i Performance Management Systems in the Air Traffic and Navigation Services Mmasefako Cathrine Mashilo 0500478W Masters of Management A research report supervised Professor Ivor Sarakinsky and presented to the WITS Graduate School of Governance in partial fulfilment for the Masters of Management in the field of Governance DECEMBER 2021 ii I declare that this report is my own unaided work. It is submitted in partial fulfilment of the requirements of the degree of Master of Management in the field of Governance: Sector Monitoring and Evaluation at the University of the Witwatersrand, Johannesburg. It has not been submitted before for any degree or examination in any other university. _________________ Mmasefako Cathrine Mashilo 13 December 2021 iii TABLE OF CONTENTS BACKGROUND ......................................................................................... 1 1 INTRODUCTION TO THE RESEARCH .............................................. 3 1.1. Title ........................................................................................... 3 1.2. Research purpose statement .................................................... 3 1.3. Problem Statement ................................................................... 4 1.4. Research Questions .................................................................. 6 1.5. Research purpose ..................................................................... 6 1.6. Research Objectives ................................................................. 7 1.7. Outline of Research Report Chapters ....................................... 7 2 LITERATURE REVIEW ....................................................................... 9 2.1. Role of SOEs in South Africa .................................................... 9 2.2. Performance Management Systems in the SOEs ................... 10 2.3. International Examples of SOEs ............................................. 26 2.4. The Performance Management System in the ATNS ............. 28 2.5. Theoretical Framework ........................................................... 30 2.6. Conceptualizing Performance Management Systems............. 33 3 RESEARCH METHODOLOGY ......................................................... 38 3.1. Research Approach and design .............................................. 38 3.2. Research Tools and their Application ...................................... 38 3.3. Sampling ................................................................................. 39 3.4. Data Processing and Analysis ................................................ 40 3.5. Validity, reliability and dependability ........................................ 42 3.6. Limitations, feasibility and positionality .................................... 44 3.7. Ethical consideration ............................................................... 44 4 RESEARCH DATA PRESENTATION ............................................... 48 5 ANALYSIS AND INTERPRETATION OF FINDINGS ........................ 71 6 CONCLUSION AND RECOMMENDATIONS .................................... 85 REFERENCES ........................................................................................ 92 iv LIST OF FIGURES Figure 1: Performance management process .............................................. 13 Figure 2: Extrinsic feedback model .............................................................. 36 Figure 3: Comprehensive of the measurement system ................................ 51 Figure 4: System assist achieve goal ........................................................... 52 Figure 5: Does system measure what it supposed to .................................. 54 Figure 6: Clarity of KPAs and KPIs .............................................................. 57 Figure 7: System improvement .................................................................... 59 Figure 8: Implementation plans and evaluation measures ........................... 60 Figure 9: Turbulent economic conditions ..................................................... 63 Figure 10: Measures to improve efficiency .................................................. 66 Figure 11: Factors impacting performance .................................................. 67 1 BACKGROUND This study was undertaken in an attempt to investigate the performance management system of the Air Traffic and Navigation Services (ATNS). This is a State-Owned Company (SOC) under the Department of Transport responsible for the provision of air traffic, navigation, training and associated services throughout the country as well as part of the Indian and Atlantic Ocean regions. The aim of the study was to investigate and discuss the performance measurement system in place at the ATNS. It further explored whether the system in place is comprehensive enough to enable the organization achieve its set objectives, with a view to improving the performance of the organization and that of the employees and confirm if this system is linked to the organization’s strategy and its operations. Thirteen respondents participated in this qualitative study. The research method used was a questionnaire with open-ended questions. The respondents were all employees closely working with the system including an Executive, Senior Managers, Managers and specialists. The research instrument that was used was a questionnaire with open-ended questions. This research report has revealed that although the performance management system exists at the Air Traffic and Navigation Services, more work should be undertaken to improve the current performance management system. Themes that emanated from the research led to a greater understanding of the factors affecting the implementation and utilization of the performance management system at ATNS. The research findings point out that although there is a performance management system, the effective and efficient implementation thereof is a challenge. The respondents recommended that for the performance management system to be effective, it should be aligned to the strategy and the entity’s business objectives. It was also established that the cascading of objectives to other levels of employees from senior management 2 is still a challenge which in turn leads to misalignment of organizational and employee performance. Although the research findings revealed that the current performance management system does not assist the organization to achieve its goals, further analysis of secondary data indicated that ATNS performance has been consecutively satisfactory. 3 1 INTRODUCTION TO THE RESEARCH 1.1. Title “Performance Management Systems in the Air Traffic and Navigation Services”. 1.2. Research purpose statement The main purpose of this study is to investigate the performance management systems in the Air Traffic Navigation Services, a State-Owned Company (SOC) under the Department of Transport. This is the SOC that provides air traffic, navigation, training and other related services throughout the country as well as part of the Indian and Atlantic Ocean regions, encompassing approximately 6% of the world’s airspace. In a broad sense, state-owned entities (SOEs) are those enterprises in which the state exerts significant control through full, majority, or significant minority ownership. They could be owned by the central or national governments and federal or provincial governments as well as the local governments (Sturesson, McIntyre, & Jones, 2015). According to Bolton (2010) these entities carry out business activities on behalf of the state. In many parts of Africa, they operate in virtually all sectors (Kikeri & Kolo, 2006). In South Africa SOEs are legally defined by the Public Finance Management Act (Act of 1999) (PFMA). Section (1) of the PFMA of 1999 (updated in 2008, pp8-10) refers to SOEs as “National Government Business Enterprise” to be “an entity which: (a) is a juristic person under the ownership control of the national executive (b) has been assigned financial and operational authority to carry on a business activity (c) as its principal business, provides goods and services in accordance with ordinary business principles (d) is financed fully or substantially from sources other than the National Revenue Fund or by way of a tax, levy or statutory money” (PFMA, 1999). 4 Performance of SOEs has often been one of the most talked about topics in recent years. There is a wide-spread belief that state-owned enterprises world- wide perform worse than privately-owned companies (Stan, Peng and Bruton, 2013). “This is so largely due to association of public services with poor performance in many parts of the world. Therefore, performance measurement in SOEs is of increasing interest to scholars and so are the systems thereof” (Ngqumeya 2012:1). However, studies on performance management systems of specific entities have not drawn a lot of research output, hence the need to further explore this subject. In South Africa, performance of SOCs has been under scrutiny recently (Chilenga, 2016:1). In general terms, these SOEs have acquired a reputation of poor performance (Nellis, 2005). “The reasons for such poor performance are only vaguely documented and are often argued along the lines of inefficiencies inherent in government’s involvement” (Mbo 2017:1). Therefore, this reputation epitomizes the importance of measuring performance of SOEs in South Africa to determine their effectiveness (Sturesson et al., 2015). As an effective and efficient performance management system is critical for growth, sustainability, and improvement of products, services and internal processes (Mensah & George, 2015). The ATNS is not necessarily among the underperforming SOEs perhaps owing to its critical and somehow monopolistic role in the sector it operates in. The entity has a performance management system that this research wants to assess. 1.3. Problem Statement SOEs are expected to contribute positively to the economy by providing a variety of services such as electricity, water and transport on behalf of government in a sustainable manner. For such contribution to be sustainable, SOEs need to be competitive and perform well in the sectors that they operate in. However, according to Ngqumeya (2012:1) there have been questions about the performance of SOEs in South Africa in recent years. Most SOEs in South Africa are under financial distress putting these developmental 5 objectives in jeopardy. According to Mashamaite & Raseala (2018) there are a variety of factors that put SOEs under pressure and public scrutiny. One of these has been their performance management systems. However, not much research, especially from local scholars has gone into this subject. The ATNS, as one of the SOEs in South Africa, has a performance management system that can be assessed in this regard. ATNS provides a good platform in this subject especially because it has no competition in the sector it operates in, yet it operates in an environment that requires strict adherence to aviation safety standards. As an air navigation services provider (ANSP), ATNS is expected to provide air navigation services that contribute to the safety of flights in an efficient and cost-effective manner. Thus, ATNS operates in an environment where safety and efficiency are of paramount importance. To facilitate the design, implementation, and operation of a shared air traffic management system to serve the aviation community, ANSPs were urged by the International Civil Aviation Organization (ICAO) to adopt a performance driven approach. Several frameworks were developed by: ICAO, European Union, EUROCONTROL and even the Civil Air Navigation Services Organization (CANSO). Thus, this makes performance management crucial in the operations of ATNS. Organizations differ in their structures, culture and operational environment, therefore what works in one might not work in other. Due to its operational environment, implementing performance management system at the ATNS can be challenging. The aim of the study is therefore to investigate and discuss the performance measurement system in place at the ATNS and if the system in place is comprehensive enough to enable the organization to achieve its set goals. Apart from its mandate, ATNS like other SOEs is expected to contribute to developmental outcomes as outlined in the National Developmental Plan (NDP), 2030. As an entity of the department of transport, ATNS is expected to contribute to developmental outcomes such as; transport safety and security, infrastructure development and economic investment, the fight against fraud 6 and corruption, environmental protection, job creation, broad-based black economic empowerment (BBBEE) and employment equity. Therefore, for these outcomes to be achieved, the shareholder should assume an assessment of the performance of the SOE to identify its objectives, assets, and resources; financial assets and liabilities; evaluate their performance in meeting their objectives; and demonstrate their contribution to economic and social development. This process will assist to align the objectives of the SOE to those of the government (UN, 2008). Otherwise, without such checks and balances, performance management will just be a compliance activity and will not be able to focus on an in-depth analysis of performance and strategic focus of the SOE. This study focuses on the need to ascertain how performance is measured and managed at ATNS. 1.4. Research Questions In order to achieve the objectives of this research report, the following research questions relating to performance management systems at the ATNS were explored: 1. Does the performance management system assist the entity to manage and measure performance? 