Page 24 - DMGT517_PERFORMANCE_MANAGEMENT_SYSTEM

Unit 2: Performance Management System

The following steps should be followed while designing a competency based performance Notes
management system:
1. Categorizing Competencies: Competencies can be divided into two categories, “threshold”
and “differentiating” according to the performance criterion they predict.

(a) Threshold Competencies: These are the essential characteristics (usually knowledge or
basic skills, such as the ability to read) that everyone in a job needs to be minimally
effective but that do not distinguish superior from average performers. A threshold
competency for a salesperson is knowledge of the product or ability to fi ll out
invoices.

(b) Differentiating Competencies: These factors distinguish superior form average
performers. For example, achievement orientation expressed in a person’s setting
goals higher than those required by the organization, is a competency that
differentiates superior from average salespeople.
2. Mapping Competencies: Competency Mapping beings with identifying key competencies
for an organization and/or a job and incorporating those competencies throughout the
various processes (i.e. job evaluation, training, recruitment) of the organization. With a
competency based job description, the second step involves mapping those competencies
throughout the organization’s human resources processes. The competencies of the
respective job description also become factors for assessment on performance evaluation.
Using competencies helps in more objective evaluations based on displayed or not
displayed behaviours. Taking competency mapping one step further, the results of
performance evaluation can be used to identify in what competencies individuals need
additional development or training.

3. Building Competency Models: There are three ways in which competencies models may be
developed:
(a) Behavioral Indicators: Behavioural indicators describe the behaviours, thought
patterns, abilities and traits that contribute to superior performance.
(b) Evaluative Competency Levels: Exceptional competencies of high performers are set as
standards for evaluating competency levels of employees.
(c) Competencies Describing Job Requirements: This approach is useful for organizations
having multiple competency models. Competencies required in a particular job are
described. Job specific competency models help in structuring focused appraisal and

compensation decisions.
4. Profiling Competency Framework for a Particular Role: To identify role-specifi c

competencies required industry specific, functional and behavioral competencies,
which need to be developed for enhanced performance. The approach for developing a
competency framework for a particular role is as proposed below:
(a) Understand strategic business context of the organizations in term of its structure
and environmental variables.

(b) Detail role description for positions. Defining and scaling (relative importance and

mastery level) of specific behaviours for each identified competency as a measure of
performance.
(c) Develop competency framework taking into consideration the core values and the
culture of the organizations in addition to specific functional and level requirements.

This should jell with the vision and mission of the company.
(d) Validate the competency framework through a workshop, which should include

functional experts and top management personnel in order to define critical and

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