Framework for the Performance Management System - Buffalo City

The BCMM has developed and implemented a performance management system In accordance withthe legislated instruments. The main objective of the system is to guide and manage theperformance of the municipality (as an organisation) and employees (as individuals) throughout theCity.1.2.1 The Local Government: Municipal Systems Act, No. 32 of 2000.This legal instrument requires that a Municipality must:1. Develop a Performance Management System;2. Set targets, monitor and review performance based on indicators linked to the IntegratedDevelopment Plan (IDP);3. Publish an Annual Report on performance for the Councillors, staff, the public and otherspheres of Government;4. Conduct an internal audit of performance;5. Have their annual performance report audited by the Auditor-General; and6. Involve the community in setting indicators and targets and reviewing municipalperformance.1.2.2 The Local Government: Municipal Planning and Performance ManagementRegulations, 2001.This legal instrument requires that a Municipality must when developing its PerformanceManagement System, ensure that the system:1. Complies with all the requirements set out in the Local Government: Municipal Systems Act;2. Demonstrates how it is to operate and be managed from the planning stage up to the stagesof performance review and reporting;3. Clarifies the roles and responsibilities of each role player, including the local community, inthe functioning of the system;4. Clarifies the processes of implementing the system within the framework of the IntegratedDevelopment Planning process;5. Determines the frequency of reporting and the lines of accountability for performance; and6. Aligns with the Municipality’s Employee Performance Management processes.In terms of Section 43 of the Local Government: Municipal Systems Act, the Minister hasprescribed general KPIs that every municipality must report on. The following general KPIsare legislated:1. The percentage of households with access to basic level of water, sanitation, electricity andsolid waste removal;2. The percentage of households earning less than R1100-00 per month with access to freebasic services;3. The percentage of the Municipality’s capital budget actually spent on capital projects interms of the IDP;4. The number of local jobs created through the Municipality’s local economic developmentinitiatives, including capital projects;5. The number of people from employment equity target groups employed in the threehighest levels of management in compliance with a Municipality’s approved employmentequity plan;195

6. The percentage of a Municipality’s budget actually spent on implementing its workplaceskills plan; and7. Financial viability with respect to debt coverage; outstanding debtors in relation to revenueand cost coverage.1.2.3 The Local Government: Municipal Finance Management ActThe Local Government: Municipal Finance Management Act contains various provisions relating tomunicipal performance management. It requires municipalities to annually adopt a Service Deliveryand Budget Implementation Plan with service delivery targets and performance indicators. Whenadopting the annual budget the Municipality must also set measurable performance targets for eachrevenue source and vote.The objective of institutionalising a Performance Management System (PMS) is to serve as a primarymechanism to monitor, review and improve the implementation of the Municipality’s IDP.In doing so it:Promotes accountability;Facilitates decision-making and resource allocation;Guides development of municipal capacity-building programmes;Creates a culture of best practice and shared learning among Municipalities;Provides early warning signals and facilitates the development of intervention mechanisms;Creates pressure for change at various levels; andContributes to the overall development of a Local Government System.2. The Municipal ScorecardThe Municipality has adopted the Municipal Scorecard as its performance management model. Interms of the model, indicators are grouped together into five (5) perspectives as depicted in figure1.1. below -C o s t sI n p u t sO u t p u t sO u t c o m e sF i n a n c i a lM a n a g e m e n tP e r s p e c t i v eI n s t i t u t i o n a l S e r v i c eD e v e l o p m e n t D e l i v e r yP e r s p e c t i v e P e r s p e c t i v eAM u n i c i p a lD e v e l o p m e n tP e r s p e c t i v eG o v e r n a n c e P r o c e s s P e r s p e c t i v eFigure 1.1: Municipal Scorecard.T h e M u n i c i p a l O r g a n i s a t i o n2.1. The Municipal Development PerspectiveT h e M u n i c i p a l A r e aP r o c e s sThis perspective is intended to indicate if the desired development outcomes are beingS o u r c e : P a l m e r D e v e l o p m e n t G r o u p ( 2 0 0 6 )achieved. The measurement of developmental outcomes is useful in informing whether ornot policies and strategies are having the desired impact.2.2. The Service Delivery Perspective196

