement are no longer appropriate, the

11 contents must by mutual agreement between the parties, immediately be revised. One of the components of the Performance Agreements is the Annual Individual Performance Plan. The Performance Plan sets out the Objectives, key performance indicators, weightings and the targets set, in order to achieve the operational and strategic objectives of the organisation. Paragraph 25 - Performance objectives 1) The performance plan sets out: a. The performance objectives and targets that must be met by the employee; and b. the time frames within which those performance objectives and targets must be met. 2) The performance objectives and targets reflected in the performance plan are set by the employer in consultation with the employee and based on the Integrated Development Plan, Service Delivery and Budget Implementation Plan (SDBIP) and the Budget of the municipality, and shall include key objectives; key performance indicators; target dates and weightings. 3) The key objectives describe the main tasks that need to be done. The key performance indicators provide the details of the evidence that must be provided to show that a key objective has been achieved. The target dates describe the timeframe in which the work must be achieved. The weightings show the relative importance of the key objectives to each other. 4) The employee's performance will, in addition, be measured in terms of contributions to the goals and strategies set out in the employer's Integrated Development Plan. An example of an Individual Performance plan is attached as Annexure B. 7. The Performance Management System Paragraph 26 - Performance management system 1) The employee agrees to participate in the performance management system that the employer adopts or introduces for the municipality.

12 2) The employee accepts that the purpose of the performance management system will be to provide a comprehensive system with specific performance standards to assist the employer, management and municipal staff to perform to the standards required. 3) The employer will consult the employee about the specific performance standards that will be included in the performance management system as applicable to the employee. 4) The employee undertakes to actively focus towards the promotion and implementation of the Key Performance Areas (KPAs) (including special projects relevant to the employee's responsibilities) within the local government framework. 5) (This is only relevant to Section 57 employees) The criteria upon which the performance of the employee must be assessed consist of two components, both of which must be contained in the performance agreement. The employee must be assessed against both components, with a weighting of 80: 20 allocated to the Key Performance Areas (KPAs) and the Core Competency Requirements (CCRs), respectively. Each area of assessment will be weighted and will contribute a specific part to the total score. KPAs covering the main areas of work will account for 80 % and CCRs will account for 20 % of the final assessment. (For all other senior management, the criteria for the performance of the employee, is assessed at 100%, using the Key Performance Areas and Indicators in the employee s individual performance plan) 6) The employee's assessment will be based on his or her performance in terms of the outputs/outcomes (performance indicators) identified as per the performance plan which are linked to the KPA's. For Section 57 employees this constitutes 80 % of the overall assessment result as per the weightings agreed to between the employer and employee. For all other Senior Managers, this constitutes 100% of the overall assessment.

13 Key Performance Areas (KPA s) for Municipal Managers Weighting Basic Service Delivery Municipal Institutional Development and Transformation Local Economic Development (LED) Municipal Financial Viability and Management Good Governance and Public Participation Total 100% Paragraph (7) is excluded as the KPA s are set above. (8) The CCRs will make up the other 20% of the Section 57 employee's assessment score. CCRs that are deemed to be most critical for the employee's specific job should be selected from the list below as agreed to between the employer and the employee and must be considered with due regard to the proficiency level agreed to. NB: The CCR assessment is only applicable to section 57 employees. Non-section 57 senior managers will be assessed on a 100% of the Key Performance Areas. CORE COMPETENCY REQUIREMENTS FOR SECTION 57 EMPLOYEES (CCR) Core Managerial and Occupational (Indicate Weight Competencies choice) Core Managerial Competencies: Strategic Capability and Leadership Programme and Project Management Financial Management Change Management Knowledge Management Service Delivery Innovation Problem Solving and Analysis People Management and Empowerment Compulsory Compulsory

