Performance Management Model A system based approach to

Performance Management Model A system based approach to public service quality by John Isaac Mwita Presented by: Lucy Mbugua - SBE/D/121/12 Maina Kio – SBE/D/ Carol Manyeki – SBE/D/ Michael Mwangi – SBE/D/102/12 Peter Ngugi---SBE/D/ Contemporary Issues in Management – DBM 915

Introduction The paper is by John Isaac Mwita, International Development Department, University of Birmingham, UK. The paper reviews the underlying literature and theoretical framework of performance management (PM) as a systemsbased model for cultivating the “achievement culture” in public sector organisations (PSOs) It looks at how the various political economic and managerial techniques can integrate the PM model The paper looks at the new role of management accounting systems in meeting information needs of modern public sector managers as a potential area for further research. The paper proposes that the adoption of the performance management model is a universal remedy for improving service quality in PSO’s in developing countries

Introduction (Cont’d) Traditionally, public services are described as “non productive” and a drain on the “wealth producing” part of the economy in developing countries. New public management (NPM) has influenced a comprehensive process of change to public sector organisations (PSOs) across the board The performance management (PM) model is a system-based approach to cultivating the achievement culture in any economic entity by linking primary objectives to the secondary objectives. The model pinpoints appropriate performance measures of output from the customers viewpoint. Current strategic management literature suggests that the PM model is in place when there is a strong linkage between primary objectives and secondary objectives and between strategic plans and performance measures. This paper adopts a comprehensive view that performance is achieved if it is defined as embracing three interrelated variables: behaviours (processes), outputs and outcomes (value added or impact).

Factors affecting performance Performance as defined above is affected by a number of factors all of which should be taken into account. (i) Personal factors - the individual skills, confidence, motivation and commitment (ii) Leadership factors - the quality of encouragement, guidance and support provided by the managers and team leaders (iii) Team factors - the quality of support provided by colleagues (iv) System factors - the system of work and facilities (instruments of labour) provided by the organisation (v) Contextual (situational) factors – internal and external environmental pressures and changes. Traditional approaches to performance appraisal associate variations in performance with personal factors when infact they could be caused by situational or analysis (Skidmore 1994) budgetary control systems (Otley 1999) the balanced score card can provide this linkage.

Conceptual Framework Service quality management: This may be described as the process of minimising the performance gap between actual delivery and customer expectation. In order to improve service quality, managers have to adopt customer oriented techniques. In this regard, the Performance Management model appears to be the most ideal. What is Performance? “If you can’t define performance, you can’t measure or manage it” (Armstrong and Baron 1998). Various authors have come up with various definitions of performance Otley 1999 defines performance as being about doing the work as well as being about the results achieved. Roger 1994 argues that performance should be defined as the outcomes of work because they provide the strongest linkage to the strategic goals of the organisation, customer satisfaction and economic contributions system factors.

Conceptual framework (Cont’d) Campbell (1990) argues that the functional relationship between performance and attributes of performance can be explained in algebraic terms as (knowledge, skill and motivation) The role of motivation in the Performance Management model is to modify the current behaviour of job-holders. An individual’s behaviour can be systematically adapted to meet the desired standard by using the ABC model of behaviour change (Ayers, 1995, Daniels 1989)

ABC Model of Behaviour Change This model comprises of three elements i. e I )Antecedents, ii) Behavior and iii) Consequencies. Model advocates that behaviour can be changed in 2 ways: Ex – ante (What comes before) q Ex-post (What comes after) q Trying to influence behavior before it occurs is using Antecedents while consequences is trying to influence behavior by doing something after it occurs. PM model is based on systematic use of antecedents and consequences to improve the current behavior – performance. Antecedents prompts behavior which is followed by consequences. Understanding the way these elements interacts, managers will manage to analyze performance problems, take corrective measures, design work environment and management systems in which high performance prevail and current behavior is modified.

