inca capacity building fund conference

INCA Capacity Building Fund Conference

Performance Management in Local Govt

RATIONALE ‘Performance’ and ‘Management’ are the cornerstones of the

“quiet revolution” and the paradigm shift introduced by the Municipal Systems Act (MSA) and Municipal Finance Management Act (MFMA)

‘Performance’ relates to efficiency; effectiveness and economy ‘Management’ relates to the change of emphasis from

administering finances and resources to the management thereof Necessity for Performance Management increases as communities

apply pressure for more and better services which municipalities have to meet with limited resources

In the past, the aim of budgeting was merely to keep control of all money spent, however, the focus is now on resource usage and service delivery outputs

“The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man” – George Bernard Shaw

LEGISLATIVE FRAMEWORK Requirements of MFMA in terms of linking expenditure to

service delivery complement requirements of Municipal Systems Act and Municipal Structures Act to establish performance management systems

All three pieces of legislation emphasize the need to be able to determine whether municipalities are getting value-for-money in terms of tax rands spent.

“People are like stained-glass windows. They sparkle and shine when the sun is out, but when the darkness sets in, their true beauty is revelaed only if there is a light from within” – Elizabeth Kubler Ross

MUNICIPAL FINANCE MANAGEMENT ACTs17(3)(b) stipulates that when the annual budget is tabled in Council, it must be accompanied by measurable performance objectives for each vote.s121(3)(f) requires an assessment of performance against these measurable objectives.s62(1)(a) states that the Accounting Officer is responsible for effective, efficient, economical and transparent use of resourcess69(3)(a) requires the Accounting Officer to submit a draft SDBIP (Service delivery and Budget Implementation Plan) that shows how the priorities set in the IDP will be achieved.s121(4)(d) requires the submission of annual reports that contain performance reports and the audit report of the municipality’s performance.

“The challenge is not to manage time, but to manage ourselves” – Steven Covey

MUNICIPAL SYSTEMS ACT Chapter 6 describes in detail requirements for municipalities to

develop and establish a PM system.Section 41 (1) states that municipalities must:

a) set appropriate key performance indicators as a yardstick for measuring performance, including outcomes and impact, with regard to priorities set out in municipalities IDP;b) set measurable performance targets in respect of each of those development priorities and objectives;

“To think is easy. To act is hard. But the hardest thing in the world is to act in accordance with your thinking” - Goethe

c) with regard to each of those developmental priorities and objectives and against KPI’s and targets in (a) or (b) –i) monitor performanceii) measure and review performance at least once per year.

d) take steps to improve performance where performance targets are not met, and

e) establish a process of regular reporting to –i) the council, other political structures, political office bearers and staff of the municipality and, ii) the public and appropriate organs of staff.

It is important to ensure that performance measures and targets as well as monitoring systems are integrated with the budgeting process:

MUNICIPAL SYSTEMS ACT contd

“When you reach the end of your rope, tie a knot in it and hang on” T Jefferson

MUNICIPAL STRUCTURES ACT Chapter 4 deals with powers and functions of the Executive

Committees and Executive Mayor Section 44(3) provides:

- The Executive Committee, in performing its duties must –a) Identify and develop criteria in terms of which

progress is made in implementation of strategies; programmes and services can be evaluated, including KPI’s which are

specific to municipality common to local government in general.

It is important to recognise the need for an integrated system that can measure both financial and non-financial performance.

“There is nothing more noble about being superior to some other man. The true nobility is in being superior to your previous self” – Hindu Proverb

HOW HAVE MUNICIPALITIES SHAPED?

• The Demarcation Board reduced 843 municipalities to 284.• Since introduction of the 3 Acts highlighted, it is interesting to

see how municipalities have risen to the challenge of introducing PM in their environments.

