Why competency-based is the future of performance management

For the last three years I’ve been building Pando , a platform designed to disrupt the current paradigm of performance management in an effort to: Level the playing field for all employees, make performance evaluations transparent and fair, and, lay a foundation to move organizations from cyclical to continuous performance management .

We know continuous feedback is crucial–and many organizations are working to build cultures of in-the-moment, structured, unbiased feedback from both managers and peers–and, feedback is foundational to aligning the right behaviors to impact outcomes for an organization which can result in career advancement, increasing our talent density, and hopefully enabling the most employees to perform their best.

But, continuous feedback also needs an anchoring structure which provides guideposts, clarity and a blueprint for getting to the next level and having the desired business impact.

That’s where competencies come in.

Most companies I talk to have some version of competency frameworks at their company. Either generally for the broader company or maybe for individual roles. But, 90% of the time, they haven’t yet been fully integrated into the day to day conversations between managers and their reports, OR in how performance is evaluated.

What’s more is that most companies aren’t exactly sure or aligned on how to define or measure the business impact an employee needs to have which leads to a lot of time and energy spent "post-review" period to argue, debate and finally get on the same page about what's expected.

Here are 5 reasons why competency-based performance is the future of performance management:

1. Provide clarity and context for continuous coaching

Every employee will be better at different things. Role-based competencies with behaviors and expectations clearly outlined give managers a simple tool to coach individual reports accordingly. If you have a level 2, 3 and 6 reporting into a manager, that manager needs to be able to clearly articulate to the L2, and L6 different expectations based on their level. This structure also makes it easier for managers and employees to align on specific dimensions where growth is needed and follow up in an iterative and on-going approach.

2. Remove bias from feedback and performance evaluations

Competencies defined by level and used for the core structure of performance reviews or evaluations reduce bias by providing the report, manager and all other reviewers and stakeholders clearly defined expectations and measures of success upfront and throughout the process to help curb unconscious biases that otherwise creep in. For example, an engineering manager will assess their engineers on the same competency but at different level descriptions - so an IC 3 is assessed against IC 3 criteria not the top performing IC 5 as a benchmark. This gives employees and managers a clear guideline for what to expect and how to measure success.

3. Remove the lengthy “calibration” process

Not only does it reduce bias in the process systemically, having level and competency-based performance evaluations also give everyone a blueprint for success upfront so you don’t need to spend the time post-review trying to “calibrate” employees–a lot of this work can be done upfront—first by leveling them, and next by evaluating performance base on level and competencies defined at their level (no more arguing about the difference between a Eng Manager and Marketing Manager, “Manager” this should be pre-calibrated and pre-defined) setting managers and employees up for success at the start.

4. Easily identify skills gaps across the org

Using competencies as a frame for measuring performance also creates a more nuanced view of your talent density and more easily helps organizations identify where they may have gaps across the company. Competency-based performance enables a more quantitative structure to see trends and insights around your talent density, where you’d otherwise have a lot of qualitative data around talent and skills hidden in performance assessments that can't be analyzed meaningfully.

5. Create the foundation for a strong feedback culture

Most companies are working to build a feedback culture that encourages peer-to-peer and in-the-moment feedback . Competencies can be a great tool that also provide guidance and structure to individuals giving feedback to their peers. So often companies ask peers to provide feedback without training or tools. Competency-based performance assumes competency-based feedback which enables individuals to anchor their feedback in specific skill they've observed rather than general assessments or ratings on the person's holistic performance.

Competency-based performance can enable a lot of agility and help you move your organization from a cyclical to real-time performance culture.

Here are a few things that can help make this strategy effective:

• Standardized job leveling (across company)
• Role-based career tracks (IC, Manager, etc) - individual vs leadership pathing
• Regular “small batch” feedback/coaching - in 1-1s, monthly or quarterly syncs
• Clear performance goals - associated outcome expectations to levels
• Culture of psychological safety, transparency, and candor

Curious about your thoughts on this. Where is your company at from a performance perspective? Traditional performance reviews? Competency-based? Always-on? If you'd like to learn more about how to implement this approach, feel free to reach out, or learn more at pando.com

#PerformanceManagement #ContinuousFeedback #CompetencyBasedPerformance #FutureOfWork