14 Client Orientation and Customer Focus Communication Honesty and Integrity Core Occupational Competencies: Competence in Self Management compulsory Interpretation of and implementation within the legislative and national policy frameworks Knowledge of developmental local government Knowledge of performance Management and Reporting Knowledge of global and South African specific political, social and economic contexts Competence in policy conceptualization, analysis and implementation Knowledge of more than one functional municipal field / discipline Skills in Mediation Skills in Governance Competence as required by other national line sector departments Exceptional and dynamic creativity to improve the functioning of the municipality Total percentage - 100% 8. Evaluation Process In evaluating the performance of the individual the following is regulated for Section 57 managers and is also applicable to all other levels of senior management except for the assessment of the CCRs. Paragraph 27 - Evaluating performance (1) The performance plan sets out (a) the standards and procedures for evaluating the employee's performance; (b) the intervals for the evaluation of the employee's performance.

15 (2) Despite the establishment of agreed intervals for evaluation, the employer may in addition review the employee's performance at any stage while the employment contract remains in force. (3) Personal growth and development needs identified during any performance review discussion must be documented in a personal development plan (see Annexure C) as well as the actions agreed to and implementation must take place within set time frames. (4) The annual performance appraisal must involve: a) Assessment of the achievement of results as outlined in the performance plan: i. Each KPA should be assessed according to the extent to which the specified standards or performance indicators have been met and with due regard to ad hoc tasks that had to be performed under the KPA. ii. An indicative rating on the five-point scale should be provided for each KPA. iii. The applicable assessment rating calculator must then be used to add the scores and calculate a final K PA score. (c) (b) Assessment of the CCRs (Applicable to Section 57 employees only) i. Each CCR should be assessed according to the extent to which the specified standards have been met. ii. An indicative rating on the five-point scale should be provided for each CCR. iii. This rating should be multiplied by the weighting given to each CCR during the contracting process, to provide a score. iv. The applicable assessment-rating calculator must then be used to add the scores and calculate a final CCR score. Overall rating i) An overall rating is calculated by using the applicable assessment-rating calculator. Such overall rating represents the outcome of the performance appraisal. ii) The assessment of the performance of the employee will be based on the following rating scale for KPA s and CCR s:

16 Level Terminology Description Outstanding performance Performance significantly above expectations Fully effective Performance not fully effective Unacceptable performance Performance far exceeds the standard expected of an employee at this level. The appraisal indicates that the Employee has achieved above fully effective results against all performance criteria and indicators as specified in the PA and Performance plan and maintained this in all areas of responsibility throughout the year. Performance is significantly higher than the standard expected in the job. The appraisal indicates that the Employee has achieved above fully effective results against more than half of the performance criteria and indicators and fully achieved all others throughout the year. Performance fully meets the standards expected in all areas of the job. The appraisal indicates that the Employee has fully achieved effective results against all significant performance criteria and indicators as specified in the PA and Performance Plan. Performance is below the standard required for the job in key areas. Performance meets some of the standards expected for the job. The review/assessment indicates that the employee has achieved below fully effective results against more than half the key performance criteria and indicators as specified in the PA and Performance Plan. Performance does not meet the standard expected for the job. The review/assessment indicates that the employee has achieved below fully effective results against almost all of the performance criteria and indicators as specified in the PA and Performance Plan. The employee has failed to demonstrate the commitment or ability to bring performance up to the level expected in the job despite management efforts to encourage improvement. Rating Performance Ratings An indicative rating on the five-point scale should be provided for each KPA and the rating calculator must then be used to add the scores and calculate a final performance level score. Calculating the final score (Applicable to Section 57 employees only):