• The following Table is taken from the General Report of the Auditor-General on Local Government released in June 2004. Taking the audit results of the 50 municipalities sampled, the basic result is as follows:-

Report Format Number of Municipalities

Not made sufficient progressSome progress made

Fully-fledged PMS audit Not yet audited

Total

32012650

“Create and stir other people to create” – Robert Frost

• The Auditor General commented as follows on the 26 municipalities where the audit process in respect of IDP’s that

could not be completed :-“However, the number of municipalities (26) where the audit process in respect of the 2002-03 municipal year is not yet finished, representing 52 per cent of the top fifty, is of grave concern. As a result this compromises accountability. A concerted effort should be made by all spheres of government to address this matter.”• Another notable statistic is that only 1 out of 50 municipalities sampled had a fully-fledged PMS audit.• The irony of this case is that a qualified opinion was expressed because of a lack of proper governance structures and processes.


“Act as if what you do makes a difference. It does” – William James

• Where IDPs were developed, the consultative processes had often not been properly completed, IDPs and budgets were not aligned, or other shortcomings existed.

• The auditors confirmed that at only seven (29%) of the 24 municipalities had developed a PMS and some level of implementation had been attempted.

• However, in each of these 7 municipalities significant shortcomings had been identified :-- Inadequate consultations with communities.- Inadequate monitoring.- Targets and objectives not identified.- Each of proper governance structures on municipalities.

• The Report Card on municipalities is not encouraging


“A man’s feet must be planted in his country, but his eyes should survey the world” – George Santayana

WHAT IS A PERFORMANCE MANAGEMENT SYSTEM?

There are various core components relating to PM as required by Section 41 of the MSA and which are recognised by the Auditor General.

The Auditor General uses the model which shows 9 phases related to PM as required by the MSA (discussed later).

The PMS must be devised in such a way that it serves as an early warning indicator of under performance.

PM is a means by which policy makers and managers monitor performance over time so that they ensure that areas for improvement are identified, targets set, and service delivery improved.

“The difference between what we do and what we are capable of doing would suffice to solve most of the world’s problems” – M. Gandhi

KEY FEATURES OF AN EFFECTIVE SYSTEM

• Focused on the organisation’s key aims and objectives

• Appropriate for, and useful to, all stakeholders

• Timely, clear and accurate

• Cost effective

“Even if you are on the right track, you will get run over if you just sit there” – Will Rogers

Phases related toPerformance

Management asrequired by the

Municipal Systems Act

Phase1

Development of

integrated

Development plan

Phase 2Development and Implementation ofPMS Phase 3

Development andimprovement of KPI’s

Phase 4Setting targets for KPI’s

Phase 5Actual service delivery process

Phase 6Internal monitoring

Phase 7Internal controlPhase 8

PerformanceMeasurement and reporting

Phase 9Revision ofstrategies andobjectives

PHASES RELATED TO PERFORMANCE MANAGEMENT ito MSA

PROBLEM AREAS RELATING TO PERFORMANCE MANAGEMENT PHASES

PHASE 1 : DEVELOPMENT OF IDP

• Community involvement is now a stipulated pre-requisite in terms of s42 of the MSA.

• Municipalities lack the human resources to effectively engage in a credible consultation process with the community

• IDP’s are strategic documents to guide and inform the budget. It is necessary to integrate the budgeting process with the IDP and the Performance Management System to form a holistic approach to resource management

• Linkages between IDP and the Budget and Performance targets not easily established and discernible.

“Behold the turtle. He makes progress only when he sticks his neck out” – James B. Conant


PHASE 2 : IMPLEMENTATION OF PMS• In terms of resource requirements, PM is information intensive and not

many municipalities have the required systems in place• Personnel capacity is also found to be wanting.• PMS needs to integrate with the IDP and Budgeting process.• Single most significant obstacle to successful implementation of PMS lies in

realm of organisational culture.• PMS requires radical change to commit to specific and tangible levels of

performance and thereafter regularly measure, report and account for actual results.

• National policy, legislation, regulations and guidelines do not adequately recognise the need for interventions dealing with organisational culture and change.

“After the game, the king and the pawn go into the same box” – Italian Proverb


PHASES 3 & 4 : IMPLEMENTATION OF PMS• Performance targets should comply with the SMART

principle (Specific; Measurable; Attainable, Realistic and Time related)

• Data availability is a key constraining factor in many cases.• The 9 National KPI’s do not adequately measure socio-

economic outcomes in municipal areas.• Some of the national indicators are poorly structured, open to

ambiguity and are in need of revision. (E.g. In the case of the determinants of 3 formulae required : debt coverage, outstanding service debtors to revenue, cost coverage).

