CHAPTER 5: PERFORMANCE MANAGEMENT SYSTEM 5.1 INTRODUCTION The purpse f this Chapter is t reflect the status qu f the City f Tshwane Metrplitan Municipality (CT s) Perfrmance Management System. 5.2 BACKGROUND Chapter 6 f the Lcal Gvernment: Municipal Systems Act, 2000 (Act N. 32 f 2000) (MSA), requires lcal gvernment t: Develp a perfrmance management system. Set targets, mnitr and review perfrmance based n indicatrs linked t the Integrated Develpment Plan (IDP). Publish an annual reprt n perfrmance management fr the cuncillrs, staff, the public and ther spheres f gvernment. Incrprate and reprt n a set f general indicatrs prescribed natinally by the Minister respnsible fr lcal gvernment. Cnduct an internal audit n perfrmance befre tabling the reprt. Have the annual perfrmance reprt audited by the Auditr-General. Invlve the cmmunity in setting indicatrs and targets and reviewing municipal perfrmance. 5.3 OVERVIEW OF POLICIES GUIDING PERFORMANCE MANAGEMENT IN THE COT POLICY FRAMEWORK On 28 August 2003 1, the Cuncil adpted a Perfrmance Management Framewrk regulating the Perfrmance management system in the municipality. The Framewrk prvides guidelines n the develpment and implementatin f the rganizatinal and individual perfrmance management system. The framewrk prvides the fllwing guidelines n rganizatinal perfrmance management: Planning fr Perfrmance Management In planning fr perfrmance management and in the prcess f reviewing ur plicy, we have aimed t ensure that ur system cmplies with all the requirements set ut in the Act. Amngst thers we are aiming t ensure that we: Shw hw we are ging t perate and manage the system frm the planning stage up t the stages f perfrmance review and reprting; Indicate hw ur varius stakehlders and rle-players including the cmmunity will be included in the implementatin and functining f the system; clarify hw we will implement the system within the framewrk f the integrated develpment planning (IDP) prcess, including any prcedures t be fllwed; Address the matter f hw ften we will reprt and t whm; and Link the perfrmance management system t hw we manage the perfrmance f ur emplyees. 1 This plicy framewrk is currently under review TIDP 2006 2011 Secnd Revisin 137
We have integrated seamlessly the IDP and the perfrmance management prcesses. Thrugh the IDP we plan fr perfrmance management, and thrugh perfrmance management we manage, mnitr and evaluate the achievement f the IDP. Pririty Setting Thrugh cmmunity cnsultatin and the cnsultatin f ther key stakehlders, the IDP prcess helps t define: What the delivery pririties and bjectives are. We have aimed t ensure that the bjectives are clear, tangible and measurable; What transfrmatinal initiatives will be undertaken by the institutin and hw; Which prjects will be implemented t achieve the delivery pririties and bjectives; What financial resurces will be used t realize the pririties. Hw we will measure the achievement f the bjectives thrugh clear indicatrs. Many f the key perfrmance indicatrs are prescribed in sectin 43 f the MSA and must therefre be included in ur IDP. They include: The percentage f husehlds with access t basic level f water, sanitatin, electricity and slid waste remval. The percentage f husehlds earning less than R1100 per mnth with access t free basic services. The percentage f a municipality s capital budget actually spent n capital prjects identified fr a particular financial year in terms f the municipality s integrated develpment plan. The number f jbs created thrugh municipality s lcal ecnmic develpment initiatives including capital prjects. The number f peple frm emplyment equity target grups emplyed in the three highest levels f management in cmpliance with a municipality s apprved emplyment equity plan. The percentage f a municipality s budget actually spent n implementing its wrkplace skills plan. Financial viability which lks at debt cverage, utstanding debtrs t service revenue, and cst cverage. Each f these areas are expressed by ratis as fllws: Area f financial viability What it means Debt cverage Hw much f mney we we can we pay back, such as lans. Outstanding service debtrs t revenue Hw much f mney is still wed by the cmmunity fr water, electricity, waste remval and sanitatin cmpared t hw much f mney we have Frmula must against A = B C D A = B C we reprt What des the frmula mean? A = debt cverage B = ttal perating revenue received C = perating grants D = debt service payments (i.e. interest redemptin) due within the financial year; A = utstanding services debtrs t revenue B = ttal utstanding service debtrs C = annual revenue actually received fr services What the implicatins are fr the City If A is lwer than we planned, then it means that we d nt have funds t pay lans. The less peple wh pay and the mre peple wh we impacts n whether we can buy mre water fr example t prvide t the cmmunity. TIDP 2006 2011 Secnd Revisin 138
