1 DEVELOPMENT OF A PERFORMANCE MANAGEMENT SYSTEM FOR THE SABC (PORT ELIZABETH) VUYO NYEMBEZI Submitted in partial fulfilment of the requirements for the degree of Magister in Business Administration at the Nelson Mandela Metropolitan University Business School Supervisor: Prof D.M. Berry November 2009
2 ii ACKNOWLEDGEMENTS It is with sincere appreciation that I thank the following persons for their contribution to my completion of this dissertation: 1. My family and friends for their support, encouragement and inspiration. 2. Professor D.M. Berry for his structured guidance, tolerance and readiness to share his knowledge and experience. 3. The entire SABC staff and management, especially the Eastern Cape team, for their willingness to partake in the study. 4. The library staff at the NMMU Bird Street for their understanding and patience.
3 iii ABSTRACT This study focused on exploring and finding the ideal performance management system suitable for the South African Broadcasting Corporation by establishing an understanding of employees experiences and perceptions of the previous and a proposed performance management systems and their value to SABC employees. This was done by eliciting how employees see, make sense of and interpret their everyday experiences of performance management systems, in order to develop a more suitable inclusive performance management system. A qualitative study was used to seek answers to the research questions. A focus group interview was selected for data collection. The data was analysed according to guidelines indicated and proposed by Creswell (1998: ). The researcher made use of convenience sampling to select 45 participants in 5 groups for the focus groups. One group consisted of managers/supervisors, and the other four groups were employees from four different business units. Participants were guaranteed confidentiality. Credibility, transferability, dependability and conformability were used as the main components in the model, to determine the truth-value of the study. Findings indicated that there was a fair understanding of the previous performance management system but there had been poor implementation of the system. The participants concurred that the previous performance
4 iv management systems in the organisations were not adding any value to their lives. They pointed out that there was no reward in place for high performers and no action taken for non-performers, and this impacted negatively on how implementation was perceived and experienced. The recommendations are that the revised performance management system should have a stronger emphasis on effective management, monitoring, feedback and reward. Furthermore, the system should close the current gaps of reward for high performance and correction of low performance. It was further concluded that for a performance management system to be effective, it should incorporate updated job descriptions, performance measures and standards, as well as evaluator training and guidelines for improvement, employee input, compensation and/or rewards.
5 v DECLARATION I declare that the research: Development of a performance management system for the SABC (Port Elizabeth) is my own work, that it has not been submitted for any degree or examination in any other university, and that all sources I have used or quoted have been indicated and acknowledged by complete references. Vuyo Nyembezi. DATE
6 vi TABLE OF CONTENTS Page Acknowledgement Abstract Declaration Table of Contents List of Figures ίί ίίί ν νί ҳίί CHAPTER 1 INTRODUCTION TO THE STUDY INTRODUCTION PROBLEM STATEMENT TERMINOLOGY SIGNIFICANCE OF THE RESEARCH RESEARCH OBJECTIVES Research Design Objectives Delimitation of Research OUTLINE OF THE STUDY 9
7 vii 1.7 ETHICAL CONSIDERATIONS CONCLUDING REMARKS 10 CHAPTER 2 UNDERSTANDING PERFORMANCE MANAGEMENT STRATEGIES FOR PERFORMANCE MANAGEMENT Introduction What is Performance Management? Why is Performance Management Essential? Performance Management System Approach The Balanced Score Card What is Performance Appraisal? The Purpose of Performance Appraisal º Performance Appraisal Self- Appraisal Management by Objectives Conducting Performance Appraisal PERFORMANCE MANAGEMENT BENEFITS PERFORMANCE MANAGEMENT CYCLE 26
8 viii 2.4 TRAINING IN PERFORMANCE MANAGEMENT PERFORMANCE INCENTIVES DEVELOPING A PERFORMANCE MANAGEMENT SYSTEM THEORETICAL MODEL FOR CONDUCTING A PERFORMANCE 31 MANAGEMENT SYSTEM Phase 1 Developing and Planning Performance Phase 2 Managing Performance Phase 3 Rewarding Performance Performance Measures CONCLUDING REMARKS 42 CHAPTER 3 RESEARCH METHODOLOGY RESEARCH METHODOLOGY Introduction The Research Paradigm Sampling Design Demarcation 49
