Question

Develop a financial management dashboard for a division within Eskom including the following:

1. A summary of the organization's strategic goals

2. A strategy map linking key performance indicators to the selected strategic goals

3. A list of four selected financial measures for your area of authority with a short justification for your selection to show how these measures will support achievement of the strategic goal.

4. A dashboard showing month-to-month performance for the last two measures you have selected

5. A review of the performance findings revealed by your dashboard, indicating the decisions that you have made to take corrective action to improve performance.

Answer 1

PERFORMANCE MANAGEMENT AT ESKOM

Measuring the performance of financial and non-financial objectives require special consideration in this particular kind of service organisation. Although a lot has beenwritten about the need for accurate measurement of multi-dimensional performance measures, very little is known about performance measurement systems. Effective performance management relies on the quality of the relationship and understanding betweensupervisor and subordinate. To facilitate this, the following roles and responsibilities are assigned toeach party.

• Supervisor/manager

(a) Assigns, negotiates, and coordinates activities, tasks, and projects – provides line of sight, and linksindividual and team goals.

(b) Monitors progress.

(c) Identifies problems, and seeks solutions.

(d) Applies expertise and judgement to the evaluation of results.

(e) Enables and encourages employee/subordinate development.

(f) Communicates individual roles, responsibilities, expected behaviours, results, and standards toensure effective delivery of required results.

(g) Ensures that employees are provided with sufficient resources to make decisions and take actionson their own. (h) Holds frequent development discussions to assist in the achievement of employees’ performancegoals.

(i) Regularly provides feedback with regard to employee performance and how it relates toorganisational performance.

• Individual

(a) Negotiates, plans, and executes work assignments.

(b) Assists manager/supervisor in setting goals.

(c) Seeks and gives timely feedback. Performance Management

(d) Proactively identifies problem areas with recommended solutions.

(e) Presents evidence.

(f) Takes responsibility for own performance and development.

• Required leadership behaviours

(a) Set and articulate clear and consistent strategic performance goals.

(b) Interpret the organisation’s strategy into specific goals and priorities for the teams and individuals.

(c) Create an atmosphere of open and transparent communication.

(d) Empower employees to develop themselves with skills required to do well in their job role and meetperformance objectives.

(e) Drive and expect performance excellence through effectively differentiating high performers and poorperformers.

PROCESS FOR MONITORING

The procedure will be reviewed annually and input will be obtained from the PerformanceManagement Forum members when significant changes need to be effected. Remuneration and Benefits Department will monitor adherence to the procedure and Divisional HR Managers will be informed of non-adherence.

PERFORMANCE MANAGEMENT SYSTEM PROCEDURE

This procedure is aimed at the following: (a) Drive organisational performance by linking Eskom’s strategic objectives and priorities toindividual/team outputs. (b) Facilitate desired behaviour to support the Eskom values. (c) Reward employees for achieving and exceeding targets. (d) Ensure that managers and supervisors are held accountable for the performance of theirsubordinates and that employee’s take responsibility for their own performance. (e) Cultivate a high-performance culture in Eskom.

ESKOM VALUES

Performance management embraces Eskom’s stated values and seeks to ensure fairness, objectivity, and consistency, while allowing sufficient flexibility to create the appropriate climate for positive interaction, communication, and feedback regarding individual performance.

ESKOM’S STRATEGIC OBJECTIVES AND PRIORITIES

Eskom’s strategic objectives and priorities are informed by the shareholder mandate and are cascaded down to the divisional, business unit, and individual levels. All individual performance contracts shall bebased on, and aligned to, these strategic objectives and priorities.

PERFORMANCE MANAGEMENT PROCESSES

Management of employees’ performance is embedded in effective management processes and basedon the following five processes: planning for performance, contracting, managing performance,performance appraisal, and also developingand encouraging performance

INDIVIDUAL RATING SCALE

Performance will be appraised and rated by means of the following continuous fivepoint scale: 1 = Unacceptable performance: requires an intervention, which would be either development orredeployment. 2 = Meeting some expectations: there is substantial room for improvement before all performanceexpectations can be met. 3 = Meeting expectations: performance is aligned with expectations and requirements. 4 = exceeding expectations: performance is better than expected and planned. 5 = Exceptional performance: performance that deserves an extraordinary reward. 9 = Not rated (neutral rating) for the following reasons: 9.1 = an employee who made an appeal against the performance rating 9.2 = an employee with less than six months’ service 9.3 = an employee who is a full-time shop steward (representing organised labour) 9.4 = an employee who is on leave (extended sick leave) 9.5 = an employee who died in service, retired, or resigned from Eskom 9.6 = not rated (after closure of the system) Please note that a performance enhancement programme (PEP) should be introduced toemployees identified as underperforming against the agreed outputs. This can be done at anypoint during the performance cycle.