Area f financial viability What it means been paid fr these services. Cst Cverage Hw much f mney is available t run the city Frmula must against A= B + C D we reprt What des the frmula mean? A = cst cverage B = all available cash at a particular time C = investments D = mnthly fixed perating expenditure What the implicatins are fr the City If A is lwer than we planned, it means that we d nt have sufficient funds t run the city. If A is higher than planned, it culd mean that we have mre cash because we are cllecting all wed t us, ur investments are ding well, r that prjects are nt spending their funds. The CT reviews its key perfrmance indicatrs annually as part f the perfrmance review prcess referred t in regulatin 13. This is initiated thrugh the review f the IDP annually, and filters all the way thrugh t the individual perfrmance plans. Setting Targets We cntinuusly aim t ensure that ur targets cmply with the Perfrmance Management Regulatins (Chapter 3, Regulatin 12). Therefre the targets set in the IDP have t: Be practical and realistic; Measure hw effective and efficient the CT is, as well as what the impact we are making; Clearly indicate wh (which department will deliver a target); Have crrespnding resurces, include the budget; and Relate t the pririties and bjectives fr develpment as in the IDP. Perfrmance mnitring Perfrmance mnitring is an nging prcess that runs parallel t the implementatin f the apprved IDP. Our plicy is being reviewed t ensure that the framewrk : Identifies the rles f the different rle players in mnitring and measuring the municipality s perfrmance. Ensures that specific tasks are allcated t the gathering f data and submissin f reprts. Ensure that prcedures are in place t cllect, stre, verify and analyze data and t prduce reprts. Prvides fr reprting t the municipal cuncil at least twice a year. Is designed in a manner that enables the municipality t detect early under-perfrmance (Organisatinal and emplyee [Human Resurces] perfrmance management). Prvides fr crrective measures where under-perfrmance has been identified (Organisatinal and emplyee [Human Resurces] perfrmance management). Cmpares current perfrmance with perfrmance during the previus financial year and baseline indicatrs. The Perfrmance Measurement Framewrk The Balanced Scre Card Mdel was adpted as the mdel t be used in the City f Tshwane and is aimed t measure perfrmance using fur perspectives, i.e. custmer, internal prcesses, financial, and learning and grwth. TIDP 2006 2011 Secnd Revisin 139
In the develpment f the current City 5-year Prgramme (5YP) we did nt hwever, use the balanced screcard methdlgy (which was apprved fr the perfrmance management prcess) as pint f departure fr ur planning prcess. We therefre d nt have KPA s in the varius perspectives f the balanced screcard supprting the achievement f ther strategic bjectives, e.g. Gd gvernance KPA s invariably link t ther strategic bjectives. Cnducting Perfrmance Reviews Perfrmance review is a prcess where the rganizatin, after measuring its wn perfrmance, assesses whether it is ding the right thing by: Analysing the infrmatin t see whether targets have been met and whether the future targets will be realized. Benchmarking t cmpare the perfrmance f the City with ther similar cities. Surveys t btain feedback frm the cmmunity abut their views f the perfrmance f the municipality. The CT has t date applied all methds in assessing its perfrmance, and is cntinuusly seeking ways t imprve assessment f its perfrmance. Reprting n Perfrmance Reprting requires that the municipality takes the pririties f the rganizatin, its perfrmance bjectives, indicatrs, targets, measurements and analysis, and present this infrmatin in a simple and accessible frmat, relevant and useful t the specific target grup, fr review. The Service Delivery and Budget Implementatin Plan (SDBIP) is the basis fr ur reprting. Generally fur reprts are submitted per annum t Cuncil. Individual Perfrmance In rder t ensure that the City f Tshwane meets and deliver n its City Screcards KPA s and KPI s at a high standard, it was apprpriate t intrduce a perfrmance management system fr the individual emplyees within the City. The link between rganizatinal perfrmance and individual perfrmance is as fllws: Perfrmance measurement rests n the fllwing tw pillars: The identificatin f the selected few strategic bjectives/1st level strategic bjectives (inclusive f the 7NKPI s) which summarises the perfrmance f the