Performance appraisal in the Western Balkans: Overview and good practices from a capacity development perspective 1

United Nations Development Programme

November 2009

Performance appraisal in the Western Balkans:Overview and good practices from a capacity development perspective

April 2010

This study discusses performance appraisal systems in Western Balkan countries and the challenges they face. Based on an analysis of the current situation, the study focuses primarily on non-monetary aspects of performance appraisal and performance management.

It also proposes the following measures for implementation: a) Creation and development of institutes for performance appraisal training; b) Development of precise job descriptions framed into broader organizational needs; c) Design of model career plans including provisions for fast-track schemes;d) Increasing automaticity of the process of putting into action rewarding and training schemes; e) Improving transparency of recruitment and promotion; f ) Providing mechanisms preventing politicization of the performance appraisal system; and g) Fighting formalism in performance appraisal.

The study discusses the reasoning behind these proposals and elaborates upon them in more detail.

Performance appraisal in the Western Balkans: Overview and good practices from a capacity development perspective 2

Contents

1. Introduction

2. Literature review 2.1 Conceptual issues 2.2 Specificity of contexts 2.3 Existing literature on performance appraisal in Central and Eastern Europe 3. Performance appraisal tools 3.1 Civil service codes and overall legal context 3.2 Relevant by-laws, guidelines and regulations 3.3 Modalities of performance appraisal 3.4 Direct monetary incentives 3.5 Promotion 3.6 Non-monetary incentives 3.7 Major challenges to the performance appraisal systems

4. Analysis 4.1 Situation in the individual countries 4.2 What works and what does not 4.3 Policy proposals

5. Conclusions

6. Bibliography References Presentations by civil servants Selected useful reports for further reference

7. Appendix

This publication was produced by the Capacity Development PracticeUNDP Bratislava Regional Centre, RBEC http://europeandcis.undp.org/cd

April 2010

Author: Michal ParizekAdvisor and Coordinator: Mao Kawada, Capacity Development Programme OfficerContributors: Western Balkans Human Resources Management Community of Practice Editor: Blythe Fraser, Communication and Advocacy Officer

For more information, please contact: Mao Kawada mao.kawada@undp.org

The United Nations Development Programme (UNDP) is the UN’s global development network,advocating change and connecting countries to knowledge, experience and resources to help peoplebuild a better life.

The views expressed in this publication are those of the author and do not necessarily represent those of the United Nations, including UNDP, or their Member States.

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Performance appraisal in the Western Balkans: Overview and good practices from a capacity development perspective 3

1. Introduction

In recent years, UNDP has been leading a shift in the way the world perceives the challenges of develop-ment. The move towards capacity development, now apparent in the work of many national as well as international donor agencies, signals an increasing understanding that sustainability and genuine national ownership of development programmes is the core of successful development. This includes implementation capacities, especially within public administrations.

UNDP’s capacity development approach seeks primar-ily to assist countries with developing and strength-ening their own national administrative capacities so that they are then able to cope with the challenges of today’s world on their own, without external assistance.

The four core issues of the capacity development ap-proach are Institutional Arrangements, Leadership, Knowledge, and Accountability. Human resources man-agement (HRM) is one of the main areas that falls under Institutional Arrangements, and performance appraisal is one of the core aspects of human resources manage-ment (indeed, some claim it is the core aspect of HRM). Thus, the topic of this study is very much relevant for UNDP’s capacity-oriented approach. Studying how individual countries approach the problems of perfor-mance appraisal within their civil service is absolutely necessary for understanding how the public administra-tion bodies in the countries operate. Assisting countries with development of functioning performance ap-praisal tools and policies – both at the systemic and the organizational level – is one of the keys to sustainable human development.

Looking at the Western Balkans shows that it is precisely the lack of capacity in human resources management issues and specifically in performance management tools that call for increased attention by development assistance agencies. Most countries in the Western Bal-kans are well on their way in terms of development and are achieving progress in many human development indicators. At the same time, public administration still carries the burden of the past as reform efforts some-times run out of steam due to pressures from groups with interests in maintaining the status quo and due to rather rigid overall institutional environments. New stimuli in the matters of human resources management are necessary and the lack of capacity in performance appraisal is certainly a key area for increased support.

The purpose of this study is to offer insights into the challenges of performance appraisal systems in the Western Balkans and to propose potential solutions. The study is situated within the broader framework of human resources management issues and of perfor-mance management but in practical terms it mainly focuses on the specific questions of performance ap-praisal. Geographically it covers the seven countries in the Western Balkans.1

The findings of the study are based on a comparative analysis of information derived from several types of sources both academic and non-academic in nature. In particular, the sources of data used include: presenta-tions by and subsequent discussions with senior civil servants from the bodies responsible for human re-sources management and performance appraisal mat-ters within the respective countries, E-mail interviews with these civil servants as well as with their subordi-nates directly responsible for the issues in question, relevant laws, by-laws, and guidelines, reports by both national and international independent analytical bod-ies, and academic texts. The major strength of the study lies in its comparative reach, allowing for the identification of the major chal-lenges common to all countries in the Western Balkans. The limitations mirror this strength; the comparative reach of the study is a tradeoff as there is less atten-tion paid to the very specific problems of the individual countries. In other words, the study should be treated as a framework for approaching performance appraisal issues in the region but not necessarily as the source of most concrete or up-to-date information on individual countries. It provides the context, not step-by-step guidance for the individual countries.

1 Albania, Bosnia and Herzegovina, Croatia, the Former Yugoslav Republic of Macedonia (hereafter referred to as ‘Macedonia’), Kosovo - UN administered territory under UNSC Resolution 1244 (hereafter referred to as ‘Kosovo’), Montenegro, and Serbia.

Performance appraisal in the Western Balkans: Overview and good practices from a capacity development perspective 4

2. Literature review

This section provides a review of the academic litera-ture relevant for the study of performance appraisal systems in the Western Balkans region. Although one can see an increase in attention paid to these issues in academic literature, the overall amount of research done so far is minimal.

