How to Enable Job Mastery with Competency-Based Performance Appraisal Systems

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In this guide, we’ll talk about how you can get the most out of your performance appraisal system with a competency-based approach, the business case to make for smarter learning tech, and where you may be going wrong. Let’s dive in. 

How to get the most out of your performance appraisal system

The performance appraisal system is a solution that manages and runs your (you guessed it) performance appraisal process. Most are set up to execute performance reviews and performance reviews only, but this is where we diverge from that path. 

In our experience, performance appraisals work best as part of a greater performance management ecosystem, rather than being core to it. Ergo, getting the most out of the system you choose means understanding the most effective process for performance management. 

From our perspective, that is: 

1. Defining core competencies for appraisal 
2. Setting performance goals for development plans 
3. Designing tailored training and development 
4. Measuring progress to performance goals 
5. Providing and gathering feedback for continuous improvement. 

1. Define competencies 

Competencies refer to the performance standards attached to a job role. They are used as a way to evaluate the performance of business and human capabilities, aka the skills, knowledge, processes, behaviours, tools, and systems that combine to achieve business objectives. 

The competencies that are key to each job role are then dependent on the capabilities of the role. For ease of use, it’s best to display these in a framework like so. 

A competency framework gives employees—i.e the people whose performance we’re measuring—a clear idea of performance outcomes and indicators. It also gives managers and other stakeholders a benchmark for evaluation, negating potential subjectivity bias. The best point in time to define competency is generally when designing a job role and its scorecard, as it allows you to understand the level at which that role performs. 

What we mean by that is competency is a scale or spectrum. It can be categorised by hierarchy (i.e. team member, team leader, executive) or by schema similar to assessment grading (beginner, intermediate, advanced). If one capability has three levels of performance at which it can be performed, that enables you to apply a capability to multiple roles with clear differentiations in expectations. 

If you’re facing a deluge of job roles to break down, we have a capability library with over 600 capabilities and 1600+ levels of competency you can download, edit, and repurpose as needed. We recommend you reword anything you copy into your organisation’s internal language so: 

1. Performance expectations can be clearly communicated to all employees, across teams, functions, and locations; and 
2. All employees can see how their roles contribute to success and how their performance will be assessed. 

If it’s not a crystal clear path to follow, go back to the drawing board. 

2. Set performance goals for development plans 

There’s little connection between training and learner. We’ve seen it many times over; vendors push libraries of third-party content. Learners are then expected to wade through to find the one training needle in the content haystack. The assumption is that not only will they manage to find content that impacts their performance, but that they’ll want to do it. 

We want to connect learning and performance at this, the turning point for the learner. Performance goals offer two distinct advantages. 

1. They show in no uncertain terms that the purpose of training is. 
2. They allow you to create tailored training initiatives. 

It starts with a competency assessment. This is where most appraisal systems kick off; you can use our very own workflow automation tool Momentum to book these in. Where Momentum differs from the pack is that it lives in our performance learning management system (PLMS), Acorn. It flows a little like this: 

1. You set a trigger for an assessment (either at a certain frequency or because of a performance conversation). 
2. Momentum notifies the employee that they have an assessment to complete and takes them directly to the assessment in Acorn. 
3. The self-assessment asks employees to evaluate their competency level for the capabilities of their current job roles or, alternatively, a role they aspire to move into (hello, succession planning). 
4. Momentum notifies the employee’s manager the self-assessment is complete, and it’s their turn to complete an assessment of said employee’s competencies. 
5. When both assessments are complete, Acorn provides a visual report of the employee’s current competency levels compared with the desired level for their role. 

There are two ideal points at which you can schedule a conversation about goal-setting: before the initial assessment, and after step five. 

Goals should be specific, measurable, achievable, relevant, and time-bound in order to a) address employee career aspirations, b) align with business needs, and c) have a tangible impact for said employee. That sets the stage for training. 

3. Design tailored training & development 

The crux of Acorn PLMS is to enable truly strategic learning and development. This is why competency assessments are housed within the system. 

Acorn also enables you to map capabilities and competencies to content, so that the outcome of an assessment is the immediate creation of a development plan. There’s no time to speed on creating a plan for every single employee, which means employees aren’t waiting to start on a plan. And once content is matched to capabilities, you can easily create plans across your org or even tenancies. 

The added advantage is that assigned content is timely (based on competency), relevant (based on capability), and able to be reported on (but more on that later). Content isn’t just static courses, either; live learnings and workshops can be included. 

Don’t rely solely on online learning, though. Most learning happens through application, which happens on the job. That can’t be reported on, you might say. Again, we thought about this in designing Acorn. The system enables you to capture key interactions—e.g., best-in-breed sales calls or software demonstrations—as recordings, and turn those into shareable learning assets. (Side note, you’re not just relying on the relevance of third-party content this way. You’re actually creating living knowledge guides unique to your workplace.) 

4. Review progress to goals 

Think of this step as a circle back to step two. Momentum is again your best friend here. You have two options. 

1. Restart the trigger cycle in Momentum, so that the first step is the last one and you create a loop of appraisal, development, and feedback. 
2. Add another trigger to end the workflow (if goals were achieved) or start a new one and a new development plan (if goals weren’t reached). 

Either way, any development plan that starts with a competency assessment should end with one. It’s the objective way to ascertain definitive progress toward performance goals, and should act as the basis for the next performance appraisal meeting in the cycle. 