2. Does performance measurement hinder or improve the entity’s performance? 3. What recommendations can be made to improve the performance management system at the Air Traffic and Navigation Service 1.5. Research purpose The purpose of this study is two-fold: Firstly, to analyse the performance management system currently used at ATNS. Secondly, to draw a conclusion 7 on the effectiveness of the current system in the ATNS’ fulfilment of its mandate. 1.6. Research Objectives The primary objective of this study is to examine the performance management system at ATNS. The secondary objectives are;  To describe and explain the performance measurement system of the ATNS;  To assess the effectiveness of the current performance management system of the ATNS on the fulfilment of its mandate; and  To contribute to literature on performance management that can form the basis to expand to other SOEs in South Africa. 1.7. Outline of Research Report Chapters The report is structured into six chapters. Chapter 1: Background and Introduction to the study The first chapter provides introduction to the research report about performance management systems in SOEs. The introduction also covers the objectives of the research and indicates the primary objective of this study is to investigate the performance management system in the ATNS. Chapter one also provides the problem statement, research purpose statement and the research questions. Chapter 2: Literature Review The second chapter provides a literature review that looks at the role of SOEs in South Africa, by discussing reasons SOEs were established in South Africa, and also some international examples of SOEs looking at how SOEs operate 8 in other parts of the world., performance management system in the SOEs discussing different views on performance measurement in general and performance management systems, its historical background including the conceptual framework of the research report. Chapter 3: Research methodology In the third chapter, a description of the research methodology, research design and sampling procedure that was used to collect data and how such data was analyzed. It offers justifications for the chosen research approach. More details with regard to the validity and reliability of the research report as well as the ethical considerations that were considered are provided in this chapter. Chapter 4: Data presentation This chapter presents the results of data which was obtained during data collection and identifies themes for each question. Chapter 5: Data analysis and interpretation Chapter five focuses on interpretation and analysis of the research findings. Chapter 6: Conclusion and Recommendations Finally, chapter six covers the summary of key findings, conclusions and recommendations based on the research findings. References and appendices follow chapter six respectively. Chapter 1 of this report provide the research background, introduction and outline of the research report was provided. 9 2 LITERATURE REVIEW This section has been divided into three subsections. The first part briefly explores what has been written on the role of SOEs in South Africa, followed by the second part that deals with performance management in SOEs. The last part explores performance management in the ATNS which is the actual subject of this research. 2.1. Role of SOEs in South Africa Available literature acknowledges that in South Africa, SOEs were created to contribute to the social needs of the nation while at the same time expected to operate on a commercial basis. This means they must contribute to development and rendering of service while at the same time ensuring that they operate profitably in order to sustain themselves. These two objectives sometimes create tension between the commercial requirements as companies and governments’ social responsibility (Magwentshu, 2001). This tension often creates challenges in relation to the required performance of these SOEs where one role may be emphasized over the other. In the height of apartheid, the then government used SOEs primarily for three main purposes: To mitigate against the implications of sanctions the international community imposed on it for its apartheid policies particularly in the transportation sector; to provide the government with critical access to arms; and secure employment for mainly the Afrikaner (Transnet Shareholder Compact Presentation, 2011). These purposes certainly made performance to be one of the key priorities in these entities. With the dawn of the democratic government in 1994, SOEs evolved, from a policy point of view in South Africa. The new political dispensation has since led to a review of the SOEs to ensure the successful implementation of Growth and Employment and Redistribution Program (G.E.A.R) (Department of Public Enterprise, Annual Report, 2006). This review has changed the emphasis to 10 the use of SOEs to support development objectives of the government. This emphasis often affects the performance element in these SOEs as it tends to allow political interference to override other objectives of the SOEs. However, in terms of the definition of SOEs, the State cannot operate them by itself and needs to delegate their control to the enterprises themselves. The key for a successful SOE remains performance in order to achieve its mandate (Lin, 2007). Because to measure the performance of an SOE requires an appropriate performance management system, studies on the performance management systems themselves need to be enhanced. 2.2. Performance Management Systems in the SOEs “State-owned enterprises are an important element of most economies and they account for over a fifth of the world's largest enterprises” (OECD, 2016:4). SOEs are primary drivers of the formal sector of the economy, providing the majority of economic growth and deliver most social goods and services to ensure quality of life to all South Africans (Kanyane & Sausi, 2015). Because of their strategic role in the economy and developmental role (Khoza & Adam, 2005), performance measurement of organizations has generally become an increasingly important topic in recent years (Omondi, 2015). Like other organizations, SOEs have not escaped this interest. Therefore, there is a growing need for the performance of SOEs to be jerked up. To achieve this, there is growing recognition of the necessity to better understand the effective performance management systems that are used by these entities to manage their performance. There is also an understanding that in order to derive the full benefit of measuring performance, it is necessary that the performance management systems are suitable for the task (Parmenter, 2010). Interestingly, studies reveal that each organization, at some stage, will face some challenges that will force it to consider performance management in one way or the other. This will compel such an organization to consider an effective 11 performance management system. Stříteská, Zapletal & Jelínková (2016:44) state that “increasing globalization and technological revolution represent the primary challenges for maintaining competitiveness in today’s business environment. Thus, businesses must create a long-term vision and formulate new strategies to allow managers to manage short-term performance in accordance with long-term needs. Therefore, measuring and managing performance is being increasingly emphasized”. Several scholars agree on the effectiveness of performance management systems in helping organizations achieve their goals, while emphasizing the significance of performance measurements and their usefulness to organizational efficiencies. Proponents of performance measurement such as Hatry, (1996) believe that it provides information which can be utilized to improve programme outcomes, planning and budgeting process. This sentiment is supported by Julnes, (2009:15) when indicating that “performance measurement can provide the basis for the refinement of goals and objectives, for monitoring results, and for modifying plans to enhance performance”. Additionally, Goh (2012) described performance measurement as an administrative process addressing issues relating to performance challenges in public sector organizations. As stipulated by De Bruijn (2007) that the purpose of performance measurement is to enhance performance improvement and positive reinforcement. Hatry (2014), further describe performance measurement as a process in which organizations regularly collect data on outcomes and outputs for its programmess and services. On the other hand, Jarrar et.al, (2007:5) noted that “performance management provide public sector organizations with means for planning and implementing strategies; for influencing organizational behavior and to focus, compel, monitor and reward people; for communicating with stakeholders both internally and externally; and for adopting and developing the principles of a learning organization”. Thus, performance management is associated with measuring results and monitoring progress towards the achievement of objectives (Tomić et al., 2016). 12 According to Vance (2006), performance management intends to align, engage and integrate individual and group efforts for continuous improvement in attaining organizational mission and vision. Furthermore, as purported by Vance (2006), performance management can also offer the base for other employee management activities including:  Training and career development,  Performance pay as recognition and reward,  Promotion and placement, and  Disciplinary action as a consequence. It is therefore important for organizations to use performance measurement information to improve performance, learning, change and for decision-making once measures for performance are developed (Goh, 2012). This is because performance measures can be utilized by public managers to evaluate, control, budget, motivate, promote, celebrate, learn, and improve as part of their general management strategy, (Behn, 2003). Performance measurement utilization is when performance information is used by leaders in organizations to plan strategies for future performance improvement and for decision-making Goh (2012). The goal of performance management systems as defined by Vieira, O’Dwyer, and Schneider (2016) is to help organizations define a set of measures reflecting their objectives and then assess their performance in relation to these objectives. As supported by Markić, (2014), that performance measurement system encompasses data collection, processing, analysis and action. Whereas Stříteská et al (2016:45) described performance measurement system “as incorporating the process of establishing goals, collecting, analyzing and interpreting data concerning performance”. Moreover, Aguinis (2009:2), defined performance management as “a continuous process of identifying, measuring, and developing the performance of individuals and teams and aligning performance with the strategic goals of the organization”. 