• Many of the national indicators requires the use of surveyed information from the citizens.

“A failure is a man who has blundered, but is not able to cash in on the experience” – Elbert Hubbard


PHASE 5 : ACTUAL SERVICE DELIVERY PROCESS• If the municipality has not been explicit about the unit of

measurement; the measurement source and frequency with which the indicator will be measured, it will be difficult to measure the outputs and results achieved.

• Project management skills are required to ensure that the service delivery targets are being met.

“I demolish my bridges behind me … then there is no choice but to move forward” – Firdtjof Nansen

PHASES 6 & 7 : INTERNAL MONITORING AND INTERNAL CONTROL

• The municipality has to set up an internal monitoring system to track progress on an ongoing basis. This requires skill and expertise and poorly resourced municipalities may have to outsource this function where there is no internal audit capacity.

• There will be resistance by those apposed to transparency and accountability to the close monitoring of results that PMS requires.

• Delays in the compilation of appropriate management information will negate the benefit of an early warning system.


“Most people achieved their greatest success one step beyond what looked like their greatest failure” – Brian Tracy


PHASES 8 & 9 : PERFORMANCE MANAGEMENT REPORTING AND REVISION OF STRATEGIES• PMS is often seen as an additional or parallel process. However, it

is a new way of working, where planning and management is performance based.

• Customer satisfaction surveys are often costly and time consuming.• Organisational climate surveys for internal customers could reveal

issues which may be difficult to address (e.g. staff motivation issues).

• The political will to change course as prompted by the indicators published may not be forthcoming.

“Life is like a game of cards. The hand that is dealt to you represents determinism; the way you play it is free will” – Jawaharial Nehru

SOME SOLUTIONS TO PROBLEMS IDENTIFIED

PREPARING STAKEHOLDERS Buy-in of stakeholders is essential to success of PMS. The

following can be done in this regard.

- Send officials and Councillors on appropriate training programmes.

- Employ the train-the-trainer-approach for knowledge transfer.

- Disaggregate stakeholder groupings e.g. Labour; business sector; community organisations; IDP Forums, etc, and run specialised interventions for each.

“Nothing can stop the man with the right mental attitude from achieving his goal; nothing on earth can help the man with the wrong mental attitude” – W. W. Ziege

INSTITUTIONAL ARRANGEMENTSCouncillors, particularly the Mayor and Exco should take a leading role in driving and championing PM.At least one senior staff member should be solely responsible for PM. This official should be located in the office of the Municipal Manager.Municipal cannot expect officials with other work demands to drive and implement PM as an “add on”.Buy-in is significantly enhanced when a senior official/Municipal Manager or Mayor champions the implementation of PM.Municipalities must be circumspect when using consultants to implement PMS.


“Life is like a library owned by the author. In it are a few books which he wrote himself, but most of them were written for him” – Harry R Fosdick


FRAMEWORK• Framework for PMS must be conceptualised as an inherent part

of management in the municipality, and as part of the IDP process, not an “add on” i.e. it is the new way of doing Business!

IDENTIFYING INDICATORS• Data availability will be a critical factor in the choice of

indicators.• Municipality must ensure that each of its chosen indicators has an

official who will be responsible for measuring, analyzing and reporting on that indicator.

What we do for ourselves can get us by. What we do for others is what gets us ahead; whether in our profession, spiritual pursuits or relationship” – Vincent Kituku

ORGANISATIONAL CULTURE AND CHANGE MANAGEMENT

• PM requires a radical change to organisational culture and the various Municipal Clusters will need to commit to specific and tangible levels of performance.• Thereafter, such performance will be measured against commitments made.• Change management courses mentioned earlier will play a critical role here.


“Good teams become great ones, when the members trust each other enough to surrender the me for we” – Phil Jackson

SOME SOLUTIONS TO PROBLEMS IDENTIFIED ANNUAL SURVEY

• Many national indicators require the use of surveyed information from Citizens.

• Possibility exists for a national annual survey, providing data that is useful to and statistically significant for municipalities.

