Briefing by Public Service Commission on Investigation into Performance Contracts & Awarding of Performance Bonuses at the Depar

STANDING COMMITTEE ON PUBLIC ACCOUNTS
30 August 2006
INVESTIGATION INTO PERFORMANCE CONTRACTS AND AWARDING OF PERFORMANCE BONUSES AT THE DEPARTMENTS OF LABOUR, CORRECTIONAL SERVICES AND HOME AFFAIRS: PUBLIC SERVICE COMMISSION BRIEFING

Chairperson: Mr T Godi (PAC)

Documents handed out:
PowerPoint Presentation: Public Service Commission
Report on an audit into the Granting of Performance Rewards: Departments of Correctional Services, Labour and Home Affairs

SUMMARY

The Public Service Commission presented its report on the performance management systems of the Departments of Labour, Correctional Services and Home Affairs. The investigation covered the top three layers of management. This included the directors-general, managers reporting to them and the next layer. The report revealed that performance management in these Departments was inadequate. Performance agreements were either not concluded or not completed timeously. It was also difficult to assess whether key performance areas were aligned to the strategic objectives of the Departments. The Commission recommended that performance bonuses paid without the completion of performance assessments should be should recovered in terms of Section 38 of the Public Service Act of 1994.

Members expressed their concerns regarding the lack of accountability of Directors-General and other senior managers. Moreover, senior officials were unable to account for the financial affairs of Departments and regulation and management of performance of Departments had to be ensured. The Chairperson expressed concern over the ongoing need for the Committee to investigate issues of compliance with rules and regulations, rather than service delivery.

MINUTES

Presentation by the Public Service Commission (PSC)

Ms Odette Ramsingh (PSC Director-General) presented the Committee with the report of an assessment of the level of performance management in the Departments of Correctional Services, Labour and Home Affairs. This report was compiled at the request of the Standing Committee on Public Accounts (SCOPA) to conduct an investigation into the performance rewards in these three Departments for the 2003/2004 and 2004/2005 financial years.  The Committee had requested that the investigation cover all employees in the top three layers of management: Directors-General (DG), managers reporting to the DG and the next layer. 

Common trends in the three Departments were identified. These included the deterioration of the conclusion of performance agreements as well as the granting of performance rewards from 2002/2003 to 2004/2005. The report stressed that the failure to conclude performance assessments hampered the assessment of individual contributions towards Departmental goals. This impacted on the accountability of employees. The report identified a lack of commitment to the goals and objectives of the Departments.  Key performance areas were not aligned to the strategic goals of the Departments.

Department of Correctional Services:

This Department had shown an improvement in the management of performance.  It had undertaken assessments as required by the Senior Management Handbook. However, the report noted that the National Commissioner had been awarded performance rewards for two consecutive years, while only one senior manager had been rewarded similarly award. The report cautioned that this could indicate that the Commissioner performed his duties in isolation from his senior managers or that these managers were not performing satisfactorily. The report recommended that this money should be recovered in terms of Section 38 of the Public Service Act.
 
Department of Home Affairs

The Report revealed that the Department had not aligned its key performance areas with its strategic objectives. The Department had also failed to conduct performance appraisals for 2002/2003 and had displayed a lack of commitment to performance assessment. The Department had awarded performance bonuses without the completion of the assessment process. The Commission advised that the money spent should be recovered by 30 September. Moreover, the Department of Public Service and Administration (DPSA) must provide the technical assistance and advice needed to institutionalise the performance management system within the Department.

Department of Labour

Although key performance areas were aligned to the strategic goals of the Department, only one performance assessment had been concluded within the stipulated timeframes. Performance rewards were granted to employees without performance assessments being concluded for 2002/2003. As decided by the executive of the Department, performance awards were forfeited for 2003/2004. The report noted that the performance reward paid to the Deputy Director-General of this Department should be recovered, as the necessary regulations were not followed.

Discussion

The Chairperson noted the strict time frame in which the Commission had to produce the report. He said that the report would assist the Committee to appreciate the state affairs at these Departments.

The Chairperson said that the Committee was convinced that a link existed between service delivery and the management and administration of public money by Departments.  The performance management agreements were key to ensuring that service delivery occurs and that public money is spent effectively.  The Committee had to ensure that money was utilised in the best interest of the country.

Dr E Nkem-Abonta (ANC) asked how DGs were evaluated.  He commented that these officials must be evaluated on the extent to which they have managed the performance of the Department. Therefore the evaluation of a DG should be related to how other officials in the same Department were assessed. It was thus surprising that a DG could be awarded a performance bonus while lower ranked officials had not.

Prof S Sangweni, Chairperson of the Commission, replied that the Commission had to manage the process of performance evaluation within the framework provided by the DPSA.  The Commission provides the secretariat for the process.

The performance evaluation process was steered by a panel, convened by the Minister, and consisting of ministers, peers of the DG and other stakeholders interacting with the Departments. This panel of three or four people operated under certain guidelines and should carry out an interview with the DG concerned. The Minister would be present to provide the background information and should be involved in the assessment of reports and other documentation provided. The panel would then compile a report, which the Minister would use to evaluate performance. Overall, an evaluation should be based on the performance agreement, which should be entered into with the executing authority. This was the requirement of the Handbook of Senior Management Service (SMS) and was a regulatory framework.

Dr Nkem-Abonta said that the Commission’s report revealed that DGs could not manage their Departments. The most important task of these officials was to manage performance. The report reveals that this was not the case.

Ms Ramsingh responded that the report revealed the inadequacy of performance management in Departments. It should be appreciated that the report only investigated post levels 14, 15 and 16 of Departments. It was very difficult to assess whether the lack of performance at these levels had an impact on service delivery. However, evidence revealed that performance management was not taking place at the higher levels and therefore could be an indication of the state of affairs at the lower ranks.

