PerformanceSkill mapping

Competency-based review – how to make sure it has a positive impact on employee experience

competency-based review

The upper management’s expectations concerning the process of a performance review are quite high. It is supposed to serve as a learning tool, boost motivation, improve employee engagement, supplement talent development, and reveal skills gaps. For employees, however, it is often yet another stressful appraisal tool. How to make sure competency-based review is also beneficial to employees by enhancing their positive working experience?

Recently, performance reviews haven’t been given good press. Numerous specialists have claimed that their end is nigh. And yet, the current trends show that the attitudes toward the process have changed and that this tool is no longer totally dismissed. 

Competency-based review from the employee’s perspective

According to research done by Mercer, 95% of managers are dissatisfied with the existing appraisal systems and 90% of heads of HR departments believe that their appraisal systems fail to produce accurate information. It looks no better from the employee’s point of view. As shown by Gallup, only 14% of the people surveyed fully agree that the appraisal process motivates them to change. A similar percentage of employees are fully satisfied with their workplace experience. 

The debate around the point of performance reviews has also been fueled by the researchers from the NeuroLeadership Institute who have discovered that the reaction of the brain to performance rankings is exactly the same as its neural response to physical threat. In such circumstances, a person is more likely to fight or flee than to become development-oriented. 

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So, is it time to say goodbye to competency-based reviews, following in the footsteps of Google, Adobe, or Accenture? Not necessarily. The process of annual or quarterly assessment may be satisfactory to both sides by shaping positive employee experience and motivating the employee to grow and work better, which is, in turn, going to meet the requirements of the management board and improve the company’s financial results. 

How to achieve that?

Shifting the attitude to competency-based performance evaluation

Before moving on to the specific guidelines on how to organize annual reviews to make them supporting and motivating to the staff, let’s find out why companies are so reluctant to give them up despite their limitations and the negative feelings they evoke. Surely, the main reason behind this is that the interviews with employees in this framework are systemized and clearly outlined in terms of dates and subjects. Competency-based reviews have their advantages and for many busy managers they are probably the only occasion to:

  • show appreciation for employees; 
  • discuss the performance results of employees; 
  • plan employee development. 

It is also a more or less effective tool of exerting control. However, if the appraisal process is meant to build a positive employee experience, traditional performance reviews are not sufficient. 

6 tips to guarantee that competency-based performance review has a positive impact on employee experience

#1. Goals

Employee performance goals must be:

  • consistent with the strategy of the company,
  • consistent with the employee’s qualifications and roles.

If barely 14% of employees fully understand their company’s strategy, how can they understand the goals set for them? In such cases, the employer is to be blamed, alongside defective internal communication. Competency-based reviews should be coherent with the reality of a given company – it is not a person who gets evaluated but his or her competencies for performing certain tasks. 

#2. Competencies

Before starting off with the process of appraisal, it’s a good idea to rate the competencies in terms of their relevance. Are you sure that a fixed set of skills thoroughly represents the needs of your company? The corporate VUCA world is characterized by constant change, which has actually become even more rapid since the onset of the COVID-19 pandemic. Both before and during the employee interview, you need to ensure that the job description assigned to a particular person reflects the actual state. Otherwise, the employee may feel that the appraisal process is only aimed at following the procedures and that it has little to do with the real world. 

#3. Tools

In the process of shaping employee experience through appraisal, tools are crucial for two reasons. Firstly, a structured appraisal questionnaire will help set the right tone to the conversation and raise all the important subjects. Secondly, modern tools will help form the digital experience, which plays an increasingly important role these days. Thanks to an internal platform, employees have access to anything that might be relevant to them in this process: appraisal previews, development plans, scope of duties, or a list of courses that could help them develop their qualifications. 

#4. Minimized risk of error

How to minimize the risk of error in the process of employee appraisal? First of all, managers should be trained regularly, not only when it comes to running the performance review, and competency-based review but also in terms of motivating, providing feedback, and empathetic leadership. Next, by proper planning of the process, you will be able to avoid bias. If the reviews are just closed-door meetings between two people, the risk of bias and prejudice grows

#5. The managers’ needs

A simple manager training is not enough – you need to take care of the managers’ time and needs. Most managers are so busy with their daily responsibilities and solving mundane problems that they find it difficult to assess some abstract competencies such as critical thinking or emotional intelligence. This is where we go back to the subject of the usability of the process and its adjustment to the actual needs of the organization and employees. After all, the primary task of the managers is to manage rather than fill out some complicated questionnaires which rarely lead to any practical outcomes. 

#6. The employees’ needs

Taking care of the employees’ well-being has become the most visible trend in times of the pandemic. Many studies have shown that the companies which improve their employee-centered organizational culture are likely to achieve better financial results than their competition. Competency-based reviews are a great occasion to provide your employees with the necessary support and to get to know their needs and perspectives. The objective of the appraisal process is to listen to your employees: with empathy, understanding, and acceptance. 

In the world of business, where change is the only constant, business needs transform as quickly as the employees’ needs. This may feel unsettling to the employees and affect their sense of safety. Employers are then obliged to provide their employees with working conditions that alleviate stress and sense of discomfort. Only then will they be able to shape positive employee experience and improve employee engagement through this approach.

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