ABC Model of Behaviour Change Antecedents Daniels(1989), antecedents – person, place, thing, event coming before behavior which encourages performance or behavior but don’t control it. Characteristics of antecedents - Must always come before the behavior - Communicate information - Work because they have been paired with consequences. - Consequences may also be antecedents Antecedents without consequences have short- term effects. Examples of antecedents Goals, objectives, packaging, incentives, job descriptions, policies, procedures, standards, rules, regulations, meetings, tools, raw materials, work conditions, directions, instructions. Antecedents sets the “landscape” for work behavior or performance but doesn’t guarantee occurrence of desired output. Incentive schemes, coaching, training and development are most common and effective antecedents used to change/improve performance

ABC Model of Behaviour Change Behavior of other people (colleague or boss) is an antecedent called modeling (Daniels, 1989) Selecting right antecedent Behaviors usually follow particular antecedents. However, even if an antecedent is specific and paired with a consequence, it may not be the best antecedent to produce the desired performance. Eg people may use outdated procedure manuals in case they aren’t updated. Classes of antecedents (Daniels, 1989) Those that describe expectations and desired outcomes e. g primary objectives, job descriptions, accountabilities, standards and priorities. - Those that have a history of being associated with a specific consequence – e. g warnings, traffic spotlights, police cars etc - Behaviors occurring just prior to the desired performance eg visitor asking for directions, counselor entering conference room. -

ABC Model of Behaviour Change Behavior - what you see if you observe someone working – a pinpoint (Ayers, 1995) A pinpoint is a specific description of performance that refers to any action (process) of a person or an outcome (result) the performer produces (Daniels, 1989) If an organization hasn’t pinpointed the desired behaviors from the beginning of the performance process, it will be impossible to objectively measure and determine whether changes in the results are performer –produced or system –produced. Organizations should pinpoint to avoid managing undesired behavior.

ABC Model of Behaviour Change Modifying Employee Behavior Motivational theories explain how individuals can be influenced to acclimatize new behaviors. Need, goal settingm expected attractiveness of outcome and social comparison are argued to be the main driving motivational forces (Dixon et al 1998) and are explained by the following theories. Need motivational force – Maslows theory of hierarchy of needs (1970), motivational hygiene theory (Mintzberg et al 1959, 1996), achievement-power-affiliation theory (Mc. Clelland, 1961), and existence relatedness –growth theory (Alderfer, 1972) - Goals theory (Locke, 1968, “Goal setting motivational force” locke and Ladham, 1990) - Expectancy theory by Vroom (1964) explains the “expected attractiveness or outcome” - Social comparison – Equity theory by Adams (1965) -

ABC Model of Behaviour Change Modifying Employee Behavior Practical impact of these theories on behavior depends on things like attitudes, values and personal qualities of individuals and organizations. Individual’s capacity and willingness to amass incentives to assume new behavior, to critically observe own behavior and motivators and ability to develop intuition and aptitude to manage own behavior change. There are many organizational strategies required to craft required behavioral change in workplaces. Organizations and individuals undergo learning process through observations and/or imitations (social learning theory – Bandura, 1986) or feedback received by learner on behavior practiced (positive and negative reinforcement theory – Daniels , 1989, Skinner, 1969) PM model enables an economic entity become a “learning organization”

ABC Model of Behaviour Change Consequences are events that follow behavior and change probability that the behaviors will reoccur in future. They either increase or decrease behavior. There are four behavioral consequences either increasing or decreasing. i) Consequences that increase behaviors - Positive reinforcement (R+) ie getting something you want; and - Negative reinforcement (R-) ie escaping/avoiding something you do not want. ii) Consequences that decrease behaviors are: - Getting something you do not want (P+) called punishment ; and - Failure to get something you do not want (P-), called extinction.

Thus R + is any consequence that increases the probability that the behaviour that preceded it will occur more often in future while R- is a consequence that strengthens any behaviour that reduces or terminates the consequence(Daniels, 1989). On the other hand , P+ is a consequence that decreases that frequency of the behaviour it follows while P- implies non-delivery of positive reinforcement for previously reinforced behaviour.

