Performance Reviews

Competency based performance reviews: Here’s all that you need to know

By on April 2, 2018

The only worst thing than training your employees and having them leave is not training them and having them stay.

Henry Ford

It’s been a long time since Henry Ford said this, yet it is still very relevant today. Employees are the backbone of an organization. It is important that they be skilled in their respective responsibilities to help the company achieve success. Conversely, if they do not have the right levels of expertise, cost of poor performance can be huge for the company.

Case for competency based performance reviews

Majority of the times employees’ prior education is not sufficient to ensure they perform well at their jobs. They need to be formally trained and developed to handle all the responsibilities that may come their way. Thus, a large number of companies today are focusing on maximizing the efficiency of their performance management process. They have begun by investing resources into training employees and ensure their efforts align with the organizational goals.

However, these efforts are great at determining what the employees will achieve. It is equally important to identify how they will achieve these goals. What are the skills and behaviors needed to perform their job. Managers need to track the level of competency (behavior) in related areas and if needed, provide training to improve them further. This is where competency based performance reviews come into the picture.

The main intent of competency based performance reviews is to focus on the skills, personality traits, motivators & behaviors of an individual. Collectively these attributes are referred to as ‘competencies’. They not only take into account the individuality of an employee but also incorporate needs of the job they are doing. That way, employees are growing as well as helping the company grow.

These reviews study the pattern of each individual’s behaviors over a period of time and whether they have been able to hit their goals or miss them. The analysis helps the management identify the existing competencies of that individual and determine additional ones that they may require to further improve their performance.

How to initiate competency based performance reviews in the organization:

Set expectations and communicate them:

To measure performance, you need to first aim for a target against which your progress can be determined. Management should clearly communicate with all employees what is expected of them during a specific duration. Failure to do so is one of the reasons organizations do not achieve their goals.

Thus, there needs to be ample focus on the goal setting process in the workplace. Setting goals helps employees identify with the organization’s purpose and align their efforts in that direction. Without a proper goal setting process, the workplace tends to flounder about aimlessly, wasting precious amount of time and resources.

Not just individuals but every team, level and department should align their goals with the company’s overall objectives. Clearly communicate how all these efforts will help the company become successful. If employees do not see any value, they will be reluctant to come on board.

Define job responsibilities:

Clearly define all the skills that are required to perform a particular job. Also which additional skills will help these individuals move up the ladder. Once employees understand what skills are required for them to succeed in their current position and what can help them grow further, they are more confident about their job and their future in the company.

This step also helps your recruitment process. Whenever there is a requirement for a specific position to be filled, the HR can quickly shortlist those individuals whose skill set match with the skills that are required for the job. They are able to eliminate misfits and hire competent individuals who are more suited to the process.

Identify lack of competencies:

Upon setting a list of expected competencies required for a job, identify individuals who lack these in their current profile. This information can be obtained through one-to-one meetings, questionnaires or surveys conducted by the HR Team. Find out what behaviors should your team project in order to perform well. What are those missing competencies that prevent them from being exceptional performers?

The information can be used to study how a job needs to be defined and what should be the thought process while hiring new employees for this job.

Types of competencies (Source)

Sr. No
1 Organizational competencies The mission, vision, values, culture and core competencies of the organization that sets the tone in which the work of the organization is carried out Customer-driven, risk taking and cutting edge). How we treat the patient is part of the patient’s treatment.
2 Core competencies Capabilities and/or technical expertise unique to an organization, i.e. core competencies differentiate an organization from its competition The technologies, methodologies, strategies or processes of the organization that create competitive advantage in the marketplace).
3 Technical competencies Depending on the position, both technical and performance capabilities should be weighed carefully as employment decisions are made. Organizations that tend to hire or promote solely on the basis of technical skills, i.e. systems software designs versus relationship management skills)
4 Behavioral competencies Individual performance competencies are more specific than organizational competencies and capabilities. Development of talent
5 Functional competencies Functional competencies are job-specific competencies that drive proven high-performance, quality results for a given position. They are often technical or operational in nature Backing up a database is a functional competency
6 Management competencies Management competencies identify the specific attributes and capabilities that illustrate an individual’s management potential Competencies in this category should demonstrate pertinent behaviors for management to be effective.

Training and developing for competencies:

The next logical step would be to conduct training and development programs for your employees. Nurture them to acquire new skills or refine existing skills as required by their job profile. Again, it could be a company wide training or a personally conducted session by an expert or reporting manager for each employee as needed.

There are multiple benefits of conducting training and development programs. Managers can reduce the gap between expected and existing competencies, get employee performance back on expected levels and motivate them to consistently improve themselves.

Point to note:

It is essential to understand that this training does not make it mandatory for them to stay back. Even after completion of training they are free to look for better opportunities wherever they want to. The company environment should be such that employees willingly stay back and not because they are under contractual obligations.

Conduct performance reviews:

It is this step that some companies get wrong. Once you have all the information carefully documented, analyze and identify the changes from the starting point to its most recent documentation.

During the review, manager should provide feedback about the behaviors of the individual in addition to the achievement or failure of their goals.

For example,

If a marketing executive’s goal is to increase number of visitors on website from 40,000 to 75,000 and he/she was able to reach only 60,000 visitors, then do not declare outright that he or she failed to fulfill their objective.

Provide them with an analysis of how certain behaviors prevented them from reaching their goal. It could be that they couldn’t empathize with the target audience and hence couldn’t develop the right personas. Hence the deficit.

Employees will appreciate a more actionable and constructive feedback as opposed to a generic feedback. This is your competency based performance review.

Also, performance reviews should be conducted when there is a need as opposed to a fixed schedule. Companies need to steer clear of annual reviews and adopt a culture of continuous improvement in the workplace. Any time there is a deviation from expected standards, it needs to be rectified at the earliest before it snowballs into a huge problem. Also, all achievements should be duly recognized as it is one of the biggest motivators for the employee to keep on giving his or her more frequently.

Benefits of competency based reviews for the company

  1. Develop employees and raise the levels of their skill set
  2. Better communication between management and employees
  3. Detailed reports to rely on during performance reviews
  4. Regular feedback enables quicker resolution of problems and recognition of achievements
  5. Keep track of employees levels of skills and behaviors and how well do they match with their jobs
  6. Reduce costs incurred due to poor performance and low productivity of employees

Benefits of competency based reviews for the employees

  1. Have a clearer picture of how they contribute to their company goals
  2. Motivates employees to develop themselves and give their best
  3. Better understanding of why newer skills need to be developed
  4. Higher job satisfaction and subsequently employee engagement
  5. Clear analysis of how an employee’s performance has improved over time
  6. All achievements and contributions are documented and recognized by the management

By assessing and suggesting improvements for competencies, companies show that they are genuinely interested in their employees’ growth.  Such measures help increase employee engagement in the workplace and companies too get to reap the benefits of this increased productivity and performance levels.

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