Competency-Based Performance Management

2017-11-03 09:05:05

Overview

A formal system of performance management, carried out by executives, managers, supervisors, and team leaders, along with other members of the workforce, shapes human performance within an organization 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 management, and how is it implemented?

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 competency 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 performance evaluation, which reviews results at the end of a time period.

[1]For further information about performance management concepts or practices, please consult any of the following sources: Adler and Coleman (1999); Bowen and Lawler (1992); Greene (2000); Kanin-Lovers and Bevan (1992); Laumeyer (1997); Lukesh (2000); McAfee and Campagne (1992); Pardue (2000); Ripley (1999); and Weiss and Hartle (1997). For in-depth information on many of the processes and technical aspects of using competencies in human resource management practices, please consult Dubois and Rothwell (2000) or Dubois (1993).

Traditional Performance Management

Traditionally, performance management systems concentrate on performance 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 performance 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 something 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’!"

"I don't know what my job is and is'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 does n'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 measure 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, systematic 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.

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 performance management practices in organizations. For the 2000 Performance Management Survey, SHRM researchers measured current and best practices in performance management and sought to determine respondents' perceptions of the effectiveness of their overall performance 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 management 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 system were providing performance feedback to employees, clarifying organizational expectations of them, and focusing on their development needs.

How satisfied were respondents with their organization's performance management system components? SHRM's research report suggested that respondents were much more satisfied with components of traditional performance management systems rather than with developmental 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 satisfied 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.

Senior management support is essential to the long-term success of any performance management system, whether or not it is competency driven, but the SHRM survey found that executives did not review the performance management system at all at 42% of participating 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 performance appraisal data as a guide for developing their employees ("Competencies Drive HR Practices," 1996).

In summary, many organizations take a traditional approach to performance management by using a performance appraisal and disciplinary 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 influenced 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 management's interest in and commitment to the concept of systematic performance management, the organization's business plans, and the relationship 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, performance 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 management. They must commit resources to the systematic assessment of 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 benefits 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 proposed system. If an organization already has a performance management system, adopting a competency-based approach may require reinventing, which is usually a bit more challenging.

Figure 9: Competency-Based Performance Management

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 practitioners 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 foundation for having them create their own "ideal" system. Next, the facilitator 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 performance 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 reflections 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 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.

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 organization'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 contribute directly and overtly to the organization's success—then there is little justification for completing it, and it should be eliminated from the employee's list of required tasks. After this process of elimination is completed, the work that remains is therefore strategic to the organization's success. Employees who are performing unnecessary tasks can be reassigned to activities that are meaningful both to them and to the organization. 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.

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 performance 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:

Obtain senior management support for, and willingness to commit, the needed resources to design, implement, and maintain the system.

Identify the scope of the application (for example, work units, divisions, employees by work roles) and ensure alignment among the organization's strategic objectives and the affected workers' measurable contributions to the organization success.

Define the work or roles that will be a part of the competency-based approach to performance management. This includes the completion 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 information that would contribute to implementation success.

Create system administration documents (for example, competency assessment materials, record-keeping forms needed to track performance, 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.

Create and implement an organization communication strategy to in-form all employees about the system, its benefits, processes, and plans.

Design and deliver competency-based training that communicates the competency-based performance management system processes, elements, and instruments as well as how participation will benefit 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 participate 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 factors, including the availability of resources.

Competency assessment for the performance managers would add value to the training since it could be highly individulaized 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 performance roadblocks and what to do about them, competency assessment, identifying and closing competency gaps, observing and assessing performance, conducting effective performance reviews, coaching, managing and resolving conflict, and other topics dictated by the system elements that are selected. Similarly, affected workers need to be trained to perform their new roles in the competency-based performance management process. They need to understand and accept responsibility, for example, for their competency assessment results, their competency development activities, and their day-to-day performance. They must openly receive performance feedback from their managers and respond to conflicts or disagreements in win-win organizational ways when possible.

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 performance assessment materials.

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 employees' 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.

Identify performance support opportunities other than formal training that can be made available to employees before implementing the system processes.

Establish an individual development planning process for all affected employees.

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 organizations consider using the option of staggering the dates for employee performance reviews that mark the close of a performance period unique to the employee.

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 communicate 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 function, moving to a competency-based performance management system requires a resource commitment from the organization's senior managers. Although this work may be daunting at first, the results achieved are well worth the investments made.[2]

[2]Others have written about, and several organizations have implemented, the use of competencies for elements of the performance process as we have described it. You might want to consult, for example, Nolan (1998); Jones (1995); Pickard (1996); or Orr (2002) for further information.

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 nonadversarial 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.

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 productive 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 employees' training in a targeted manner. It also gives employees information that is essential for their life and career development and provides them with opportunities to plan to meet their needs. For some employees, 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 frustration 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 clarified 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 recognition 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, relationships, and responsibilities of both managers and employees are well defined and clearly stated. This straightforward and mutually understood system builds trust as it ensures accountability and improves performance.

The decision to adopt a competency-based performance management 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 available 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 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 possible, roadblocks to employees' successful performance. When performance 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 roadblocks, no matter how competent they are, because they might lack the control or authority needed to do so. Managers need to accept responsibility 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 organization's competency-based performance management system. The organization 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 undertaking 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 performance management system is like tending a rose garden. It requires constant, loving attention and lots of good fertilizer." HR practitioners 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 encourage 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 opportunities to improve work conditions.

Regardless of what decision is made regarding an organization's performance 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 competencybased 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.

Figure 10: Implementing Competency-Based Performance Management

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?

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 management 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 management system. Those delivering the briefing must provide definitive and convincing answers to the questions in Step 1, supported by examples 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 additional 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 performance management system. Involving stakeholders at the conceptual stage ensures representation of a significant cross section of the organization's employees.

An HR representative should provide technical leadership and also manage the group's activities and contributions to the project. This person must have expert knowledge of the requirements and practices of a competency-based system. He or she will be responsible for providing 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 completing 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 performance management system are described in the discussion accompanying Steps 1 through 4. Necessary system materials generally include work analysis results, competency models and assessments, development 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 forms and implement the other processes of the performance management 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 specific 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 training 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 system 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 competency-based system are trained and fully informed of the system objectives, their responsibilities, and the timetable for administering system activities. The timetable should include activities such as competency 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 accustomed to assuming the role of listener. Until managers are able to accept this role, difficulties can arise. Remember that implementing a competency-based performance management system is a continuous change effort—not only for the organization but for every person in the organization. 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, delivering 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 organizational performance improvement, they can act appropriately during potentially difficult situations. Open yet respectful exchanges of information will contribute a great deal toward successful implementation.

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 involed in conducting the ongoing formative evaluations.

Summative evaluations assess the long-term impact of the competency-based performance management system in terms of system objectives 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.

[3]Other sources of information on implementing the use of competencies in the performance management process include Jones (1995); Nolan (1998); Orr (2002); and Pickard (1996). For further review on the concepts, processes, and technical aspects of using competencies in HR management, see also Dubois (1993); Dubois and Rothwell (2000); Harris, Huselid, and Becker (1999); and Maccoby (2001).

Summary

In this chapter, we defined performance management and discussed its traditional application in organizations. We explained how to make performance 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 transitioning to competency-based performance management, and a model portraying implementation of a competency-based system.