Competency-Based
Performance Management

Improve Performance and Competence

Competencies and results are assessed side by side, reminding individuals that how they do things is as important as what they do.

What is Competency-Based Performance Management

Many organizations are becoming more interested in management and appraisal of competence – the “how” of performance. They are seeking more qualitative assessment, oriented to the future and focused on development. A competency-based approach brings a different perspective to performance management. Performance is viewed in terms of the process em­ployees use to achieve their job results. It combines planning, management, and appraisal of both perfor­mance results and competency behaviors. It assesses what employees accomplished and how they did it (with personal characteristics they possess that predict superior performance in present jobs, or in future jobs).

Performance and competence are balanced in a competency-based performance management system. In a line job, achievement of performance results may be weighted 80-90 percent and demonstration of competency behaviors only 10-20 per­cent. At the other extreme, an appraisal form for a service position might weight competence 100 percent. Performance objectives for a staff job might give equal weight to results and demonstration of competency behaviors.

In traditional systems, achievement of performance results is quantified, past oriented, and tied to unit goals, based on a short term, and used to make compensation decisions. Competency appraisal is more qualitative, longer range, future oriented, and used for employee devel­opment and career path planning.

Shifting the Emphasis

Competency-based performance management systems shift the emphasis of appraisal from organization results achieved to employee behaviors and competencies demonstrated. Diag­nosis and problem solving to deal with poor performance takes this form: “If results are not at the desired level, give higher priority to these job tasks, demonstrate these behaviors more often, and develop these competencies” (i.e., model the task priorities, behaviors, and competency levels of the best performers in the job).

An important factor in implementing a competency-based perfor­mance management system is the training of managers to provide coaching and developmental assistance. (Studies of effective performance management sys­tems consistently find training to be an important input.)  Employee training also helps employees understand how the system works, what their role is, how to assess themselves, and how to contract for competency development activi­ties with their managers.

Employees’ Perspective of the Performance Management Process

From an employee’s perspective, performance management involves five steps, as shown in the above illustration. Step 1 is to write your job goals and develop appropriate action plans. Step 2 gives you the chance to review your progress with your supervisor so he/she can let you know how well you are doing, allowing him/her to guide and coach you as needed. Step 3 is where career development plans are discussed. Step 4 is the quarterly or annual performance review, where your overall job responsibilities and achievements are evaluated. Step 5 is a discussion of pay decisions related to your performance.

Our Performance Planning and Review booklet covers these steps in more detail. It describes employees’ role in the planning and review process. It includes sections on setting job goals, reviewing progress, career development, the annual review, and the correlation to compensation actions.

17 pages (PDF) https://workitect.com/PDF/performance-planning-and-review.pdf

Organizational Issues

Problems that indicate a need for competency-based performance management include the following:

• Job performance standards and appraisal criteria are seen as unequal or unfair,
• Performance appraisal is seen by managers and employees as a bureau­cratic “paperwork” exercise,
• Employees see nothing in the system for them,
• Has little impact on actual man­agement,
• Does not reflect or reinforce the organization’s strategy.

Particularly appropriate for:

• Uncertain Environments,
• Qualitative/Process Service Jobs,
• Jobs Intended for Development of Future Performance,
• Changing Organizational Strategy, Focus, or Markets.

A Blueprint for Competency-Based Performance Management

What a competency-based approach is and does, its impact on individual and organizational results, organizational issues addressed, situations best served by a competency-based approach, and steps to implementing. 5 pages (PDF)

Make Performance Management a Positive Experience

Performance management can be improved in most organizations with a few basic, common-sense principles. These principles also can help make performance management a good source of motivation. Since performance management is a human process, however, following a prescribed formula will not satisfy employees in all situations. 5 pages (PDF)

Performance Management Kit – A set of forms for performance & competency planning and review are included with a Competency Bundle license.