Competency Based Performance Appraisal

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Competency based performance appraisal
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I. Contents of getting competency based performance
appraisal
==================
Competency management systems allow employers to evaluate employees' performance. Use of
these systems allows managers and supervisors to identify gaps, deploy remedial training, recruit
staff and compensate current employees appropriately. Developing competency-based
performance management systems typically involves creating comprehensive competency
models for all jobs and assessing employees against those models during annual performance
reviews. Employers may use these systems for all staff or restrict their use for only salaried
employees. By identifying core competencies that align with the company’s mission, vision and
goals, management can consistently and fairly rate employees who contribute to the bottom line.
Successful organizations also encourage employees to establish personalized objectives that
allow them to develop their abilities while supporting company goals.
Advantages
Incorporating competencies into performance management activities demonstrates that
companies connect achievement to compensation, align employee work to strategic goals and
objectives, and reinforce behavior that leads to excellence. In addition to traditional business
metrics, such as revenue and sales, employers who use competency-based performance
management systems can quantify and qualify the work done by employees. For example, using
comprehensive assessments, such as 360-degree reviews, employers gather extensive data about
an employee’s work. This also allows company executives to more effectively manage resources
and designate individuals to take over leadership positions.
Challenges

Defining the skills and behavior required to complete a task successfully requires time, effort and
coordination between multiple sources. Getting agreement on the relevancy of a particular
competency, such as business acumen, communication or team management, may require
numerous meetings and discussions to get consensus among multiple company executives.
Defining the process for assessing individuals against the model may also take time.
Additionally, conducting competency-based performance reviews tends to be time-consuming.
Alignment
Successful companies align competencies defined in the performance management system with
the company’s strategic objectives. For example, companies that want to improve customer
satisfaction and loyalty may require employee competence in personal effectiveness
competencies, such as communication, influencing and integrity. These skills involve speaking,
writing and listening effectively to co-workers, partners and customers. Formally linking
employee development to performance management systems ensures that knowledge transfer,
succession planning and employee training needs get met as part of daily operations rather than
remedial actions taken only when problems occur. Career development activities contribute to
improved employee morale and retention. This tends to reduce absenteeism as well.
Implementation
Implementing a competency-based performance management system typically begins by
analyzing the business environment and listing the job roles needed to achieve strategic goals.
By identifying the skills and behavior required to perform these jobs, effective HR professionals
develop competency models. They publish these models on intranet pages, distribute newsletters
and run workshops to explain how these frameworks can be used by employees for career
development. Then, employees create their development plans aligned with the company’s
mission. When managers conduct performance reviews and enter data into the performance
management system, they can evaluate each employee fairly and consistently. Many systems also
permit employees to conduct a self-assessment.
==================

III. Performance appraisal methods

1. Essay Method

In this method the rater writes down the employee
description in detail within a number of broad categories
like, overall impression of performance, promoteability
of employee, existing capabilities and qualifications of
performing jobs, strengths and weaknesses and training
needs of the employee. Advantage – It is extremely
useful in filing information gaps about the employees
that often occur in a better-structured checklist.
Disadvantages – It its highly dependent upon the writing
skills of rater and most of them are not good writers.
They may get confused success depends on the memory
power of raters.

2. Behaviorally Anchored Rating Scales
statements of effective and ineffective behaviors
determine the points. They are said to be
behaviorally anchored. The rater is supposed to
say, which behavior describes the employee
performance. Advantages – helps overcome rating
errors. Disadvantages – Suffers from distortions
inherent in most rating techniques.

3. Rating Scale
Rating scales consists of several numerical scales
representing job related performance criterions such as
dependability, initiative, output, attendance, attitude etc.
Each scales ranges from excellent to poor. The total
numerical scores are computed and final conclusions are
derived. Advantages – Adaptability, easy to use, low cost,
every type of job can be evaluated, large number of
employees covered, no formal training required.
Disadvantages – Rater’s biases

4. Checklist method

Under this method, checklist of statements of traits of
employee in the form of Yes or No based questions is
prepared. Here the rater only does the reporting or
checking and HR department does the actual evaluation.
Advantages – economy, ease of administration, limited
training required, standardization. Disadvantages – Raters
biases, use of improper weighs by HR, does not allow
rater to give relative ratings

5.Ranking Method
The ranking system requires the rater to rank his
subordinates on overall performance. This consists in
simply putting a man in a rank order. Under this method,
the ranking of an employee in a work group is done
against that of another employee. The relative position of
each employee is tested in terms of his numerical rank. It
may also be done by ranking a person on his job
performance against another member of the competitive
group.
Advantages of Ranking Method
Employees are ranked according to their
performance levels.
It is easier to rank the best and the worst
employee.
Limitations of Ranking Method
The “whole man” is compared with another
“whole man” in this method. In practice, it is very difficult
to compare individuals possessing various individual
traits.
This method speaks only of the position where an

employee stands in his group. It does not test anything
about how much better or how much worse an employee
is when compared to another employee.
When a large number of employees are working,
ranking of individuals become a difficult issue.
There is no systematic procedure for ranking
individuals in the organization. The ranking system does
not eliminate the possibility of snap judgements.

6. Critical Incidents Method
The approach is focused on certain critical behaviors of
employee that makes all the difference in the
performance. Supervisors as and when they occur record
such incidents. Advantages – Evaluations are based on
actual job behaviors, ratings are supported by
descriptions, feedback is easy, reduces recency biases,
chances of subordinate improvement are high.
Disadvantages – Negative incidents can be prioritized,
forgetting incidents, overly close supervision; feedback
may be too much and may appear to be punishment.

III. Other topics related to Competency based performance
appraisal (pdf, doc file download)
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