whle rganisatin and which are the result f fcused strategic planning. These bjectives are captured in the tp dwn design f the city scre card. Individual perfrmance measurement which prvides the bttm up measurement data fr the measurement f perfrmance f 1st level strategic bjectives. The emplyee perfrmance management prcess within the COT invlves fur key phases (see diagram Perfrmance cycle belw). The first phase represents the perfrmance agreement between the emplyee and the emplyer whilst the next tw phases represent the actual perfrmance thrughut the year. The templates t be utilised t capture the infrmatin as well as additinal dcuments are available as a perfrmance pack. Detailed guidelines fr the cmpletin f the templates are prvided t emplyees. TIDP 2006 2011 Secnd Revisin 140
Diagram 5.1: Perfrmance Cycle Phase 1 Planning What is expected f the emplyee this year? Phase 2 Caching Hw well is the emplyee ding thrughut the year? Phase 4 Rewarding What recgnitin will the emplyee receive fr utstanding perfrmance? Phase 3 Reviewing Hw well has the emplyee dne at the end f the year? PHASE 1 PERFORMANCE PLANNING This is abut jintly identifying individual perfrmance expectatins and gaining the emplyee s cmmitment in achieving these expectatins. This als entails the identificatin f KPA s and indicatrs, the establishment f year-end targets and the planning fr the phasing in f the yearend target int quarterly targets (cumulatively and quarterly). Setting f KPA S The identified KPA s must be infrmed by the KPA s and indicatrs n the next higher level (see Unpacking f indicatrs fr an example heref). TIDP 2006 2011 Secnd Revisin 141
Unpacking f indicatrs: Custmer CITY SCORE CARD Objective Indicatr Baseline Target Prvide safe, cnvenient %average ridership f 5% 10% transprta-tin public transprtatin Custmer DEPARTMENTAL SCORE CARD Objective Indicatr Baseline Target Prvide safe, cnvenient transprtatin %f fleet available 70% 90% Custmer DIVISIONAL SCORE CARD Objective Indicatr Baseline Target Prvide safe, cnvenient transprtatin %f vehicle repairs cmpleted within 24 hurs 70% 75% In a service rendering envirnment, e.g. lcal gvernment, KPA s, which reflect the addressed needs f the cmmunity shuld be identified first and are als captured first in the scre card. Hereafter internal KPA s which supprt the executin f the frmer KPA s shuld be identified. The three types f supprtive internal KPA s are as fllws: Internal business prcess KPA s, fr e.g. T develp a ne integrated transactin prcess within three years with effect 01.07.2008 Financial KPA s, e.g. T manage the remuneratin budget dwn within reasnable limits within 5 years with effect 01.07.2008 Learning and grwth KPA s, e.g. T enhance capacity within 5 years with effect 01.07.2008 Sme generic KPA s and their cncmitant indicatrs have been established. It is expected f Managers and Deputy Manager t include these KPA s (and their indicatrs) in the scre cards. Setting f apprpriate key perfrmance indicatrs (KPI s) During the perfrmance management prcess key perfrmance indicatrs (KPI s) must be identified fr each f the CKPA s. They are statements f measurement in terms f e.g. a percentage, a number, an index r any ther recgnisable unit. Indicatrs are used t indicate whether prgress is being made in achieving the CKPA s. Indicatrs shuld be measurable, simple, precise, relevant, adequate and bjective. The chice f an indicatr must be guided by the availability f data fr its measurement and the capacity t cllect it. TIDP 2006 2011 Secnd Revisin 142
Setting f measurable perfrmance targets Perfrmance targets are the planned level f perfrmance r the milestnes an rganisatin sets fr itself fr each identified indicatr it is the desired level f service delivery fr the current financial year r specified perid. Baseline measurements, which are the measurement f the chsen indicatr at the start f the perid, must be set. Baseline infrmatin defines the status qu. It is imprtant t knw hw the rganisatin is perfrming at the current mment in rder t determine, after a perid f time, if any psitive prgress was made. This step als tests whether the chsen indicatr is in fact measurable and whether there are any prblems. The targets need t be realistic, measurable and be cmmensurate with available resurces and capacity. The setting f targets entails a tw-way cmmunicatin: Pliticians need t give clear directin as t the imprtance f the target and hw it will address the public need. Targets shuld be infrmed by the develpment needs f cmmunities and the develpment pririties f the municipality. Line managers need t advise as t what a realistic and achievable cmmitment fr a target is, given the available resurces and