The Performance Cycle - How Competencies are Incorporated (Part 5 of 10 of HRSG’s Guide to Performance Management through Competencies)

In this and the next three blogs, we will review the performance management cycle and discuss how competencies play a key role at each stage.

This is the first in a 10 part series that looks at:

1. What is Performance Management?
2. Linking Performance Management to Corporate Strategy
3. How to Design a Performance Management System - Step 1
4. How to Design a Performance Management System - Step 2
5. The Performance Cycle – How Competencies are Incorporated
6. Stage 1 – Planning for Success
7. Stage 2 – Managing & Feedback for Success
8. Stage 3 – Evaluating Performance
9. Multi-source Feedback
10. Performance Management in Summary

No matter what type of performance management process is put in place, there are always three fundamental stages in the performance management cycle:

1. Planning: During this stage the manager and employee meet and agree on not only what the employee must accomplish and to what standard (e.g., sales goals), but also the competencies needed (e.g., Customer Focus; Organization; Product Knowledge; etc.) to effectively accomplish the performance objectives. To achieve optimal performance, it is also important to define what learning and development the employee may need to address any gaps in competency.
   
2. Progress Review: Throughout the cycle, both the employee and manager track the employee’s performance and development. Both address the question of whether there are improvements required; and if there are any barriers to effective performance that must be addressed in order for the employee to perform the work to the required standard. As necessary, the employee’s performance plan is adjusted to address any changing circumstances. 
3. Evaluation: At the end of the review period, both manager and employee reflect on the employee’s accomplishments against the work goals and standards that have been agreed to at the beginning of the cycle. They also consider what has been learned by the employee during the period that can be effectively applied within the employee’s current role or beyond in future jobs. They come to an agreement on how well the employee performed during the cycle and what needs to be considered in terms of future work goals and standards to be achieved in the next cycle. A formal rating or evaluation of the employee’s performance may be conducted by the manager, particularly if key decisions affecting the employee’s employment, rewards or compensation must be made. 

How Competencies are Incorporated
Typically competencies are incorporated in the performance management process in order to provide a description of the type and level of behavior the employee must display to achieve the key goals / objectives and standards. In other words, “performance outcomes” represent “what” must be accomplished and the competencies elaborate “how” they must be accomplished.

Performance can be measured from three perspectives:

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In the next three blogs, we will discuss each stage of the performance cycle in more depth and how competencies play a vital role at each stage.

HRSG is a leader in competency-based performance management solutions and training. Contact us today to find out how we can help you.

How to Design a Performance Management System - Step 2 (Part 4 of 10 of HRSG’s Guide to Performance Management through Competencies)

In the previous blog post in this series, we discussed the importance of defining the purpose and goals for designing your competency-based performance management system, which in turn can be used to lay down a set of guiding principles for performance management in your organization. We also discussed the importance of engaging stakeholders, like senior managers, employees, unions and others, who are key to the success of your system.

In this blog we discuss parameters you should consider when designing your system.

This is the first in a 10 part series that looks at:

1. What is Performance Management?
2. Linking Performance Management to Corporate Strategy
3. How to Design a Performance Management System - Step 1
4. How to Design a Performance Management System - Step 2
5. The Performance Cycle – How Competencies are Incorporated
6. Stage 1 – Planning for Success
7. Stage 2 – Managing & Feedback for Success
8. Stage 3 – Evaluating Performance
9. Multi-source Feedback
10. Performance Management in Summary

Groups or Types of Jobs
The design of the process will most likely vary with the group or types of jobs. For example,

• Executive / management / professional – typically have a goals / objectives-based system, complemented by assessment of competencies
• Routine / regularized jobs – are often task-based check lists, sometimes with rating scales, complemented by assessment of competencies / skills
• Project-oriented work – are most often goals / objectives-based systems that reflect the project plans, milestones and outcomes, complemented by assessment of competencies
• Level or rank-based groups (e.g., police, military, etc.) – often have key dimensions of performance or competencies required for their level, complemented with job-based goals / objectives

