C H A P T E R 7

Competency-Based
Performance Management

A formal system of performance management, carried out by execu-

tives, managers, supervisors, and team leaders, along with other mem-
bers of the workforce, shapes human performance within an organiza-
tion and affects the organization’s ability to achieve its objectives.
This chapter answers the following questions:
• What is performance management?
• How is performance management traditionally carried out?
• How can performance management become competency based?
• What are the advantages and challenges of a competency-based
approach to performance management?
• When should performance management be competency based, and
when should it be handled traditionally?
• What model can guide competency-based performance manage-
ment, and how is it implemented?

141
142 Competency-Based Human Resource Management

Performance Management
The term performance management means several things to workers in
organizations around the world. For the purpose of providing a context
for the information that follows, we are using Cripe’s (1997) definition: a
systematic process for “improving and sustaining human performance
throughout an organization.” Performance management acknowledges
human competence as a key performance driver (adapted from Cripe,
1997). It is multidisciplinary and uses an integrated approach to compe-
tency assessment and development, performance observation and feed-
back, training, employee development, performance appraisal, and
rewards.1 It is important not to confuse performance management,
which involves planning for performance and reviewing results, with per-
formance evaluation, which reviews results at the end of a time period.

Traditional Performance Management

Traditionally, performance management systems concentrate on per-
formance planning and evaluation, rewards and discipline, according to
the 2000 Performance Management Survey (2000).
Traditional performance management in organizations includes
many HR activities that are intended to improve worker performance.
These practices achieve an uncertain level of success, judging from the
following common complaints from employees:
• “I dread my annual performance review. It’s always the same. First,
my supervisor tells me about how wonderfully I did certain things
over the past year. And then the mood radically changes, and she
tells me about all the things I did not do so well over the perfor-
mance period. I wouldn’t mind hearing about these things during
my final appraisal if she had told me about them when she noticed
them during the performance period. In fact, she knew about some
of these issues months before the current performance period began
but didn’t tell me about them. If she had, I would have done some-
thing about them, and they wouldn’t have shown up as performance
deficiencies at the end of the year. I think it’s my supervisor who’s
‘deficient’!”
 Competency-Based Performance Management 143

• “I don’t know what my job is and isn’t around here. One day I’m
supposed to move mountains and the next day I’m putting out fires.
A week later, I’m told to change the course of a river! I’m afraid to
see my performance review this year!”
• “I come in at eight o’clock, sometimes later, and I always leave no
later than five. My boss doesn’t seem to know when I’m here and
when I’m not, and he never talks to me about my work or what he
expects. When I ask him what he expects from me on a project, he
says something like,‘You know what to do.’ Sometimes my friends tell
me that he asks my colleagues to redo my work. This really annoys
me because he never comes to me and explains what I did wrong. My
annual performance appraisals are like carbon copies of each other
from year to year: ‘Overall performance for the year: Satisfactory.’ I
think it’s time to look for another job—or a different boss.”
• “In the past 2 years, I achieved dramatically more results than I’m
normally expected to achieve. But I didn’t receive any recognition
from my boss since he doesn’t ever measure my accomplishments in
a consistent way. Frankly, I don’t think he even knows how to meas-
ure the quality or quantity of my results. So that means I’m never
rewarded for exceptional performance.”
• “I’m in a dead-end situation here, even though it does pay a lot of
money. The CEO talks with me about the eight divisions I’m
responsible for, but he never wants to discuss my need for growth.
All we ever talk about are ‘the numbers.’ I was made vice president
because I was a good technician and team player, and I’ve had to
learn about how to fill my executive role while I was on the job.
When I ask the CEO for some help or coaching, he’s always too busy.
Maybe he thinks my needs just aren’t his concern.”
We hear stories like these again and again from employees at all
organizational levels. The problem situations we described could be
eliminated or at least ameliorated by the use of a competency-based, sys-
tematic approach to managing performance. Yet many organizations
have minimal or no performance management practices in place, at least
not when a group of researchers last checked in 2000.
144 Competency-Based Human Resource Management

