Implementing a New Performance Management System at The

Implementing a new PMS at the LGSC in line with PRB Report 2003

Implementing a new Performance Management System at the

Local Government Service Commission

in line with the PRB Report, 2003.

G. Veeramah-Ramasawmy

This dissertation is submitted in partial fulfilment of the requirements for the degree of

B.S.C (Hons.) Business Studies with specialization in Human Resource Management.

University of Mauritius

Faculty of Law and Management

DECEMBER 2003

CONTENTS

List of Figures / iv
List of Tables / v
List of Abbreviations / vi
Abstract / vii
Acknowledgement / viii
INTRODUCTION / 1
1.1 Objectives of the project / 1
1.2 Overview of the project / 1
PERFORMANCE MANAGEMENT / 3
2.1 Definition of Performance Management / 5
2.2 The aim of Performance Management / 7
2.3 The philosophy of Performance Management / 7
2.4 The Performance Management Process / 8
2.5 Performance Management – The practical side / 9
2.6 Methods of appraising performance / 11
2.7 Ethical considerations / 11
2.8 Benefits and drawbacks of a Performance Management System / 12
ORGANISATIONAL BACKGROUND / 13
3.1 The Local Government Service Commission / 13
3.2 The existing method of appraising Performance at the LGSC / 14
RESEARCH METHODOLOGY / 16
4.1 Defining the problem and research objectives / 16
4.2 Determination of Research Design / 17
4.3 Determination of data collection method / 17
4.4 Designing data collection forms / 18
4.5 Designing the sample and collection of data / 18
4.6 Presenting and analysis of the findings / 18
4.7 Limitations of the Research / 19
PRESENTATION AND ANALYSIS OF FINDINGS / 20
RECOMMENDATIONS / 31
CONCLUSION / 33
SELF-REFLECTION / 34

LIST OF FIGURES

Figure 1. The Performance Management Process / 4
Figure 2. Percentage of awareness of the Performance Management System / 20
Figure 3. Rating of the Confidential Reporting System / 21
Figure 4. Attitude to change to the new Performance Management System / 21
Figure 5. Percentage of labour force trained / 22
Figure 6. Interface between training and performance / 23
Figure 7. Percentage of awareness of the mission, vision statements / 24
Figure 8. Decision making process / 25
Figure 9. Motivational factors / 25
Figure 10. Interface between pay and performance / 26
Figure 11. Percentage of acceptability of the new Performance Management System / 26
Figure 12. Clarity and feasibility of the new Performance Management System / 27
Figure 13. Conditions for success / 28

LIST OF TABLES

Table 1. Background and Employment information / 30

ABSTRACT

In line with the recommendations of the PRB Report 2003 a new Performance Management System will be introduced in the public sector. Performance Management is an essential tool for managing performance of employees. This project shall focus on the implementation process of the new Performance Management System and a study has been carried out at the Local Government Service commission on how to implement the system effectively and ensuring that the necessary structure and culture are present for such a major reform.

G. Veeramah-Ramasawmy

LIST OF ABBREVIATIONS

CPE / Certificate of Primary Education
HRM / Human Resource Management
HSC / Higher School Certificate
LGSC / Local Government Service Commission
PMS / Performance Management System
PRB Report / Pay Research Bureau Report 2003
PRP / Performance Related Pay
PRR / Performance Related Reward
SC / School Certificate

ACKNOWLEDGEMENTS

I am grateful to all those who directly or indirectly made it possible to collect and prepare the information required for this project.

In particular, I owe much to my Project Supervisor, Miss G. Napal for her continuous support, guidance and encouragement throughout the project.

I wish to thank Mr. Roy Jaunky, the Secretary of the Local Government Service Commission for having allowed me to conduct the study within the organisation.

I am indebted to Mr Nikhil Chooramun, faculty at NIIT, for his invaluable contribution to my project.

Finally, I wish to express my appreciation to my husband Swaraj and our son Yogesh for their comprehension, constant patience, support and help in the progress of my study.

1

Implementing a new PMS at the LGSC in line with PRB Report 2003

Introduction

The Public Service exists to achieve a purpose which is to meet the increasing needs and expectations of its stakeholders: the people working there, customers, government agencies and bodies, suppliers, trade unionists and the public at large. The concept of performance management viewed holistically cannot be divorced nowadays from accountability, result-orientation and value for money operations, taking stock of the processes and features of a growing public service.

1.1 Objectives of the project

• To audit the attitude, skills and competence of the staff of the Local Government Service Commission to the new way of managing performance
• To examine the conditions prevailing at the LGSC
• To analyse how the PMS can be implemented for the benefit of the whole organization and to be in line with the recommendations of the PRB Report 2003.

1.2 Overview of the Project

This chapter provides with a general introduction and an overview of what the ensuing chapters.

A review of the concept of Performance Management is presented in Chapter Two. This chapter defines the concept of performance management and the process of managing performance.

Chapter Three relates to the historical background of the LGSC, the aims and objectives of the organization and the existing system of appraising performance at the LGSC

In Chapter Four, the methodology adopted for the research is laid down.

