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Competency-Based Performance Management What, Why, and How
Written by Edward J. Cripe
They are seeking more qualitative assessment.” so that most workers are rated average or below average. future oriented. Performance is viewed in terms of the process employees use to achieve their job results.g.Competency-Based Performance Management Overview Many organizations are becoming more interested in management and appraisal of competence — the “how” of performance. longer range. In traditional systems. achievement of performance results may be weighted 90 percent and demonstration of competency behaviors only 10 per-cent. 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 because: One group of employees must achieve at a higher level than other employees in equivalent jobs to receive a good evaluation or reward Employees are graded on a “bell curve. using www. Short time frame: One year. achievement of performance results is quantified. based on a short term. oriented to the future and focused on development. It assesses what employees accomplished and how they did it (with personal characteristics they possess that predict superior performance in present jobs. PERFORMANCE (“Pay for results”) 50%-90% “What” of performance Quantitative: Tied to unit goals. or in future jobs). At the other extreme.softexpert. an appraisal form for a service position might weight competence 100 percent.. More qualitative. COMPETENCIES (“Pay for skill”) 10%-50% “How” of performance. and used to make compensation decisions. Performance objectives for a staff job might give equal weight to results and demonstration of competency behaviors. Reward oriented. (e. Competency appraisal is more qualitative. A competency approach brings a different perspective to performance management. regardless of the absolute level of their performance Expected results are not under the workers’ control. past oriented. In a line job. Longer time frame: Future performance in present and future jobs. It combines planning. and appraisal of both performance results and competency behaviors. and tied to unit goals. Development (behavior change) oriented. Performance and competence are balanced in a competency-based performance management system. past performance. management. and used for employee development and career path planning.com .
The performance management system has little impact on actual management. In jobs with no measurable outcomes. management trainee positions). the ability to sell a firm’s new products in a global market may be more important than sales of older products in domestic markets.softexpert. The greater a firm’s emphasis on future performance. qualitative skills-competencies-are the best indicators of employee performance.. where results are not under employee control. whether they demonstrated the right behaviors rather than achieving targeted results. evaluation must be based on whether employees did everything they could.Competency-Based Performance Management • • • • • • • • • a productivity index such as “tons of steel per secretary”) Employees have little input into the performance goals set for them. performance appraisals do not address their questions about skill development or career advancement. Employees see nothing in the system for them.com . it doesn’t lead managers to do their jobs better or to develop or provide feedback to their employees. the more important it is to appraise competency behaviors. Performance appraisal is seen by managers and employees as a bureaucratic “paperwork” exercise that they do not take seriously because it has little impact on employee performance or development. A competency-based approach is particularly appropriate for: Uncertain Environments. If 95 percent of the workforce is rated “4 (very good)” on a scale of 1 to 5. Identify competencies required for superior performance in present or future jobs (competencies needed to implement a desired strategic change). hard results objectives are often rendered irrelevant by external events. the more performance should be based on expression of competencies. Focus.g. Steps in developing a competency-based management system 1. The more subjective the job output. or Markets. Qualitative/Process Service Jobs. Performance ratings are inflated. The less control employees have over results. The more a job or organization’s objectives for employees stress development of skills (e. the more its system should stress development and appraisal of competencies. employee ratings are not of any use for promotion decisions or succession planning. Jobs Intended for Development of Future Performance. Most performance management systems are past oriented. www. In changing environments and organizations. For example. Changing Organizational Strategy. In uncertain and rapidly changing environments. employees’ potential to contribute to the firm in the future may be more important than their past performance. the more appraisal should be based on demonstrations of improved competence. In such situations. The performance management system does not reflect or reinforce the organization’s strategy because it fails to focus employee behavior on strategic priorities such as quality or service.