Who Provides Feedback
Determining who provides feedback on employee performance will vary depending on the nature of the job and the goal(s) of the process. Almost all systems incorporate feedback and review by the employee’s immediate supervisor. However, we have developed systems that incorporate feedback from a variety of sources, including: clients or customers, project leaders, peers of team members, employees who report to the target, employee and self-ratings. Ultimately, it is nonetheless the immediate supervisor of the employee who has the final say in the overall evaluation, especially if critical decisions are being made based on the performance review (e.g., salary increase, bonus, etc.)

When and How Often to Appraise
The performance cycle can also vary with the type of work being performed:

• Consistent with the business year for the organization – typically for executive, managerial and professional level jobs where the business goals of the organization are cascaded and assigned according to responsibilities and levels within the organization
• On the anniversary date of hire for the employee – typical where the employee has a routine or regularized job that is tied to standards for the job that do not tend to vary significantly from one cycle to the next (e.g., customer service)
• Project cycle – typical for workers that deliver services / products in keeping with the project plan, with milestones, deliverables and a schedule for completion
• Monthly / quarterly – typical for workers that need to deliver clear results within shorter timeframes – e.g., sales

Performance Constraints
Another consideration that needs to be taken into account is that performance can be constrained by factors beyond employee control. Examples include: shortages of supplies, raw materials, equipment; budget restrictions; shortage of qualified staff; economic conditions, etc. It is Important to identify these, and minimize their impact to the extent possible.

Integration with Other HR Processes
Performance management results can often feed into and support other HR process areas like learning, rewards and recognition, leadership development, promotion, and succession planning. This can not only, create efficiencies for HR, but also provide employees mechanisms to improve performance in a tangible way.  Organizations that use different competency architectures and models to support the different HR functions won't be able to realize these efficiencies or other benefits. In order to have a completely integrated system, it is important to have a common framework, competency dictionary and competency profiles underlying all the HR processes.

Privacy and Confidentiality of Results
Organizations need to set policy with regard to:

• where results are to be stored
• who has access and for what purpose, and 
• how to protect privacy and confidentiality, especially using automated systems. 

Countries often vary with regard privacy legislation; therefore, it is advisable to check this legislation before setting policy.

Training and Instruction
Performance Management is often one of the most difficult processes for managers and employees. Training and instructions on how to participate and gain the best out of the system are essential. This includes:

• Instructions and Guidebooks – targeted to both managers and employees on the steps and stages, roles and responsibilities, and how to participate effectively in the process.
• Training and Information Sessions
• For Managers – to ensure that they understand the process and have the skills to coach and provide fair and accurate feedback to employees.
• For Employees – so that they understand their role in the process and build skills in receiving and gaining the most from the feedback they receive.

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The next blog in this series covers the main stages of the Performance Management cycle and how competencies play a key role at each stage. Sign up to our blog’s mailing list through the form on the right-hand side to receive the rest of the series in your inbox.

HRSG is a leader in competency-based performance management solutions and training. Contact us today to find out how we can help you.

Who owns the competency process?

A key question that is rarely asked or even addressed in planning for a competency-based talent management (CbTM) project is "Who owns this project?" Every process must have an "owner." A process owner is defined as someone who has responsibility for the overall success of the process and its continuous improvement. Depending on the size and impact of the process, a process owner may choose to manage this on their own, or in more complex situations, may decide to set up a process improvement team. It's been my experience that an organizational wide CbTM initiative can be complex enough to justify a team development approach.

A common stumbling block for many organizations attempting to implement CbTM is a lack of clear ownership. Is HR leading the effort? Is this a business line function driven by their management group? Many individuals from different groups will be involved. But who is accountable when there is an unproductive outcome? The individual or department with this responsibility must also have the authority to own the process.