13 Performance management process The performance management process is presented by Aguinis (2009), “as a cyclical process involving six stages including: prerequisites, performance planning, performance executions, performance assessment, performance review, and performance renewal and re-contracting” as shown in figure 1 below. Figure 1: Performance management process Source: Aguinis (2009) The Prerequisites This phase is the foundation of the whole process and comprises two important aspects that should be understood for the successful implementation of the performance management system. Firstly, understanding that the organization’s purpose, strategic objectives and what needs to be done is fundamental for the implementation of performance management system as organizational goals and objectives are the reason for its existence. Therefore, these plans and targets should be adopted as departmental roadmaps across the organization as they assist in guiding the actions of employees. The 14 second and equally important aspect is the understanding of job analysis (Aguinis, 2009). Performance Planning During planning stage of the performance management system, it is imperative that all employees are involved. The discussion and agreement of activities and how these should be executed is undertaken among the manager and employees. This process would include the discussion of results, behaviors and development plan. As performance management intends to enhance employees’ and organizational performance, employee activities should be planned in line with organizational outlook. In addition, the identification of measurements that need to be executed and their augmentation plans should be undertaken during this phase (Aguinis, 2009). Performance Execution The third stage of the performance management proposed by Aguinis is the performance execution. During this phase, execution commences where employees produce results that were ratified and display behaviors approved when developing activities and their outcomes (Aguinis, 2009). Supervisor should also be actively involved, during this stage, the supervisor should observe and document performance regularly, update employees on any changes on organization’s goals and review and revise initial objectives. Supervisors are also expected to provide continuous feedback on progress towards achievement of goals and negative employee’s positive or negative performance and provide coaching where necessary for performance improvement. Also, necessary resources should be made available to the employees. It should be noted that employee’s participation does not only begin during the current phase (Smither, 2009). 15 Performance assessment: During this phase, both the employee and the manager meet to evaluate the extent to which the desired behaviors have been displayed and whether the desired results have been achieved and the supervisor provides the performance information. Further, an evaluation of the extent to which the goals stated in the development plan have been achieved is evaluated. Self-appraisal process increases employee’s job satisfaction while enhancing their conception with regards to performance management system, inevitably viewing feedback from this system as precise and unbiased. Further, at this point, previous information pertinent to performance, current environment as well as upcoming planned activities are provided (Aguinis, 2009). Performance review The performance review phase provides an opportunity for both employee and supervisor to evaluate their assessment. This is a platform referred to as appraisal meeting where employees are provided constructive by the supervisor with regards to their performance. The involvement of both the employee and the supervisor in the evaluation process creates an independent setting where employee performance is discussed. The involvement of an employee and their manager in assessment exercise forge an independent environment where employee performance is discussed. This encourages employees to take control of the process thus increasing their commitment level, consequently, imminent utilization of this information is likely (Aguinis, 2009; Tenakwah, 2015). Performance appraisal as one of the processes within the performance management system intended to engage, align, and merge individual and group efforts to continually improve the achievement of the overall organizational goals and can thus provide a basis for identifying and correcting inconsistencies in performance (Vance, 2006). 16 Performance renewal and re-contracting During the renewal and re-contracting stage, information from other phases is gathered and used to draw lessons learnt. The goals and objectives set during the planning stage are reviewed and some of them may be refined at this stage because, there may be deficiencies for example, setting unrealistic goals, thus achievable goals must be set for the upcoming period. Because the main purpose of performance management is to improve employee performance and to achieve organizational goals, the continuous monitoring of the prerequisites is crucial to ensure that all the other stages in the process are consistent with the strategic organizational goals and objectives (Aguinis, 2009). The performance management process as outlined by (Aguinis, 2009) revealed that performance management is not a sequential process but instead a continual exercise ensuring that employees’ activities and outputs are in alignment with the vision, goals and strategic objectives of the organization, thus giving an organization a competitive advantage over their rival organizations. If followed, this process can also assist employees understand their contribution towards the achievement of organizational goals and objectives. Purposes of Performance Management Systems There are many possible ways in which performance management may be used. Performance management systems can be used to improve the performance of the organization, to generate quasi competition, to improve accountability in the public sector and as a resource-allocation system (Propper et.al. 2003). According to Smither, (2009), performance management systems can serve six important purposes which are: strategic, administrative, communication, developmental and organizational maintenance. 17 Strategic: By linking the organizational goals with individual goals performance management reinforces behaviors consistent with the achievement of organizational goals (Smither, 2009). Administrative: Performance management systems are a source of valid and useful information for decisions-making (Smither, 2009). Communication: Performance management systems provide employees with feedback pertaining to both their performance and that of the organization and are able to know what is expected of them and which aspects of their work are believed to be critical towards achievement of the organizational goals (Smither, 2009). Developmental: Performance management systems provide continuous feedback that can be used by managers to coach employees and assist them improve performance (Smither, 2009). Organizational maintenance: Performance management systems generate information about skills, abilities, promotional potential and assignment performance histories for lessons learnt that can be used for planning as well as assessing future training needs, evaluating performance achievements at the organizational level and the effectiveness of human resource interventions (Smither, 2009). Overall, performance management systems are designed to help organizations achieve their goals and are essential for their survival and success (Vieira, et.al. 2016). Performance management as argued by Amaratunga et al., (2001) is the utilization of data collated from performance measurement systems to influence modifications in organizational practices and beliefs, while supporting an organization to create pragmatic targets, allocate scarce resources properly, alert managers to either maintain or change current policies or organizational focus to achieve strategic goals and share the anticipated outcomes. It is therefore necessary to set goals against 18 which performance can be measured as it forms the basis of performance management. Further, it is also essential to link the objectives of employees to those of the organization (Thorgren & Wincent, 2013). Moreover, (Jarrar et.al, 2007) stipulated that in recent years, the need for public service organizations to increase their accountability and customer focus led to the implementation of performance measurement systems with the aim to improve efficiency and performance in these organizations. Performance management system is thus one of the fundamental practices in the public sector organization and it is believed that companies with performance measurement systems perform better and are anticipated to be efficient than those without it (Ljungholm, 2015). Similarly, the successful implementation of performance measurement system is dependent on the validity of available performance information, thus employee training becomes imperative (Armstrong, 2008). Fryer et al., (2009) “proposed several basic characteristics of an effective performance management including”:  “alignment of the performance management system with vision, goals and organizational strategies”,  “commitment of leaders to goals and objectives of the organization”,  “an organizational culture in which performance management is used to improve employees’ performance and recognizes good performance and does not promote poor performance”,  “stakeholder engagement”; and  “continuous monitoring, feedback, information dissemination and learning from results”. There is scholarly literature indicating that performance measurement can actually improve performance. On the other hand, implementing performance measurement system within the public sector organization turned out to be challenging. As noted by Gao (2015) that the successful design and implementation of performance measurement system in the public sector is 19 faced with challenges hence performance measurement is never perfect. This is believed by Anderson & Eshima, (2013) that it could be due to the problems associated with identifying suitable elements for measurement within this sector. The introduction of the New Public Management (NPM) in the 1980s and 1990s, resulted in the importance of performance management in the public sector. This paradigm emerged to embed a new approach into traditional public administration and was geared towards enhancing efficiency, productivity, improved service delivery and accountability, with an emphasis on results as opposed to a traditional process-oriented public administration (Ljungholm, 2015). This era led to the adoption of private sector management concepts and styles, with the establishment of the concept of pseudo-markets and contracting processes and the application of explicit standards and measures of performance within the public sector. This with the objective to improve the public sector performance through accountability relating to direct connection between