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In this white paper, Ed Cripe and SoftExpert, a market leader in software and services for enterprise-wide business and Ian Huntly, CEO and MD of Rifle-Shot Performance Holdings, discuss the reasons why organisations are realising that competency-based performance management (PM) is crucial to their organisations. SoftExpert is represented in sub-Saharan Africa by Rifle-Shot Performance Holdings.
Many organisations 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 approach brings a different perspective to performance management while performance is viewed in terms of the process employees use to achieve their job results. This approach combines planning, management, and appraisal of both performance results and competency behaviours.
Problems that indicate a need for competency-based performance management include:
* 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 and often employees have little input into the performance goals set for them.
* 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.
* Employees see nothing in the system for them – performance appraisals do not address their questions about skill development or career advancement.
* The performance management system has little impact on actual management – it doesn’t lead managers to do their jobs better or to develop or provide feedback to their employees.
* The performance management system does not reflect or reinforce the organisation’s strategy because it fails to focus employee behaviour on strategic priorities such as quality or service.
* Performance ratings are inflated. If 95% of the workforce is rated “four (very good)” on a scale of one to five, employee ratings are not of any use for promotion decisions or succession planning.
Most employee performance management systems do not address daily behaviour as they are applied and reviewed at best, a couple times a year. Driving high performance behaviours often requires short interval control and/or feedback.
Steps in developing a competency-based management system:
* Identify competencies required for superior performance in present or future jobs (competencies needed to implement a desired strategic change).
Train managers and employees in performance management (such as coaching for performance improvement).
Performance coaching involves: a
greement between manager and employee on his or her “actual” levels of competence; the employee identifying the “desired” levels of competence they want to develop to meet their own performance or career advancement goals; and a
greement on a “contract” between employee and manager.
They must agree on: the employee’s competency development goals and the action steps they will take to attain them; and the help and support the manager will give the employee.
Competency-based performance management systems shift the emphasis of appraisal from organisation results achieved to employee behaviours and competencies demonstrated.
The addition of competencies to performance management systems has important implications for management in that managers explicitly commit themselves to provide employees with formal training, coaching, and other competency development activities during the performance period.
The most important factor in implementing a competency-based performance management system is training managers to provide this 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.