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Competency-Based Performance Management

Evaluate “employee behaviors and competencies demonstrated” in addition to “organizational results achieved”. Speak with a Workitect consultant to learn how you can create a competency-based performance management process for your organization.


A Blueprint for Effective
Performance Management

An effective system combines planning, management,
and appraisal of both performance results
and competency behaviors.



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Diagnosis and problem solving to deal with poor performance takes this form: "If results are not at the desired level, give higher priority to these job tasks, demonstrate these behaviors more often, and develop these competencies" (i.e., model the task priorities, behaviors, and competency levels of the best performers in the job).

Implications for Management

The addition of competencies to performance management systems has important implications for management. Managers explicitly commit themselves to provide employees with formal training, coaching, and other competency development activities during the performance period.

Implications for Pay

Performance and competence are balanced in a competency-based performance management system. In a line job, achievement of performance results may be weighted 80-90 percent and demonstration of competency behaviors only 10-20 percent. At the other extreme, an appraisal form for a service position might weight competence 100 percent. Performance objectives for a staff job might give equal weight to results and demonstration of competency behaviors.

In traditional systems, achievement of performance results is quantified, past oriented, and tied to unit goals, based on a short term, and used to make compensation decisions. Competency appraisal is more qualitative, longer range, future oriented, and used for employee development and career path planning.

Performance ("pay for results") 50%-90%

  • "What" of performance
  • Quantitative: Tied to unit goals
  • Short time frame: One year, past performance
  • Reward oriented

Competencies ("pay for skill") 10%-50%

  • "How" of performance
  • More qualitative
  • Longer time frame: Future
  • Performance in present and future jobs
  • Development (behavior change oriented)

Organizational Issues

Problems that indicate a need for competency-based performance management include the following:

  • Job performance standards and appraisal criteria are seen as unequal or unfair,
  • Performance appraisal is seen by managers and employees as a bureaucratic "paperwork" exercise,
  • Employees see nothing in the system for them,
  • Has little impact on actual management,
  • Does not reflect or reinforce the organization's strategy.

Particularly appropriate for:

  • Uncertain Environments,
  • Qualitative/Process Service Jobs,
  • Jobs Intended for Development of Future Performance,
  • Changing Organizational Strategy, Focus, or Markets.

Training of Managers

The most important factor in implementing a competency-based performance management system is training managers to provide this coaching and developmental assistance. (Studies of effective performance management systems consistently find training to be an important input.) Employee training also helps employees understand how the system works, what their role is, how to assess themselves, and how to contract for competency development activities with their managers.

Steps to Developing a Competency-Based System

Described in “Competency-Based PM: What, Why, and How” - What a competency-based approach is and does, its impact on individual and organizational results, organizational issues addressed, situations best served by a competency-based approach, and steps to implementing a system. Learn more (PDF)

Make Performance Management a Positive Experience

Performance management can be improved in most organizations with a few basic, common-sense principles. These principles also can help make performance management a good source of motivation. Since performance management is a human process, however, following a prescribed formula will not satisfy employees in all situations. Learn more (PDF)


Client Testimonials

“Workitect did an outstanding job in helping our business enter the realm of ‘performance management’. Without their help, we certainly would not be as far, nor would we have accomplished nearly as much, as we have. Their experience and the insights and opportunities brought by their consultants have allowed us to gain a true understanding of the concept behind competency-based Performance Management and has also enabled us to begin the type of cultural change which can only come when an organization raises its honesty.” Vice President, Human Resources, Manufacturing Company

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