the services providers and users thereof and social accountability (Christensen & Lægreid, 2015). Although performance measurement and management are used in both the commercial and non-commercial enterprises, studies of organizational behavior within the public sector established that profit driven enterprises are different from non-commercial organizations, hence, what contribute to improved performance within the commercial institutions cannot be directly adopted for the non-commercial institutions (Propper & Wilson, 2003). Below are some of the features that differentiate the non-commercial from the commercial enterprises: Dixit (2002), maintained that state-owned organizations are confronted with multiple principals and goals. For instance, civil servants working within this sector usually report to numerous high ranking officials including politicians from different offices, consumers of services, professional institutions and taxpayers. Likewise, these bureaucrats are faced with the challenge of 20 delivering on varied results while improving productivity and value in the provision of essential goods. As noted by Rantanen, (2007) that there are multiple participants including the state, taxpayers, civil society, politicians and regulators within organizations ran by the state each with their own objectives. Consequently, public sector organizations find themselves faced with two main problems with regard to the successful performance measurement implementation. Firstly, challenges with establishing coherent targets thus producing performance results which foster informed decision-making. Secondly, these interested parties could have varied performance measures that do not satisfy everyone. Also, private sector organizations are aimed at profit making, thus this enables clear target setting within these enterprises. On the other hand, due to multiplicity of goals within the public sector organizations, setting clear targets has become more difficult (Arnaboldi & Azzone, 2010). Additionally, the complexity of the concept of performance within the public sector impacts on the effective development of some performance measures due to the fact that certain objectives and targets are not measurable, thus, analysis of such is generally based on guidelines. As a result, three difficulties emanate during this process: firstly, discussions pertaining to the notion of performance are still underway, secondly, there are difficulties relating to how performance is attained, and lastly, the way in which performance should be evaluated within the public sector (Diana, 2014). An additional distinguishing factor of the public sector from the private sector is clearly defining what organizations produce. Whether to measure output or outcome, that is efficiency instead of effectiveness is still a dilemma faced by the public sector. Because outcome results may take longer to be achieved than output results, measuring outcomes tends to be more challenging than measuring output in the public sector (Chan, 2004; Rantanen, 2007). While the NPM was based on the assumption that accountability would improve performance, this has been found not to be always the case in the 21 public sector organization. It has been discovered that the relationship between performance and accountability in the public sector is characterized by austerities, ambiguities and contradictions (Bouckaert & Halligan 2008). On the other hand Behn (2001) stated that performance audit were found to be inclined to compliance and were biased towards hierarchy and punishment and not on performance itself. Whereas Dubnick (2005) revealed an accountability paradox in which organizational performance is been reduced by accountability. Furthermore, a study by Van Thiel and Leeuw (2002: 269) identified unintended performance measurement consequences associated with minimal accountability requirements, such as; “the use of performance indicators can inhibit innovation and lead to ossification, that is, organizational paralysis. Another effect is referred to as tunnel vision, which "can be defined as an emphasis on phenomena that are quantified in the performance measurement scheme at the expense of unquantifiable aspects of performance". Other unintended side effects are sub optimization, which is defined as "narrow local objectives by managers, at the expense of the objectives of the organization as a whole" and measure fixation, "an emphasis on single measures of success rather than on the underlying objective". Additionally, an analysis of public sector organizations in the United Kingdom revealed that the relationship between administrative reform and accountability is unclear, there is no direct link between accountability and performance, rather the relationship is described by tensions, dilemmas and dispositions and audits are more focused on compliance than on performance improvement (Glynn & Murphy, 1996). From this, one can deduce that the promise of the NPM with the introduction of accountability in the public sector did not improve performance but rather increased the complications, thus it can be said that more responsibility for performance does not lead to more accountability for performance in the public sector organization. One of the difficulties in executing and utilizing performance measurement system in the public sector is the assessment and management of information 22 and impalpable measures (Jarrar & Schiuma, 2007). As supported by Bourne et al. (2003) when citing two challenges in the design of performance measurement system as (a) evaluation and quantification of results in areas that are outcome oriented and qualitative in nature, (b) the identification of true drivers, time and financial resources for performance measurement. Furthermore, results from a study conducted by Sanger (2008) indicated that developing an ideal performance measurement system is costly, and requires a considerable amount of investment towards designing and training of personnel on collection, usage and reporting of data. The study further revealed that regularly redesigning measures and reports, while rearranging resources make performance measurement to be current, thus using performance measurement systems is found to be costly by many organizations. Insufficient management dedication and lack of support towards performance measurement was identified as problematic and affecting the successful development of performance measurement (Hacker & Brotherton, 1998). As supported by Sanger (2008) that for the public sector organizations to realize efficient and effective performance measurement, the traditional bureaucratic culture norms need to be changed and this requires leadership commitment. Furthermore, varied shareholders with different interests, inadequate management abilities coupled with vague objectives and goals were also identified as hindrances in the design of performance measurement system in the public sector organizations (Rantanen et al., 2007). Furthermore, literature indicates that due to the multiplicity and vagueness of the public sector goals, the performance management system tend to be complex thus measuring these goals tends to be difficult. As a result individuals respond to performance management systems in such a way that they are beneficial to them. This can lead to behavioral distortion and manipulation with an intention to improve performance at the expense of unmeasured activities (Propper et.al., 2003). 23 These behaviors include tunnel vision, myopia, measure fixation, sub- optimization, gaming, misrepresentation and misinterpretation (Smith, 1995). For example, a study by Gao (2015) identified gaming as one of the factors hindering the successful execution of performance measurement system in China, however, this finding could possibly be related to various states globally. Another study by Hood (2006) identified gaming as one of the perverse effects of performance measurement. Gaming occurs when performance results are deliberately altered with the aim of attaining a strategic assessment leverage. This is when key performance data is distorted so as to enhance anticipated results. The reason for gaming to be deep-rooted in the public sector organizations could be due to the fact that managers are continuously striving to score political points with their principals (Propper et.al., 2003). From the discussions above, it can be deduced that although performance measurement is important in the public sector organizations, the implementation thereof is nevertheless marred by numerous complications. As noted by Sanger (2008) that more research is required to identify deficiencies affecting the effective design, implementation and utilization of performance measurement in the public sector organizations. Key to an effective performance management system is governance and leadership or effective corporate governance. The South African private and public sectors are influenced by the three King Codes on Corporate Governance (Report on Corporate Governance for South Africa 2016) Nonetheless, governance of SOEs is regulated by the Public Finance and Management Act, as amended (Republic of South Africa, 1999) and the related Protocol on Corporate Governance (Department of Public Enterprises, 2002). It is the way these guidelines are exercised that determine the effectiveness of the performance management system of an SOE. 24 Therefore, governance structures have a significant role to play in this regard. Literature suggests the first layer is that of the shareholders, who must ensure that governance structures are in place and appoint the board of directors and in some instances auditors (Napier & Shah, 1992). This is followed by the board that must play an important role of monitoring to ensure performance (Leblanc, 2007). Executive management, on the other hand, is responsible for implementation of the strategy and board’s risk and control policies. In addition, they are expected to meet compliance targets essential for sound corporate governance principles (Khoza & Adam, 2007). Other critical structures include internal audit which monitors and evaluates the efficiency of the organization’s risk management processes (The Institute of Internal Auditors, 2009). The audit committee also assures that proper accounting records are maintained, effective internal control systems are initiated and also that the company complies with the principles of good corporate governance (Smerdon, 2007). Another structure is the external audit which assists to enhance the audit committee’s effectiveness and to ensure the reliability of financial reports (OECD, 2015). Furthermore, they validate and investigate the information presented by the board to ensure it is equitable and precise (Personal & Archive, 2013). This means the effectiveness of the governing structures and the way they relate with each other may influence the effectiveness of the performance management systems. Literature on performance measurement in general and performance management systems in particular is quite extensive. Several studies explore their nature and their effectiveness. According to Sahlin and Angelis (2019:21) the study of performance management systems of SOEs is also becoming one of the attractive research subjects. However, not much has been done in this regard. Very few studies have been completed on the measurement of performance in the SOEs as well as the performance management systems thereof (Ngqumeya 2012:1). 