Chapter Five shows the findings of the survey and the last part of the project includes recommendations of how to successfully implement the new Performance Management System at the LGSC.

Chapter Eight shows the self- reflection that is the personal development opportunities encountered in the course of the mini-project.

Performance Management

PM is characterized as a system (Storey and Sission, 1993), a systematic model (Mabey and Salaman, 1995), or a cycle (Torrington and Hall, 1995).

The elements in each of these frameworks are broadly similar, in that each of them link together planning, doing and supporting, reviewing progress, rewarding and preparing performance development plans.

Michael Armstrong put forward a conceptual framework for managing performance as illustrated in figure 1. The Performance Management Framework should not be viewed as an “off-the-shelf” model but should rather be customized to the needs, context and complexity/specificity of the organisation.

Figure 1: The Performance Management Process

During the past decade, the world has witnessed the emergence of an important and positive development in the sphere of management – the concept of Performance Management.

Performance Management is gradually gaining momentum as more and more organizations are feeling the need for a continuous and integrated approach to the management of Human Resources.

It has become more important as an area of HRM because of increased competition, changes in the organizational structure and culture, and a need for a strategic focus.

2.1 Definition of Performance Management

Performance Management is a process or set of processes for establishing shared understanding about what is to be achieved and on managing and developing people in a way, which increases the probability that it will be achieved in the short and long term (Armstrong and Murlis, 1994).

The real concept of Performance Management is associated with an approach to creating a shared vision of the purpose and aims of the organization, helping each employee understand and recognise their part in contributing to them, and in so doing, manage and enhance the performance of both individuals and the organisation (Fletcher, 1993)

Performance Management is a strategic and integrated approach to delivering sustained success to organizations by improving the performance of the people who work in them and by developing the capabilities of teams and individual contributors. (Armstrong and Baron, 1998)

Performance Management is:

• Strategic in the sense that it is concerned with the broader issues facing the business if it is to function effectively in its environment and with the general direction in which it intends to go to achieve longer-terms goals.
• Integrated in four ways:

(1) Vertical integration– linking or aligning business, team and individual objectives.

(2)Functional integration – linking functional strategies in different parts of the business.

(3) Human Resourceintegration – linking different aspects of human resource management (HRM), especially organizational development and human resource development and reward, to achieve a coherent approach to the management and development of people.

(4)The integration of individual needs with those of the organization, as far as this is possible.

2.2 The Aim of Performance Management

The overall aim of an effective performance management system is its ability to be seen as a method of continuously securing improvements in the performance of teams and individuals against predefined business strategies and objectives.

The term performance appraisal is outdated, implying as it often does a ‘top down’ process associated with what has all too often become a dishonest annual ritual designed to deliver a performance rating to fulfil the demands of a PRP scheme.

Performance Management is a continuous process shared between managers and the people for whom they are responsible. It is about improving both results and the quality of working relationships. Effective Performance Management means that people are clearer about what their priorities are, what they should be doing currently, what they should be aiming for and how well this contributes to both team and organizational performance. It grows from open, positive and constructive discussions between managers, individuals and teams to produce agreement on how to focus on doing the job better.

2.3 The Philosophy of Performance Management

The philosophy underpinning Performance Management is as follows:

The need for a process of management which supports the achievement of the organization's strategy by integrating corporate, functional, departmental, team and individual objectives.

The importance of communicating the organization’s mission, vision and objectives to all employees;

The need to develop and maintain a process which enables the organization to fulfil. Its responsibility for its members;

The need to empower employees and to enable them to manage their own performance and development;

The importance of managing expectations – clarifying goals and responsibilities;

The significance of input, process, output, outcomes sequence in managing performance;

The importance of creating a partnership between managers and their staff in managing performance - managing by agreement rather than by command.

Setting Specific, Measurable, Achievable, Realistic and Timely (SMART) objectives is crucial; measurement, feedback, reinforcement and contingency management are important issues. Performance Management is a natural process of management in developing a learning organization and empowering people. The following are the prerequisites:

The importance of creating a partnership between managers and their staff in managing performance;

The importance of measurement, feedback, reinforcement and contingency management' in managing performance;

2.4 The Performance Management Process

Performance can be described as a continuous self-renewing cycle. The main activities are:

• Role definition in which the key result areas and competence requirements are agreed
• The performance agreement or contract which defines expectations that is what the individual has to achieve in the form of objectives, how performance will be measured and the competences needed to deliver the required results.
• The personal development plan which sets out the actions people intend to take to develop themselves in order to extend their knowledge and skills, increase their levels of competence and to improve their performance in specific areas.
• Managing performance throughout the year which is the stage in which action is taken to implement the performance agreement and personal development plan as individuals carry on their day to day work and their planned learning activities. It includes a continuous process of providing feedback on performance.
• Performance review which is the formal evaluation stage when a review of performance over a period takes place, covering achievements, progress and problems as the basis for a revised performance agreement and personal development plan. It can also lead to performance ratings (Armstrong, 2000)

The performance management cycle, as elaborated above, is illustrated at Appendix I

2.5 Performance Management – The Practical Side

2.5.1 Commitment

Management commitment is a sine-quanon condition for success. Staff should be involved all along the line and it is important that the SMART objectives be set. In these times of change, objectives need to be constantly reviewed and modified in line with new business requirements and new priorities need to be set.

