A Decade of Performance Management Reforms in Bhutan: Problems and Prospects

Introduction

There has been an increase in public sector reform related to performance management initiated by various countries. Performance management has, in fact, been one of the most widespread international trends in public management in recent decades (Bouckaert, 2007; Moynihan & Pandey, 2010; Pollitt, 2005). These reforms, in general, were based on managerial values and practices incorporating principles from the business and institutional economics models. However, the experiences of implementation performance management reforms in developed and developing countries can be quite different. The reforms have not worked at all instances, particularly for developing countries (Common, 2008; Grindle, 1997; Pillay, 2008; Schick, 1998). There are fundamental differences in the administrative domain between the developed and the developing countries because of the differences in politics, economy and culture.

This commentary provides a description of the performance management reforms that the royal government of Bhutan has initiated from 2006 until 2017. It briefly discusses some of the challenges that these reforms faced, and will likely encounter for more recent reforms, in their implementation. There have been two major performance management reform initiatives in Bhutan. The first performance management reform was implemented in 2006 and was one of the main components of the Position Classification System (PCS) implemented by the Royal Civil Service Commission (RCSC; see Ugyel, 2016) for a comprehensive description of the PCS). The second reform was only just recently implemented in 2017, Managing for Excellence (MaX), again implemented by the RCSC. ¹ MaX also incorporates the Annual Performance Agreements, a series of performance compacts that various agencies sign with the government. These performance compacts are managed by the Government Performance Management Division established in 2015 under the office of the prime minister and cabinet. ²

Bhutan and Its Public Sector

Bhutan, classified by the World Bank as a lower middle-income country, is a land-locked country in the South Asian subcontinent. It is a small country, 38,394 square kilometres in size with a population of approximately 700,000 people, located in the Southern slopes of the Himalayas in between China (to the north) and India (to the south). Steeped in a strong cultural influence of the Tibetan Buddhist religion, Bhutan is guided by a unique developmental philosophy of the maximization and realization of gross national happiness (or in short GNH), which includes the pursuit of economic as well other non-economic goals such as well-being and happiness of all Bhutanese. In addition to its development philosophy, the voluntary transfer of absolute power from the monarch to an elected government in March 2008 also distinguishes Bhutan from its neighbouring South Asian countries, which are often riddled with political turmoil. The constitution of Bhutan labels the government as a Democratic Constitutional Monarchy, and the first democratic elections were held in March 2008.

The constitution, in Article 26, also prescribes the RCSC to promote and ensure “an independent and apolitical civil service that will discharge its public duties in an efficient, transparent and accountable manner.” The RCSC Secretariat is the central personnel agency of the government, and is responsible for the human resource management and development policies and programmes of the civil service of Bhutan. Over the last few decades, the RCSC has introduced various systemic changes and reforms in the civil service.

Performance Management Reforms in Bhutan (2006–2017)

The performance management reform introduced in Bhutan in 2006 was one of the major component of PCS, a wider set of public sector reforms implemented. The objectives of the performance management system under the PCS were to promote a civil service in Bhutan based on “principles of transparency, efficiency, fairness, accountability, meritocracy and professionalism” (RCSC, 2005, p. 16). The performance management system was identified as a critical factor to determine various human resource actions such as appointments, transfers, promotion and remunerations. The performance management system of the PCS represented a paradigm shift. It transformed the performance objective of Bhutan’s public administration from only managing inputs to managing both inputs and outputs. Under the previous system, the main emphasis of the performance management was on attributes such as attitude to work, initiative, decision-making ability, planning skills, knowledge of work, communication skills, supervisory ability, coordination capability and interpersonal relationships (RCSC, 1990). With the reforms, the performance management system focused on outputs. Each employee and manager was to record and review the performance outputs that were the key focus for a given six-month period. The performance management system had two forms for each employee to fill, the work planning and review form, and the summative review form. The work planning and review form were used by the employee and the supervisor to determine six monthly targets and identify six relevant core competencies that were required to achieve those targets. These targets were prepared every six months based on the organizational strategy and annual work plans. At the end of the six months, the managers and employees were to review the performance outputs, and record the remarks regarding each of the expected and achieved performance outputs (RCSC, 2005). The summative review forms were to be used to evaluate the performance of the employee by reviewing the performance factors and the core competencies. The performance factors were to be rated in relation to the performance outputs as outlined in the work planning and review forms by assigning a score of 1 (improvement needed), 2 (good), 3 (very good) and 4 (outstanding). The core competencies were also to be rated on a scale of 1 to 4. In the final rating, the average score of the performance factor was to be given a 60 per cent weighting and the average score of the core competencies was to be given a 40 per cent weighting.

