PERFORMANCE MANAGEMENT AND GOAL SETTING FOR WATER UTILITIES

Presentation to the Kenya Water Service Providers Association-Kisumu

Dr. William T. MuhairweDr. William T. Muhairwe

Managing Director, NWSC-UgandaManaging Director, NWSC-Uganda

November 2010November 2010

4th November 2010, Kisumu Kenya

Outline ….2

Introduction Global WSS Challenges Specific Public Utility Challenges Implications Performance Management and Goal

Setting What next? CEO’s Practical Perspective Key lessons Conclusion

Introduction3

The provision of Water and Sanitation Services is of paramount importance as it provides the foundation for sustainable development.

Global trends show provision of water and sanitation services is still inadequate:

1.1 billion people have no access to safe water services, and 2.6 billion have no access to adequate sanitation services

The provision of water and sanitation services in the developing World has lagged behind that of the developed countries.

Introduction …4

Indeed , the challenges facing the Water and Sanitation Industry in the developing countries are generic and homogenous in nature.

The cost of failing to properly address the water and sanitation gap is significantly higher than the cost of addressing it

The question is what are the prevailing water and sanitation challenges?

WSS Challenges: 1. The Financing Gap

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Infrastructure needs in most developing countries are enormous.

There is scarcity of resources because; Full cost recovery Tariffs in Developing economies is still

a myth Private sector financing is not readily available Returns in the water sector are long term in nature Government funding is over stretched Donor funding ebbing But even where financing is not a major problem,

there are still gaps in the provision of water and sanitation services.

WSS Challenges: 2. Climate Change

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Unfamiliar draught and excess rains Intermittent supply leading to back siphoning-

recontamination of piped water Flooding leading to destruction of works and mains,

recontamination of potable water

Lowering of lake/river levels - affecting the Quantity & quality of water & leading to increased production costs

Destruction of land cover - through human activities - Pollution and siltation.

Destruction of wetlands - Natural Filtration system destroyed.

Even where there is abundant row water supply, there are still gaps in the supply of potable water

WSS Challenges: 3. Provision of Services to the Poor

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Social dislocation resulting in high rate of urbanization and increase in urban poor settlements

Challenge of serving the poor due to the unplanned settlements & the question of who should pay?

WSS Challenges: 4. The Sanitation Challenge

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Generally provision of sanitation services tends to lag behind that of Water services

This is attributed to a number of factors including;

High cost of piped water sewerage services. The institutional fragmentation for provision of

sanitation services with no clear responsibility The proliferation of on-site sanitation facilities.

The rapid urbanization places a major challenge in providing sustainable sanitation

WSS Challenges: 5. Leadership and Management

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The greatest of all these challenges is lack of competent, efficient, business-like and service-oriented institutions.

Most institutions are characterised by Poor Governance: Corruption Poor Leadership : lack of foresightedness & priorities Operational inefficiencies. Poor Organizational culture

What are the Specific Public Utility Challenges

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1. Poor Leadership. What is Leadership? – the process of social influence in which one person

can enlist the aid and support of others in the accomplishment of a common task. (Alan Keith, 2010)

What happens in Public Enterprises? Emphasis is put on managing, controlling and interference Visionary and focused leadership is non existent Organizations have no clear and motivating visions and missions Lack of leaders who can study and understand the existing performance

situation, set vision and bring turn-around solutions

Specific Public Utility Challenges…11

2. Poor ManagementWhat is Management? – an art of getting activities

completed efficiently and effectively with and through other people. (Gulick & Urwick, 1937)

Management Functions Planning Organising Staffing Directing Co-ordinating Reporting Budgeting

Specific Public Utility Challenges …12

3. Poor Goal setting Goal setting involves establishing specific,

measurable and time-targeted objectives "Goals provide a sense of direction and purpose" Goal Setting should be SMARTER

Specific Measurable Agreed Realistic Time Bound Ethical Recorded

Specific Public Utility Challenges …13

4. Poor Accountability & Governance Lack of accountability frameworks - No

framework that clearly spell out each parties obligations to avoid overlapping of responsibilities

Poor governance and corrupt tendencies - everyone wants to be rich right from the time they are born

Technology slavery - perception that new technology is the solution to all organisation problems

Specific Public Utility Challenges …14

5. Attitudinal problems - living with the status quo (sit and do nothing syndrome)

6. External interference – Political Interference, global crisis external to the business

7. Inadequate financing – is the problem availability or leadership?

The list is endless ----------------

What are the Implications ?15

Financial crises for businesses – bankruptcy & deficits

Poor service delivery - rampant customer outcry

Management condemnation from the political and other oversight authorities

The sinking ship – restructuring and loss of jobs

Invitations/imposition of managerial ideologies, including those that are incompatible

Again, the list is endless ----------------

Performance Management and Goal Setting

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Performance:

A process of doing things either individually or collectively with a view of reaching agreed or set targets/ objectives/ Missions/ Visions etc

Management:

An art of getting things done effectively and efficiently with or through other people

Performance Management

A combined art and process of making sure that goals and aspirations of an organisation, team or set of individuals are effectively and efficiently realised

Goal Setting17

Goals:

These are desirable results of an individual or set of individuals

Goal Setting Involves Recognising where you are in relation to your

operational environment (Situational Analysis)

Recognising your successes Recognising your limitations/ weaknesses Recognising your Strength &Opportunities

What next ??18

What are the first things you would do in terms of goal setting and performance management if you were appointed MD Barclays Bank, MD National Water & Sewerage Corporation, MD Mombasa Water, or even a Head Master of a Top Secondary School in Kenya or Director of a Referral Hospital??