25 More studies are needed in this field of study in order to understand this aspect of governance better. However, various reports provide some literature that can be used as a point of departure. This study will therefore investigate the performance management system of one of these entities which is performing fairly well to see if its performance management system could be adopted and customized for other SOEs. Thus, this study aims to contribute to literature on performance management that can form the basis to expand to other SOEs in South Africa. More importantly, this study will examine a performance management system of ATNS in order to understand how performance information is used and the determinants of its effectiveness within this particular entity. Studies on organizational improvement have indicated that the successful design and implementation of performance management systems in the private sector organizations has led to performance improvement of these organizations. On the other hand, public sector organizations have been faced with challenges hindering the successful design and implementation of the performance management systems. This is because the public sector organizations have multiple stakeholders with conflicting priorities thus affecting the implementation of ideal performance management system. Furthermore, public sector organizations are providers of essential services such as; energy, water, telecommunications and transport, thus quantifying their performance measures could be proof difficult. It should therefore be acknowledged that implementing performance management systems may differ across organizations. Although, implementing an effective performance management system may require a reasonable amount of time and effort once it is developed, the system could benefit the organization. Subsequently, performance management and measurement systems should be aimed at resolving certain issues within their respective organization. Hence, developing and implementing an effective performance measurement system is crucial to any organization. 26 2.3. International Examples of SOEs State owned enterprises are deemed critical for developmental agenda for most countries (Büge, Egeland, Kowalski, & Sztajerowska, 2013) and are thought to both commercial and public policy objectives but balancing the two can be difficult and lead to negative effects on efficiency and performance (Kikeri, 2018). It is thus imperative for governments to implement evaluation method that are inclusive of all aspects to assess performance of SOEs (Taghizadeh-hesary et al., 2019). As emphasized by Jarrar et.al, (2007) when stating that the implementation of performance management systems and procedures improved decision making within government institutions while improving performance and accountability ratings of governments in developed economies. As a result several countries reviewed the structure of their SOEs to align them to the nation’s growth and developmental objectives. As experiences of reform will differ for each country, a comparative analysis of Malaysia and New Zealand is outlined below. SOEs in South Africa, especially those classified as Schedule 2 are business enterprises required to generate revenue to fund their operations while achieving different socio-economic goals of government. Nevertheless, their performance challenges pose several problems, including slowing down economic growth. As a result, there has been calls for the government to privatize some of these enterprises as there is no effective evaluation method within government to assess performance of these SOEs. In 2010, the Presidential Review Committee (PRC) was established in order to review all state entities and determine if SOEs were responding to the government’s developmental agenda. One of the recommendations from the PRC was that for performance monitoring and evaluation to be effective, the state should adopt a standardized criteria based on best-practice (PRC, 2012). To date poor performance of most SOEs in South Africa is still a concern. Contrary to the South African approach, the Malaysian government started a Transformation Programme for Government-Linked Companies (GLCs). The programme’s performance-based objectives are aligned to international 27 benchmarks. The programme introduced key performance indicators and performance-based contracts and compensation, for board members and senior management. It was supervised by the Putrajaya Committee on GLC High Performance, included reps of all key SOE shareholders and external experts and was led by the Deputy Finance Minister. Legal and operational frameworks of SOEs were commercialised, and new management from private and public sector was introduced within SOEs. Management received clear mandate and refined time-bound indicators to improve performance of SOEs. SOEs became effective as the changes introduced encouraged performance- based culture resulting in better utilization of capital and other resources (ADB Institute, 2017). Similarly, the Malaysian GLC grew by 11% between 2004 and 2014, their market capitalization tripled and their return on equity equated to those recorded by the listed companies. By 2014, GLCs revenue increased to $22 billion compared to $7 billion in 2004, and their operations expanded to 42 countries (World Banks, 2016). New Zealand like many countries undertook government reform in the 1980s, with the aim to increase efficiency and effectiveness within the public sector (Wilkinson, 2019). The purpose of this reform was to ensure alignment of the public with the private sector prioritizing results and outcomes coupled with effective use of public sector resources (Mason & Lang, 2018). New Zealand’s SOEs were restructured and their transformation necessitated market deregulation, corporatization, accountability for quality services and profitability. SOEs were compelled to generate revenue, their management was separated from the state, and their managers entered into performance- based contracts and rewards. Thus SOEs were well-organized commercial organizations (Luke et al., 2013). With financial footprint proportional to that of the private sector. SOEs’ commercial value equalled 30% of all equity market capitalization at the end of 2012 (Chan et al., 2018). Thus, due to corporatization SOEs turned into efficient and profitable organizations with increased public service delivery (Luke et al., 2013). The literature on both Malaysia and New Zealand SOEs indicate that, their performance can be attributable to their governance structure and not 28 necessarily the performance management system used within the public sector organization. Both countries experienced efficiencies within SOEs once corporatized them. It does show that it is not easy to adopt the traditional performance management systems for SOEs in their current governance structure due to their multiple and yet competing mandates. Although SOEs profitability is important, it will be misleading to consider it alone when analyzing performance of SOEs as most of them focuses on social welfare improvement rather than making profit, thus, these objectives should be considered accordingly when evaluating SOEs performance (Taghizadeh- hesary et al., 2019). As for the Air Traffic and Navigation Services, performance management system is still relevant and can be used to improve performance at this entity. It should be acknowledged though that with suggestions proposed by the participants, the incorporation thereof might improve the performance management system. Furthermore, as it was indicated in the annual reports, the entity has an aviation training academy that provides relevant training within and some countries in the continent. There is evidence that SOEs can successfully implement performance management systems to improve performance as seen in the case of Malaysian SOEs and those in New Zealand (Luke et al., 2013). Therefore, the entity has a commercial service unit which is a vehicle to expand the business outside the regulated model. In this regard, the current performance management system can be customized and adopted for these two units of the entity. 2.4. The Performance Management System in the ATNS The ATNS, as a state-owned company and a schedule 2 public entity as per the PFMA, is accountable to the Minister of Transport on behalf of the South African Government. The Minister of Transport is therefore the shareholder in this regard. “The ATNS was established in 1993 in terms of the ATNS Company Act“(45 of 1993). Its mandate is to own and operate the infrastructure of, and provide air navigation services. Furthermore, The Act mandates ATNS to provide Air Traffic Management solutions and associated 29 services on behalf of the State in accordance with ICAO standards, recommended practices as well as the South African Regulations and Technical Standards (Republic of South Africa, 1999). The entity is structured along two primary business divisions; regulated (operating mainly within the country) and non-regulated (which is the international growth partnerships and related activities). These two divisions allow ATNS to provide safe and efficient service across the African skies, thus providing air traffic control services throughout South Africa, and part of the Indian and Atlantic Ocean regions, comprising approximately 6% of the world’s airspace. The Aviation Training Academy offer courses on air traffic services and air traffic services’ electronic personnel training, as well as safety-related courses (ATNS Report, 2020). As an entity of the DoT, the ATNS responds to developmental outcomes identified by the shareholder to demonstrate its contribution and support towards national priorities as stipulated in the medium-term strategic framework (MTSF). The ATNS enters into a performance agreement with its shareholder contained in the shareholders’ compact, as represented by the Minister of Transport, on an annual basis (National Treasury, 2002). The performance against the predetermined objectives’ key performance indicators (KPIs) is monitored by the board through the Audit and Risk Committee (ARC) and is reported to the DoT on a quarterly basis. The performance report includes both financial and non-financial KPIs (ATNS, Integrated Report, 2020). As a monopoly service provider, ATNS is required to seek permission from the Economic Regulating Committee (ERC) to levy air traffic services charges, provide air navigation infrastructure and conduct air traffic and air navigation services. The formulation and appointment of the members of the ERC as a legislative institution is undertaken by the DoT. This committee is responsible for the issuance of the five year permission to ATNS as authorized by the ATNS Company Act. It is therefore important that the organization operates within the parameters of the permission (ATNS Report, 2019). 30 ATNS complies with South African Civil Aviation Regulations (CAR) Part 140, supporting the ICAO Annex 19 requirements, with some of the imperatives such as: embedding a safety culture, ongoing personnel development and performance management in safety matters, minimizing risk associated with aircraft incident or accident, comprehensive safety audits and active monitoring of safety processes and procedures. Furthermore, ATNS is expected to develop, implement and improve on its safety management system (SMS) maturity metric as per the International Civil Aviation Organization's (ICAO's) Annex on Safety Management. The SMS maturity is measured against the Civil Air Navigation Services Organization (CANSO) Standard of Excellence yearly. Furthermore, an annual audit is conducted in terms of the ISO: 9001 Standards where certification is issued if the standard is adhered to. With all these compliance and regulatory standards, one tend to wonder what it means to have a performance management at ATNS. The above indicates that the air navigation environment within which ATNS operates is complex, therefore necessitates a comprehensive performance management system encompassing different measures inclusive of air traffic management (ATM), socio-economic and developmental elements. It might thus seem that measuring performance for this organization is a sensible step. However, in the case of Air Traffic and Navigation Services, being part of a global and regional ATM community provides the organization with many options as well as many difficulties in the choice of the performance management framework. Thus this study intended to evaluate the performance management system of this organization with interconnected objectives where safety is of paramount importance and yet expected to be profitable and contribute socio-economically. 