The professional knowledge and skills required to own a competency process are not usually found in line operations. Line managers and frontline workers provide subject matter expertise and are essential to the creation and evaluation of competency profile assessment instruments. Business Unit Managers can initiate the Competency Profiling Initiative to address their various HR needs i.e.: establish learning plans, staffing, career development, performance management, etc. However, the HR function needs to be involved to ensure there is an alignment to an existing Competency-based Talent Management Framework and to current HR policies.

A competency-based talent management process potentially requires skills in consulting, facilitation, job analysis, assessment, testing, resource administration, IT systems development, etc. Expertise in these areas is usually found across many functions within the organization. Because so many groups within an organization are affected in a competency initiative, the process owner is best centrally located rather than line function based. Professionals within HR often are logical candidates for competency process ownership. Competency-Based Management Training is available to help executives and HR professionals develop the skills needed to design, develop and implement competency-based programs for their organization, and this can often make the different between success implementation or not.

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HRSG is a leader in competency-based talent management solutions. Contact us today to find out how we can help you.

How to Design a Performance Management System - Step 1 (Part 3 of 10 of HRSG’s Guide to Performance Management through Competencies)

When designing a Performance Management process and system I often tell clients that it is not the form or the software for delivering the system that you have to worry about. Performance Management is all about creating a “… a shared understanding about what is to be achieved as well as how it is to be achieved. It is an approach to managing people that increases the probability of achieving success.” The form or software delivery tool simply enables and guides participants in the process. In this respect then, system design becomes very important. Taking a system “ off the shelf” or borrowing one that worked for another organization will in all likelihood not meet your needs.

This is the first in a 10 part series that looks at:

1. What is Performance Management?
2. Linking Performance Management to Corporate Strategy
3. How to Design a Performance Management System - Step 1
4. How to Design a Performance Management System - Step 2
5. The Performance Cycle – How Competencies are Incorporated
6. Stage 1 – Planning for Success
7. Stage 2 – Managing & Feedback for Success
8. Stage 3 – Evaluating Performance
9. Multi-source Feedback
10. Performance Management in Summary

Engaging Key Stakeholders

Engaging key stakeholder groups in the design of the system is essential to the success of the system. If the major stakeholders are involved, they are far more likely to support the system and encourage others to engage in the process in a constructive positive manner.

Senior Management should be the key champions for the system and should “walk the talk”. If you have unions within your organization, they should contribute to the design of the system; otherwise, they will be a key stumbling block in implementation. Employees also must understand the value of the system– how it will help in understanding the performance requirements of their jobs, and how it will support their growth and development. Customer perspectives interests are also often incorporated, since they are the recipient or your organization’s services or products.

Goals / Purpose for Management

There are a variety of reasons why organizations want to have solid performance management systems in place. You should clearly articulate what you want to accomplish through your system. For example, if the results of the process are used to drive key and important employee decisions like pay increases, bonus or reward programs, succession planning or promotional decisions, disciplinary action for poor performance, etc., then the process should be as objective and as well-documented as possible. Often, it is important to be able to discriminate different levels of performance (e.g., for allocation of incentive pay or bonus schemes), and this is most often done through rating scales that have clear criteria for establishing the level of performance.

In designing a Performance Management system you need to clearly define the goals of your system. In doing so, you should engage as many different stakeholder perspectives as possible. One method we have often used is to engage a Design Committee to represent the interests and perspectives of senior management, middle management, employees, unions (if applicable) and clients/customers, as necessary. Leading them through a structured process, we help them in defining the perspectives and interests and reaching a consensus on systems goals, principles and parameters that will meet most of all stakeholder needs.