9 ix Research Instrument and Data Collection Method Constructing a Questionnaire Conducting a Focus Group Selection and Recruitment of Participants The size of the Focus Group Ensuring Attendance in the Focus Groups The Role of a Moderator CONCLUDING REMARKS 52 CHAPTER 4 PRESENTATION OF THE RESEARCH FINDINGS INTRODUCTION DISCUSSION OF THE RESEARCH FINDINGS Understanding of the Performance Management System Experiences and Observation The Effectiveness of the Previous System The Process Transparency Attitude and Competency 60
10 x Manager/Supervisor and Employees Attitudes Manager/Supervisor Competency Components of the Expected System Conclusion on the Discussion SUMMARY OF THE FINDINGS 64 CHAPTER 5 CONCLUSION AND RECOMMENDATIONS INTRODUCTION DISCUSSION OF THE RESEARCH METHODOLOGY Summary of the Research Methodology Conclusion on the Discussion CONCLUSIONS ON THE FINDINGS Understanding of the Performance Management System Experiences and Observation The Effectiveness of the Previous System The Process Transparency Attitude and Competency Manager/Supervisor and Employees Attitudes 72
11 xi Manager/Supervisor Competency Components of the Expected System RECOMMENDATIONS Summary of the Recommendations Integrated Model for Conducting Performance Management CONCLUSIONS ON THE RESEARCH 79 BIBLIOGRAPHY 81 APPENDIX A STRUCTURED FOCUS GROUP QUESTIONS 92
12 xii LIST OF FIGURES FIGURE 2.1 : The Performance Management Cycle 26 FIGURE 2.2 : The Performance Management System Process Flow 32 FIGURE 2.3 : The Key Performance Value Drivers 34 FIGURE 2.4 : Performance Comparison 36 FIGURE 2.5 : The Performance Measures 39 FIGURE 5.1: The Performance Management System Phases 76 FIGURE 5.2: The Performance Management Process Flowchart 78
13 - 1 - CHAPTER 1 INTRODUCTION TO THE STUDY 1.1 INTRODUCTION Today more organisations are relying on employees for success and competitiveness, and consequently to find strategies for identifying, encouraging, measuring, evaluating, improving and rewarding employees performance at work. In this respect, performance management and appraisal systems have come to play an indispensable role in helping organisations to reach their goals of productivity (Stevers & Joyce, 2000:22). Human Resource Management (HRM) practices can be seen as signals of an organisation s intentions toward its employees, and are interpreted as such by individual employees (Rousseau & Greller, 1994:385). However, employees do not necessarily perceive such signals similarly or react to them in a similar manner. The impact of Human Resources (HR) practices on employees commitment and performance depends on employees perception and evaluation of these practices (Guest, 1999: 5). Perceptions and attitudes may mediate and moderate the relationship between HRM practices and employees performance-related behaviour. Variation may exist in employees perceptions of HRM practices even when, in objective terms, what is offered to different employees is very similar. Individual
14 - 2 - differences in perceptions and reactions to what the organisation has to offer may, for instance, follow from an employee s previous experience as well as his/her beliefs. Against the above background, it was important that research be conducted or existing research be expanded, on understanding employees experiences and perceptions of performance management and appraisal systems, in order to develop a comprehensive performance management system. The cognitive perceptions people have about performance management and appraisal systems are a key determinant of a system s long-term success or failure (DeNisi, 1996:360). If employees are not happy about the system, they are likely to be unwilling to take an active part in the process because they do not see any value in it, which in turn creates low morale and inevitably affects productivity. This study attempts to improve employees productivity by investigating their cognitive perceptions of the organisation s performance management system. 1.2 PROBLEM STATEMENT The process of measuring and subsequently actively managing organisational and employee performance in order to improve organisational effectiveness is currently seen as critical to the development and survival of organisations (Heinrich, 2002). It may be positively dangerous simply to copy schemes used in other organisations, and worse still to introduce a scheme simply because it is the managerial fashion (Rees & Porter, 2002:229). Employee perceptions and attitudes affect employee performance, which in turn affects organisational performance and productivity.