Here is where you need to coach managers to give constructive feedback. Part of this is having regular meetings (read: not annual) to ensure development plans are delivered when needed and that competency gaps don’t fester or cause strategic weaknesses. Find a way to capture these conversations, whether they are recorded as assets or transcribed, to provide quantitative data on progress. 

Don’t be afraid to have informal check-in conversations alongside formal performance conversations. Every employee’s performance and progress will differ wildly, and discussions about learner satisfaction can improve the learning process in the moment of need. 

5. Gather feedback for continuous improvement 

On the point of learner satisfaction, training efficacy, and process improvement should be woven throughout the performance appraisal process. There are a few ports of call here. 

1. Depending on job role, you may need to review your capability and competency frameworks. Roles that require core technical qualifications (e.g. operations, IT, marketing) may need to complete training at more frequent milestones. 
2. Training surveys give you quantitative data on training effectiveness. While not always an accurate measure of training design, learner sentiments can speak to engagement rates. 
3. Get feedback from managers on the performance appraisal process and system. You may find that you need different workflows to match the different training needs between teams. Momentum is customisable here, allowing you to create multiple workflows as needed. 

When all is said and done, recognising employee achievements can go a long way toward boosting learning uptake. The greater the uptake, the greater the ROI on L&D and the better the impact on organisational performance. Rewards can go beyond promotions to mentoring with senior leaders or more choice in future learning and development opportunities (e.g. offsite training programs). This is where conversations with managers matter; they can ascertain what drives employees and how best to recognise and reward improvement. 

The importance of performance appraisal systems 

Employee performance is generally the make or break for your organisation. But without a way to evaluate employee performance, it exists in a vacuum rather than as part of a cycle. 

And when employee performance exists in a vacuum, so too does feedback. A lack of structured or objective feedback mechanisms creates pockets of potentially contrary workflows, that somehow must work together. Say your sales team receives near-daily, informal performance feedback based on their calls and service, but the marketing team has only formal, quarterly reviews.  

Despite working in close quarters, sales and marketing professionals are likely developing capabilities and competencies at different rates. So not only could there be a perception of inequality, but co-dependant organisational capabilities could well be working at different levels of maturity. That’s like having one leg that moves faster than the other—the body can’t move fluidly or change course easily. 

If performance appraisal is slow, broken, or infrequent, it’s a good bet your organisation will be more susceptible to disruptive technological and market changes. The most effective performance appraisal systems focus on iterative development as much as transformation; small but meaningful course corrections to skills, behaviours, knowledge, tools, and processes in the flow of work. 

Organic rhythms for appraisal can even be used to define core metrics for team and job performance, like cycle times. That’s one of the reasons we lean into capabilities as the basis for performance, with competency as the performance indicator in Acorn. The former enables you to understand what work is truly strategic, and the latter is the iterative measures for continuous improvement. And: 

1. Continuous improvement comes from a culture that’s constantly creating, acquiring, and transferring knowledge. 
2. Consistent, documented progress provides definitive validation for departmental strategies or business plans.  
3. Centralised performance data gives managers the information to understand their team’s contribution to organisational goals, and reward or intervene as needed.  
4. Training and development is intrinsically impactful when the result of consistent performance appraisals, given its focused on personal mastery.  

Technology like Momentum and Acorn is key for enabling a consistent approach to performance management across your workforce. The automated and centralised nature of our systems means you can instantly report on performance—and understand it in business terms, not just individual performance. 

Where organisations go wrong with performance appraisal systems 

Part of why capabilities work so well for performance is that they create a clear picture of what is being evaluated about an employee’s job performance. Companies without a clear strategy rely on the subjective discretion of managers to define and evaluate performance, which leads to differing interpretations of what should be evaluated.  

That means job descriptions and scorecards become static tools, and behaviours and mindsets may be overlooked in favour of outputs. One is not more meaningful than the other; in fact, appraisal should consider the behaviours displayed to achieve outcomes.  

While outcomes are the ultimate goal of a job role, they don’t provide information for training and development. The skill, knowledge, and behaviours shown and systems and tools used to achieve that outcome reflect the competency of your employees. Without a system or framework for evaluation, managers might overemphasise lagging indicators or past performance without considering potential. In doing so, not only are capability gaps left unidentified, but managers miss crucial opportunities to hone their own coaching and leadership abilities. You risk internal hiring becoming political, too, if the basis for decisions is not objective job mastery, but rather subjective beliefs from hiring managers. 

And in case you thought we wouldn’t mention technology, well—a fatal hit to the performance management process is not using the right technology. Admin-heavy evaluations are usually light on value, given the process becomes more about maintaining and validating documentation in one of the hundreds of spreadsheets or documents filled with employee information. While that may work (though inefficiently) for managers and their teams, it doesn’t give HR, OD, or L&D oversight to make truly informed workforce decisions. 

That puts your team on the back foot. Not only are you encumbering your organisation with outdated and inefficient processes, but you’re simply failing to enable employees to master their roles and have business impact. 

Key takeaways 

Performance appraisal systems have traditionally been seen as an HR tool; we staunchly believe performance shouldn’t exist as its own entity. By that, we mean performance management happens in vacuums separate from functions it should naturally support like learning and development and succession planning.  

Integrating your performance appraisal system into the employee lifecycle requires a solid foundation for understanding performance. We built ours on capabilities, with the added dynamism of competency to make performance progressive. To emulate that in your organisation, look to: 

1. Define competencies for performance appraisal 
2. Set performance goals for development plans 
3. Design bespoke training and development for individuals 
4. Measure progress to goals 
5. Gather feedback to restart the cycle. 

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