Competency-based performance management

Performance management is about achieving results in a manner that is consistent with organizational expectations. Integrating competencies within the performance management process supports the provision of feedback to employees not only on "what" they have accomplished (i.e., performance goals), but also "how" the work was performed, using competencies for providing feedback. Assessing competencies as a part of performance management is an important means of assisting employees in understanding performance expectations and enhancing competencies. Multi-source feedback, while not an HR application per se, is a method that is often used in performance management to assess and provide employees with feedback on "how" they performed their work (i.e., their demonstration of the competencies).

Performance management programs are set up to provide feedback to employees on how effectively they are performing in their jobs. Such programs normally include a set of goals or objectives the employee must accomplish within the review period as well as the standards or criteria for determining whether the defined goals have been accomplished.

Effective performance management include the following features:

Competencies can be integrated into the regular performance management (PM) process in one of two ways:

In this case, the manager and employee identify the key competencies required to achieve each performance goal / objective (typically 1 to 3 competencies per goal/objective). At the end of the performance cycle, the employee's performance is evaluated in relation to the performance goals/objectives as well as the key competencies associated with each goal. Using this approach, the competencies included in the employee's performance plan may or may not completely coincide with the standard competency profile for the employee's role/job. The advantage of using this method is that the competencies being assessed are entirely consistent with the employee's performance goals for the performance review cycle. The disadvantage is that not all competencies within the competency profile for the employee's role/job will necessarily be assessed within the cycle.

In this case, the performance plan includes the performance goals/objectives for the review period as well as the complete set of competencies from the competency profile for the employee's role/job. The performance goals/objectives address "what" must be accomplished during the review period, and the competencies measure "how" the employee conducted him/herself to accomplish their work. The advantage of this method is that all competencies defined in the competency profile for the employee's role/job are evaluated. The disadvantage is that due the specific nature of the performance goals/objectives, key competencies for the effective performance during the review cycle, but not included in the competency profile, will not be assessed.

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