2.5. Theoretical Framework Frameworks can be assumed to be structures, systems or plans arranged logically and consistently to assist describe and interpret a case under observation through analyzing its various components and their relationships 31 (Nilsen, 2015). In the context of this research, part of the task of interpreting final results is identifying appropriate frameworks that best capture and describe the phenomenon under investigation. There are several frameworks that have been developed in the study of performance management systems. In this section, performance management frameworks, by Otley, Bouckaert and Halligan and Ferreira and Otley are reviewed. As a result of some general control theories been unable to fully capture complexities of performance management and internal activities of organizations, Otley (1999) came up with an integrative model and introduced performance management framework. This framework introduced organizational strategy and operation control within performance management. Additionally, the framework emphasizes five elements central to the development of a systematic performance management systems namely; identification of the organization's key objectives, formulation and implementation of the strategy, performance targets setting, development of effective organization's reward system and information flows (Otley 1999). This performance management framework has been viewed to be compatible with management control systems as its performance components are comprehensive and can efficiently be integrated with strategic elements and routine operations. Further, the framework emphasizes performance data and information flow and how they should be utilized to maximum benefit, also, it has capacity to improve productive, client satisfaction and encourages employee to engage in continuous self-improvement (Ferreira, 2002). Nonetheless, some scholars viewed this framework as lacking analysis of external context and assumptions, time consuming and costly. Other limitations are related to its focus on what works instead of how things should work and the fact that the interconnection between different components of the performance management system is not clearly addressed in the framework (Stringer, 2007). Recognizing this knowledge gap, Bouckaert and Halligan (2008) extended the framework and proposed an interpretive and analysis model that enables comparison of effectiveness and challenges of implementation of performance 32 management. They identified three core dimensions of a comparative framework which are measurement, incorporation and using. Although it is thought to be helpful towards the implementation of performance management, this framework was developed through an extended analysis of performance managed by examining experiences of selected highly industrialized countries. Thus it is limited to its one dimensional snap shot of realities on the ground as they emerge and not be able to address the ambiguity surrounding what the concept of performance entails, the dynamic nature of the public sector and complexities of organizational management (Talbot, 1999). The most relevant in this study is the much-improved Ferreira and Otley performance management systems framework since it is designed to specifically study performance management systems of specific organisations. Vieira et al (2016:6) identify the Ferreira and Otley framework as the one that has been developed to an extent of addressing many weaknesses in the frameworks pertaining to performance management systems. The framework was first proposed by Otley (1999) to study performance management systems within specific organizations. It evaluates five key areas: key objectives, strategies and plans, target setting, reward systems, and information flows. According to Vieira et al (2016:6) the framework initially had some limitations such as being static and its failure to develop links between a company’s vision and its mission as well as ignoring the dynamics of change. To address these weaknesses, Ferreira & Otley (2009) extended the initial Otley (1999) framework to develop what they called the performance management systems framework. The new hybrid framework captures the complexity and particulars of the performance management systems. Vieira et al (2016:6-7) identify a significant improvement of the new performance management systems framework as it is more holistic in nature encompassing several important, interrelated issues or themes such as; mission and vision, key success factors, organization structure, strategies and plans, key performance measures, 33 target setting, performance evaluation, reward systems, systems and networks, performance management systems use, change and its strength and coherence. Because of its extensiveness, this framework will assist the researcher to explore whether the performance management system at ATNS is comprehensive enough to enable the organization achieve its set objectives, with a view to improve its performance and verify whether the strategy is aligned to its mandate. This is because ATNS is in a highly specialized sector with various stakeholders with competing demands. The framework is relevant first because it is meant to study a performance management system of an individual institution, which is the case in this study that will focus on the ATNS as an institution. Further, its improved version will assist this research to unbundle the complexities in the analysis of the performance management system of ATNS. Although performance management system frameworks are generally viewed as time consuming and financially costly, if implemented effectively, they can assist the organizations to plan, measure, and control their performance as per agreed strategy. As argued by Julnes, that (2009), though performance measurement can provide evidence to measure performance, for performance management system to be successful, it should be understood that it is a diverse and continuous process which requires constant development and refinement. 2.6. Conceptualizing Performance Management Systems Conceptualization involves the analysis of data, in an attempt to develop a theoretical approach. The collection of data for a research study calls for a reasoning basis and a frame of reference to guide and evaluate such data. Conceptualising will assist with the classification and identification of questions on the performance measurement and challenges of implementing performance management in the Air Traffic and Navigation Services. There is 34 also the question on the extent to which the performance management system impact and influence its effectiveness, towards achieving organizational goals. As stipulated by Asmah-Andoh (2012:52) that “any guidelines for the establishment of performance management in public institutions need to overcome some of these conceptual difficulties, and also to meet the requirements of effectiveness and efficiency associated with the applied side of performance management systems. This provides a rationale for this research. Several theories can be used in the study of performance management. In this study, the systems thinking theory will form the basis of analyzing the implementation of performance management in the Air Traffic and Navigation Services. According to Dye (1984:40), “systems thinking theory can be used to evaluate performance management for service provision and management improvement”. A system can be assumed as a structured whole consisting of connected parts directed at a particular purpose (Terry, 1977). Additionally, Jordan (1998) described a system as a network of related components integrated together identified within a certain object or process. It can thus be said that systems are fundamental to human activities. Components of systems theory are; input, processes, output and impact (Dye, 1984; Meiring, 2001). When it was first introduced in the study of biology, the aim of systems thinking theory was to assist the earlier biologist to understand systems better, Von Bertalanffy (1969), so that they could find new ways to deal with recurring problems Skyttner (1996). Moreover, systems thinking theory supports the concept of order, patterns and systematic structures, (Skyttner 1996; Kim, 1999) thus providing scientific modelling, rational, testing, implementation and evaluation processes, (Jackson, 2000; Von Bertalanffy, 1968), which are necessary to unbundle complexity of "systems" in modern technology. This theory was introduced within the management field to assist in dealing with problems, Jackson (2000) whereas in physics and cybernetics it was introduced as a vision of hierarchic order Skyttner (1996) and to minimize overspecialization in one field Von Bertalanffy (1968), and was perceived by 35 Kim (1999) as a useful tool to comprehend how systems fit into a broader context. Ackoff (1994) suggests that a system should satisfy the following characteristics:  “The behaviour of each element has a specific effect on the behaviour of the whole”,  “The behaviour of the elements and their effect are interdependent, by and large”,  “However, subgroups of the elements have an effect on the behaviour of the whole, but none has an independent effect on it”. Thus, systems thinking theory is a means to ensure solutions are planned, designed, evaluated and implemented, and can be effectively used in various fields, to uncover hidden assumptions and perpetual practices that contribute to poor results, (Skyttner 1996; Von Bertalanffy,1968, Jackson, 2000). Coetzee (2009), posits that within the systems theory, problems are approached with an understanding that humans and their environment are part of an interacting system. Within this system there are specific feedback mechanism, where inputs are conveyed through a receptor and control apparatus to an effector. In reaction to the input received, an effector becomes a monitor response. Coetzee (2009) illustrated the concept diagrammatically, as follows: 36 Figure 2: Extrinsic feedback model Source: The development, Implementation and Transformation of Disaster Management; Coetzee, 2009:25 The above suggests that a system has an input and a feedback mechanism. A feedback mechanism provides a formal evaluation to check the relevance of the system; and this can be either formative or summative. To be effective and efficient, a system needs a feedback mechanism that can ascertain whether the outputs of the system are what they should be; if not, a system should have the ability to adjust its inputs or process to improve the outputs, Coetzee (2009). A feedback mechanism in an information system may be automated, or it may be manual. The research aims at establishing the effectiveness and impact of the performance management system of the ATNS towards achieving its set goals. Organizations has control over and can change the internal operating environment; but do not have control on the external operating environment and should thus adjust to such. The internal environment relates mainly to the structure, culture and management systems of the organization; whereas, the external environment relates to the environmental, socio-political and economic setting in which the organization operates (Martnez, 2001). As supported by Amagoh (2008), that within the systems concept, organizations are continually interacting with their environment, whereas organizational environment is a set of relationships between stakeholders, and any factors beyond the organization’s control. 