How to Conduct Competency-Based Performance Management?

Performance management can get stressful. Both employees and employers feel like they have a lot to worry about. But have you ever considered that you’re approaching it all wrong? Are skills and competencies integrated into your performance management?

In this article, we’ll discuss why you should consider a competency-based approach to performance management, and how. Doing so shows that you’re a company conscious of compensating its employees based on performance and effort. It reinforces behavior that will allow individual and company-wide growth.

In this article, we’re going to discuss what competency-based performance management is, how competency frameworks can help, and ways to evaluate the skills of your employees.

What is Competency-Based Performance Management?

So, what exactly is competency-based performance management? It involves using skills and competencies to evaluate employee performance. Rather than evaluating employees based on broad or general factors, you have a set criterion to measure their performance.

A competency-based performance management approach also works in favor of your organization’s overall mission. You can align individual goals with company goals and ensure everyone’s working towards the same desired outcome. It will help you recognize what talent you have in your team and reward high performers accordingly.

When mastered, this integration of skills and competencies can act as a tool for nurturing a motivated team. As such, your employees will likely be more satisfied in their jobs and remain dedicated to your company for longer.

Designing Competency Frameworks

Start by creating competency frameworks. You need to establish what skills and competencies certain roles require. These profiles must describe the tasks and responsibilities employees should fulfill to be successful in their position. What’s more, it helps management assess performance and hold employees accountable.

There are several things to include when designing these competency frameworks.

Knowledge requirements, including education and experience
Soft skills, such as critical thinking, leadership, and time management
Hard skills, such as software or coding knowledge
Behavioral indicators or characteristics of success

Defining these expected skills and competencies is crucial. It’ll help you hire people who have what it takes to excel in their position. You can also assist your workers to continuously improve over time throughout their careers.

Mapping Competencies to Performance Objectives

Competency-based performance management can really impact talent potential in your organization. Firstly, it will help your employees understand how they can contribute to company goals. It will also allow HR and management to track employee progress and objectively analyze performance.

A useful method is mapping skills and competencies to performance objectives. This requires developing a competency framework, setting goals, and then measuring progress.

Create a competency framework – As discussed, competency frameworks are a matrix of skills and competencies required for success in a role. Different roles will have their own individual skills. Consider utilizing performance management software to organize this data.
Set your company goals – With a framework in place, you can start to set goals. Be mindful of skills gaps in your organization and current industry trends. The overarching goal should be employee skills development that is aligned with the company’s mission and values.
Measure employee progress – Ensure you know how you’ll measure employee progress. Again, utilizing software can make this process much more manageable. You’ll need to conduct regular check-ins, offer support or development, and reward hard work.

Evaluating Skills & Competencies to Measure Performance

Successful performance management requires skills and competencies evaluation. There are different ways to do this. Your competency framework can guide the evaluation. Offer feedback based on tracking OKRs and KPIs. Use leaderboards to celebrate high performance and link it to a rewards system as motivation.

Discuss employee expectations at the beginning of a review period. Ensure everyone’s on the right page about individual and company goals. You can then utilize your competency framework to ensure that everyone’s meeting their skills and competencies expectations. It helps by keeping your performance management structured.

Competency-based performance management can seem like information overload. Performance management software can really help keep all this information organized. It ensures that data is stored accurately and can help managers monitor progress toward specific goals. It shows progress, helps compare learning techniques, and analyses a lot of data at once.

Final Comments

Performance management is important in every organization with a desire to succeed. Taking a competency-based approach means you can identify your employees’ skills and competencies and nurture their development. It helps managers optimize team performance. This is mutually beneficial for employers and employees alike.

When you focus on skills and competencies, you can foster an engaged team driven by learning and development opportunities. Employees are motivated to develop their skills with a shared goal of helping the company succeed. They feel valued in the workplace, which increases satisfaction and, consequently, retention.