Is competency assessment the new performance review?



With the news in the April 2015 edition of the Harvard Business Review that Deloitte is joining the likes of Accenture and Adobe and dumping the performance review, we examine the case for using a competency assessment in its place.


Authors Marcus Buckingham and Ashley Goodall from Deloitte don't mince their words, "like many other companies, we realize that our current process for evaluating the work of our people - and then training them, promoting them, and paying them accordingly - is increasingly out of step with our objectives."


Not only that, but they worked out that Deloitte spent over two million hours a year (yes you read that correctly) on the whole performance management process. For a company whose business runs on billable hours, the opportunity cost is truly staggering!



Thinking of removing your performance management process?

Simply removing your current performance management process without a suitable replacement is clearly not an option. Buckingham and Goodall continue, "The current workplace environment has an ever-increasing focus on growth and learning as key areas of job satisfaction." According to a study by the Intelligence Group, 72 percent of millennials want to be their own bosses at work. If they do have a boss, 79 percent of them state that they want their bosses to serve as a coach or a mentor. This research explains that there is a need for a performance management system designed to guide employees into being more equipped experts in their line of business.



Using a competency assessment to measure performance


The popularity of using competency frameworks is sky-rocketing, penetrating deeper and deeper into organizations, now not only for assessing leadership and core values, but also functional role specific competencies in areas such as sales and project management. Nearly all roles can now be dissected and viewed under the lens of related competencies.



So how far can we push the use of a competency assessment?


Traditionally designed to assess capabilities for the purposes of understanding strengths and working on development needs, a competency framework has its roots set firmly in the realm of employee development, and more specifically, leadership development which, after all, is the area with the largest development costs.


Nowadays however, competencies are created and mapped to just about every aspect of our roles – to measure our leadership capability, see how aligned we are to company values, identify our technical capability and so on. So if we measure all of these aspects of roles, what's to stop us using this as a means of performance management? Can competency frameworks be adequately used for performance measurement?


Yes and No.


  • No – if it's dressed up as a development process, only covertly or indeed subconsciously used to inform performance based decisions.

  • No – if we seek feedback from numerous rater groups who may have an ill-informed view of performance measures for a person's role.

  • No – if a poor communication plan leaves the interpretation of this process as a vague outcome, not quite suggesting its meaning properly.

  • No – if the competencies are not very well associated with the organizational KPI’s.


Under the right circumstances, competency assessment can be adapted effectively as a performance tool under the following circumstances:

  • Yes – if the process is sold as a performance based review only and its purpose and outcome is clear.

  • Yes – if it's a 180-degree review only – between a job-holder and their manager, with input from dotted line managers or other key relevant stakeholders.

  • Yes – if the assessment offers the ability to justify and explain ratings, and comes with a meaningful debrief of the results.

  • Yes - if the competencies are meaningful to the measured role, and related to a corporate plan. 



Continue to evolve and grow


A competency framework will continue to evolve and grow more and more aligned to the day to day lives of their users. Under the right circumstances, a more regular competency based feedback program can be a beneficial and meaningful substitute for the traditional performance review.  


To find out how to design and manage a successful competency assessment program, we'd encourage you to download your complimentary copy of our short eBook on the subject.


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