Performance assessments for levels 1-12 were guided by the regulations put in place in April 2000, while the SMS handbook guided the assessment of performance of those in post levels 13-15. The Framework of Heads of Department guided the evaluation of DGs and the heads of Department.

Dr Nkem-Abonta asked what aspects of the performance management process Departments had to be assisted with.

Ms Ramsingh replied that there were clear guidelines governing the operations of a Department.  However, the SMS handbook had been amended to include the Batho Pele principles in performance agreements. Therefore these agreements had to be revised and Departments needed initial assistance in the completion of performance agreements.  This assistance was needed to ensure that Departments did not merely comply with regulations. These agreements and assessments could be useful to establish the extent to which the Batho Pele principles were adhered to.

Prof Sangweni added that the Commission also provided guidance in the form of circulars as well as workshops.

Ms A Dreyer (DA) asked who decided on the performance awards for the DGs.  She said that the Department of Correctional Services, during a previous hearing, could not provide the basis for the R43 million cash awards paid out to officials.

Prof Sangweni responded that money should be paid out after the appraisal of performance agreements and should be the basis of the R43 million.  He said that this amount should be placed in the context of the different performance management systems.  The R43 million should be in relation to the payment for levels 1 to 16. This report did not look into these areas.

The Chairperson added that the Member’s question demonstrated the lack of information the Committee as well as the Commission had regarding performance awards.  Moreover, during the course of the Committee’s briefings by Departments, Departments could not give a breakdown of figures. If such inadequacies were at the highest levels of Departments, surely similar inadequacies existed in the lower ranks?

Dr Nkem-Abonta asked why DGs were allowed to continue their duties if they were found to be in violation of the SMS.  He was not aware of any DG being sanctioned.

Mr E Trent (DA) raised a similar question. He asked whose responsibility it was to act on the recommendations of the Commission.

Prof Sangweni said that this was the responsibility of Parliament and its Committees. The Commission merely provided the technical oversight and information needed for the Committee to carry out its oversight duties.

Mr Trent wanted clarity on the meaning of “360 degree evaluation”.

Ms Ramsingh replied that this was merely a tool to evaluate heads of Departments and was not compulsory.  It utilised the idea that performance evaluation should be a co-ordinated and constructive exercise. In practice superiors, peers as well as those under immediate supervision, would evaluate a person. This could be a good indicator of the environment within an organisation.

Mr Trent said that previous hearings indicated that the human resource units of Departments were not adequately run to provide the necessary support for the performance evaluation.

Ms Ramsingh agreed that the report indicated that the human resource units of especially Home Affairs and Labour did not have the ability or the competence to support performance management. She stressed that these Departments should provide the necessary administrative structure to support the process of evaluation. A DG must ensure that the human resources unit provides the administrative backbone of the evaluation process.

Mr Trent said that the migration of DGs was problematic as there was not any continuity in the leadership of a Department. He said that at a recent Committee meeting, the DG of the Housing Department could not answer the questions asked by Members as he was only appointed six weeks prior to this meeting.
 
Prof Sangweni replied that the migration of DGs would not be problematic if the Departments they left behind were adequately run. Internationally, this migration of directors-general was encouraged, and properly managed.

Mr T Madikiza (UDM) asked what the fate of officials was who received unsatisfactory evaluation.

Prof Sangweni said that the panel responsible for evaluating the performance of an official would recommend the remedial actions the Minister should take to ensure that performance improved.  He stressed that performance evaluations were a means to assess and improve levels of performance rather than a means to penalise. The performance reward acts as an incentive for better performance.

Mr Madikiza asked what process would be followed to ensure that those who awarded a performance bonus to a Home Affairs official, contrary to the regulations, were held accountable. What recommendations did the Commission have?

Prof Sangweni replied that the rewarding of performance bonuses was at the discretion of the executing authority. Parliament must utilise its oversight powers to take action.

Mr V Smith (ANC) concurred that Parliament and the Committee were responsible to act on the recommendation of the Commission.  The report was a means to empower the Committee with the relevant information needed to act effectively.

Mr Smith asked who was responsible was for the alignment of strategic goals of a Department. Should the Departments not be the initiators?  He suggested the Commission conduct regular checks on whether performance agreements are aligned with strategic objectives.

Ms Ramsingh responded that the Departments were principally responsible for the alignment of key performance areas to the strategic objectives The Commission used the findings of the head of Department’s evaluations to assess the link between the strategic objectives and the performance agreements. She said that the Commission operated on the assumption that these strategic objectives were correct.

Mr Smith said that Departments should not merely comply with the deadline to submit performance evaluations but that these should add value in the management of performance within each Department.  What role would the Commission play to ensure this?

Mr N Koornhof (ANC) asked what mechanisms were in place to ensure that performance was regularly discussed between the director general and the executing authority.  Were quarterly or half-yearly reviews conducted?

Prof Sangweni said that the Commission could not answer these questions. However, the executing authority and director-general were required to hold periodic reviews.

Mr Koornhof asked if the systems of evaluation, especially the areas of evaluation, were updated regularly.

Prof Sangweni said that the Commission had learnt from and adapted some aspects of performance assessment practices in Canada and New Zealand. The Commission had experienced difficulty in ensuring that the executing authority conduct regular reviews of a director general.  It would submit a report to Cabinet regarding the improvement of this process.

Ms Ramsingh added that the Commission provided annual guidelines to the executing authorities.  These guidelines were meant to kick-start the performance evaluation process.  The Commission also explored how the administrative structures of Departments could be improved.

The Chairperson expressed his concerns that the Committee had to continue investigating matters of compliance with rules and regulations and not the qualitative aspects of service delivery. He thanked the Commission for a very useful report.

The meeting was adjourned.