Competency Models and Performance Management — Getting It Right
©2007 William J. Bradford
Many managers and employees greet the subject of performance management and annual reviews with the same attitude that one might bring to a morning of root canal work in the dentist’s chair. What has the potential to be the most meaningful employee engagement opportunity of the year is often seen as an awkward and archaic ritual.
Many traditional approaches to performance management and annual appraisals are outdated and irrelevant in a contemporary setting. These processes were designed for an industrial age when change was slow, competition was negligible and the economic and operational context was largely domestic. Now, human resource practitioners are challenged to develop strategies and tactics that attract, retain and motivate employees in a world where change is constant, competition is global and highly educated and mobile employees make minute-by-minute decisions about how much discretionary effort they are prepared to give.
If an organization sees its appraisal process as the primary vehicle for performance management it is living in a costly time warp. The imperatives of speed, customer expectations and competition dictate that performance must be managed daily. This requires both competent and enlightened leadership of the human resource and exceptional management of the systems and processes. Organizational diagnostics consistently validate the relationship between the quality of leadership at all levels and organizational performance. Bluntly put, quality people do not have to work for jerks and people give exceptional performance to their managers because they want to. It’s about trust, relationship, shared purpose, respect and a range of related variables that constitute “engagement.”
The annual review, appraisal or whatever one wishes to call it becomes more important than ever but requires more sophisticated talent management insights with increasing emphasis on development, goal setting, communication, job satisfaction and, yes—performance and contribution.
The implementation of a competency framework into an organization is a complex process requiring advanced technical skill and organization development expertise. If it is seen as just another human resource process, disaster often ensues. Most get it wrong before they get it right and many wish they had invested more time and intellectual effort in considering the implications and managing the risks associated with the initiative. If the competency framework is coupled with a 360-degree multi-source feedback process, the situation can be very problematic. If linked to pay, the scenario becomes even more complex. This does not mean it is not a good idea—it means this is serious HR work requiring good analysis, critical thinking and creative design.
Competency frameworks have emerged from a narrow application concept in the 80s to a leading method for diagnosing, framing and improving all aspects of human resource management.
A well designed and implemented model can become a strategic cornerstone of an integrated process which can:
• Clearly signal corporate priorities and values
• Focus recruiting efforts
• Act as a career and job development tool
• Focus the connection between competence and performance
• Aid in succession planning and talent management
• Assist an employee in managing their own career, development and job satisfaction
• Act as both an individual and organizational dynamic training needs analysis
• Provide the data to establish a dynamic statistical norm base of competence and track organization development
• Help to focus development resources on high value returns in either a specific job or more broadly in the organization.
Although these theoretical outcomes are very possible, it is worth being aware that the successful implementation of a scheme represents dramatic change that will require a paradigm shift on the part of many. If it is managed as a “process” implementation rather than a fundamental change in values, expectations and the subtle nature of the unwritten employer-employee contract, expect problems. The competency model itself, the definitions, the measurement process and all aspects of the operation of the new model must pass rigorous scrutiny and maintain an intellectual integrity in the face of robust challenge and resistance. If you do not get it right the first time, resistance can become systemic and the battle for hearts and minds is lost. If the proper resources are given to the design, consultation, testing, validation and implementation, a competency model has the potential to dramatically enhance both corporate performance and individual job satisfaction.
Each organization will have its own goals, expectations, culture and tasks and for that reason there is little “best practice” theory and bench marking is difficult. Case studies tend to be journeys of exploration which evolve uniquely for each organization.
DEFINITIONS AND MODELS
In commercial terms a “core” competence is often seen as an organizational capability that:
• Benefits the customer
• Is difficult to imitate
• Can be leveraged to different markets or products
Honda is often cited as having a competence in engine technology; Volvo in safety and so forth.
In cultural and HR terms, a “core” competence is usually seen as the skills, behaviours and attitudes which will lead to competitive advantage or an aspirational level of organizational effectiveness. Core competencies are helpful in reinforcing values and encouraging common culture and behaviour. A core competence model loses the specificity of job focus and is of limited use in recruitment and expectations are often vague and inferential.
Whatever model an organization adopts it will usually break down into a range of categories with behavioural or technical statements or definitions with a consistent scoring mechanism.
Job or Job Family Competencies
A job or job family model would provide definitions and competence statements which relate more directly to a specific function. They can assist in recruitment and are helpful in reinforcing job territory boundaries. This model often makes sense in a functional structure or in a matrixed organization where talent management is dynamic or where work is project based. This model is also appropriate where technical expertise is specific or where the common sense application of competence would mean different things in different professional areas.
Role or Level Competencies
This model often applies different competencies at different levels in the organization. This approach is often used when attempting to link competency development to job evaluation, promotion or compensation issues. It requires a role or level-based structure to be in place but does not work well in a fast-changing environment where flexibility is important.
Some large organizations have successfully implanted a core model with varying definitions at different levels. For example, “Customer Focus” as a competence would have a different definition for a vice-president than it would for an entry level position. These models are helpful where there is longer term commitment to a strategic direction, a clear values proposition or a strong sense of what kind of organization will deliver competitive advantages in the future.
A combined model may take elements from core, role and job family. In an attempt to be all things to all people, these models are complicated, difficult to work with and often mean nothing to anyone. There may be applications that make sense after serious thought and the development of a defensible rationale but success is rare.
Combined models are difficult to design, articulate or communicate and can end up meaning little to anyone.