17 1. Each KPA rating x weighting % = score for that KPA 2. Each CCR rating x weighting % = score for that CCR 3. Add all KPA scores then x 80% = a 4. Add all CCR scores then x 20% = b 5. (a) + (b) = FINAL SCORE Weightings in KPA s add up to 100, for final score this converts to 80%: Weightings in CCR add up to 100, for final score this converts to 20% Out of a five point scale, 3 is the standard and, therefore, equates to 100% 9. The Evaluation Panels (d) For purposes of evaluating the annual performance of the municipal manager, an evaluation panel constituted of the following persons must be established i. Executive Mayor or Mayor; ii. Chairperson of the performance audit committee or the audit committee in the absence of a performance audit committee; iii. Member of the mayoral or executive committee or in respect of a plenary type municipality, another member of council; iv. Mayor and/or municipal manager from another municipality; and v. Member of a ward committee as nominated by the Executive Mayor or Mayor. (e) For purposes of evaluating the annual performance of managers directly accountable to the municipal managers, an evaluation panel constituted of the following persons must be established i. Municipal Manager; ii. Chairperson of the performance audit committee or the audit committee the absence of a performance audit committee; iii. Member of the mayoral or executive committee or in respect of a plenary type municipality, another member of council; and iv. Municipal manager from another municipality.

18 v. The manager responsible for human resources of the municipality must provide secretariat services to the evaluation panels referred to in subregulations (d) and (e). (f) For purposes of evaluating the annual performance of Heads, an evaluation panel constituted of the following persons must be established i. The Deputy City Manager of the cluster ii. The Deputy City Manager appointed by the City Manager (g) For purposes of evaluating the annual performance of Deputy Heads and below, an evaluation panel constituted of the following persons must be established i. The Deputy City Manager of the cluster ii. The Head of the unit iii. The Deputy Head if deemed necessary (in case of senior managers) 10. Performance Review Schedules Paragraph 28. Schedule for performance reviews / assessments (1) The performance of the employee in relation to the employee s Performance Agreement must be reviewed on the following dates. 2 nd & 4 th quarter reviews must be recorded while 1 st & 3 rd quarter reviews may be verbal if performance is satisfactory: Quarterly Reviews Quarter Period Month of Nature of review review First quarter July - September October Verbal Second quarter October December January Recorded Third quarter January-March April Verbal Fourth quater April - June July Recorded

19 Annual Performance Assessment after year end Employees Period Date of assessmentanytime between Nature of assessment Non-section 57 July - June Jul - Sept Recorded Section 57 July - June Oct - Nov Recorded (2) The employer must keep a record of the mid-year and fourth quarter reviews as well as annual assessment meetings. (3) Performance feedback must be based on the employer's assessment of the employee's performance. (4) The employer will be entitled to review and make reasonable changes to the provisions of the performance plan from time to time for operational reasons on agreement between both parties. (5) The employer may amend the provisions of the performance plan whenever the performance management system is adopted, implemented and/or amended as the case may be on agreement between both parties. 11. Personal Development Plans The Municipality is committed to (a) the continuous training and development of its employees to achieve its vision, mission and strategic objectives and empower employees; and (b) managing training and development within the ambit of relevant national policies and legislation To ensure the necessary linkage with performance management, the municipality s Performance Management and Development System provides for the Personal Development of employees to be included in their annual Performance Agreements. Such an approach will ensure the alignment of individual performance objectives to the municipality s strategic objectives, and that training and development needs are also identified during the performance management and appraisal process

20 Paragraph 29 of the regulations states on Development Requirements states that: A personal development plan (PDP) for addressing developmental gaps must form part of the performance agreement. Refer to Annexure C for details on PDP. Development entails increasing the capacity of employees to perform. During the processes of monitoring and review, deficiencies in performance that become evident should be addressed. Personal growth and developmental needs identified and plans to action them must be documented in a personal development plan and implementation must take place within set time frames. 12. Obligations of the Employer Paragraph 30 of the regulations provide details on the Obligations of the employer The Employer must (1) create an enabling environment to facilitate effective performance by the employee; (2) provide access to skills development and capacity building opportunities; (3) work collaboratively with the employee to solve problems and generate solutions to common problems that may impact on the performance of the employee; (4) on the request of the employee delegate such powers reasonably required by the employee to enable him or her to meet the performance objectives and targets established in terms of the agreement; and (5) make available to the employee such resources as the employee may reasonably require from time to time to assist him or her to meet the performance objectives and targets established in terms of the agreement. Consultation Paragraph 31 states that