First Things First - What next?19

In Theory, Any Manager would do the following1. SWOT analysis2. Formulate a Vision 3. Formulate a Mission4. Design Strategic Plans and Goals (Long-term and Short-term)

Corporate Plans (3-5 years) Annual Financial Budgets

5. Formulate Operational Plans/Programmes (short-term and long-term

NWSC´s Situation as at 199820

Quote World Bank at that time: “Over the last 10 years, the GOU in partnership with the World Bank and Other Donors have made significant investments (over US $ 100 million) in the Urban Water and Sewerage sector. These investments have contributed immensely in rehabilitating the existing infrastructure under the NWSC management. Unfortunately, these investments have not been matched with the necessary efficient commercial and financial management capacity that can ensure the delivery of sustainable services in the medium to long-term”.Low Service Coverage Insufficient water supply

Large inefficient work force with conflicting roles: Staff Productivity 36/1000 connections

Poor organizational culture -Corrupt Field Staff

High UFW 60 -65% Monthly Deficit - $300,000

Poor Customer Care High operating Expenses (adm, medical, transport

Low Collection Efficiency (60-70%) High Debt Burden 100 million $

Huge level of Debtors of about 14 months

Poor organizational culture i.e. late coming etc

Typical of Watsan Utilities in Developing Countries

NWSC Case: SWOT Analysis as a first step of the Transformation Process

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NWSC SWOT Analysis as at 1998

Strengths: Sound infrastructure, abundant plant production capacity enabling legislative framework, well trained workforce, sound billing system, good corporate planning strategy, good financial budget planning policy.

Weaknesses: Low staff productivity (36 staff/1000 connections),high UfW (60%), Low Collection Efficiency - 71%, huge arrears of about 14 months of billing, high number of unviable towns.

Opportunities: Government support, relatively stable economy, donor support, abundant water resources,

Threats: Huge Debt and pending debt Servicing obligations, VAT law.

NWSC Case: Visions & Mission

Previous Visions of NWSC1. To be the Pride of the Water Sector in Uganda

(before 1998)2. To be the Pride of the Water Sector in Africa (1998-

2004)

Current Vision Statement3. To be One of the Leading Water Utilities in the World

Mission StatementTo provide Efficient and Cost effective Water and

Sewerage Services, applying Innovative Managerial Solutions to the Delight of our Customers

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NWSC Case: Strategic & Operational Plans

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Formulated both Long Term and Short Term PlansPolicy level Performance Contracts with Government /Water Boards Corporate Plans (3-5 years) Annual BudgetsOperational level Operational framework through Change Management

Programmes (100 Days) Service and Revenue enhancement project

(SEREP), Area Performance Contracts (APC), Stretch out programme Internally Delegated Area Management

Contracts (IDAMCS), One Minute Management Concept (OMM), Checkers system

See our Website for details: www.nwsc.co.ug

Key Performance Drivers24

=>Autonomy■ Devolution of power from centre to areas■ Institution of Performance Contracts (APCs and IDAMCs)

=>Customer Focus

=>Team Work■ Collective participation in the development and formulation of the

programmes. ■ Work outs through the “stretch out programme” in which workers

were free to air out any of their grievances and needs.

=>Monitoring and Evaluation Systems■ Checkers un announced visits: both process ad outputs oriented

=>Appraisal system ■ Strong incentive systems and equitable gain sharing plans■ One Minute management system■ Performance Contracts for all staff■ Performance based pay■ Penalties

Key Lessons for Setting Goals25

Ref Book: “How to be Brilliant; Change your ways in 90 days”-Michael Happell1. Positive Action2. Break out of Limiting Beliefs3. Think Differently4. Ability to Manage Stress5. Massive Action

Key Lessons for Managing Change26

“Attitudes that Attract Success”- Wayne Cordeiro

Attract Success1. Make your choice2. Believe you can change3. Train your eyes to see what is

good4. Practice, Practice & Practice5. Never Give Up

NWSC Key Achievements27

Performance Indicator 1998 2010

Service Coverage 48% 74%

Total Connections 50,826 246,459

New Connections per year 3,317 25,000

Metered Connections 37,217 245,199Staff per 1000 Connections 36 6

Collection Efficiency 60% 98%

NRW 60% 33.3%

Proportion Metered Accounts

65% 99 %

Annual Turnover (Billion Shs)

21 112

Profit (Before. Dep) (Billions Shs)

8.0 (loss) 25.4 (Surplus)

Key Lessons: NWSC Experience28

Hard Working and committed Leadership Dynamic management team Staff motivated by clear Vision, mission and objectives Autonomy and empowerment of staff Strong M&E Comparative competition Financial incentives for good performers Increased Customer Focus Incorporation of “private management style” efficiency (less

bureaucracy, performance-based pay, “customer-pays-for-a good service” principle etc).

Good planning & continuously challenging management teams with new performance targets

Outsourcing non-core activities Information sharing through benchmarking Open Communication between Management and Staff

Services offered by NWSC

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Organizational behaviour change

Institutional development

Contract design & incentive systems

Asset management Project management Systems

development

WaterElectricityIndustries (Steel Mills)BanksGovernment Ministries

Kenya, Tanzania, Zambia, MozambiqueNigeria, YemenEthiopia, Pakistan Water BoardsSouthern SudanNew Delhi & Several Municipality Water Boards

Conclusion 30

Goal Setting is an important driver for improved Performance

However, Regular meetings are paramount to track progress in resolving the long term issues.

It is important to introduce goals focused on uncovering and addressing the business most important strategic issues.

Management and staff have to embrace change as a constant factor.

■ Incentives key to efficiency and productivity of staff■ Team work and collective responsibility key to change■ We can work together to improve water utilities in Kenya

under WASPA

“Be the Change you want to see” (Mahatma Gandhi)INNOVATION IS KEY!

In line with the Innovative Programmes, we are currently offering Consultancy services as shown overleaf