15 - 3 - The South African Broadcasting Corporation (SABC) has developed four performance management systems over the past eight years. Currently a new performance tool was developed, and was presented to the top management. It appears that staff and union councils are still doubtful and suspicious of the implementation of this new tool. This study seeks to find and understand descriptions of employees experiences and perceptions of the previous performance management system and its value to SABC employees in the SABC Port Elizabeth region. The objective is to identify performance standards as perceived by employees, and to develop an improved, relevant performance management system. The research problem in this case is defined as follows: How can failures in the implementation of the previous performance management system at the SABC be rectified by the introduction of a new system? The sub-problems that have arisen are: What performance management system model is suitable for the SABC employees? How can buy-in from the employees and union council be obtained when a new performance management system is introduced? Past studies have mostly focused their attention on appraisal ratings, scales and rater error training as a means of increasing the accuracy of performance evaluation. A closer look at the literature reveals that the influence of behavioural factors on the use
16 - 4 - of the performance management process has been underexposed in scientific and professional literature (Vagneur & Peiperl, 2000). A great deal of performance management research has focused on the technicalities of implementing a performance management system, rather than on behavioural issues (Martins, 2000).This indicates that there is a gap. Therefore, the focus of this study is centred on employees cognitions of the previous performance management system used by the SABC, to find how employees see, make sense of and interpret their everyday experiences with such a system, with the aim of developing a suitable improved performance management system. 1.3 TERMINOLOGY Performance management: is defined by Armstrong (2001:6) as a means of getting better results from a whole organisation by understanding and managing within an agreed framework, performance of planned goals, standards and competence requirements. Performance appraisal: (or evaluation) is a systematic process of measuring a person s performance in the job, based on predetermined performance criteria (Smit, 2004:2). Managers/supervisors: For the purposes of this study, managers/supervisors are defined as those individuals who are first-line function supervisors of employees. These individuals have a minimum of three employees reporting to them.
17 SIGNIFICANCE OF THE RESEARCH It appears that the SABC staff and union councils were still doubtful and suspicious of the implementation of the previous performance management system and the one being proposed by the Human Capital Services (HCS) [HR department] in SABC. Therefore, the aim of this study was to investigate the challenges around the previous performance management system at the SABC. Although the study was exploratory; it might contribute to identifying causes of resistance and stumbling blocks to the acceptance and implementation of the proposed performance management system. The challenges listed below were identified during various discussions with management and staff, and were investigated in order to contribute to an improved performance management system: Employees and union councils were not consulted when a new performance management system was developed. There was a lack of buy-in from the employees and union council when a new performance management system was introduced. There were two different performance management systems used at the SABC, one for middle to senior managers and the other for the rest of the employees. Middle and junior managers/supervisors did not understand either the previous or the proposed new system. Staff perceptions were that performance management systems are intended to punish employees.
18 - 6 - There were also additional sub-challenges: Management wanted to link the proposed performance management system to the existing annual bonus pay-out. The performance review process was not clearly explained. The reward system was not clearly explained. Therefore the study aimed at providing a better understanding of employees cognitive thought-processes, which could contribute to the tailoring of a suitable performance management system that would have buy-in from all stakeholders. 1.5 RESEARCH OBJECTIVES The primary objective of this study was to improve the effectiveness of the performance management system. This was done by exploring employees experiences and perceptions of the current performance management and appraisal system that was in place, and assessing its value to the workers in the SABC Port Elizabeth region. Performance standards as perceived by staff members were identified. In addition to the above-mentioned primary objective, the following objectives were pursued: - To present a group perspective of employees experiences and perceptions by means of focus group data-gathering methods; - To compare the findings with existing related literature; and - To present descriptions of participants experiences and perceptions of the previous performance management system.
19 - 7 - The ultimate objective of this study was to help the organisation in selecting the most appropriate and effective performance management methods and system. Although the study was exploratory, it is helpful in identifying causes of resistance and stumbling blocks for the implementation of the performance management system/s in the SABC Port Elizabeth region. To achieve the above-mentioned research objectives, a Qualitative research method was employed, and therefore the following research questions related to the themes performance management and appraisal system were explored in an open-ended fashion: - What experiences did the employees have with the previous performance management system? - What were employees understandings of a performance management system? - Were employees effectively prepared for the new performance management system/s? and - What were the challenges during the implementation of previous and proposed performance management system/s?
20 Research Design Objectives A Qualitative research approach was used to seek answers, using focus group interviews for data collection. The research took the form of applied research, and the findings were used to solve the research problem in a deductive way. The participants were selected using a systematic sampling and convenience sampling method so as to eliminate bias while using available employees. A literature review was conducted to achieve the research design objectives. The aim of the literature review was to identify the critical points of current knowledge on this research subject, with the goal of summarising current literature on the topic Delimitation of Research This study was confined to the employees of the SABC Port Elizabeth region. The researcher selected 45 participants in 5 groups for the focus groups. One group consisted of managers and supervisors and the other four groups consisted of employees from four different business units. This approach was used as an attempt to get as many different points of view as possible from the SABC Port Elizabeth region. Confidentiality was guaranteed. A private office was arranged for the focus group sessions. The participants were usually seated around a table to ensure maximum opportunity for eye contact with the researcher as well as with other participants.