Research by the Society for Human Resource Management (SHRM)

provides insight into traditional performance management practices
and describes the current state of the practice regarding the use of per-
formance management practices in organizations. For the 2000
Performance Management Survey, SHRM researchers measured current
and best practices in performance management and sought to deter-
mine respondents’ perceptions of the effectiveness of their overall per-
formance management systems and tools. The survey also suggested a
profile of performance management in the near future.
Respondents to the SHRM survey provided their perspectives and
indicated that the purpose of an organization’s performance manage-
ment system should be focused on objectives related to employees
rather than record keeping or other data collection functions. The
highest ranked objectives for having a performance management sys-
tem were providing performance feedback to employees, clarifying
organizational expectations of them, and focusing on their develop-
ment needs.
How satisfied were respondents with their organization’s perfor-
mance management system components? SHRM’s research report sug-
gested that respondents were much more satisfied with components of
traditional performance management systems rather than with develop-
mental components intended to provide employees with feedback about
others’ perceptions of their performance and about their needs for
development. About one-third of the survey respondents were not satis-
fied with their organization’s performance management system. This
lack of satisfaction was again attributed to respondents’ concern about
the development components of the performance management system
in their organization.
Written performance plans are a major ingredient of any successful
performance management system. SHRM survey findings showed that
70% of the respondents wrote performance plans for at least 75% of their
executives, approximately 66% of their nonexempt employees, and less
than 50% of their exempt employees. Executives’ performance goals
tended to be linked to operating results, but this was true for a much lower
percentage of nonexempt and exempt employees. Most respondents’
organizations conducted performance evaluations on an annual basis,
with development plans used more often than long-term career plans.
 Competency-Based Performance Management 145

Senior management support is essential to the long-term success

of any performance management system, whether or not it is compe-
tency driven, but the SHRM survey found that executives did not
review the performance management system at all at 42% of partici-
pating organizations.
From a different perspective, in a survey of 217 companies that was
sponsored by the American Compensation Association, 195 of the 217
companies, or about 90%, reported using competency-based perfor-
mance appraisal data as a guide for developing their employees
(“Competencies Drive HR Practices,” 1996).
In summary, many organizations take a traditional approach to per-
formance management by using a performance appraisal and discipli-
nary format. The biggest challenge for HR professionals is in gaining
executive support for the use of more comprehensive and systematically
delivered performance management practices.

Making Performance Management

Competency Based
An organization’s choice of performance management practices is influ-
enced by factors such as its size and culture, the geographic distribution
of its divisions and their degree of management autonomy, the types of
outputs or results its employees are expected to produce, senior man-
agement’s interest in and commitment to the concept of systematic per-
formance management, the organization’s business plans, and the rela-
tionship perceived between workers and organizational success. There is
no one correct performance management system for all organizations or
even for all work units within an organization. The competency-based
approach proposed, however, is applicable with some variation to every
organization, regardless of the preceding factors. Transitioning from a
traditional performance management process (for example, perfor-
mance appraisal and discipline) to a competency-based performance
management system does require some change.
The organization’s leaders need to be willing to support change in
this area of critical importance to organizational performance. It
requires a major change in their thinking about performance manage-
ment. They must commit resources to the systematic assessment of
146 Competency-Based Human Resource Management