The PM model is systematic in approach and managers can actually adopt systems analysis theory(SAT) to link primary and secondary objectives of an organization (Burch, 1992). SAT attempts to be comprehensive by taking into account many variables that affect the day-to-day functioning of an entity-It is holistic in nature and Private Sector Organizations( PSOs) can safely adopt its philosophy.

LITERATURE REVIEW ON THE PM MODEL PM model is defined within the context of private sector organizations as a systematic, data-oriented approach to managing people at work that relies on positive reinforcement as the major way of optimising performance(Daniels, 1989). According to Slater et al, 1998, it is a ‘’value-adding’’ process of organizational performance. Data-oriented means that an organization must use performance data to evaluate the effectiveness of the strategies employed (secondary objectives) to achieve the primary objectives (Fitzgerald et al, 1991)

LR CONT’D Naht, 1991, describes PM as ‘’a process that links people and jobs to the strategy and objectives of the organisation’’. It is emphasised that through PM individual jobholders: 1. Have greater clarity about what their organization is trying to achieve. 2. Understand what is expected of them in their job 3. Are entitled to regular feedback on how well they are doing 4. Have continuous support from their managers 5. Have an opportunity to assess their overall performance achievements over a given period.

LR ÇONT’D The techniques and practices of PM are derived from the field study of applied behaviour analysis , this being the term used to describe the scientific study of behaviour(Baer, 1968)—This enables precise definition of behaviour under study , experimentation and consistent replication of the experimental findings. PM is an integrated set of planning and review procedures , which cascades down through the organization to provide a link between each individual and the overall strategy of the organization (Rogers, 1994)

INSTALLING PM IN AN ORGANISATION ENTAILS § § § creating and supporting the ``achievement culture'' performance orientation and professional excellence (Edis, 1995). a clear understanding by every member of the organization's mission and values, managers developing a style that promotes achievement with the right motivation ``or positive reinforcement'' and performance-based information-set from the management accounting system (MAS) role of financial planning and control (Drury, 1996). Such as activity-based costing (ABC), activity management (AM), activity-based management (ABM), local information systems (LS), balanced scorecard (BS), life-cycle costing (LCC), target costing (TC), strategic management accounting (SMA), cost of quality (CQ), EVATM, etc. , are applicable in a public sector environment

IMPLICATIONS OF THE PM MODEL IN LOCAL GOVERNMENTS • • Performance management model is the process by which the organisation integrates its performance with its corporate strategies and objectives (Bititci et al. , 1997). evidence shows that organisations concentrate on measuring what is easily measurable rely on operational concepts however little is done on performance in terms of economy and efficiency, and effectiveness (Palmer, 1993). Most organizations should use Balanced score card (financial, community/customer, internal business processes, and growth/innovation and learning) to measure performance There should be a focus on stakeholders, Atkinson et al. (1997) call strategic performance measurement system

EMPIRICAL STUDIES SHOW THAT • • • dissatisfaction with performance appraisal comes from the ineffectiveness of the system in achieving some of the purposes for which the schemes are established problems with performance measurement are attributable to the flaws in the design, implementation or operation of the performance appraisal schemes in organisations Surveys consistently show that managers spend little time on the measurement process of individual performance.

the focus of this study is on the role of MAS in response to the revised information needs of public sector managers in the UK local government system q In conclusion q philosophy of NPM is a contemporary customerfocused approach, which aims at improving the delivery of public service quality q theoretical framework emphasizes the use of PM as a systems-based model for cultivating ``the achievement culture'' within PSOs. q for the PM model to function effectively, performance of employees must be linked to corporate objectives, measured, and recognised.

The planning, decision- making and control processes must be based on performance information from the MAS. q PM model focuses on optimization of customer service level. q There is a need to link PM systems design with issues of policy, strategy, operations, assessments and information systems. q The PM model reflects and correlates the aims of an organisation and the plans that have been developed to achieve those aims. q management accounting and other performance measurement practices need to be evaluated not just from an economic perspective, but also from a social, behavioural and managerial perspective, within an overall organisational context. q organizations to adopt Strategic PM an approach recognizes the results (primary objectives) and the means to achieve these results (secondary objectives). q