2.1 Conceptual issues“Performance evaluation is one of the most central hu-man resources practices,” (Ferris et al., 2008: 146) and as such deserves much more attention than is paid to it by national administrations in most transition countries – Western Balkans countries being no exception. At the most general level, the concept of ‘performance ap-praisal’ refers to a method of evaluating an employee’s job performance according to some specified criteria (e.g. quality, time). Accordingly, a performance appraisal system is a mechanism or a set of mechanisms by which employers hold employees accountable for their efforts, or lack thereof, and ability or, lack thereof, to perform the assigned jobs. According to a definition by the Organization for Economic Cooperation and Develop-ment (OECD), also adopted by UNDP, performance assessment or appraisal is an “[a]ssessment against a set of predetermined criteria of the economy, efficiency and effectiveness with which an organization or an individual carries out a particular activity or range of activities. Organizations or individuals may set regular targets on particular aspects of their performance – financial returns, efficiency, quality of services supplied, etc. – against which their performance is monitored and evaluated” (UNDP Capacity Assessment User Guide, p. 27-28). In practice, performance appraisal involves activities such as collecting information on employee work outputs, holding interviews seeking to determine employee strengths and weaknesses, or determining the quality of various aspects of an employee’s work. What all this activity is aimed at is not only an assess-ment of one’s efforts in the previous period but, per-haps even more importantly, motivation for improved performance in the periods to come. Equally important, performance appraisal is not focused exclusively on the particular employee, but also on the relationship between his or her activity and the overall performance of the organization.

2.2 Specificity of contextsAn important question regarding the practice of perfor-mance appraisal, one that has raised serious and lasting debates in management studies, is whether, or to what extent, the commonly known ‘mainstream’ tools of

performance appraisal mostly developed in the United States can be transferred to other cultural environments without substantial loss of effectiveness or even induce-ment of counter-productive behaviour. Especially in re-cent years, researchers have been arguing the need for a much more culturally-sensitive approach and against the universalistic paradigm of one-size-fits-all tools (Fer-ris et al., 2008). As de Waal puts it, “quite a few scholars doubt whether existing Western management practices can and will work in emerging markets” (2007: 1).

The general argument repeatedly stated in academic work is that without taking into account the specificities of cultural and institutional contexts and constraints, the Western-type performance appraisal systems are doomed to fail in transition and developing countries (Zupan and Kase, 2005; de Waal, 2007; Ohemeng, 2009). Culturally, the need for a careful attitude is indicated by such factors as traditional systems of rewarding, the overall view on how and at what pace career develop-ment should take place, etc. Institutionally, most devel-oping and transition countries differ substantially from the Western-type economic and political system in their problems with quality of governance institutions as well as in the overall institutional structures. The enabling systemic conditions differ substantially in developing and transition countries compared to those prevailing in Western Europe and the United States.

2.3 Existing literature on performance appraisal in Central and Eastern EuropeThe works on performance appraisal and overall hu-man resources management in Central and Eastern European countries (Koubek and Brewster, 1995; Jenei and Zupko, 2001; Costigan et al., 2005; Verheijen and Dobrolyubova, 2007), and specifically in the Balkans (Zupan and Kase, 2005; Milikic et al., 2008) are mainly based on works arguing for sensitivity to specific local conditions. They stress that transition countries have several specific features. Firstly, a tradition of perfor-mance appraisal as well as professional human resourc-es management is virtually absent in these countries. In the past, issues of human resources management were mostly handled by unqualified clerk staff whose respon-sibilities were purely formal. Related to this, secondly, the position of human resources departments in orga-nizations in transition countries is very weak; they have usually been considered marginal for the performance of the firm or organization, and their position remains marginalized further. Zupan and Kase even introduce ‘power of the HR department’ as an important predictor

Performance appraisal in the Western Balkans: Overview and good practices from a capacity development perspective 5

of a firm’s ability to adopt viable human resources strat-egies (2005). Thirdly, what is typical for organizations in transition countries is a high degree of formalism in performance appraisal and human resources manage-ment matters in general as opposed to the approach based on assessment of substantial outcomes typical in Western Europe and the United States of America.

Fourthly, public administrations in the region are gener-ally under significant influence from direct political pressure, not only in substantive matters but also in managerial issues such as recruitment. In other words, the civil service management cannot function as an independent expert body providing a service, since its expert function is impeded by strong political and interest group pressures (Jenei, Zupko, 2001). This obvi-ously has serious consequences for the way the human resources management tools, including performance appraisal, are used.

Overall, the (not very rich) literature on performance appraisal and human resources management issues in Western Balkan transition countries provides us with several interesting insights into what specific chal-lenges performance appraisal systems in the Western Balkans region face, and where additional efforts should focus.

3. Performance appraisal tools

Given what has been said in the previous section, it is clear that the situation in the Western Balkans in terms of human resources management is ambiguous. On the one hand, the whole region is “moving West-wards” and trying to adopt the models of human resources man-agement usual in the civil service of European Union (EU) countries. On the other hand, this effort sometimes clashes – at the systemic level – with deeply rooted norms and patterns of behaviour not conforming to the standards of democratic governance, and – at the organizational and individual level – with interests of the powerful actors within the civil service. As a result, we do see some movement on the issues of perfor-mance appraisal and yet also a lot of resistance both from powerful individuals and from the administrative structures as such.

3.1 Civil service codes and overall legal contextThroughout the region, the basic legal documents re-garding civil service are fairly recent. Among the seven countries of the region only Albania has had the current civil service code for more than 10 years (adopted in 1999); all other legislative bases of civil service are more recent. Furthermore, most of the civil service codes have been constantly amended throughout the last ten years.

The important point to be made with respect to assess-ment of impact of the newly adopted legal acts on the practical functioning of civil service is that in recent years most countries in the region have gone through the process of developing, adopting, and implement-ing (to some extent) complex public administration reforms. It is clear that the effects of individual laws on the quality of public administration and specifically on performance appraisal systems may to a large extent depend on the overall stage of public administration reform in a particular country rather than on the quality of the legal acts as such.