capacity. Managers will need t advise n seasnal changes and ther externalities that shuld be cnsidered in the prcess f target setting. There must be clear timelines related t the set targets. Planning fr perfrmance is directly related t resurces; therefre perfrmance targets can nly be set nce the available resurces, especially the apprved budgets, have been identified. Planning fr best perfrmance is therefre directly related t the budget. Hwever, cnstraints, risks and standards must als be taken int cnsideratin and must be well dcumented in advance. The dcumented infrmatin must be taken int cnsideratin during the reviewing phase f the perfrmance management cycle. Weightings and their allcatins COT has adpted a weighting apprach t shw the relative imprtance f ne input and/r utput KPI against anther input r utput KPI. Every input and/r utput KPI in the perfrmance agreement must be assigned a weighting. The ttal f the weightings n the perfrmance agreement and screcard must add up t 100 pints fr respectively the utput and input KPI s. An imprtant KPI may, fr example, be assigned a weighting f 50 ut f the ttal f 100 whereas a less imprtant KPI may be assigned a weighting f 15 ut f 100. The purpse f the weightings is t shw emplyees what the key fcus areas are in their wrk. PHASE 2 PERFORMANCE COACHING This is the phase f cntinuusly tracking and imprving perfrmance, thrugh feedback and reinfrcement f key results and cmpetencies. This is dne with a view t timely detect perfrmance relapses and t simultaneusly intrduce speedy remedial actins. A prescribed recrd sheet is used t recrd evidence and remedies. During this phase, n a quarterly basis, the actual perfrmance must be determined and be judged against the quarterly bligatin as well as the cumulative perfrmance as well as ther standards that have been set in advance. During this phase it is als imprtant t dcument any evidence prving perfrmance. Althugh actual measurements are dne each quarter, frmal caching nly has t be dne half yearly prvided the dcumented perfrmance in the first and third quarter is satisfactry. TIDP 2006 2011 Secnd Revisin 143
PHASE 3 - REVIEWING This phase invlves jintly assessing actual perfrmance against expectatins at the end f the perfrmance cycle t review and dcument planned vs. actual perfrmance. The fllwing guidelines are applicable fr cnducting a perfrmance review: Manager/supervisr t prepare ratings f emplyee s perfrmance against key perfrmance indicatrs. The rating is dne by cnsidering the year end actual cumulative as well, the evidence which were dcumented during the caching cycle as well as any ther relevant input 2. Fr an expsitin f the five pints scale and set criteria see the glssary f terms. Manager/supervisr t ask emplyee t prepare fr frmal appraisal by rating him/herself against the agreed key perfrmance indicatr. Manager/supervisr and emplyee t meet t cnduct a frmal perfrmance rating with a view t cnclude a final rating. The emplyee may request time t cnsider the rating. A secnd meeting may then be evident. In the event f a disagreement, the manager/supervisr has the final say with regard t the final rating that is given. After the ratings have been agreed upn the scres are calculated. The manager/supervisr shuld make his/her wn ntes during the frmal review meeting. All the criteria that has been specified must be taken int cnsideratin Only thse KPI s relevant fr the review perid in questin shuld be rated accrding t a five pint scale. After the year-end review nly d the manager/supervisr and emplyee prepare and agree n an individual learning plan. The setting f new key perfrmance areas which will link up t the COT KPA s and the identificatin f the cncmitants indicatrs fr the next financial year needs t be cncluded by the end f June f the current year. Hwever the identificatin f KPA s frthcming frm the learning plans and the setting f targets, weights and dates can nly be dne after, the year-end review has been cncluded. The ttal scre is determined nce all the utput and input KPI s have been rated and scred. This is dne with a view t establish if an emplyee is entitled t a ntch increase r an accelerated salary prgressin r a nn-financial award. Shuld an emplyee nt be achieving the KPA s in his/her perfrmance agreement the manager/supervisr shuld assist the emplyee by managing his/her perfrmance mre clsely. It is nt apprpriate that the first time an emplyee hears abut his/her nn-perfrmance is at the frmal perfrmance review. Emplyees must be cached and given feedback thrughut the year. PHASE 4 - REWARDING This phase establishes the link between perfrmance and reward. It aims t direct and reinfrce effective wrk behavirs by determining and allcating equitable and apprpriate rewards t emplyees. Permanent emplyees will initially be awarded nn-financial rewards fr gd perfrmance. Ultimately financial rewards will be determined thrugh the Natinal Cllective Bargaining prcess at Suth African Lcal Gvernment Bargaining Cuncil (SALGBC). 