In an internal study conducted by the RCSC in 2014 to assess the existing performance management system, it was found that almost all civil servants were rated outstanding (average rating being 3.82 out of 4), the involvement of staff in planning and involvement in the performance evaluation was minimal and performance outputs lacked objective indicators and linkages to organizational objectives (RCSC, 2017, p. 2). Towards redressing some of these challenges, the new performance management system, MaX was instituted in February 2017. According to the manual for MaX, there are three main objectives: to align employee’s performance with agencies objectives, increase accountability of an individual and agency’s performance, and differentiating performers from non-performers. MaX contains two main elements, namely the performance appraisal components and the moderation exercise. The RCSC claims that MaX differs from the earlier system in four different ways (RCSC, 2017). First, that MaX requires civil servants to plan their performance targets in the beginning of the appraisal period. Second, MaX prescribes a mandatory conduct of mid-term review. Third, evaluation of the performance is set at the end of the appraisal period. Final, the moderation exercise is instituted based on the needs of the individual or agency. At a macro level, the key difference between the new system and the previous one is the initiation of annual performance agreements between the government and agencies. The government signed the first set of performance compacts with key priority agencies at the end of 2009. A total of 40 annual performance agreements have been signed for the year 2016–2017. These include 10 ministries, 20 dzongkhags (administrative units), 4 thromdeys (municipal authorities) and 6 autonomous agencies. MaX seeks to closely align the individual’s work plans to the broader goals and objectives of the agency.

Challenges Implementing Performance Management Reforms in Bhutan

The implementation of the performance management system of the PCS faced many challenges. In a study of the evaluation of the PCS (Ugyel, 2016; Ugyel & O’Flynn, 2017), there were major problems faced, particularly with the implementation of the performance management system. The first problem was that the forms were perceived to be difficult and the process cumbersome. Identifying performance targets was also problematic due to uncertainty of government funds crucial for determining annual outputs and goals. A critical problem of performance management system was one that involved a major cultural change. The collective culture of the Bhutanese society affected the implementation of the performance management system (Ugyel, Forthcoming). Managers found it challenging to objectively evaluate an individual based solely on his or her performance. The individualistic features of the business and institutional economics model of performance management does not work well in the context of a collective society.

Whether the recent performance management reform, MaX, will face similar challenges in Bhutan is yet to be tested. There will be areas where the larger performance compacts in the form of Annual Performance Agreements will help in determining concrete targets and goals. As a rule of thumb, whatever can be measured should be measured. Particularly, if the outputs can be quantified either in terms of numbers or price, performance targets, and, in general, performance management, works well. The recent performance management reforms could address some of the challenges faced in the previous system by aligning the individual and agency performance targets. MaX, through the moderation exercise also aims to overcome some of the challenges of the previous system by ensuring that managers make objective evaluations. It seeks to make the evaluations transparent and objective through closer scrutiny by a higher level of accountability. What MaX is proposing to do is to work around Bhutan’s collective culture by making the manager accountable to another person(s) for the evaluations awarded. While this approach might seem logical, whether it will work or not remains to be seen. What MaX is not directly addressing is the deeper cultural setting that the previous performance management system faced problems with. The unit of analysis of MaX is still largely based on an individual. In a collective society, which Bhutan clearly is, there needs to be some considerations for such a cultural setting. Another factor that is important in Bhutan is that although financial rewards and remunerations are important, other non-financial rewards also matter, for example, recognition in the form of awards and medals from the king and the government. It will also be crucial to note that the performance management works well where the targets can be objective and easily measured. The subjective targets are the ones that will reveal the weaknesses of MaX or any other performance management system.

Conclusion

Bhutan has been bold in its attempts to experiment and implement various performance management reforms, with each variation seeking to make improvements over the previous system. Such initiatives by a small country in the South Asian region, where governments are often perceived to be weak, is commendable. With each reform striving to overcome the weaknesses of the previous various, the Bhutanese government has introduced various public sector reforms. The most recent is MaX, a performance management reform introduced by the RCSC. It aims to closely align the individual work plans to the organization and the nation’s goals and objectives. The introduction of Annual Performance Agreements by the Bhutanese government has complemented the reform initiative. However, there are also certain challenges that it is likely to face. Still largely based on performance management systems of individualistic settings, MaX operates within a collective society. In its present form, MaX has attempted to work around it. But at some point, in its implementation, the cultural aspect will present itself as an obstacle. Rather than avoiding it, any performance management-related reform might work best trying to incorporate Bhutan’s cultural components. An example of how to do that is to look towards Bhutan’s centuries-old religious establishment, that is, the Zhung Dratshang, which continues to exist today and can be easily identified as a meritocratic institution. While certainly, a more in-depth analysis of the Zhung Dratshang’s public administration aspects will be conducted (Ugyel, Forthcoming), at this stage, it can be suggested that the Bhutanese civil service should explore the possibilities of adapting aspects of Zhung Dratshang’s existing promotion system, which has worked well within a collective society.