3.2 Relevant by-laws, guidelines, and regulations The specific regulations related to the appraisal of civil servant performance and (most importantly for the practice of human resources management and perfor-mance appraisal) the detailed operational guidelines for appraisals are usually even more recent than the general codes of civil service (see Table 2 in Appendix for detailed information).

These laws in general follow standard ‘Western’ pat-terns, both in terms of the stated goals and the tools to

Performance appraisal in the Western Balkans: Overview and good practices from a capacity development perspective 6

be used to achieve them: they specify the conditions for recruitment and promotion of civil servants, the condi-tions the applicants have to fulfill, and the mechanisms of performance appraisal and remuneration. Those most are relevant are discussed below in some detail.

3.3 Modalities of performance appraisalThe basic set up of the performance appraisal systems (see Table 3 in Appendix) is very similar for all the coun-tries, and differences are negligible in terms of substan-tive content although there are certain notable differ-ences in the formal aspects of performance appraisal.

Firstly, in terms of clarity and formalization of the as-sessment criteria, some countries’ rules of procedures tend to be very specific about the criteria to be taken into account and about their relative weight (e.g. Bosnia and Herzegovina or to some extent Serbia) while others seem to provide the lists of criteria as mere guidance for the appraisers rather than as strict and precise instruc-tions to be followed (e.g. Croatia). While provision of detailed specifications should certainly be encouraged it should not be taken as a panacea for performance ap-praisal. The assessing managers require certain freedom to be able to capture those aspects of an employee’s work that are not present in the record forms; to achieve this freedom, higher “numeric” precision in the forms is outweighed by lower linguistic precision of the formulations of the assessment criteria. So, for instance, the performance appraisal system in Bosnia and Herze-govina assigns each of the four basic criteria for perfor-mance appraisal a particular weight (e.g. 15 points) but the formulations of the criteria are broad enough (e.g. “Motivation and efforts”) to allow the appraiser a lot of space for a highly personalized approach. In this sense, higher formalization of the process (e.g. assigning the weights to individual indicators) is on its own unable to secure better quality of the assessment process but it certainly can help the assessors focus their attention on the important aspects of an employee’s work and helps create comparable conditions across the individual civil service bodies.

Secondly, a further difference between the perfor-mance appraisal systems lies in the inclusiveness of the criteria. While some countries (e.g. Croatia) tend to include only ‘hard’ and individualized criteria (quality of work, deadlines), other performance appraisal systems (e.g. Macedonia or Montenegro) also include various ‘soft’ and more socially defined criteria of performance (creativity, teamwork, communication, and client

orientation). In light of the previous paragraph, it is clear that adopting more inclusive lists of criteria on its own does not secure any improvement in assessment as the ‘soft criteria’ are not easily measurable or enforce-able; at the same time, though, including more ‘soft’ and ‘social’ criteria in the guidelines may help manag-ers realize their importance and include them at least implicitly in their assessment (and feedback to employ-ees).

3.4 Direct monetary incentivesMost performance appraisal systems in the region possess certain tools to motivate employees for better performance by direct increase in remuneration, either through irregular bonuses or through lasting salary increases. Out of the seven countries only Croatia and Kosovo do not have such mechanisms however they are being considered for future legal provisions. Clearly the success of this domain, perhaps more than any else, is directly linked to the overall economic conditions of the country. Repeated statements by civil service manag-ers, independent analysts as well as academicians show that unless the wages in the civil sector are comparable to, if not competitive with those in the private sector, employees’ work-efforts decline sharply. Besides this almost trivial observation two issues with respect to monetary incentives deserve attention.

Firstly, a highly de-motivating factor in most perfor-mance appraisal systems is the very low spread of wages between the lowest-ranking and the highest-ranking officials. It has been calculated that in Macedo-nia this spread amounted to mere 1:2.6, i.e. the highest-ranking civil servants receive only about 260 percent of the salary of the lowest-ranking. Such a narrow space for income increase (indeed over very long period and only for the very best performing officials) can hardly motivate young civil servants to enthusiastically pursue their career plans.

Secondly, an interesting issue with respect to direct monetary incentives arises in relation to their ‘auto-maticity’ or the degree to which awards of bonuses is independent from other considerations once the highest performance marks have been assigned. The countries do possess mechanisms linking performance with salary bonuses but the bonuses tend to be highly conditional and their assignment rather non-reliable (or irregular).

Thirdly, the countries are able to award the employees

Performance appraisal in the Western Balkans: Overview and good practices from a capacity development perspective 7

participating in specific longer lasting projects. So, for instance, in Montenegro civil servants are rewarded for participation in working groups drafting more complex new laws or for active attendance of training and professional development events. In this case, the employees’ efforts are assessed based on their revealed motivation for professional growth.

3.5 PromotionAs with the previous tools for civil servant motivation, the effect of promotion as a motivating factor depends to a large extent on the degree to which its use is per-ceived by the employees as professional and impartial. In this respect the case of Montenegro is illustrative: the Montenegrin performance appraisal system stipulates the precise conditions which an employee has to fulfill for a promotion. For instance, an employee may be promoted to a higher title if he or she achieves either five marks of “good” within five years or three marks of “excellent” within three years. The automaticity is not guaranteed but clearly such specification puts pressure on superiors to follow the rules.

Related to this, specific promotion arrangements can be used as tools for attracting and retaining highly per-forming young officials (see also the following section). These arrangements, referred to as fast-track or fast career development plans, enable the employees with the very best results in the appraisal process to speed up their career in the civil service (under well specified conditions) and by this it motivates them not to flee civil service for better perspectives offered by private companies.

3.6 Non-monetary incentivesWhile monetary incentives (and promotion) are clearly the incentives preferred by employees, financial con-straints which especially the countries with relatively lower incomes per capita and especially during current economic downturn face limit the possibilities of the managers to offer salary increases and various bonuses and thus to motivate civil service staff sufficiently. In such situations the non-monetary incentives play an increased role as they may prove extremely helpful for retaining the best performing staff while not substan-tially increasing the costs for the employer.