2 At a later stage 180 and 360 reviews may be implemented, in which case Manager/supervisr may request inputs frm custmers n the emplyee s perfrmance thrughut the review perid. This may be dne thrugh discussin r by asking custmers t cmplete a rating frm t submit t the manager/supervisr fr cnsideratin. Custmers are peple wh are able t cmment n the emplyee s perfrmance since they have wrked clsely with him/her n sme r all aspects f his/her jb. TIDP 2006 2011 Secnd Revisin 144
The guiding principles regarding nn-financial rewards are discussed in detail in the Cllective Agreement n Nn-Financial Rewards. T ensure the abve the fllwing plicies were adpted: Perfrmance management plicy and prcedure Plicy fr the management f pr wrk perfrmance Perfrmance reward scheme Nn-financial rewards fr permanent emplyees; Remuneratin plicy 5.4 CHALLENGES POLICY FRAMEWORK The City f Tshwane acknwledges 3 that there is a link between rganizatinal perfrmance management and individual perfrmance management and illustrates it as per the diagram belw: Diagram 5.4: Organizatinal and Individual Perfrmance Management Link The systems and prcesses are hwever nt supprtive f dealing sufficiently with the management assumptins made in unpacking rganizatinal perfrmance int individual perfrmance. T assist in this regard the City Manager has established a Perfrmance Management Steering cmmittee t versee prcess integratin f the perfrmance management system. This cmmittee will as a pint f departure update the perfrmance management plicy and prcedure t allw fr changes in the IDP as well as new individual perfrmance management regulatins published in 2006 by the Department f Lcal Gvernment in August 2006. TIDP 2006 2011 Secnd Revisin 145
Furthermre, it has been difficult t determine key perfrmance indicatrs fr all ur strategic bjectives. Nt all ur indicatrs are as measurable as we wuld like. This has created a challenge in aligning fully ur perfrmance management prcess with the IDP prcess. Mnitring and evaluatin is therefre still challenging. The fllwing is still being imprved in planning prcesses: Integratin f develpmental targets with cre business, e.g. the training f wmen and yuth whilst delivering capital prjects fr infrastructure. Understanding and managing the setting f pririties fr the varius financial years in the MTEF and their KPI's in the cntext f the 5 year term f the IDP, i.e. managing the cntext f inputs and the underlying assumptins f the inputs will achieve thrugh prcesses n the utput level. There is a need t reprt achievement against a "fixed" target as ppsed t the city's administrative reality f mving targets this is best explained against an indicatr such as % f husehlds with access t basic r higher levels f service (NKPI). The husehlds in a city are nt static and are cntinually increasing therefre within a restricted resurce allcatin twards service delivery, it might lk as if eradicatin f service delivery backlgs is slw hwever the backlg might be grwing as a result f unplanned fr grwth due t migratin etc. When the number f husehlds is annually increased as per grwth figures, it creates tensin n the reprting side. Targets are set in line with the established need in departmental business plans, which are t be included in the IDP. When the budget is hwever finalized, the resurce requests are nt granted due t budgetary cnstraints the impact f this is that smetimes the targets are nt changed in the IDP. The City f Tshwane perfrmance management plicy, currently nly makes prvisin fr the review f individual perfrmance and nt fr the review f rganizatinal perfrmance, which is why the plicy is being reviewed at the mment. The municipality has a number f challenges in develping a mnitring framewrk: The current systems des nt allw fr the nn-financial planning f initiatives i.e. fr develpmental initiatives e.g. imprving cmmunity skills, r fcusing n target grups such as the yuth r wmen There are n city level databases f all wmen, r yuth r disabled The mnitring has t include ability t reprt n nt nly the city s pririties but als n Natinal KPI s r prvincial indicatrs. This becmes challenging when the city has a pririty t supprt peple receiving an incme f R1700 r less as indigents whereas the natinal regulatins make prvisin fr R1100 and reprting n the peple that the City is supprting is therefre narrwer than required. TIDP 2006 2011 Secnd Revisin 146