and a sample of peers. what their role is. by his or her boss. and competency levels of the best performers in the job). coaching.softexpert. which holds that adults change only when they feel it is in their own best interests to do so. coaching for performance improvement). • • • Feel dissatisfied with their existing situation or level of performance (“actual”) Are clear about a “desired” situation or level of performance Are clear about action steps they can take to move from the actual to the desired situation or level of performance Competency-based performance management systems shift the emphasis of appraisal from organization results achieved to employee behaviors and competencies demonstrated. An employee’s competency levels are most easily assessed with “360 degree” ratings by colleagues “all around” the employee (i..com . give higher priority to these job tasks. Agreement on a “contract” between employee and manager on: i. The most important factor in implementing a competency-based performance management system is training managers to provide this coaching and developmental assistance. how www. Performance coaching involves: a. ii. Agreement between manager and employee on his or her “actual” levels of competence. and other competency development activities during the performance period. c. behaviors. The addition of competencies to performance management systems has important implications for management. The average of these ratings is compared with the employee’s selfassessment of his or her competencies. b. subordinates. the employee’s competency development goals and the action steps he or she will take to attain them the help and support the manager will give the employee This coaching approach uses the principles of “self-directed change” theory. and develop these competencies” (i. model the task priorities.e.) Employee training also helps employees understand how the system works. demonstrate these behaviors more often.e.. The employee identifying the “desired” levels of competence he or she wants to develop to meet his or her own performance or career advancement goals. Managers explicitly commit themselves to provide employees with formal training.g.Competency-Based Performance Management 2. Diagnosis and problem solving to deal with poor performance takes this form: “If results are not at the desired level. (Studies of effective performance management systems consistently find training to be an important input. and customers who know the employee’s work well).. Train managers and employees in performance management (e.
President of Merit Performance. DaimlerChrysler Services. Enhancing Employee Value. His experience includes positions as President of Workitect. automotive. along with its extensive network of international partners. service and quality improvement. including Building Competency Models. Pacific Gas & Electric. transportation and logistics.com .. ICL-Fujitsu. Principal of McBer & Company/Hay Group. Inc. NYU Medical Center. and many others. Training and Organization Development of Bendix Corporation (Allied Signal). GMAC-RFC and CIGNA Dental Health. Ed received his undergraduate degree in business from the University of Toledo.softexpert. Ed's clients have included companies in a wide range of manufacturing and service industries. energy and utilities. including manufacturing. government and public sector. Managing Performance – With Competence and The Competent Leader. Group Director. providing the most comprehensive application suite to empower organizations to increase business performance at all levels and to maximize industry-mandated compliance and corporate governance programs.A. Shared Services and Corporate Director. www. and how to contract for competency development activities with their managers. American National Can.000 customers and 300. Corporate Director. post-sales support and validation services for all solutions to ensure that customers get the maximum value from their investments. training. degree from Indiana University and has completed doctoral level courses at the University of Michigan plus the Program for Specialists in Organization Development at the NTL Institute. an M. Ford. Inc. About the author Ed Cripe has over thirty years of experience in organization development. National Aeronautics and Space Administration. Director of the Institute of Entrepreneurship and Executive Education for Nova Southeastern University. SoftExpert solutions are used by leading corporations in all kinds of industries. provides hosting. Customer Focus Center with Ryder System. Corporate Director. SoftExpert. performance management. Senior Consultant with Kaset International (Achieve Global). About SoftExpert SoftExpert is a market leader in software and services for enterprise-wide business process improvement and compliance management. He has developed and facilitated numerous training programs. financial services. ConAgra. Attracting and Retaining Talent. and Presidential Exchange Executive. competency systems. Ashland Oil. Nortel. Bessemer Trust.Competency-Based Performance Management to assess themselves. executive coaching. Founded in 1995 and currently with more than 2. life sciences. food and beverage. oil and gas. NCR. human resources and management consulting. Recruitment and HR Director with Carborundum Company. mining and metals.. the Limited. including Cable and Wireless. healthcare. and "The Value-Added Employee" (Butterworth-Heinemann) released in 1999. Training and Organization Development and Quality and Director.000 users worldwide. implementation. Inc. high-tech and IT.B. EXTEND Consulting Skills. He is the co-developer of the FOCUS Coaching program and author of "Competency Planner: a Resource Guide for Developing Competencies"..