One way to retain qualified staff has already been indicated in the previous section, it is the provision of the fast-track career development plans. It offers the very best performing civil servants an increase in status

and an expected medium-term increase in salaries (as a consequence of promotion). It does not pose demands on available resources since it is restricted to only the very best performing individuals but at the same time it generates incentives for a larger group of civil servants. In Macedonia, for example, allowing for ‘fast-track’ career development has been suggested by an inde-pendent expert group – Analytica – as one of the core steps necessary for increased performance in the civil sector (Analytica, 2007). It should be noted that unless a fair promotion system (including the fast-track option) is is in place, the motivational factor does not work well: employees lose motivation as they realize the benefits of the system are not distributed according to impartial judgments.

A different way to motivate civil servants is provision of what can be labeled as ‘honorary’ or ‘prestige’ incen-tives. These can range from daily informal recognition of success (both spoken and expressed in increased responsibility and freedom of work) to tangible rewards at specific occasions (e.g. gifts). The first type of recogni-tion is fully within the discretion of the direct supervi-sor, it is not costly, and brings immediate results; the second type of award usually takes the form of ‘ex post’ lifelong awards for excellent officials (and its prospec-tive motivational factor appears to be limited unless these awards are connected with substantial financial rewards). A study by USAID of the Ministry of Justice of Bosnia and Herzegovina discusses these issues in more detail (USAID, 2006).

A different approach – a more investment oriented one – towards motivation of high-performing civil servants to stay in the civil sector is based on such career devel-opment opportunities that civil servants really value (i.e. not the usual compulsory training schemes). Namely, a system of a limited number of scholarships can be designed through which a few highly motivated young civil servants can be provided with an opportunity to obtain a degree from a recognized university in West-ern Europe or the United States in their field of work. Alternatively, possibilities for secondment either at peer national offices in the countries of the EU or at field-related international institutions can be very attractive and accessible even for employees at a more advanced stage of their career. In particular, in the CEE region and the Balkan countries civil servants tend to value highly when they are given opportunities to meet with for-eign/international counterparts within the structures of the EU.

Performance appraisal in the Western Balkans: Overview and good practices from a capacity development perspective 8

3.7 Major challenges to the performance appraisal systemsEfforts by the states in the region to improve the quality of civil service through use of performance manage-ment tools are impeded by two major constraints on the systemic level: ethnic diversity, and corruption.

Firstly, the region has been known for centuries for being exceptionally ethnically heterogeneous, a factor that contributed substantially to an outbreak of mass conflict in the region in the 1990s. Due to extreme po-litical and social sensitivity of the problems of ethnic di-versity all human resources management systems in the region face a major challenge of reconciling two criteria for selection of employees and for their promotion: the usual criterion of competency, and the region-specific factor of ethnic identity (see e.g. Respa, 2009, on these issues). It has been reported that there is a considerable tendency within the civil service to misuse the criterion of proportional representation of ethnicities for purely private purposes. The fact that professional competen-cies are explicitly not considered the sole criterion for selection of employees opens the door to nepotism (Sigma, 2008).

Secondly and related to this, corruption is widespread in the societies of the Western Balkans (see Table 4 in the Appendix) and this dramatically reduces the quality of administrative processes. The states’ intense efforts to control corruption in general have been translated into the specific articles in the civil service laws and autono-mous agencies are being created to deal with corrup-tion (e.g. Agency for Anti-corruption Initiative in Monte-negro, Anti-corruption Prosecutor Office in Bosnia and Herzegovina, and others). However, the problems are persistent and especially the public procurement mech-anisms are often reported to be corrupt (Sigma, 2008). Some success has been achieved in recent years but Western Balkan countries still count among the states with high levels of corruption in worldwide comparison. Clearly a positive trend has been set but the achieved results are by no means sufficient (again, Table 4 in ap-pendix provides some quantitative indicators on this).

Overall, this section presented very briefly the tools employed by countries to increase performance of civil servants and the general (systemic) challenges the performance appraisal systems in the region face. What is specific to the performance appraisal systems in the Western Balkans is not so much the concrete perfor-mance management tools (which are being more and

more adjusted according to the human resources man-agement models imported from Western countries) but rather the overall socio-economic context within which these tools are employed. The following section departs from this general observation in order to provide some more specific insights.

Performance appraisal in the Western Balkans: Overview and good practices from a capacity development perspective 9

4. Analysis

The purpose of this section is to provide an overview of the particular problems faced by the countries of the region and how to overcome them. The individualized information provided at the beginning is in the second section analyzed in a general framework; the third part offers several policy proposals based on the analysis.

4.1 Situation in the individual countries This section offers some insights into the major chal-lenges the individual performance appraisal systems face. As indicated in the introduction, the information is derived from a broad range of materials from various sources, both by high-ranking public officials from the particular countries and by independent analysts and academicians. At the same time, though, other experts on the issue might identify other key challenges for the individual countries. Thus we do not suggest that these are the only challenges or that it is only the particular countries mentioned here that suffer from them. To the contrary, rich empirical evidence supports the view that in fact most of the challenges are to some extent pres-ent throughout the region (see the section after this one).

AlbaniaThe Albanian performance appraisal systems suffer primarily from two partially interrelated problems: mal-functioning grading system and missing links between individual performance appraisal and functioning of the organizational unit as a whole. Most civil servants in Albania score very high in the assessment, no matter what their actual performance is. As a result, it is hardly possible to use the standard appraisal procedures for distinguishing between highly performing individuals from those civil servants in need of further training or of disciplinary measures. Interestingly, this problem has not been alleviated even by creation of a link between appraisal results and benefits; the traditional informal structures guiding work relationships seem to be persis-tent vis a vis direct monetary measures.

The second problem reported in Albanian performance appraisal system is that of an unclear or even missing link between performance of an individual and of the unit as a whole (see also below).

Bosnia and HerzegovinaIn Bosnia and Herzegovina, the efforts to improve per-formance management mechanisms are to some extent impeded by the ethnic and religious diversity of the population and a high degree of independence of the

individual units constituting the state. As a result of dif-ferent procedures and requirements in individual parts of Bosnia and Herzegovina, mobility of civil servants be-tween institutions and between regions is very limited. Furthermore, ethnic considerations play a major role in appointment and promotion procedures.