Guiding Principles

Closely tied to the goals for your Performance Management process, it is important to define the guiding principles for its design. Here are a few that I have seen many organizations adopt:

• Align staff goals with the goals of the organization
• Foster joint accountability and ongoing partnership between superiors and employees 
• Encourage regular two-way feedback
• Address both the “what” and “how” of performance
• Impact performance positively and support development for current and future roles
• Recognize accomplishments and the right behaviors
• Be simple and straightforward

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The next blog in this series looks more closely at some of the key parameters to consider in designing and implementing a system that integrates competencies. Sign up to our blog’s mailing list through the form on the right-hand side to receive the rest of the series in your inbox.

HRSG is a leader in competency-based performance management solutions and training. Contact us today to find out how we can help you.

Linking Performance Management to Corporate Strategy (Part 2 of 10 of HRSG’s Guide to Performance Management through Competencies)

To be effective, the performance management process must be firmly linked to and rooted in the organization’s core strategy and business goals.  Strategy involves the formulation of the organization’s mission, goals, objectives and action plans for achievement.  Every employee must share in this.  The key is to clearly articulate each employee’s goals, objectives and competency requirements in a way that will facilitate the successful achievement of the organization’s strategy.

In performance management, strategic and business goals should be cascaded throughout the organization.  Employees should be able to see a direct link between what they must achieve and the organization’s vision, strategy and goals.  These should be reflected in each employee’s performance plan as well as in the competencies needed for success.

This is the first in a 10 part series that looks at:

1. What is Performance Management?
2. Linking Performance Management to Corporate Strategy
3. How to Design a Performance Management System - Step 1
4. How to Design a Performance Management System - Step 2
5. The Performance Cycle – How Competencies are Incorporated
6. Stage 1 – Planning for Success
7. Stage 2 – Managing & Feedback for Success
8. Stage 3 – Evaluating Performance
9. Multi-source Feedback
10. Performance Management in Summary

To ensure that there is complete coverage of all of the important strategic elements, organizations often use performance frameworks for designing strategy.  The one most commonly used is The Balanced Score Card in which Vision and Strategy for the organization is considered from 4 perspectives: Financial; Customers; Internal Business Processes; as well as, the Learning and Growth needed to achieve the vision as well as to adapt and improve.

Companies will build goals into their performance management system that are aligned with each quadrant of the balanced scorecard.  For example, the IT department might have business goals related to supporting customers (Customers quadrant), providing results within budget (Financial), creating software solutions to support processes (Internal Business Process) and ensuring it has the talent to create innovative software solutions (Learning and Growth).  These goals for the IT department would then be cascaded down to each group and individual performance plan.

Example Performance Framework: Balanced Scorecard

Source: Translating Strategy into Action: The Balance Scorecard.  Kaplan, R.S. & Norton, D.P., (1996) Harvard Business School Press, ISBN 0-87584-651-3, p. 9

The balanced scorecard is only one example of such a framework.  In each case, the elements are translated in measurable indicators of success, which are reflected in management and employee performance plans.

Looking more closely, competencies translate the strategic vision and goals for the organization into the actions or type of behavior employees must display for the organization to be successful.  Competencies effectively form a bridge between how the employee needs to behave and the success of the organization.

It is sometimes hard for employees to relate their work and performance to the organization’s overall success.  For example, employees in roles like cleaners, maintenance workers, retail and sales staff, etc. often have difficulty understanding the importance of their work to the organization.  Competencies help them see how their attention to quality or their concern for the customer contributes to the success of their organization.  They in turn feel more valued knowing the importance of their role.  This helps drive change in an organization - by reinforcing those key competencies people need to be successful in their jobs.

Many organizations reinforce both goal attainment and competencies in the performance management system.  For example, a company might include both Customer Service goals (from the Balanced Scorecard) and the competency Customer Service in the performance management system.

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The next blog in this series on Performance Management addresses key questions and considerations in designing and implementing system that integrates competencies. Sign up to our blog’s mailing list through the form on the right-hand side to receive the rest of the series in your inbox.

HRSG is a leader in competency-based performance management solutions and training. Contact us today to find out how we can help you.