37 This chapter undertook a literature review on the role of SOEs in South Africa, performance management systems in the SOEs, the international examples of SOEs and performance management systems in the ATNS. It revealed that, SOEs are common throughout the world and the important role they play in economic development, especially in South Africa. Furthermore, it showed how performance management and measurement systems can contribute to performance of SOEs with international comparisons and the challenges faced by public sector organizations with regard to the design and implementation of these systems. This chapter also discussed the theoretical framework that was selected when undertaking the research and processing the data. The next chapter discusses the research methodology that was used to gather the research data. 38 3 RESEARCH METHODOLOGY This section identifies and describes the research approach, research tools and their application, sampling, process of analysis, limitations, feasibility and positionality validity, reliability and dependability and ethical considerations. 3.1. Research Approach and design The research employed a qualitative research methodology. A recognised research design used broadly in an extensive range of practices, particularly in the social sciences (Crowe et al., 2011). The approach was selected because it would allow the researcher to examine people’s experiences in detail using a variety of methods. Since the study was about the performance management system of the ATNS, this method enabled the researcher to gather the necessary data from people in their natural setting (Hennink, Hutter & Bailey, 2020:10) using questionnaires as one of the multiple tools the method allows (Khan 2014:300). This research further opted for a case study, a research design that assisted in generating an in-depth, multi-faceted understanding of a complex issue in its real-life context. This is an established research design that is used extensively in a wide variety of disciplines, particularly in the social sciences (Crowe et al., 2011). Case studies are widely used in organizational studies and across the social sciences, and there is some suggestion that the case study method is increasingly being used and with a growing confidence in the case study as a rigorous research strategy in its own right (Kohlbacher, 2006). This approach was relevant as this study wanted to explore and give a descriptive analysis of the performance management system of the ATNS. 3.2. Research Tools and their Application Primary data was collected from the interviewees using questionnaires. According to Radhakrishna (2007) questionnaires are the most frequently used data collection methods in various fields and they assist with gathering 39 of information on a variety of subjects. They were selected specifically for this research project because they are useful, versatile, quick to implement and the data they generate can generally be analysed quickly and easily (Coombe & Davidson, 2015:217). According to Khan (2014:306) questionnaires can be structured, semi-structured and open-ended. This research selected a semi- structured questionnaire to gather the data from the relevant sources within the ATNS. Lewis, Saunders, & Thornhill (2005) highlight that semi-structured interviews are suitable in the kind of research where the researcher wants to categorise responses from sources while at the same time allowing for the exploratory questions. In other words, while the semi-structured questionnaire directly responds to certain categories of data, it also give room for other categories to be introduced through exploratory questions. Interview times varied from each responded, but the average time was about forty five minutes to complete each questionnaire. It was not easy securing interviews with respondents as most indicated work pressure that came with working from home coupled with personal time. None of the respondents opted for a face to face meeting citing time constraints. About four respondents opted to complete questionnaires on their own and others agreed to virtual interviews. On average, interviews were completed within 45 minutes. Five virtual interviews were conducted and eight respondents completed the questionnaire at their leisure. Secondary sources of data includes published books and journal articles, strategic planning documents, annual reports as well as other performance related documents of the ATNS. Other sources include relevant reports by government departments such as the Auditor General and the national Department of Transport, speeches by the president, ministers and press releases by these departments as well as research outcomes by other scholars. 3.3. Sampling According to Khan (2014:305) sampling is a method of deducing information about a whole population from a limited number of units. The sample was 40 limited to members of management in the ATNS because they are involved in the implementation of the performance management system. The study employed a purposive sampling strategy. This approach involves selecting a small number of respondents to yield the most information and have the greatest impact on the development of knowledge (Guetterman, 2015). The sampling technique in this research therefore corresponds to the purposive sampling, as the population elements will be selected based on the purpose of the interview (Peljhan & Marc, 2018:926). Staff members working directly with the system were interviewed as they are knowledgeable in terms of the contents of the system. As Yin (2012) puts it, purposive sampling is a strategy which allows the selection of specific data sources from which data are collected to respond to the research question. The plan was to interview sixteen employees directly involved with the performance management system. Thirteen employees responded and participated in the research.The respondents within the sample included an Executive, Senior Managers, Managers and Specialists. These four key positions were interviewed as they are involved with the performance management system and provide the inputs thereof. Eight participants completed the questionnaire on their own as they indicated that there were not available for face to face or virtual interview, but were willing to complete the questionnaire whenever they have time. They did avail themselves when they were required to clarify their responses. Five participants agreed to be interviewed, though one opted not to be recorded. The other eight opted to complete the questionnaire on their own and were available for further consultation if necessary. 3.4. Data Processing and Analysis The purpose of data analysis, irrespective of data type or underlying research tradition, is to organize, provide structure, and generate meaning from the data (Polit & Beck, 2010). Furthermore, Neuman, (2000) stipulates that generally, data analysis means a search for patterns, recurring behaviors, objects or body 41 of knowledge. The researcher used thematic analysis to identify the main themes in the data gathered from the participants. This was achieved by analyzing and reviewing transcripts and field notes. Thematic analysis is defined as a method to identify, analyze, and report themes within data. (Boyatzis, 1998). This method of analysis organizes and describes a data set in detail. According to Fereday and Muir-Cochrane (2006), thematic analysis enables the identification of overarching themes in the raw data from interview transcripts and organizational documents and capture the phenomenon as described by participants. The researcher then analyzed the data gathered about the performance management systems in the ATNS. By analyzing the information gathered on the performance management system in ATNS, the researcher “examined the raw data recorded line by line in order to identify isolated events, incidents, ideas, actions, perceptions, and relevant interactions that were coded as perceptions” (Bhattacherjee, 2012:114). Thereafter, the remaining data were coded, similar concepts grouped into higher order categories. The researcher arranged the pieces of information into various groups, taking into account the categories or groupings suggested by the participants themselves. From this information a set of categories were formed. Themes were manually identified from responses as provided by participants for each question posed in the questionnaire. Identifying themes manually was vital as it ensured that when the data was processed, themes that appear were reflective of the data collected and ensured that the distortion of data is minimized as much as possible. Practically, thematic analysis allowed the researcher to analyze the data such that a certain trend in the information is identified, which then formed a theme. Consequently, the researcher was able to provide a report based on the collected data allowing for a conclusion to be made from these data and reveal research findings and analysis thereof as outlined in chapter 4 and 5 respectively. Using this approach to data analysis was helpful as the researcher was able to organize data, divided it into manageable units, 42 synthesize it, and search for patterns thus discovering what is vital and what is to be learned and deciding what will be shared with others (Bogdan & Biklen, 2007). 3.5. Validity, reliability and dependability To ensure validity, reliability and dependability, this qualitative study utilized different sources to gather data that is; interviews and documents. This study included interviews with managers, senior managers and executives of ATNS through semi-structured or open-ended interviews. Data gathered through interviews was triangulated with audited information from annual reports, corporate plans and the strategy. To derive contextual meaning from the information provided by the respondents, the researcher employed content analysis. Krippendorff (2013:403) defined content analysis as “a research technique for making replicable and valid inferences from data to their context”. The emphasis in this study was to capture and describe the participants experience, perception, description and judgment of the phenomenon being studied. Based on this, there are areas where the researcher used direct quotations from the research participants, as these are often informative. To confirm some of the research findings, annual reports from 2016 to 2020 were analyzed. These reports were accessed from the company website to ensure that only audited information is analyzed. Performance measurement information related to the research was retrieved and analyzed with data received from the respondents and literature. Data triangulation assisted in obtaining different viewpoints to validate the study’s findings, conclusions, and recommendations. The semi-structured questionnaire allowed free flow of information thus producing enough information to a point of data saturation. To further ensure credibility, the transcribed spreadsheets were shared with respective respondents to correct or confirm if the recordings were true and completely articulated their intentions, knowledge and understanding. As the researcher was interviewing the colleagues, the primary concern was how knowledge will be acquired from participants without compromising the 43 collected data considering the relationship between the researcher and the interviewees. There was a risk of data biasness from both the participants and the researcher alike. Therefore, the researcher had to mitigate against this in order to avoid bias during data collection and analysis. To achieve this, the researcher sought assistance with data coding and review of findings from peers. This process assisted in confirming that all information was included, while identifying gaps that needed to be addressed in the argument. Peer review also provided affirmation that conclusions reached are sound and reasonable given the data gathered. Also, the researcher adopted a two-column approach to mitigate for data bias while preparing data into field notes and transcripts. To do this, in, one column verbatim reports were recorded while in the other column, the researcher’s thoughts in contexts were recorded. This meant that during interviews, and when going through the questionnaires respondents completed on their own, the researcher had to record her reaction or even immediate thoughts coming to her mind. This was done because the researcher is part of the team that work with the performance information and is responsible for compiling some of the performance reports. This process actually helped the researcher to capture her reaction about the responses in context (Rajendran, 2001). It must be noted though, that the first interview was actually the most difficult especially the first five questions as the researcher believed that these questions were focused on the anatomy of the system. Though it did not come naturally, as the interview progressed, the researcher manage to remove both the interviewer and the respondents from the process. For example, when Respondent 3 indicated that “we do not have a dynamic capable M&E unit, it seems as if this unit is by default and not by design”. With both the interviewer and the respondent working within this unit, the first reaction would be, “does this person think we are not doing what we are supposed to really, or why they aren’t even working towards that capability?” 