As in other countries, there is a pronounced problem of linking results of performance appraisal with the individual employee’s salary and with his or her career prospects. Even where the results are excellent the indi-vidual is unlikely to feel this directly on the payroll or in better prospects for promotion.

CroatiaThe major challenge to the Croatian performance ap-praisal system is rather similar to one of the problems faced by Albania: individual performance appraisal is typically not incorporated into any comprehensive organizational framework, there is no clear sequence from organizational needs to specific job description and to the development of criteria suited for assess-ment of performance of the particular job. Similarly to other countries, most employees are graded as excep-tionally well performing.

A second issue of concern is appraisal of performance of high ranking civil servants. Clearly the positions of e.g. permanent secretaries are insubstantial managerial methods but at the same time, it is inherently difficult to measure performance of ministries using the criteria used to assess the work of managers in the private sec-tor. The problem of deciding according to what criteria top public officials will be assessed is omnipresent in the region.

FYR MacedoniaIn Macedonia several issues in performance appraisal deserve attention. Firstly, what has been reported as the major problem is the generally low capacity of the human resources management sections within the in-dividual administrative bodies. As has been elaborated upon in the previous sections (see especially section 2.3), the position of the human resources manage-ment bodies had largely been neglected in the past in most countries in the region and this translates into the current position of the human resources manage-ment bodies in the civil sector as well. Macedonia lacks a strong agency able to provide quality training for a sufficient amount of human resources management specialists within the individual ministries and public

Performance appraisal in the Western Balkans: Overview and good practices from a capacity development perspective 10

bodies and able to increase awareness of centrality of the human resources management issues in provision of public services and in the civil service generally.

What has also been reported as an important problem is the high level of politicization of the civil service, pri-marily at its top levels. Clearly a problem on its own, this phenomenon brings difficulties to functioning of the performance appraisal systems as well: politicization and lack of transparency of the management dimin-ishes confidence of civil servants in fair recruitment and promotion procedures. This problem is naturally most pronounced with respect to young and highly perform-ing individuals and their willingness to stay in the civil service.

KosovoNot enough information specific for the problems of Kosovar performance appraisal system was collected. The specific conditions of the civil service and its ex-treme interconnection with work of the international administrative bodies suggest that the key phase for how the performance appraisal system develops is the transitive period when international bodies gradually pass the work to the local administrative bodies. How these bodies perform in terms of motivation of civil servants remains to be seen.

MontenegroThe key problem of the Montenegrin performance ap-praisal system is very similar to that of Albania and oth-er countries in the region: the actual grades assigned to individual performance are extremely skewed towards the high end of the scale. In particular, according to the statistics provided by the Montenegrin authorities, as many as 66 percent of appraised employees have been reported to perform excellently (the best mark possible). Performance of 33 percent of employees has been marked “good”; the mark “satisfactory” has been assigned to only one percent of employees. Clearly, the entire performance appraisal system and related award mechanisms lose most of their use in this situation.

SerbiaIn Serbia, two challenges to the performance appraisal system stand out. Firstly and similarly to Montenegro and other countries, there is the issue of skewed grad-ing where more than 70 percent of employees receive the mark of “exceptional distinction” or “distinction” (two highest possible grades).

Secondly, there is the more complex problem of incor-porating the individualized assessment mechanism into a broader framework of organizational needs. In partic-ular, performance appraisal is often treated as a matter of individual interest, not as a procedure the primary purpose of which is to enhance effectiveness of the administrative body as a whole. Only after determining the organizational needs is it possible to develop pre-cise job descriptions, and only after that to determine the criteria suited for assessment of performance of the particular job, and to assess the individual employee’s performance. Related to this, the Serbian performance appraisal system lacks a strong link between assess-ment results and appropriate training programmes for the laggards or mechanisms of accelerated promotion for the individuals that perform exceptionally well.

4.2 What works and what does notBased on the weaknesses described above, as well as on other less pronounced ones (although perhaps no less important) it is possible to develop a list of areas where more attention should be paid. Although some coun-tries perform better than others on specific issues it can be argued that the problems listed here are common to most countries in the region and that they prove to be substantial obstacles to development.

Performance appraisal as an obstacle, weak human resources managementOverall, the performance appraisal mechanisms in the region suffer substantially from problems partially in-herited from the past: positions of the human resources management bodies within the respective administra-tive organizations are weak, and performance appraisal as such is considered as an obstacle to “correct” inter-personal relationships within the unit rather than as a mechanism designed to help the laggards and reward outstanding performance (e.g. Zupan and Kase, 2005). These are core problems which can only partially be alleviated through better use of performance appraisal tools as such, they are mostly determined by the overall organizational and even societal cultures persistent in civil service structures of the countries in the region. It is clear, then, that no one-off solution can be found to these problems, and that continuous pressure for change is necessary.

Performance appraisal as a mere formalityClosely related to this is the fact that most civil servants as well as managers tend to treat performance appraisal as a pure formality, something that needs to be done

Performance appraisal in the Western Balkans: Overview and good practices from a capacity development perspective 11

but that actually has very little sense (Respa, 2009). As a result, most civil servants are assigned the high-est possible marks although in general the managers, independent observers, as well as ordinary citizens con-sider civil service inefficient or even dysfunctional. The formal procedures of assigning scores to performance of individual employees fail to produce reliable results. This does not necessarily mean that managers are un-able to award good performance, indeed some research shows that civil service bodies are more and more able to detect and award exceptional performance (Demko, 2009). On the other hand, where the informal proce-dures of performance appraisal lack power profoundly is when the problems of the laggards should be man-aged, i.e. they fail to provide standard functioning mechanisms for getting rid of people whose substan-tive performance (not the formal one on a score list) is insufficient.

Politicization of civil service and performance ap-praisal toolsFunctioning of the performance management tools is largely undermined by relatively widespread politiciza-tion of civil service and by inability of the managers to offer their employees credible progressive career plans (e.g. Analytica, 2008). These two partially interrelated issues result in civil servants lacking security of employ-ment and perspectives for professional development. The lack of explicit promotion perspectives and the feeling that the best jobs are inaccessible to non-po-litical professionals can be detrimental for motivation of well-performing civil servants. Without clear career plans and without limiting the widespread notion of politicized civil service the public bodies cannot hope to attract more than average personnel.