employees’ competencies, plan and make available job-specific training

opportunities and coaching, set performance goals and develop work
plans, monitor performance, collaborate with employees on a planned
schedule regarding their performance, and deliver both good and bad
news about performance in an open and supportive manner. They must
also create and implement an ongoing communication strategy for
keeping all employees informed about the features, processes, and ben-
efits of the competency-based system.
Figure 9 depicts our model for a competency-based approach to
performance management. In an organization with no performance
management system, it is important to start fresh regarding employees’
past performance and with little or no preconceptions about the pro-
posed system. If an organization already has a performance manage-
ment system, adopting a competency-based approach may require rein-
venting, which is usually a bit more challenging.
Process reinventions are often challenging because workers can
become comfortable with the status quo, regardless of how difficult or
dysfunctional existing practices might be. Consequently, HR practi-
tioners who plan to reinvent their existing performance management
practices to those that are competency based will need to incorporate
change management strategies in order to smooth the transition.
One approach is to ask operating managers to identify their concerns
about current performance management practices and use this as a foun-
dation for having them create their own “ideal” system. Next, the facilita-
tor presents the process in Figure 9 and asks participants to compare the
details of their ideal system with those included in a competency-based
approach. Although we hope the two will match exactly, this is seldom the
case. However, the closer the fit between the operating managers’ ideal and
the model in Figure 9, the easier the transition to a competency-based per-
formance management system will be. This approach gives participants
the opportunity to compare the similarities and contrast the differences
between the two systems. The differences that are noted are often reflec-
tions of such factors as organizational culture, how the organization does
business or works with its constituents, the nature of the organization,
and other factors. Patience is required in getting operating managers to
make this transition since they require, and should be given, time to
 Competency-Based Performance Management 147

Figure 9: Competency-Based Performance Management

Step 1
Define the work and the competencies required to perform it.

Step 2
Identify the employees to do the work.

Step 3
Assess employee competencies.

Step 4
Identify and document competency gaps.

Step 5
Prioritize employee development needs.

Step 6
Establish work goals, plans, and standards with the employees.

Step 7
Implement competency development activities.

Step 8
Monitor performance.

Step 9
Conduct performance reviews.

process the information that was presented and then revisit the new
process at a later time—for example, a week or two later.

A Model for Competency-Based Performance Management

Next, we take a look a competency-based approach to performance
management, using the steps shown in Figure 9 to guide the discussion.
148 Competency-Based Human Resource Management

Step 1: Define the work and the competencies required to perform it

The first step in competency-based performance management is to define
the employees’ work by means of effective work analysis. In most cases,
this includes naming the specific outputs or results that employees are
expected to produce. These outputs or results must align with the organi-
zation’s strategic goals or objectives, and the relationship must be made
very clear to the operating manager and the employee. If the work is not
considered strategic—meaning that the outputs or results do not con-
tribute directly and overtly to the organization’s success—then there is lit-
tle justification for completing it, and it should be eliminated from the
employee’s list of required tasks. After this process of elimination is com-
pleted, the work that remains is therefore strategic to the organization’s
success. Employees who are performing unnecessary tasks can be reas-
signed to activities that are meaningful both to them and to the organiza-
tion. Process improvement alone is a significant reason for undertaking
work analysis. Also key to our approach to performance management is
the identification of the competencies employees must have and use in
appropriate ways to produce the expected measurable outputs or results.

Steps 2 and 3: Identify the employees to do the work and

assess employee competencies
Next, employees are identified to perform the work, generally using
selection methods. The degree to which they possess and can consistently
demonstrate the key competencies required for successful performance is
determined through the application of competency assessment methods.

Step 4: Identify and document competency gaps

Competency gaps for which development is needed are identified and
documented.

Step 5: Prioritize employee development needs

Priorities for developing employee competencies are determined, and a
plan for developing the competencies is prepared.

Step 6: Establish work goals, plans, and standards with the employees
After reviewing the plans, operating managers and employees establish
goals, plans, and standards to which both parties agree. Standards set
a minimum expectation for measurable results. Goals establish desirable
targets.
 Competency-Based Performance Management 149