TARGET SETTING

Proper target setting is one of the factors that contribute to the success and effectiveness ofperformance management. Targets must be challenging, yet achievable. Targets shall be set andagreed up front by both parties, that is, the manager/supervisor and the employee, and shall be used tomonitor and track the performance of the individual. The following target range is employed to evaluate performance against set targets:

• Floor - Performance at this level is unacceptable. If the actual result is at or below this value, it will beconsidered as a reason for applying a development option. The probability that this particular point willbe exceeded is 95%.
• Kick-in - This value represents a level of performance below the expected performance. The probability that thisparticular point will be exceeded is 80%.
• Norm - This value represents the “expected performance” level. The probability that this particular point will beexceeded is 50%.
• Stretch - This value means that performance has “exceeded expectations”. The probability that this particularpoint will be exceeded is 20%.
• Ceiling - This value represents “top-level performance”. The probability that this particular point will be exceededis 5%.

ESKOM PERFORMANCE MANAGEMENT PROCESS

The performance management process is an integrated cycle of:

• planning for performance;
• contracting;
• Managing performance; •
• appraising performance; and
• Developing/encouraging performance.

The performance management system envisaged complements the type ofinformation required by the Financial Management Bill in terms of assessingvalue for money. Thus it is important to ensure that the performance measures andtargets, as well as the monitoring and measuring systems, .are integrated with thebudgeting process. 1. "Identify and develop criteria in terms ofwhich progress in the implementation of thestrategies, programmes and services can be evaluated, including key performanceindicators which are specific to Eskom and common government ingeneral;

2. Evaluate progress against the key performance indicators;

3. Review the performance of Eskom in order to improve the economy,efficiency and effectiveness of theorganisation" The same functions, stated above, are required from theboard. Once again, theimportance of measuring and evaluating performance is highlighted, suggesting anintegrated system, which can measure both financial and non-financial performance.

How Eskom utilizes its resources in order to maximize itspotential to become more effective and efficient. Firstly, the basic organizational anddevelopmental questions need to be addressed - for example, the relationship between Eskom and outlying offices; the creation of co-operative mechanisms amongst Eskom departments, and improving Eskom' public relations withintheir employees. In the process, it is envisaged that SHC should be theframework according' to which Eskom is organized. There is a need forEskom to focus on the basic requirement of administrativecompetence when programmes and anticipated deliverables are identified in the SHC.This would be the strategic departure for performance measurement.

Secondly, in order for Eskom to increase its performance, adherenceto the following requirements of the policy aims to ensure that the administrationbecomes development-orientated: • To ensure that its managers and other staff members align their roles andresponsibilities with the priorities of the SHC. • To establish clear relationships, and facilitate co-operation, between government office-bearers and Eskom • To perform its functions through operationally effective and appropriateadministrative units and mechanisms, including departments and other functionalor business units, and where necessary, on a decentralized basis; • To assign clear responsibilities for the management and co-ordination of these administrative units and mechanisms; • To delegate responsibility to the most effective level within the administration, And • To involve staff in management decisions as far as practicable.Throughout the whole spectrum of these requirements, Eskom isrequired to take serious steps to promote co-operation with government and toinvolve the employees on a sustainable platform, in decision-making as a measure toincrease performance. For Eskom to maximize performance and become an SHC-guidedorganization, it should thus: • Focus on developmental outputs such as infrastructural projects, build programme, network strengthening, or investment promotion, which, to a certainextent. • Secondly, in an output-oriented Eskom, the administrative, financial andtechnical departments would be aimed primarily at supporting the developmentalfunctions (whether located in the economic, social services or technicaldepartments);

Thirdly, it would be more developmentally driven should Eskom employa high level of developmental staff, where such staffs has appropriatequalifications and experience in development management, programmemanagement or project management. Fourthly, the need for departments in Eskom to co-operate and coordinatetheir activities in the implementation of development projects is to beintensified. Key functions in Eskom that can play a more effectiveguiding role in developmental programmes should be investigated. Herebyreferring to the utilization of functions to ensure that can be programmes andprojects are SHC guided. Co-ordination and mutual adjustment of priorities should be continuously monitored and reviewed. This requires a high degree ofleadership from the CEO, who needs to be sufficiently andconstantly informed of project requirements and dynamics;

Lastly, for a Performance Management Framework to increase output, Key Performance Indicators (measures), as identified by Eskom, to becomedevelopmentally orientated in the SHC, should be the tangible measurement yardsticksprojecting itself in the form of programmes and projects to be achieved. This should beapproach with consideration of all the above mentioned to ensure that Eskom becomes output driven.

The importance of performance indicators is aimed at guiding resource allocation and atthe same time communicates the goals, objectives and effectiveness of a programme tothe employees