44 But by recording the immediate thoughts as the responses were provided, assisted the researcher to be able to remove both the interviewer and the respondents from the process during data collection, interpretation and analysis, and was able to focus on recording the respondents’ understanding and knowledge of the system. Thus, it can be said that this strategy assisted the researcher to concentrate on the data and avoid being bias thus rejecting the participants’ realities when collecting, interpreting and analyzing the information. 3.6. Limitations, feasibility and positionality The study will use primary data obtained from a group of managers from ATNS who interact with each other on daily basis. Such analysis may tend to be subjective. Nonetheless, the information to be used would have been subjected to audit. 3.7. Ethical consideration In this research, the researcher is also an employee of the organization working within the unit that deals with performance management systems and directly involved with the performance information. This has a potential to exert power dynamics between the researcher and the participants. To mitigate on this risk, at the beginning of each interview, the researcher assured the potential participants that the research was for academic purposes only and will not be used otherwise without their consent. The researcher therefore approached the research from a neutral angle so that the objectives of the study could be achieved without compromising the quality thereof. The participants were also informed that although the permission to conduct research was granted by the Executive Management, it did not mean that they were expected to participate in the study, but it was emphasized that participation was voluntary and there was no expectations from their seniors to take part in the research. 45 Prior starting with the interviews, the researcher reminded the participant of the objectives of the study and informed them that the research data will not be used for any other purpose but academic. If needs be permission will be requested from all the participants if the research data is to be used for other purposes than those outlined in the consent form. The interview process was challenging as the participants would address the researcher as a colleague and who is aware of what is happening in the organization. Thus, the researcher had to continuously remind the participants that the responses required are based on their personal experiences and knowledge and not those related to the researcher’s line of work or opinions. In this way, the researcher avoided placing herself in their “shoes”. This helped as the participants were able to understand that the interview is not a notes sharing session rather an information seeking session to collect data on the performance management system in the organization to respond to an academic research topic. Furthermore, participants were requested to share their utmost understanding and knowledge of the system and not as custodians of information so that the objectives of the research could be achieved. Another potential risk identified was the researcher’s bias towards the data collected. Although the participants were assured of the intentions of the study, the researcher assumed a position of power in this study and could therefore decide on how the collected data is used. The researcher, though neutral, was in a position to use scientific knowledge to control the interview setting through initiating the interview, deciding and asking the questions, and following up on the answers and finally ending the interview (Kvale, 2006). To avoid bias, a two-column approach (Rajendran, 2001) was adopted as outlined under the validity, reliability and dependability section above. By using this strategy assisted the researcher to ensure that when the data is being processed, will be reflective of the data collected and will ensure that the distortion of data is minimized as much as possible. During data analysis, this strategy assisted the researcher to reflect back at the interview process from several perspectives to check on own interests within the interview environment. This 46 helped to identify situations where the researcher unintentionally reacted to some responses during the interviews. Thus, the researcher was able to consider all the information provided and not discard any information based on own understanding. As a result, the research was conducted from a neutral perspective. This research aims to contribute to the academic community and therefore nothing will be done to undermine the ethics driving the research and participants’ were informed as such. To adhere to ethical conduct principles, the researcher ensured that the procedure of the proposed research was disclosed to the participants before attaining informed consent and requesting permission to participate in the research process. Another ethical concern related to the fact that the researcher conducted interviews with people familiar to her and on the issue she is accustomed to from organisational level. This has a potential to limit openness on the part of the respondents. Equally, the respondents might be too willing to provide information thus exaggerating on issues. Though the interview process was not easy due to the relationship of the researcher and research the participants, it did receive positive feedback. With most participants even indicating that the topic is very relevant to the organization. One respondent even suggested that once completed, a paper be prepared and presented to executives and senior managers. It should be noted that the interview process was horizontal, this way the focus was more on the purpose of the study and what it intends to achieve. Also, the open ended questions provided respondents an opportunity to further explain their views and observations. Confidentiality and anonymity are interconnected yet different concepts. Confidentiality can be ensured through anonymity (Crow & Wiles, 2008). Anonymity is a way to intensify privacy, which intends to avoid the identification of the person who performs a certain action (Dobrick et al., 2017). Measures 47 were taken to protect confidentiality of the respondents. As a result, the names of the respondents or their positions were not included in the report. Though anonymity of respondents might not be achieved in this study, all information that can easily identify the respondents will be kept confidential. To further ensure anonymity, the interview respondents were referred to as Respondent 1 to Respondent 13 respectively. Additionally, the questionnaires incorporated a non-disclosure agreement and approval letters from both the university and ATNS to alleviate the respondent’s concerns. The study commenced after receiving permission to conduct research from both the university and ATNS, the researcher did not manipulate the gathered information. This chapter provided a discussion and explanation of the research methodology that was used in gathering the research data. Components such as the research approach, the research design, the data collection method, and the approach to data analysis were discussed. This section also discussed validity, reliability and dependability, limitations, feasibility. This section also and clarified the ethical considerations of the research. The next chapter presents the research data. 48 4 RESEARCH DATA PRESENTATION In this chapter the research data are presented as per the research methodology explained in the previous chapter of this research report. The themes that emanated from the interpretation of interview transcripts will be presented accordingly. As mentioned in the methodology, sixteen questionnaires were distributed, but only thirteen employees responded and participated in the research. This included one executive, three senior managers, three managers and six specialists. The rationale for selecting these employees was based on an assumption that they are engaged with the entity’s performance management system and would therefore provide vital information and their individual perspectives and experiences pertaining to the functioning of the performance management system and how performance measurement information is utilized at ATNS. It was therefore imperative to use the correct data analysis method when presenting research findings. As this will allow for data to be presented as accurately and objectively as possible and respond to the research questions. For the purpose of this research report, a thematic analysis approach was used. This approach was selected as it would assist the researcher to make sense of the information and find insight in order to give an accurate report on the performance management system at the Air Traffic and Navigation Services (Guest, Namey and Mitchell, 2013). Themes were manually identified and extracted from the responses provided by the research participants when responding to questions posed in the questionnaire. It was important for the researcher to identify themes manually in order to ensure that during data processing, the themes extracted would be reflective of the data collected. This would ensure minimization of the risk associated with data distortion. By using thematic analysis, the researcher was able to manage the data effectively as it was categorized, thus provided an answer to the research questions of this research report. 49 Themes that were extracted from each question were therefore grouped together and analyzed separately to draw a conclusion for each question separately. These themes were then analyzed together in the conclusion to find commonalities and systematic conclusion. The results are presented according to the research questions. The questions in the questionnaire aimed to respond to the three questions that defined this research which are: (1) Does the performance management system assist the entity to manage and measure performance? (2) Does performance measurement hinder or improve the entity’s performance? (3) What recommendations can be made to improve the performance management system at the Air Traffic and Navigation Services? The findings from the questions are highlighted below: Question 1 of the questionnaire asked the participants how comprehensive they thought the entity’s performance management system was. The opinions of the respondents on this question was split. Six out of the thirteen respondents felt that