Step 7: Implement competency development activities

Employees begin training or engaging in other learning activities to
acquire or build the competencies identified in Step 1 and work toward
accomplishing work goals or objectives.
Step 8: Monitor performance
As employees proceed to accomplish their work goals or objectives over
the performance period, operating managers monitor their perfor-
mance and provide feedback. Work goals and plans are formally reviewed
according to schedule and are modified as warranted. To be most effective,
these reviews should include discussion of how employees use their
competencies to achieve the expected work results as agreed in Step 6.
This approach to performance management builds and enhances the
organization’s competency bench strength—its competency pool. The
competency development plan may be modified as necessary.
Step 9: Conduct performance reviews
Competency-based performance management utilizes both interim
reviews and performance period reviews. Planned interim reviews
enable both employees and managers to address issues that could affect
successful performance. This type of review can be an advantage for
employees, providing scheduled opportunities to inform managers of
roadblocks to performance that could affect their ability to produce the
expected outputs or results. Use of interim reviews eliminates surprises
for employees and their organizations.
When the performance period ends, managers and employees meet
to review employee performance over the entire period and complete a
performance appraisal. It is interesting to note that many employees
and managers find a high degree of agreement regarding their ratings
of employee performance. For example, at a large client organization,
there was about 75% agreement between the ratings employees gave
themselves in their draft reviews and the ratings assigned to them by their
managers.
From a design, development, and implementation point of view,
moving to a competency-based approach to a performance management
system requires that the HR function focus on achieving the following:
1. Obtain senior management support for, and willingness to commit,
the needed resources to design, implement, and maintain the system.
150 Competency-Based Human Resource Management

2. Identify the scope of the application (for example, work units, divi-
sions, employees by work roles) and ensure alignment among the
organization’s strategic objectives and the affected workers’ measur-
able contributions to the organization success.
3. Define the work or roles that will be a part of the competency-based
approach to performance management. This includes the comple-
tion of detailed work analyses that result in the identification of
outputs, work activities, key worker competencies, performance
standards, job descriptions, job specifications, and any other infor-
mation that would contribute to implementation success.
4. Create system administration documents (for example, competency
assessment materials, record-keeping forms needed to track per-
formance, employee competency development plan forms, and
so on). Most organizations that use an automated human resource
information system usually have the capability to automate this
process; however, smaller organizations might not have this
capability.
5. Create and implement an organization communication strategy
to in-form all employees about the system, its benefits, processes,
and plans.
6. Design and deliver competency-based training that communicates
the competency-based performance management system processes,
elements, and instruments as well as how participation will bene-
fit operating managers and their employees. It is suggested that an
HR representative and members of the performance management
task group draft two competency models for those who will par-
ticipate in the system: one for the managers and the other for the
employees. These models are designed specifically to address the
system requirements as needed. Developing these models allows
the managers’ superiors to manage the performance of their direct
reports in the same manner as they are managing the affected
employees. The same model of performance management applies.
In order for executives to serve as role models for the venture, the
same approach could be applied to them. How the organization
decides to proceed on these ideas will depend on a number of fac-
tors, including the availability of resources.
 Competency-Based Performance Management 151

Competency assessment for the performance managers would add

value to the training since it could be highly individualized to their
development needs. Performance managers will, depending on their
individual background in the area of performance management,
generally require extensive training before they use the processes
and instruments. The plan for this training should include topics
such as understanding human performance, recognizing perfor-
mance roadblocks and what to do about them, competency assess-
ment, identifying and closing competency gaps, observing and
assessing performance, conducting effective performance reviews,
coaching, managing and resolving conflict, and other topics dic-
tated by the system elements that are selected. Similarly, affected
workers need to be trained to perform their new roles in the com-
petency-based performance management process. They need to
understand and accept responsibility, for example, for their compe-
tency assessment results, their competency development activities,
and their day-to-day performance. They must openly receive per-
formance feedback from their managers and respond to conflicts or
disagreements in win-win organizational ways when possible.
7. Perform complete baseline competency assessments for employees
relative to the performance requirements for the work they perform.
The outcomes of those assessments must be carefully documented
and remain in a secure location, along with all other employee per-
formance assessment materials.
8. Complete performance analyses for all work to be included in
implementing the competency-based performance management
system. Identify performance roadblocks and ensure that managers
have identified ways to mitigate those roadblocks to their employ-
ees’ performance. When surmounting a particular roadblock is
actually a result that employees must achieve through performing
the work, this must be made very clear to the employee, and the
competencies that must be used in appropriate ways should be fully
communicated to the employee.
9. Identify performance support opportunities other than formal
training that can be made available to employees before implement-
ing the system processes.
152 Competency-Based Human Resource Management