Linking performance and rewards/trainingAgain related to the previous point is the problem-atic issue of linking in predictable ways (predictable for both managers and employees) the results of the individual performance appraisals with concrete mechanisms for rewarding or sanctioning on one the hand, and training programmes on the other. Although most countries have incorporated into the relevant laws mechanisms providing for such links, their imple-mentation proves to be lagging behind. Putting the mechanism into force in each particular case depends on a decision by the supervising manager; there is actually very little automaticity in the processes. Most importantly, the mechanisms are not put into practice simply because there is no formal reason for it – almost

all employees are reported to perform exceptionally or at least well so there are no reasons for disciplinary measures or for providing the civil servant with further training. At the same time, though, the limited financial resources do not allow for systematic rewarding of the “highly performing” (i.e. almost all) civil servants. Inabil-ity of the performance appraisal mechanisms to distin-guish systematically excellent performance undermines the entire human resources management systems (including recruitment of new civil servants).

Linking individuals with organizational unitsLastly, even where the particular problems related to appraisal of individual employees’ performance are overcome, the qualitatively different problem of linking the individual performance appraisal to the needs of the entire organizational unit often remains unsolved. Here we relate back to the issue of a lack of capacity of agencies to train civil service managers and human re-sources management specialists. Motivation and ability of managers now in service to design complex schemes describing what types of employees and for what work are necessary in their organizational units is insufficient, their awareness of human resources management and in particular performance appraisal issues is low. The only way this can improve is through systematic train-ing by the human resources management agencies.

4. 3 Policy proposalsBased on the above analysis and on reports prepared in the past by both national and international analytical bodies in the region, this section offers several particu-lar policy proposals aimed at improving the quality of performance appraisal systems in the region.

Institutes for performance appraisal trainingThe systems of performance appraisal as well as of hu-man resources management in general are substantially underdeveloped throughout the region, the civil ser-vants responsible for these matters are largely unquali-fied and lack power within the respective organizations. The countries should put into practice functioning mechanisms for education and training of human re-sources management specialists and in particular of the managers who are currently conducting performance appraisals. Importantly, these agencies should be pro-vided with sufficient staff and resources; the investment in training of civil service managers’ ability to put into practice performance appraisal schemes proves highly beneficial in the medium- and long-term. One of the key areas where the managers should be trained is their

Performance appraisal in the Western Balkans: Overview and good practices from a capacity development perspective 12

ability to explain and advocate for increasing the role of human resources management issues and specifically performance appraisal in the overall functioning of the administrative bodies; overcoming the persistent neg-ligence of performance appraisal issues by (not only) civil service bodies in the region can succeed only if the managers actually assessing the employees realize how important performance appraisal is for their own work and are able to explain this to both their superiors and subordinates.

Job descriptions and their relation to organizational needsAmong the priorities on which training of the current and future managers should focus is their ability to develop and use specific, precise and well-understood descriptions of the job positions. All the job descrip-tions should be incorporated into a broader framework of the needs of an organizational unit. Only when the jobs are well specified and only when they are framed within the broader organizational needs can the criteria for their performance be meaningfully determined – otherwise the effect of even well-functioning perfor-mance appraisal is diminished.

Career plans and “fast-track” schemesGiven the relatively low wages offered by the civil sec-tor in the region it is clear that one of the few incentives for pursuit of a career in the civil service is a predict-able career path and general job security. However, the motivational factor of predictability of a career path is lost if there is no clear rising trend discernible in each individual employee’s career development plan. Only a small share of civil servants actually has an explicit career development plan including a schedule of trainings in information technology (IT), communica-tions, language skills, etc. To increase motivation of civil servants, the standardized career development plans together with guidelines for their individualiza-tion should be prepared and disseminated (with the training necessary for their adequate use). The plans should state clearly the direct link between the perfor-mance grade achieved in the performance appraisal and the career growth prospects. Given the systemic constraints on development of the civil sector caused by insufficient inflow of financial resources, the public administration bodies should focus on providing their individual employees with other incentives for pursuing their careers in the civil sector, and linking career per-spectives directly with their performance as determined during the performance appraisal.

Provisions should be designed that would allow for “fast-track” career plans for exceptionally well per-forming individuals, thus increasing their motivation for staying in the civil service. The fast-track scheme, together with enhanced possibilities for professional training as a further motivating tool, enables devel-opment of a group of highly qualified and loyal civil servants able to perform well on the highest positions in the civil service.

Automaticity of rewarding and training schemesThe motivational factor of the career plans is, to a large extent, limited as long as upgrades to higher posi-tions depends purely on the will of the manager and he or she is not bound in the decision by any specific guidelines. In other words, the discretion of the man-agers should be performed within boundaries set by generally accepted principles, e.g. that employees with three consecutive years of excellent performance are automatically promoted. The same applies to training schemes: provisions should be made in the organiza-tional guidelines for automatic assignment of specifi-cally designed training programs for employees lagging behind in specific fields (e.g. in computer literacy) or, to the contrary, showing exceptional capabilities in certain areas calling for further development. Manag-ers naturally always exhibit high levels of discretion but its performance ought to be guided by expectations shared with their subordinates.

Transparency of recruitment and promotionPerhaps the most pressing issue for the countries undergoing substantial social transformations in the broader region of post-communist countries is corrup-tion and lack of transparency. The tools to reduce the incentives and possibilities for corrupt behavior include: posting the job advertisements online well in advance of the deadlines for application, specific listing of the criteria according to which applicants are about to be chosen and employees promoted, clear and institution-alized detachment of the human resources bodies from other units within the respective organizational bodies and especially from politically appointed offices. Clearly, unless it is widely recognized that the performance ap-praisal system and the promotion and reward schemes are impartial and transparent, the ability of the particu-lar body to retain (and even attract) highly performing individuals is suppressed.

