1. PERFORMANCE MANAGEMENT AND GOAL SETTING FOR WATER UTILITIES Presentation to the Kenya Water Service Providers Association-Kisumu Dr. William T. Muhairwe Managing Director, NWSC-Uganda November 2010 4th November 2010, Kisumu Kenya

2. 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

3. Introduction 3  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.

4. 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?

5. WSS Challenges: 1. The Financing Gap 5  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.

6. WSS Challenges: 2. Climate Change 6 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

7. WSS Challenges: 3. Provision of Services to the Poor 7  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?

8. WSS Challenges: 4. The Sanitation Challenge 8  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

9. WSS Challenges: 5. Leadership and Management 9  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

10. What are the Specific Public Utility Challenges 10 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

11. Specific Public Utility Challenges… 11 2. Poor Management What 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

12. 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

13. 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

14. 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 ----------------

15. 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 ----------------

16. Performance Management and Goal Setting 16  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

17. Goal Setting 17  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

18. 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??

19. First Things First - What next? 19 In Theory, Any Manager would do the following  1. SWOT analysis  2. Formulate a Vision  3. Formulate a Mission  4. 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

20. NWSC´s Situation as at 1998 20 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 CoverageInsufficient 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 CareHigh operating Expenses (adm, medical, transport Low Collection Efficiency (60-70%)High Debt Burden 100 million $ Huge level of Debtors of about 14 monthsPoor organizational culture i.e. late coming etc Typical of Watsan Utilities in Developing Countries

21. NWSC Case: SWOT Analysis as a first step of the Transformation Process 21 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.

22. NWSC Case: Visions & Mission Previous Visions of NWSC 1. 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 Statement 3. To be One of the Leading Water Utilities in the World Mission Statement To provide Efficient and Cost effective Water and Sewerage Services, applying Innovative Managerial Solutions to the Delight of our Customers 22

23. NWSC Case: Strategic & Operational Plans 23 Formulated both Long Term and Short Term Plans Policy level  Performance Contracts with Government /Water Boards  Corporate Plans (3-5 years)  Annual Budgets Operational 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

24. Key Performance Drivers 24 => 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

25. Key Lessons for Setting Goals 25  Ref Book: “How to be Brilliant; Change your ways in 90 days”-Michael Happell 1. Positive Action 2. Break out of Limiting Beliefs 3. Think Differently 4. Ability to Manage Stress 5. Massive Action

26. Key Lessons for Managing Change 26 “Attitudes that Attract Success”- Wayne Cordeiro Attract Success 1. Make your choice 2. Believe you can change 3. Train your eyes to see what is good 4. Practice, Practice & Practice 5. Never Give Up

27. NWSC Key Achievements 27 Performance Indicator19982010 Service Coverage48%74% Total Connections50,826246,459 New Connections per year3,31725,000 Metered Connections37,217 245,199 Staff per 1000 Connections366 Collection Efficiency60%98% NRW60%33.3% Proportion Metered Accounts65%99 % Annual Turnover (Billion Shs)21112 Profit (Before. Dep) (Billions Shs)8.0 (loss)25.4 (Surplus)

28. Key Lessons: NWSC Experience 28  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

29. Services offered by NWSC 29 Core Services Advisory Services Capacity building Technical Assistance  Organizational behaviour change  Institutional development  Contract design & incentive systems  Asset management  Project management  Systems development  Water  Electricity  Industries (Steel Mills)  Banks  Government Ministries  Kenya, Tanzania,  Zambia, Mozambique  Nigeria, Yemen  Ethiopia, Pakistan Water Boards  Southern Sudan  New Delhi & Several Municipality Water Boards

30. 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