10. Establish an individual development planning process for all

affected employees.
11. With performance managers, develop a schedule for interim and
final (that is, consistent with the close of the performance period)
performance reviews. A major issue to address before the system is
implemented is whether all employee performance assessments will
be completed on the same timetable. It is suggested that organiza-
tions consider using the option of staggering the dates for employee
performance reviews that mark the close of a performance period
unique to the employee.
12. Identify training, performance improvement, and other strategies
that employees can use to develop their competencies.
One of the purposes of presenting the preceding items is to com-
municate the major work that must be completed in order to design and
implement the use of a competency-based approach to performance
management. The list is not exhaustive of the many actions that must be
taken and successfully completed by the HR representative and others
before the system can become a reality in the organization. Moving from
a traditional to a competency-based performance process is a major
undertaking for the organization and its employees. For the HR func-
tion, moving to a competency-based performance management system
requires a resource commitment from the organization’s senior man-
agers. Although this work may be daunting at first, the results achieved
are well worth the investments made.2

The Advantages and Challenges of

Competency-Based Performance Management
The benefits of applying a competency-based approach to performance
management can be dramatic. The process encourages frank and non-
adversarial communication between employees and their managers. It is
not unusual for employees to express their concerns in performing work
that is not aligned with their competency strengths or interests. And it is
not only the less productive employees but often exemplary performers
as well who will express these concerns. It also gives employees the
opportunity to convey their interests and satisfaction in performing
work that is aligned with their competencies.
 Competency-Based Performance Management 153

In a competency-based approach, employees’ work results are

aligned with achievement of the organization’s strategic objectives, and
the contributions of the results are identified in specific, and usually
measurable, terms. Work that is identified as nonstrategic and can be
eliminated allows available resources to be used in other, more produc-
tive ways.
The approach affords the opportunity to identify and develop
needed competencies. In turn, competency assessment results provide
training needs assessment data that can be used to plan and deliver em-
ployees’ training in a targeted manner. It also gives employees informa-
tion that is essential for their life and career development and provides
them with opportunities to plan to meet their needs. For some employ-
ees, the benefits of a competency-based system are more valuable than
immediate financial rewards. In addition, a competency-based approach
reduces the chance of legal and other complaints from employees—
caused by issues such as performance appraisal disagreements and frus-
tration due to performance roadblocks beyond their control—as it
encourages communication to openly discuss these concerns.
Outputs or results expectations and metrics for employees are clar-
ified at the outset of the performance period in a competency-based
approach. In addition, the approach is an incentive and retention tool
especially for exemplary or high performers as they value the recogni-
tion and rewards that such a system could bring to their work situation.
They appreciate knowing what is expected of them because they can
then create ways to exceed performance expectations.
In summary, a competency-based performance management
approach establishes a work environment in which the roles, relation-
ships, and responsibilities of both managers and employees are well
defined and clearly stated. This straightforward and mutually under-
stood system builds trust as it ensures accountability and improves
performance.
The decision to adopt a competency-based performance manage-
ment system does present challenges, however. The organization’s senior
managers must provide strong, long-term support for the project and
act as role models for the process. Required resources need to be avail-
able over the long term. Managers will face increased workloads as a
competency-based approach requires them to provide employees with
additional and more effective feedback as well as accept responsibilities
154 Competency-Based Human Resource Management