Performance appraisal in the Western Balkans: Overview and good practices from a capacity development perspective 13

The political office and de-politicization of civil serviceThe existence of political offices – the bodies of advi-sors brought into ministries and other agencies by the ministers or managers and leaving with them – should be incorporated firmly into the organizational arrange-ments of the units. The intuitive approach seeking to suppress all bodies dependent on political will of individual ministers for the sake of “de-politicization” is not necessarily always right. To the contrary, allowing for institutionalization of highly political bodies close to ministers (and appointed by them) can in the longer run lead to de-politicization and professionalization of the rest of the civil service because the ministers do not find it necessary to “hire their people” into the profes-sional staff. This can have a substantial impact on the effectiveness of the performance appraisal mechanisms as they cease to be perceived by employees as tools for legitimization of political appointments instead of as motivation tools. De-politicization of performance appraisal tools is crucial for their well functioning. Related to the proposal for developing training centres for performance appraisal, one of the core skills the managers should develop during their training is to assess employees strictly according to their substantive performance and to resist political pressure.

Fighting formalism in performance appraisalThe fact that most managers as well as employees tend to consider the entire process of performance appraisal as a pure formality fundamentally undermines the effectiveness of the civil service of the countries in the region which in turn impedes development.

Three measures reducing formalism in performance appraisal are available. Firstly, directly linking results of the individual performance appraisal with bonuses cre-ates, together with restrictions on the overall budget of the unit, pressure on the managing directors to choose whom to reward (rather than rewarding everybody). The very need to decide calls for specification of the as-sessment criteria and, at least to some extent, for their application.

Secondly, a softer measure inducing managers to genu-inely assess performance of the civil servants is to pro-vide them with guidelines stipulating verbally and very specifically e.g. what “exceptional” performance means and making them provide evidence for their decisions. Although not enforceable in any way, the guidelines of this type clearly generate pressure on the assessing

managers to consider the risks of assigning too high marks to undeserving employees.

Thirdly, lasting education of both managers and em-ployees in performance appraisal matters is necessary if the improvements are to be sustainable. Unless the managers are able, in the long-term, to explain what they reward, loyalty (and motivation) of civil servants is threatened.

On the one hand, it is clear that without achieving a genuine assessment of employees’ performance and providing a reasonably accurate description of their work, very few of the measures proposed above will bring substantial results. On the other hand, no pana-cea for this formalism has been identified so far, and formalism in performance appraisal and in human resources management in general in the region will certainly continue to be a problem in the near future.

Performance appraisal in the Western Balkans: Overview and good practices from a capacity development perspective 14

5. Conclusions

This study deals with an issue whose importance for successful development efforts of Western Balkans countries is yet to be fully recognized by the national political elites.

It is obvious that without providing functioning incen-tives for civil servants to: stay in the civil sector; and to perform well, public administration bodies will continue to face problems related to effective provision of public services well into the future.

Based on an analysis of various types of materials, the study proposes several policy adjustments aimed at improvement of the performance appraisal systems within the region:

a) creation and development of institutes for performance appraisal training;

b) development of precise job descriptions framed into broader organizational needs;

c) design of model career plans including provisions for fast-track schemes;

d) increasing automaticity of the process of putting into action the rewarding and training schemes;

e) improving transparency of recruitment and promotion;

f ) providing mechanisms preventing politicization of the performance appraisal system; and

g) fighting formalism in performance appraisal.

Although each of the seven countries of the region is in a different position and it makes little sense to offer a one-size-fits-all blueprint, one can clearly see important similarities in the challenges faced by Western Balkans countries; consequently, most of the policy proposi-tions offered here apply to most, if not all the countries.

Overall, performance appraisal systems are clearly an issue where UNDP is able to provide its valuable exper-tise-based assistance. Without functioning performance appraisal tools, the countries within the region will not be able to attract and retain the best performing civil servants, and will not succeed in meeting the challeng-es and complexities of today’s world.

Performance appraisal in the Western Balkans: Overview and good practices from a capacity development perspective 15

6. Bibliography

ReferencesANALYTICA, 2007. Human Resources Management and Practices in Macedonian Civil Service. Available from: http://www.analyticamk.org/files/ReportNo8.pdf [Accessed April 2010]

ANALYTICA, 2008. Introducing Career-based System in civil Service. Available from: http://www.analyticamk.org/files/ReportNo12.pdf [Accessed April 2010]

COSTIGAN, R., et al., 2005. An Examination of the Relationship of a Western Performance-Management Process to Key Workplace Behaviours in Transition Economies. Canadian Journal of administrative Sciences. 22: 3

DE WALL, A., 2007. Is performance management applicable to developing countries? The case of a Tanzanian college. International Journal of Emerging Markets. 2: 1

DEMKO, CH., 2009. Managing HR-Performance in the National Civil services. Presentation at the 4th Regional Workshop on Civil Service Reform in the Western Balkans. Available from: http://rcpar.org/contents_en.asp?category=30&id=212 [Accessed April 2010]

FERRIS, G., MUNYON, T., BASIK, K. BUCKLEY, M., 2008. The performance evaluation context: social, emotional, cognitive, political, and relationship components. Human Resource Management Review. 18

JENEI, G. ZUPKO, G., 2001. Public sector performance in a new democratic state: the Hungarian case. International Review of Administrative Sciences. 67

JUDGE, T., FERRIS, G. 1993. Social context of performance evaluation decisions. Academy of Management Journal. 36: 1

KOUBEK, J., BREWSTER, C., 1995. Human Resource Management in Turbulent Times: HRM in Czech Republic. The International Journal of Human Resource Management. 6: 2

MILIKIC, B. NEBOJSA, J., PETKOVIC, M., 2008. HRM in Transition Economies: The Case of Serbia. East European Journal of Economics. 3: 2

OHEMENG, F., 2009. Constraints in the Implementation of Performance Management Systems in Developing Countries: The Ghanaian Case. International Journal of Cross Cultural Management. 9

RESPA, 2009. Attractiveness of civil service in the Western Balkans. Available from: http://parco.gov.ba/eng/?page=257&kat=1&vijest=4328 [Accessed April 2010]

SIGMA, 2008. Bosnia and Herzegovina public service assessment. Available from: http://www.sigmaweb.org/datao-ecd/48/13/41636302.pdf [Accessed April 2010]

UNDP, 2008. Capacity Assessment Methodology: User’ Guide.