This perspective indicates how well the municipality is performing with respect to the delivery ofservices and products.2.3. The Institutional Development PerspectiveThis perspective assesses performance with respect to the management of municipal resourcesincluding, inter alia, the following:Human Resource allocation;Information management;Organizational Infrastructure; andAsset management.2.4. The Financial Management PerspectiveThis perspective assesses how the municipality is performing with respect to its financialmanagement, including inter alia:Operating income;Operating expenditure;Financing infrastructure investments;Capital expenditure; andFinancial management.2.5. Governance Process PerspectiveThis perspective indicates how the municipality is performing with respect to its engagements andrelationships with its stakeholders including inter alia:Public participation, including the functionality and impact of ward committees’Functionality and impact of municipal governance structures (Council structures includingthe offices of the Speaker, Executive Mayor and Portfolio Committees.);Access to information’ andIntergovernmental relations.The Process of Managing Organisational PerformanceTo be effective performance management must form part of daily management activities. ThePerformance management cycle is illustrated on figure 1.2. below:197

Figure 1.2The Municipal Scorecard model is based on the cause-and-effect assumption. This cause andeffect relationship is depicted schematically in Figure I.3.InputsProcessesOutputsOutcomesOutcomesFigure I.3:198

3. ScorecardsPerformance management is applied to various levels within the municipality. The legislativeframework provides for performance management at various levels including institutional (alsoreferred to as municipal, organisational, strategic or corporate) level, operational (also referred to asservices, departmental or section/team) level, at the level of Executive Directors in terms of section57 of the Local government: Municipal Systems Act and lastly, at individual level.The Institutional ScorecardAt institutional level the IDP forms the basis for performance management, whilst at operationallevel the annual SDBIP forms the basis. The IDP is a long-term plan and by its nature theperformance measures associated with it have a longer-term focus.The system is configured around the five (5) Key Performance Areas (KPA) identified by Departmentof Co-operative Governance and Traditional Affairs, namely:Municipal Transformation & Organisational DevelopmentInfrastructure Development and Service DeliveryLocal Economic DevelopmentMunicipal Financial Viability & ManagementGood Governance & Public ParticipationThe institutional scorecard provides an overall picture of performance for the municipality as awhole, reflecting performance on the strategic priorities set in the IDP. The developmentalperspective of this scorecard necessitates that information be also collected from otherdevelopment role players in the municipal area. These include other spheres of government,business formations and civil society organisations.The institutional scorecard is reported to Council half-yearly, and reviewed annually.The City Manager is primarily responsible for performance on the institutional scorecard. Theinstitutional scorecard therefore forms a large component of how the City Manager’s performance isappraised.Service Delivery and Budget Implementation Plan (SDBIP)At operational level the Service Delivery and Budget Implementation Plan forms the basis forperformance management. The measures at operational level are captured in the SDBIP of theMunicipality and the SDBIPs of the various Directorates.The Service Delivery and Budget Implementation Plan (SDBIP) is comprised of sections dealing withthe performance of each Executive Directorate, based on the funds allocated in the Budget. Unlikethe Institutional Scorecard, which reflects on the strategic priorities of the municipality, the ServiceDelivery and Budget Implementation Plan [Directorate Scorecards] provides a comprehensivepicture of the performance of the Directorates. It comprises objectives, indicators and targetsderived from the service plan and service strategies for each Executive Directorate.199

Each Senior Manager is primarily responsible for performance against the Service Delivery andBudget Implementation Plan [Executive Directorate scorecard]. The scorecard forms a largecomponent of how each Senior Manager’s performance is appraised.Performance contracts in terms of Section 57 of the Local Government: Municipal Systems ActEach Senior Manager is required to enter into a Performance Contract in terms of section 57 of theLocal Government: Municipal Systems Act. In the case of the City manager, this agreement isentered into by and between the City Manager and the Executive Mayor. In the case of ExecutiveDirectors the agreements are entered into by and between each Executive Director and the CityManager. The primary foundation of these agreements is found in the Service Delivery and BudgetImplementation Plan [Executive Directorate scorecard].Performance against these scorecards is assessed quarterly.Individual PerformanceIndividual or staff Performance Management deals with performance on the level of the individualemployee. The Municipality has identified four (4) phases in the performance management process.These phases are planning, coaching, reviewing and rewarding. Measuring staff performanceprovides management with information on the behaviour of staff and outcomes in the workplace.The annual performance agreements of managers and other officials are linked to the ServiceDelivery and Budget Implementation Plan of the municipality.This process is illustrated by the diagram below:Figure I.4: SDBIP as a Management ToolAt this time, the system of individual performance is not in operation, but is scheduled forincremental implementation from 1 July 2012.200