Competency-Based Performance Management System

Performance appraisal can be defined as a process whereby the supervisors evaluate and report on the performance, development and other qualities of their subordinates. It is normally performed as an annual ritual and as part of the administrative duty performed by supervisors.

On the other hand, performance management can be defined as a holistic approach to managing employee motivation, behaviour, performance and development as part of an integrated human capital management system that will help organisations achieve their vision, mission and objectives. Performance appraisal is, therefore, a part of the broader process of performance management.

In the struggle for competitive advantage, many organisations have focused on people as the key to success. A competency-based HR system helps organisations to align the employees’ behaviour, knowledge and skills with the strategic direction of the organisation as a whole. Competency can be defined as an underlying characteristic of a person which enables him/her to deliver superior performance in a given job, role or situation. A competency model describes the particular combination and proficiency level of knowledge, skills and characteristics for each job grade to effectively perform a role and deliver superior performance in an organisation. Competency models allow for the development of performance management systems that evaluate and develop people on their competencies – competencies that directly contribute to business competitiveness. Therefore, having a successful, integrated competency-based performance management system is critical in helping organisations to create, develop, grow and retain talents.

Figure below documents the 5-D methodology for designing and implementing an integrated competency-based performance management system.