21 OUTLINE OF THE STUDY The study is divided into five chapters: Chapter 1 outlines the scope of the study, comprising the contextual information, rationale for the study, the research problem, the research gaps, and the significance of the study. Chapter 2 presents a research literature review on performance management systems. Chapter 3 discusses the research methodology, which includes the research paradigm, sampling design and measuring instruments. Issues of data reliability and validity are also discussed in this chapter. Chapter 4 presents the empirical results, data analysis and therefore the interpretation and summarisation of the findings. Chapter 5 draws conclusions on the findings and makes recommendations to implement an improved performance management system.
22 ETHICAL CONSIDERATIONS Royse (1991: ) lists a few of the following ethical guidelines that were fully adhered to: - All subjects involved in the research were volunteers. - Sufficient information about the study was provided to ensure that risks and benefits were understood. - No volunteers were compensated for participation in the study. - Participants could have withdrawn at any time if they so wished. - All literature sources of information were acknowledged. - The researcher ensured freedom of opinions, respect and nondiscrimination. Permission was sought from management for the study to be undertaken, as well as from the focus group members themselves. The interviews were tape-recorded with the permission of the all the individuals. Trust was of major importance; access to SABC premises and documents needed to be negotiated, and permission needed to be granted before the study commenced. 1.8 CONCLUDING REMARKS In this chapter the aim of the study was introduced, and the research question and the sub-challenges were outlined. The terminologies were defined and the significance of the research was presented. The aim of this research was to help the organisation in selecting the most appropriate and effective performance management system that
23 performance management format studies and the related available theory, to assist in framing the current research. Creswell indicates (l998:10) that the decision on a theoretical perspective to frame the study, is taken based on the goal of the research and the strategy of enquiry. Literature was therefore used inductively in this study, and a comparison of literature to the findings of this study was carried out, and not vice versa.
24 CHAPTER 2 UNDERSTANDING PERFORMANCE MANAGEMENT 2.1 STRATEGIES FOR PERFORMANCE MANAGEMENT Introduction Creswell (1998:20) states that the literature section in a research study achieves several purposes: firstly, it shares with readers prior studies closely linked with the study being reported; secondly, it relates a study to the larger ongoing dialogue on the topic as well as filling in gaps and extending prior studies; and lastly it provides a framework for establishing the importance of the study and a benchmark for comparing the results of a study with other findings. Wright (2001) argues that people are an important resource, and like all resources they need to be managed properly so as to assist them to perform at their peak level. The success of an organisation does not depend on the resources at its disposal, but on how they are utilised. These resources need to be deployed, managed and controlled. According to Weinbach (2003:71), management is the realisation of organisational goals through such activities as planning, organising, leading and controlling organisational resources. Thus management has the responsibility to manage all these resources, including the human resources.
25 The management of each of these components plays an important role in the overall functioning of the organisation, and the management of the human component is vitally important. Swanepoel (2003:13) confirms this by saying: The employee s performance behavior at work and satisfaction levels has to be monitored and kept in line with the requirements of the organisation. Smither (1998:7) describes work performance as the record of outcomes produced on a specific job function, activity or behaviour during a specified time period What is Performance Management? Fletcher, as cited in Edmonstone (1996: 109), defines performance management as an approach to creating a shared vision of the purpose and aims of the organisation, helping each individual employee understand and recognize their part in contributing to them, and in so doing manage and enhance the performance of both the individual and the organisation. The two terms performance measurement and performance management are often used interchangeably. However, it could be argued that performance measurement is the act of measuring the performance, whereas performance management aims to react to the outcome measure, using it in order to manage the performance. This is more clearly defined by Lebas (1995: 23-25), who stated that Performance Measurement: includes measures based on key success factors, measures for detection of deviations, measures to track past achievements, measures to describe the status potential, measures of output, measures of input, etc. and Performance
26 Management: involves training, team work, dialogue, management style, attitudes, shared vision, employee involvement, multi-competence, incentives and rewards, etc. Swanepoel (2003:375) states that it is important to distinguish performance management from performance appraisal, as the former is a broader view of performance appraisal where rating is de-emphasised. Fletcher s definition, as cited in Edmonstone (1996: 109), differentiates performance management from performance appraisal. Performance appraisal comes into the picture when measuring individual performance, while performance management starts with the organisation s mission, vision and strategy until individual development plans are put in place. Baron and Armstrong (1998:38-39) emphasise the strategic and integrated nature of performance management, which in their view focuses on increasing the effectiveness of organizations by improving the performance of the people who work in them and by developing the capabilities of teams and individual contributors. Performance management is defined by Armstrong (2001:6) as a means of getting better results from a whole organisation by understanding and managing within an agreed framework, performance of planned goals, standards and competence requirements. Bacal (1999:87) defines performance management as an ongoing communication process, undertaken in partnership, between an employee and his or her immediate supervisor that involves establishing clear expectations and understanding about: - The essential job functions the employee is expected to do; - How the employee s job contributes to the goals of the organisation;