USAID, 2006. Management Assessment and Improvement Plan of the Ministry of Justice of Bosnia Herzegovina. Available from: http://www.usaidjsdp.ba/en/dokumenti/Components/Component3/human_resource/Manage-ment%20Assessment%20and%20Improvement%20Plan%20of%20the%20Ministry%20of%20Justice%20of%20BiH.pdf [Accessed April 2010]

VERHEIJEN, T., DOBROLYUBOVA, Y., 2007. Performance management in the Baltic States and Russia: success against the odds? International Review of Administrative Sciences. 73: 2

Performance appraisal in the Western Balkans: Overview and good practices from a capacity development perspective 16

ZUPAN, N., KASE, R., 2005. Strategic Human Resource Management in European Transition Economies: Building a Conceptual Model on the Case of Slovenia. Journal of Human Resource Management

Presentations by civil servantsThe presentations were given at the 4th Annual Conference of the Western Balkans HRM Community of Practice in the Civil Service in Tirana, November 2009, and are available from: http://rcpar.org/contents_en.asp?category=30&id=212 [Accessed April 2010].

ALBANIA. Blerta Selenica, Department of Public Administration, Ministry of Interior: The evaluation system of annual individual performance of civil servants

BOSNIA AND HERZEGOVINA. Aleksandar Karisik, PAR Expert Adviser, Public Administration Reform Coordinator’s Office: Performance Management in the Public Administration Structures in Bosnia and Herzegovina

CROATIA. Petra Goran, Ministry of Administration: Performance Appraisal in the Croatian Civil ServiceKOSOVO. Hatmane Lufi, Department of Civil Service Administration, Ministry of Public Administration: Performance Management of Civil Servants Work

FYR MACEDONIA. Biljana Nikolovska Zagar, Civil Service Agency: Civil servants performance management

MONTENEGRO. Svetlana Vukovic, Human Resources Management Authority of Montenegro: Appraisal, promotion and establishment of capability

Selected useful reports for further referenceANALYTICA, 2007. Human Resources Management and Practices in Macedonian Civil Service. Available from: http://www.analyticamk.org/files/ReportNo8.pdf [Accessed April 2010]

RESPA, 2009. Attractiveness of civil service in the Western Balkans. Available from: http://parco.gov.ba/eng/?page=257&kat=1&vijest=4328 [Accessed April 2010]

SIGMA, 2008. Bosnia and Herzegovina public service assessment. Available from: http://www.sigmaweb.org/dataoecd/48/13/41636302.pdf [Accessed April 2010]

Performance appraisal in the Western Balkans: Overview and good practices from a capacity development perspective 17

7. Appendix

Table 1: Years of adoption of relevant legal acts

Civil service code (year of adoption; number of law)

Albania 1999; 8549/1999

Bosnia and Herzegovina 2002; 12/02

Croatia 2005; 92/05

FYR Macedonia 2001; 36/01

Kosovo 2000; 59/00

Montenegro 2004; 27/04

Serbia 2005, 79/05

Table 2: Years of adoption of relevant laws, by-laws, regulations and guidelines

By-laws, guidelines, rule books (year of adoption)

Albania Law on the Status of the Civil Servant, 8549/1999

Bosnia and Herzegovina Law on Salaries and Remuneration in Institutions of BiH, 19/02

Croatia Law on civil Servants, 92/05; Rulebook on the civil servant’s appraisal, 2006

FYR Macedonia Rulebook on the manner and procedure of civil servants assessment, the content of the assessment report and form, 19/2006

Kosovo Administrative direction 2003/2, Administrative instruction MPS/DCSA 2003/08

Montenegro Law on civil servants and state employees and Law on salaries of civil servants and state employees, 27/04

Serbia The Law on Salaries of Civil Servants and General Service Employees, 62/06, 63/06; The Regulation on the Appraisal of Civil Servants , 2006

Performance appraisal in the Western Balkans: Overview and good practices from a capacity development perspective 18

Table 3: Basic modalities of individual performance appraisal systems

Time period

Appraiser Criteria Rating

Albania Direct supervisor

• Very good• Good• Satisfactory• Unsatisfactory

Bosnia and Herzegovina

Direct supervisor

• Efficiency, quality and timely performance (max 50 points);

• Obligatory education attendance (max 10 points);

• Commitment to service and efforts in per-formance (max 15 points); and

• Personal characteristics ( max 10 points)

• Very successful• Successful• Satisfactory• Unsatisfactory

Croatia Direct supervisor

• Quality of work• Deadlines• Work results according to the working plan

• Extraordinary• Excellent• Good• Satisfactory• Not satisfactory

FYR Macedonia

Direct supervisor

• Familiarity and application of regulations and practices ,

• Achievement of working goals ,• Timely execution of the work , • Quality performance of the work, and• Organization of the work • Creativity, • Taking Initiative and interest in the work,• Ability for team work, • Work under pressure and • Communication skills

• Outstanding• Satisfactory• Partly satisfactory• Unsatisfactory

Kosovo Direct supervisor

4 rank scale

Montenegro Direct supervisor

• Work results• Independence and creativity in the perfor-

mance of affairs• Achieved cooperation with clients and col-

leagues• Quality of organization of work in the per-

formance of affairs• Other abilities, skills and quality in the per-

formance of affairs

Staff • Excellent• Good• Satisfactory• Unsatisfactory

Managers• Satisfactory• Unsatisfactory

Serbia Direct supervisor

• Results achieved in performing tasks of a post and meeting defined objectives (50%)

• Independence, creativity, initiative, precision and diligence, quality of cooperation with others, additional criteria (50%)

• Exceptional distinc-tion

• Distinction• Good• Satisfactory• Unsatisfactory

Performance appraisal in the Western Balkans: Overview and good practices from a capacity development perspective 19

Table 4: Control of corruption by percentile, years 1998 (lower values) and 2008Adopted from http://info.worldbank.org/governance/wgi/index.asp. [Accessed April 2010]