for addressing performance obstacles. The tremendous benefits in

improved performance will not be realized overnight, and their patience
and understanding are critical to successful implementation. There must
also be a strong alignment between the organization’s strategic direction
and the benefits and costs of adopting this system.
The long-term success of a competency-based system depends on the
creation, completion, and maintenance of HR records of various types.
The organization must have the capability to preserve this information in
a secure yet convenient Human Resource Information System (HRIS)
that assures long-term availability.
The organization’s participating managers must remove, when pos-
sible, roadblocks to employees’ successful performance. When perfor-
mance roadblocks cannot be removed, performance managers should
inform their employees accordingly. It must be remembered that
employees might not be able to surmount some performance road-
blocks, no matter how competent they are, because they might lack the
control or authority needed to do so. Managers need to accept responsi-
bility to problem solve. And the organization must be willing to commit
project resources to communicating the competency-based approach to
all employees, even if the system is planned for only a small segment of
the organization. Employees are likely to be curious about a system that
will affect their performance and work lives.
Managers must be trained on their roles and responsibilities as well as
how to use the system to carry them out. Competency-based training
should be consistent with the corporate culture, which means that vendor
training is not always appropriate for designing and developing an organi-
zation’s competency-based performance management system. The organi-
zation should be prepared to design, develop, and deliver the necessary
training for its own competency-based performance management system.

Deciding on Competency-Based or
Traditional Performance Management
Launching any performance management system is a major undertak-
ing for most organizations. It requires broad-based endorsement and
acceptance. As a client remarked about a 2-year-old competency-based
performance management system, “maintaining a competency-based
 Competency-Based Performance Management 155

performance management system is like tending a rose garden. It

requires constant, loving attention and lots of good fertilizer.” HR prac-
titioners and other persons associated with performance management
are well-advised to remember this astute remark as they consider how to
meet their organization’s performance management needs.
When an organization’s senior managers endorse the approach,
then a major hurdle to meeting the objective has been surmounted.
Next, the organization’s key managers must understand and accept their
responsibilities and take the risk of changed performance. Finally,
employees must understand what the system will accomplish and what
they must do to help achieve the system objectives. One way to encour-
age this support is to help them recognize the potential benefits they will
realize from making the investment in the process: increased recognition
for their contributions, reward opportunities, growth, and opportuni-
ties to improve work conditions.
Regardless of what decision is made regarding an organization’s per-
formance management system, it’s clear that if an organization expects
to attract and retain exemplary employees, it must provide performance
support and management for its human talent. Using a competency-
based performance management approach is one way to provide
employment incentives for external job candidates and also improve
employee retention.
Despite the benefits to be realized from a competency-based system,
if the preceding conditions cannot be met, then the organization should
select a more traditional approach to performance management.

A Model for Implementing Competency-Based

Performance Management
In earlier sections of this chapter, we presented a systematic process for
carrying out competency-based performance management and action
steps required to transition to this approach. The model depicted in
Figure 10 provides a step-by-step guide to implementing the process in
an organizational setting.3 The steps in the process are flexible, and can
be adjusted to fit the blueprint of the system proposed. The following
review provides general guidance on completing each step.
156 Competency-Based Human Resource Management

Figure 10: Implementing Competency-Based Performance Management

Step 1
Determine ownership.

Step 2
Brief senior managers and obtain endorsement to proceed.

Step 3
Form a task group and design a system blueprint and project plan.

Step 4
Brief senior managers on the key elements of the work plan.

Step 5
Create system materials, collateral documents, and
training for participating employees and their managers.

Step 6
Pilot test the system and the training
with task group members.

Step 7
Implement the competency-based performance management system.

Step 8
Evaluate the implementation.

Step 1: Determine ownership

This first step is essential. Launching a competency-based performance
management system can be a challenging experience at the blueprint
development stage if certain requirements are not met.
HR practitioners and others involved in developing and installing
the system should ask the following questions:
• Who wants this system?
• What prompted the request for the system?
• What does the sponsor expect to accomplish by putting the system
in place?
 Competency-Based Performance Management 157

• Will it be a cost-effective investment for the organization?