2.5.2 Motivation and performance related pay

Good performance over time will come only from well-motivated staff and managers should understand people’s needs and how work helps to meet those needs. It also means that staff feels that their work is rewarding in some way, probably that it meets some client needs, and contributes to company objectives and success. Reward, that is satisfaction of the needs or expectations follows successful behaviour. The content theories encourage managers to think about how far they can satisfy people’s innate needs through work. The process theories relate more to employees as conscious individuals gauging how to maximise benefits through their jobs.

Differential pay is still an important element in many Performance Management Schemes. Paying for competence is regarded by many organisations as desirable for three reasons:

• It motivates people to perform better or to develop their skills and competences;
• It delivers the message that competence and performance are important; and
• It is fair and equitable to reward people differently according to their performance, competence or contribution.

The disadvantages of Performance Related Pay are that:

(i)It is not a guaranteed motivator;

(ii)It may be unfair, subjective and inconsistent;

(iii)Undue emphasis on individual performance may affect teamwork;

(iv)It can produce poor quality performance because people are concentrating on achieving targets.

(v)It may impair the corporate culture, leading to a win-lose situation

However, the advantages of PRP are perceived as far exceeding its perceived disadvantages. The most compelling reason for taking this view is that it is equitable to reward people who perform well more than those who perform badly.

2.5.3 Human Resource Development

In an effective organization, employee developmental needs are evaluated and addressed. Developing in this instance means increasing the capacity to perform through training, giving assignments that introduce new skills or higher levels of responsibility, improving work processes, or other methods.

Providing employees with training and developmental opportunities encourage good performance, strengthens job related skills and competencies and helps employees keep up with changes in the workplace, such as the introduction of new technology.

According to Mullins, the benefits of training are as follows:

• greater confidence, commitment and motivation of staff;
• recognition and greater responsibility paralleled by improvements in pay;
• feelings of personal satisfaction and achievement with enhanced career prospects and;
• improved availability and quality of staff (Naylor, 1999)

2.6 Methods of Appraising Performance

• Rating Scales usually include Graphic, Weighted and Behavioral Anchored criteria. The graphic scale is the simplest and most commonly used. A list of performance variables is determined for a particular job and for each performance variable there is a scaling of levels of performance ranging from exceptional to below normal.
• Ranking is another method used. Individuals are evaluated from the outstanding to poor on some single performance criterion.
• Paired comparison requires the rater to compare pairs of ratees on performance.
• Forced Choice technique is a rating method that requires the rater to make choices among descriptive sentences.
• Forced Distribution presents the rater with a limited number of categories and requires a designated portion of ratees for each category.
• Managerial: this method appears to be most appropriate for managerial and top-level white collar jobs and includes scenarios, critical incidents, case studies and Management by Objectives (Harvey & Bowin)

2.7 Ethical Considerations

Performance Management processes should operate in accordance with agreed ethical principles. These have been defined by Winstanley and Stuart-Smith (1996) as follows:

• Respect for the individual – people should be treated as ‘ends in themselves’ and not merely as ‘means to other ends’
• Mutual respect – the parties involved in Performance-Management processes should respect each other’s needs and preoccupations.
• Procedures fairness - the procedures incorporated in Performance Management should be operated fairly to limit the adverse impact on individuals.
• Transparency– people affected by decisions emerging from Performance-Management processes should have the opportunity to scrutinise the basis on which decisions were made.

2.8 Benefits and Drawbacks of a Performance Management System

(i)The performance improvement plan covers training and any immediate development task or experience needed;

(ii)Career development plan which defines the most suitable job progression for the employee takes fully into account the wishes of the individual and the needs of the business;

(iii)Performance rating is followed where carried by a Performance Related Reward;

(iv)The review of the performance management process is based on line manager’s feedback and experiences.

There are a number of reasons why performance management systems fail:

(i)The system is not used, modelled and supported at the top of the organisation;

(ii)Line managers view the system as little more than an administrative burden. They do not see the benefit of energy invested in making the system work;

(iii)Performance objectives that were established at the beginning of the year seem less important by year end;

(iv)Performance objectives are written so subjectively that performance measurement at the end of the period is not possible;

(v)Managers are unable to give feedback and to deal effectively and constructively with the conflict or disagreement surrounding the assessment of employees’ performance.

Organisational Background

3.1 The Local Government Service Commission

The Local Government Service Commission Act was approved by Parliament on 12th December 1975 but it was almost eight years later that LGSC Act of 1975 was promulgated on 18th august 1983.

The LGSC, which is centrally and independently responsible for almost all matters in respect of Local Government personnel, consists of a Chairman and four other members. The Chairman of the Commission is appointed by the Prime Minister and the other four members are appointed by the Minister of Local Government. The Secretary of the Commission and his staff are public officers.