• This exercise could minimize the costs of generating accurate information for performance measurements and prevent parallel and often costly surveys run by each municipality.

“Anything can be made simpler if you have the 3 most important ingredients : common sense (70%), understanding (20%) and sharing (10%)” – L Bajaj

A CASE STUDY : WEST SUSSEX, ENG

• Population of 755 900 people – 10th largest local authority

• Main services are education, social services, highways, waste disposal, and fire and rescue

• Budget of 894,3 million pounds revenue and 133,9 million pounds capital

• 28 148 staff

CONTEXT

APPROACH

• Integrates services, financial and resource planning, and risk management with performance management

• Operates throughout the organisation

• Developed over a number of years – will never be perfect

A CASE STUDY : WEST SUSSEX, ENGPLANNING & PMS

COUNTY STRATEGY

COMMUNITY STRATEGIES

SERVICE STRATEGIES

ANNUAL CORPORATE PLAN

SERVICE UNIT ANNUAL BUSINESS PLANS

TEAM & INDIVIDUAL TARGETS


FOUR MAIN LEVELS TO THE SYSTEM

• Cabinet level and the whole Council

• Cabinet members and Directors for each service

• Directors and Heads of business units for each business

• Managers, teams and individuals

“I would rather have a mind opened by wonder than one closed by belief” Gerry Spence

WHO? • The Cabinet for discussion• The whole Council for information

WHAT? • Top 20 targets in County strategy• National best value indicators• Budget monitoring• Top 20 risks

HOW? • Quarterly report to Cabinet meeting• Exceptions highlighted

STRATEGIC LEVEL


“CHANGE brings GROWTH, and with GROWTH comes PAIN… but it’s the PAIN that causes man to overcome in order to be SUCCESSFUL” M Nash

A CASE STUDY : WEST SUSSEX, ENGSERVICE LEVEL

WHO? • Cabinet Members• Directors

WHAT? • Relevant County strategy targets• Relevant national best value performance indicators• Local key performance indicators• Budgets• Relevant Top 20 risks

HOW? • Quarterly reports to meeting• Exceptions highlighted• Detailed discussion to show improvement

“Knowledge is potential; action is power” – Anthony Robbins


WHO? • Directors• Heads of business units

WHAT? • Relevant County strategy targets• Relevant national best value performance indicators• Local indicators for service• Budgets• Key risks

HOW? • Preparation and quarterly monitoring of business plans• Regular meetings to review and identify corrective action

BUSINESS UNIT LEVEL


WHO? • Heads of business units• Team leaders• Individuals

WHAT? • Tasks and targets in business plans• Personal development plans

HOW? • Regular team meetings (weekly or monthly)• Annual personal development reviews

INDIVIDUAL LEVEL

“It is when we forget ourselves that we do things that are remembered” E Bertin


KEY MESSAGES/LESSONS

• Measure what matters

• Take action on what matters most

• Help people and services to improve

“Being on the tightrope is living; everything else is waiting” Karl Wallenda

ETHEKWINI PERFORMANCE MANAGEMENT SYSTEM• Completed PM for all first and second level management 2003/4

• Third level completed 2004/5

• Roll out to every employee in the future

• Purchased a performance management system, however, further developing same on our Virtual Works platform and integrating with our other systems

• Will be done through our SmartXchange PPP

“I feel that the greatest reward for doing is the opportunity to do more” Dr Jonas Salk

CONCLUSION• Despite problems identified thus far, performance management is proving to be a

practical and useful approach to communicating commitments and expectations and ensuring accountability and transparency in Local Government.

• A good system can help performance to improve• Leaders at all levels throughout the organisation must constantly reinforce the

message that performance matters• There will always be scope for improvement …

“If 95% of people’s thinking doesn’t correlate with yours, never try to change, question or introspect yourself. The world of success belongs to people who think innovatively, differently and progressively” – L Goutam

THE END

“Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbour. Catch the trade winds in your sails. Explore. Dream. Discover.” – Mark Twain

Presentation by Krish Kumar

inca capacity building fund conference

Documents

performance reports

review performance

assessment of performance

municipalitys performance

management thereofnecessity

economy management

municipal structures

municipal systems act