• What will be the return on investment relative to the organization’s
strategic objectives?
• Why implement the system in these work areas at this time?
• When must the system be implemented, and why at that time?
• Will it replace current performance management practices?
• How should it be implemented?
These questions must be answered at this early stage since they have
financial and management implications.
The long-term success of any competency-based performance man-
agement system depends on senior managers understanding, endorsing
in principle, and committing considerable resources to the project. In
this case, we define “long-term” as at least an 18- to 24-month period
following endorsement by senior managers.
Step 2: Brief senior managers and obtain endorsement to proceed
This step presents a major challenge to the HR department and the
managers who will operate the competency-based performance man-
agement system. Those delivering the briefing must provide definitive
and convincing answers to the questions in Step 1, supported by exam-
ples specific to the organization. The goals of this briefing are to get
secure support from senior managers for implementation of the project
and obtain their agreement to act as role models for the competency-
based system. If there is little or no commitment at this point, then addi-
tional resources need not be devoted to the project.
Step 3: Form a task group and design a system
blueprint and project plan
Members of the task group should be selected from these managers and
employees who will be directly affected by the competency-based per-
formance management system. Involving stakeholders at the conceptual
stage ensures representation of a significant cross section of the organi-
zation’s employees.
An HR representative should provide technical leadership and also
manage the group’s activities and contributions to the project. This per-
son must have expert knowledge of the requirements and practices of a
competency-based system. He or she will be responsible for providing
158 Competency-Based Human Resource Management

considerable training, explanations, briefings, speeches, and overall

guidance and technical leadership on the competency-based approach
to performance management.
The system blueprint should define the target populations and the
divisions or work units and key managers, supervisors, or team leaders
who will have a major impact on the successful implementation of the
system. Answers to the ownership questions listed in Step 1 must be
included in the blueprint.
After task group members become knowledgeable about the work to
be accomplished, they should develop a detailed project plan for com-
pleting the steps outlined in the blueprint. The project work plan should
include, at a minimum, the following elements: work tasks, the outputs
or results that will be achieved by successfully completing the tasks, the
urgency of the tasks, the target date for obtaining the outputs or results,
plans for evaluating the implementation, and the persons responsible.
The plan, with appropriate explanations, serves as the basis for the next
senior management briefing.

Step 4: Brief senior managers on the key elements of the work plan
In addition to presenting the details of the blueprint developed in Step
3, the presenter should respond to any concerns or questions that were
raised at the briefing in Step 2. Task group members should allow ample
opportunity for senior managers to ask questions and can then offer
direct and realistic answers. It is essential not to inflate expectations for
the competency-based system.
Step 5: Create system materials, collateral documents, and
training for participating employees and their managers
The key elements required for implementing a competency-based per-
formance management system are described in the discussion accompa-
nying Steps 1 through 4. Necessary system materials generally include
work analysis results, competency models and assessments, develop-
ment plans, performance analyses, and project evaluation plans.
Requirements may vary according to individual organizational needs.
The details of how to create the system elements, documents, databases,
and other items have been published elsewhere.
Training for managers and their employees must be competency
based and designed to ensure that new managers can complete the
 Competency-Based Performance Management 159