• Keep it as simple as you possibly can while focusing on what is important. Data fatigue is a real issue that can undermine the process.
• Have all statements and definitions been tested and confirmed as the best indicators of success or performance? Without statistical correlation this becomes a matter of experience and judgement.
• Does it meet the needs of the organization, managers and employees?
• Is it easy to work with and time efficient?
• Is it fair, objective and just?
• Have employees and managers been engaged early in the design process? If the process, tools definitions, metrics and outcomes are not seen as meaningful, the initiative will be seen as just another top-down process which adds to the work burden.
• Does it pass the test of logic and common sense in all dimensions, in theory and application?
• Does it answer the “What about me?” question in the mind of the employee?
• Have you decided whether the competence framework will be used as a developmental platform or are you going to pursue a direct link to a competency-based performance definition with all of the implications?
• Do not let the software tool dictate the design. Design the model that is right for the organization and then find the tool to manage the data.
360-DEGREE MULTI-SOURCE FEEDBACK
If the model is to include either compulsory or optional feedback from others, a host of risks needs to be managed:
• The rules of who solicits what information from whom must be crystal clear!
• There must be absolute clarity of scoring definitions and metrics that are well communicated and understood
• There must be documented clarity of roles and responsibilities
• There must be clarity as to how the data will be used and interpreted by whom (privacy issues may need to be considered)
• A top-down rollout is best. It demonstrates leadership and develops expertise in the process
• Employee involvement in the process is critical if you wish to avoid a “big brother” paranoia
• Safeguards need to be built into the design to protect an individual’s self-esteem in the event of irrational or counter productive feedback. The objective is awareness, growth and competence. Fortunately, most employees adopt a very mature attitude when giving feedback to others. A forced distribution in the scoring process can factor out excesses.
If there is a 360-degree element to any performance assessment component, get ready to do battle with the brighter people in your organization:
• “Feedback” is perception—not necessarily fact, particularly on behaviours
• Perception is qualitative not quantitative
• Feedback is subjective not objective
• The relationship between a competence and actual performance is intuitive and only assumed unless validated by statistical correlation
THE BIGGEST ISSUE—COMPETENCE IS NOT PERFORMANCE!
One of the biggest decisions is deciding whether the competency framework is to be used primarily as a development platform (with or without 360-degree) where skills, behaviours and attitudes are encouraged, signalled, coached, taught and rewarded … or is the organization actually saying that this is either wholly or in part the new definition of performance? If this is the new definition of performance, there are significant issues to consider.
Traditionally, appraisals and performance management focused on standards, task completion and quantifiable outcomes. What we are now calling competencies were often see as “contributors”—knowledge, skill, attitude or behaviour which facilitated or enabled performance. Performance is usually measured by quantitative outcomes while behavioural competencies are usually qualitative. Competence correlates with performance but is not performance and some experts see the two as casually related. Competent people can under-perform for a wide range of reasons and it is not unusual to see highly motivated people perform well beyond their competency.
It could be argued that Abraham Lincoln was not competent to serve as President of the United States. He had experienced electoral defeat on several occasions, business failure, financial problems, bouts of emotional instability and faltering social skills—hardly a candidate for high office.
This is not finite science and a latitude of interpretation needs to be brought to the entire subject. When defining competencies, we are at best identifying norms. Ironically, exceptional performers are often successful for all the wrong reasons.
If on reflection you decide that the competence framework becomes a part of a new definition of performance with linking implications for compensation, you are well advised to have worked through the many “what if” scenarios to develop the defensible rationale.
What happens to the old definition of performance? Does the “baby go out with the bath water?”
More implementations have stumbled on this point than on any other and it is important to appreciate that if you redefine performance as competence, this is a radical, stressful and confusing redefinition of work for many people.
GUIDELINES FOR SUCCESSFUL IMPLEMENTATION
• DON’T RUSH! Invest the time to get the model, metrics, competencies, statements, process, definition, technical aspects and rationale right.
• Go slow. Consider an incremental implementation and maturing of the process
• Do not skimp on the up-front training and education investment. This is sophisticated organization development and everyone needs to fully understand the rationale, language, rules, definitions, expectations, metrics, objectives, benefits, framing values, strategic context, interpretation of data, scoring and the process
• Don’t focus on the “tool” (the technical process or the software); focus on the value, the benefits, the opportunities
• Use the initiative to signal values. The way in which you do it may say more than what you do
• Use your very best change management or organizational development talent to lead the initiative
• If you do not have advanced in-house expertise and experience (rare) get professional help from someone who has been there and done it
• Nurture an evolving critical mass; go for small wins; reward new behaviours
• Insist on total management engagement and visible leadership modelling
Implementing a competency-based performance management model is a strategic initiative. The range of benefits and potential problems in any such undertaking are reflective of the multi-dimensional nature of the concept. It touches all aspects of human resource management and can effectively re-define—not just the definition of performance but all of the assumptions underpinning the employer-employee relationship.
A well designed and implemented process can add immense value to an organization. However, if one attempts to shortcut the up-front investment required with a ready-fire-aim approach that is driven by political or budgetary expediency or other factors—get ready for resistance, cynicism and in some cases outright rebellion. If an organization is not prepared to do this properly, it is advised not to do it at all.
The evolution of a competency based performance model represents a huge leap forward in human resource practice. Getting it right is a demanding undertaking but worth the effort.
Wm. J. Bradford © 2007