Competency-based performance management systems focus on identifying, measuring and developing the competencies or behaviours that are required for success within an organization. It moves away from more traditional performance appraisals that often focus too much on goals, tasks and results.
A large professional services firm implemented a comprehensive competency-based performance management system across its entire global organization with over 50,000 employees. The key steps they took included:
Competency Framework Development: First, the company established a competency framework that clearly defined the competencies needed at different levels and roles within the organization. They conducted extensive research to identify core competencies that delivered outstanding performance. The framework included both technical/professional competencies as well as leadership and behavioural competencies.
Some examples of competencies included in the framework were things like client service orientation, quality focus, teamwork, leadership, strategic thinking, driving results, developing others. The framework established benchmark levels for each competency on a 5-point scale. This allowed them to assess performance in a consistent manner globally.
Training on Competency Framework: Once the competency framework was established, the company delivered training programs to all people managers worldwide on how to effectively utilize the framework. The training focused on how to identify competency strengths and developmental needs, set competency-based performance objectives, and conduct effective competency-focused performance reviews and development conversations.
Approximately 50,000 people managers received both virtual and in-person training over 18 months to ensure consistent adoption and understanding of the new performance management approach. Additional resources including guides, tools and examples were also made available online.
Integrating Competencies in Performance Reviews: At performance review time (semi-annually), managers were required to assess direct report’s performance against each competency using the five-point benchmark scale. Examples and behavioural statements were provided to help guide assessment and calibration of ratings. Developmental feedback also focused on addressing any competency gaps.
In addition, 2-3 competency-based development goals were set for the next review period. Progress on development goals was also reviewed in subsequent performance discussions. The competency assessments along with review discussions were documented electronically for record-keeping and input into talent processes.
Using Competencies for Succession & Development: Another key part of the system was leveraging the competency data and developmental goals to power talent management and succession planning processes. High potential employees with desired competency profiles could be readily identified for growth opportunities. Individualized development planning also targeted building the specific competencies required for upward progression.
Learning programs both online and in-person mapped back to the competency framework to allow employees to independently strengthen areas of development. Coaching and mentoring programs also utilized competency data to focus development guidance. Succession planning and resourcing decisions critically depended on having rich competency data on the organization’s diverse talent pool.
Continuous Improvement: The effectiveness of the competency management system was regularly measured through annual employee opinion surveys, manager/employee focus groups, and tracking metrics such as diversity in succession plans, reductions in turnover risks, improved performance levels over time. Necessary refinements to the competency framework, performance review process, or enabling talent systems were made on an ongoing basis to maximize results and continually enhance the maturity of the competency-based approach.
This large-scale implementation example highlights key elements of a robust competency-based performance management system including establishment of a competency framework, training managers, integrating competencies into goal-setting and reviews, leveraging competency data to inform talent processes, and ensuring continuous improvement. When done comprehensively, it can deliver business impact through enhanced employee performance and development, succession management, and retention of top talent.