forms and implement the other processes of the performance manage-

ment system. Process maps can be a helpful first step in developing this
training.
Step 6: Pilot test the system and the training with
task group members
Since task group members were drawn from the targeted application
groups, they are appropriate persons to review and critique the system
processes and collateral materials. Pilot test delivery of the training with
fictitious but realistic employee cases that provide opportunities for
group members to make use of performance management processes and
tools, for example, through role play and group or individual exercises.
Task group members should receive the same training that is
planned for delivery to the actual training audiences. Managers in the
task group should be the participants for the manager training, and
affected employees in the task group should serve as observers.
Employee members of the task group should participate in the employee
training, and the managers in the task group should serve as observers.
Observers in both situations can critique the sessions as they are being
conducted, while participants should offer their critiques during content
breaks in training delivery. After each training package is completed, the
observers should hold an assessment session for the purpose of sharing
their perceptions of the experience. Out of this session should come spe-
cific suggestions for revising the various components of the performance
management process, such as plans and techniques, and the associated
training. In other words, every program element should be carefully
examined—both the performance management processes and the train-
ing on the processes—for both audiences. Considering the resources
required to implement a competency-based performance management
system, rigorous examination is a necessary investment, even though sys-
tem implementation might be delayed somewhat for revisions.
Step 7: Implement the competency-based
performance management system
It is essential that all persons affected by the implementation of the com-
petency-based system are trained and fully informed of the system objec-
tives, their responsibilities, and the timetable for administering system
activities. The timetable should include activities such as competency
160 Competency-Based Human Resource Management

assessment, competency development priorities, performance plans,

interim performance reviews, and evaluations. Participating employees
should maintain calendars of target dates for the completion of each
phase of their own performance management, and managers must also
have calendars for organizing their responsibilities.
The HR practitioners leading implementation of the competency-
based system must provide consistent and frequent monitoring of the
progress for the implementation with both managers and employees.
New levels of performance assessment are sometimes necessary for
effective operation with the new approach. A competency-based system
works on two-way communication, and some managers are not accus-
tomed to assuming the role of listener. Until managers are able to accept
this role, difficulties can arise. Remember that implementing a compe-
tency-based performance management system is a continuous change
effort—not only for the organization but for every person in the orga-
nization. This new approach is based on honest communication and
mutual confidence and trust between managers and employees. The HR
practitioner is key to facilitating understanding in both parties.
Accordingly, the lead HR practitioner should take immediate corrective
action at the first sign of difficulty while managers and employees are
attempting to meet system requirements.
During implementation, participants often need assistance in
completing tasks such as objectively analyzing competency assessment
results, using active communication techniques to achieve mutual
understanding, identifying and reaching agreement on competency
acquisition needs, writing performance improvement objectives, deliv-
ering bad news to workers, and handling conflict in positive ways.
Providing these services is one of HR’s strengths, and HR professionals
must not hesitate to fully apply those competencies when circumstances
require their use.
When all parties involved in implementing a competency-based
performance management system focus on the objectives of the system
and maintain reasonable expectations of long-term individual and orga-
nizational performance improvement, they can act appropriately during
potentially difficult situations. Open yet respectful exchanges of infor-
mation will contribute a great deal toward successful implementation.
 Competency-Based Performance Management 161

Step 8: Evaluate the implementation

Evaluations are essential to a successful implementation. Both formative
and summative evaluation processes were included in the project plan
developed by the performance management task group in Step 3 of this
model. The HR practitioner may want to consider having task group
members involved in conducting the ongoing formative evaluations.
Summative evaluations assess the long-term impact of the compe-
tency-based performance management system in terms of system ob-
jectives and organizational strategic objectives. HR practitioners must
document return on investment so that senior managers will be able to
recognize the value of performance managment in their organization.
One method of evaluation measures results in three areas: activity,
people and business results, and the relationships between the activities
of the people and the business components (“Measuring the Impact of
Competencies,” 1997). Another successful method is to record detailed
anecdotes of successful outcomes over time. Incidents that demonstrate
significant effects on the achievement of the organization’s strategic
objectives are of special importance. The HR practitioner must take a
disciplined approach to recording and reporting these results if they are
to be included in a summative evaluation of the system.

Summary
In this chapter, we defined performance management and discussed its
traditional application in organizations. We explained how to make per-
formance management competency based and examined the advantages
and challenges of such a system. A competency-based approach is not
appropriate in all situations, and we noted conditions under which
performance management should be competency based or should be
handled traditionally. We presented and discussed a model depicting
competency-based performance management, steps involved in transi-
tioning to competency-based performance management, and a model
portraying implementation of a competency-based system.