21 (1) The employer agrees to consult the employee timeously where the exercising of the powers will have, amongst others, - (a) a direct effect on the performance of any of the employee's functions; (b) commit the employee to implement or to give effect to a decision made by the employer; and (c) a substantial financial effect on the employer. (2) The employer agrees to inform the employee of the outcome of any decisions taken pursuant to the exercise of powers contemplated in sub-regulation (1) as soon as is practicable to enable the employee to take any necessary action without delay. 13. Performance Bonus Note that the framework as regulated for Section 57 employees has been adopted for all other Non-section 57 senior management as follows: A performance bonus is a financial award granted to a member according to Individual Performance Management Regulations of It is granted in recognition of sustained performance that is significantly above expectations and is rated as such in terms of the rating scale. Section 8 of the regulations state that a performance bonus, based on affordability, may be paid to the employee, after 1. the annual report for the financial year under review has been tabled and adopted by the municipal council; 2. an evaluation of performance in accordance with the provisions of Regulation 23; and 3. the approval of such evaluation by the municipal council as a reward for outstanding performance. The allocation and payment of the annual performance bonuses is determined by the City Manager, on behalf of the Council.

22 14. Unacceptable Performance Paragraph 32 also states that: (3) In the case of unacceptable performance, the employer shall - (a) provide systematic remedial or developmental support to assist the employee to improve his or her performance; and (b) after appropriate performance counseling and having provided the necessary guidance and/or support and reasonable time for improvement in performance, and performance does not improve, the employer may consider steps to terminate the contract of employment of the employee on grounds of unfitness or incapacity to carry out his or her duties. 15. Dispute Resolution Paragraph 33 of the regulations indicate that: (1) Any disputes about the nature of the employee's performance agreement, whether it relates to key responsibilities, priorities, methods of assessment and/ or salary increment in the agreement, must be mediated by - (a) In the case of the municipal manager, the MEC for local government in the province within thirty (30) days of receipt of a formal dispute from the employee, or any other person designated by the M E C ; and (b) In the case of managers directly accountable to the municipal manager, the executive mayor or mayor within thirty (30) days of receipt of a formal dispute from the employee; whose decision shall be final and binding on both parties. (2) Any disputes about the outcome of the employee's performance evaluation, must be mediated by (a) province within thirty (30) days of receipt of a formal dispute from the employee, or any other person designated by the M E C ; and

23 (b) In the case of managers directly accountable to the municipal manager, a member of the municipal council, provided that such member was not part of the evaluation panel provided for in sub-regulation 27(4)(e), within thirty (30) days of receipt of a formal dispute from the employee; whose decision shall be final and binding on both parties. 16. Record Keeping The municipality will maintain records of performance related proceedings manually until the implementation of the electronic platform. Records of performance agreements, plans, 2 nd quarter review and annual assessments will be maintained at the Performance Management Unit in order to: Track changes in the performance agreements (revised targets, time frames, if any); Use as reference material should disputes arise; and Meet the statutory reporting requirements to different stakeholders in terms of section 34(3) of the Municipal Performance Regulations and the MFMA, Section 53(3) (b). 17. General Paragraph 34 of the regulations state that: 1) The contents of the performance agreement of Section 57b employees must be made available to the public by the employer in accordance with the Municipal Finance Management Act, 2003 and Section 46 of the Act. 2) Nothing in this agreement diminishes the obligations, duties or accountabilities of the employee in terms of his or her employment contract, or the effects of existing or new regulations, circulars, policies, directives or other instruments. 3) The performance assessment results of the municipal manager must be submitted to the M E C responsible for local government in the relevant province as well as

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