27 What doing the work well means in concrete terms; - How employee and supervisor will work together to sustain, improve, or build on existing employee performance; - How performance management will be measured, and - Identifying barriers to performance and removing them Why is Performance Management Essential? Performance management deals with the challenge organisations face in defining, measuring, and stimulating employee performance, with the ultimate goal of improving organisational performance. Performance management has come to signify more than a list of singular practices; rather, it is seen as an integrated process in which managers work with their employees to set expectations, measure and review results and reward performance, in order to improve employee performance, with the ultimate aim of positively affecting organisational success (Mondy et al., 2002). This same emphasis is found in the literature on strategic Human Resource Management (HRM) emphasising the importance of so-called high performance work systems (Appelbaum et al. 2000). According to Roberts (2001), performance management involves: the setting of corporate, departmental, team, and individual objectives (sometimes labelled policy deployment ; the cascading down of strategic objectives to a meaningful set of targets for every individual involved); the use of performance appraisal systems, appropriate reward strategies and schemes; training and development strategies and plans; feedback, communication and coaching; individual career planning; mechanisms for
28 monitoring the effectiveness of performance management system; interventions and even culture management. Thus, performance management involves the day-to day management, as well as the support and development of people. Therefore a performance management system needs to be based on meaningful, realistic, attainable and measurable performance standards. These types of standards are set, so that there is no doubt about whether the actual performance meets the standard or not. These standards emanate from a strategy, which is converted into plans and objectives for the future Performance Management System Approach Performance management involves multiple levels of analysis, and is clearly linked to the topics studied in strategic HRM as well as performance appraisal. Different terms refer to performance management initiatives in organisations, for example, performance-based budgeting, pay-for-performance, planning, programming and budgeting, and management by objectives (Heinrich, 2002). Different models of performance management are found in the literature. Each model stresses its importance as a system for managing organisational performance, managing employee performance, or for integrating the management of organisational and employee performance. Performance management involves managing employee efforts, based on measured performance outcomes. Thus, determining what constitutes good performance and how the different aspects of high performance can
29 be measured is critical to the design of an effective performance management process. These topics have been extensively studied in the area of performance management. Much of the performance management research stems from work and organisational psychology, where the accurate measurement of key aspects of employee performance has constituted an important research topic. Rudman (2003) claims that performance management techniques can be categorised into either a people approach, whereby high performance can only be achieved through the right people, or into a process approach, whereby the best procedural system is determined and adopted. In reality there is a cross-over between the two approaches. He adds that for either approach to succeed, it must fit with the organisation s culture. A performance management system, according to Rudman, is increasingly seen as a means of integrating HRM activities with the business objectives of the organisation, where management and HR activities are working together to influence individual and collective behaviour to support the organisation s strategy. The emphasis of performance management systems is on continuously improving organisational performance, and this is achieved through improved individual employee performance (Macky & Johnson, 2000).
30 The Balanced Score Card The Balanced Score Card is one of the tools used for performance management. It was introduced by Kaplan and Norton (1996: 106) as a tool to assist managers in equitably balancing the achievement of organisational objectives. The purpose of a balanced scorecard, according to Kaplan as cited in de Waal (2003:84), is that it links the vision and strategy to employees everyday actions by translating the abstract strategy into clear priorities and initiatives and relating these to clear, tangible strategic outcomes that the organisation and its employees have to strive for. These outcomes include satisfied shareholders, delighted customers, efficient and effective processes and a motivated workforce. In this way, the balanced scorecard makes strategy everyone s responsibility. The balanced scorecard is viewed as a communication and learning instrument, rather than a control system (Kaplan & Norton, 2001:10). Management alone should not formulate the objectives the staff s input should also be obtained (Huang & Hu, 2007:179). The balanced scorecard does not only measure financial performance, but also considers performance from three non-financial perspectives, namely internal business processes, the customer, and learning and growth. Non-financial measures are vital because of their long-term outlook (Kaplan & Norton, 2001). Implementation of the balanced scorecard is directed at strategic as well as individual performance management levels, and pervades the entire organisation. The scorecard can be used by profit-making as well as non-profit-making organisations.