Competency-based Performance Management System

What is competency-based performance management? Driving desired skills and behaviours from onboarding to promotions

Understanding the various types of performance management system applications is key to making the most of the tools and techniques available. A competency-based performance management system allows business leaders and HR professionals to understand how various talents are distributed throughout the workforce so that decisions about hiring and promotions can be made with confidence.

The Josh Bersin article, What is talent management, outlines the current need for performance management systems to incorporate a variety of functions which can drive talent acquisition and ensure the right people with the right competencies are in the correct roles:

“Today organizations are starting to buy, build, and stitch together performance management systems, succession planning systems, and competency management systems.  The HR function is becoming integrated with the business in a real-time fashion.”

Bersin goes on to outline a matrix of processes that make up integrated talent management, consisting of:

  1. Workforce planning. Hiring plans and targets along with compensation budgets are all integrated within the overall business plan.
  2. Recruiting. Recruitment, assessment, evaluation, and hiring bring employees to the organization through an integrated process.
  3. Onboarding. Employees are integrated swiftly into the organization through training.
  4. Performance management. The method used to measure and manage employees; a comprehensive process involving multiple aspects of an employee’s roles and responsibilities.
  5. Training and performance support. Learning and development programs are provided at all levels of the organization. This support is part of a continuous process.
  6. Succession planning. Organizations have a continual need to move people into new roles as and when required. Identifying the right individuals for the right roles is crucial, and needs to be fully aligned with the company’s business plan. 
  7. Compensation and benefits. Compensation is typically tied to performance management to ensure that these rewards are aligned with business goals and execution.
  8. Critical skills gap analysis. Josh Bersin’s report identifies this as an important, often overlooked, function in many organizations. Businesses need to be able to identify the roles and individuals who are leaving, and the competencies they are taking with them. Critical talent management is required to fulfil this need.

Let’s take a closer look at how performance management systems can be used to drive decisions about competency

Characteristics associated with competencies – creating a competency framework

When evaluating the various skills and competencies of an employee, a wide range of attributes can be considered. Physical and mental characteristics can be accompanied by a range of other abilities related to different skill sets, working in various combinations depending on the requirements of the role.

This matrix of skills and competencies can then be brought together to form a competency framework. Since each role requires different skills, these competency frameworks can vary greatly from one employee to another, with a member of staff working in sales likely to have a distinct framework from a person working on a production line. 

As HR leaders and managers build up a database of desired competencies and the frameworks associated with different roles, performance management software can be used to track and analyse existing human resources and future requirements. 

Such frameworks allow leaders to understand the “perfect” hypothetical employee for a given role. This helps make informed decisions about new hires, as well as development plans for existing employees to improve existing competencies or introduce new ones.


Onboarding new employees

Competency-based performance management begins at the onboarding stage. Here, a complete understanding of the skills they are bringing to the table is understood, together with a plan of action for the competencies necessary for the role. This information helps determine goals and can be pulled together in a competency roadmap.

Defining job roles

While the key elements of the job role are outlined in the position’s roles and responsibilities, the day to day responsibilities need to be articulated in more depth during the onboarding process. This may involve the new employee shadowing a colleague to bring them up to speed.

Any digital paperwork outlining the role in detail can be shared with the new employee via performance management tools. HR leaders and managers can also make sure the new employee is connected with the relevant peers who can help bring them up to speed on their responsibilities.

Identifying skills gaps

A new hire’s core skills, competencies and qualifications will be covered in the resume. The onboarding process gives HR leaders and managers the opportunity to dig deeper into their core competencies and how these relate to their new roles. 

A part of this process is identifying any skills gaps which need to be addressed moving forwards. This could be in the form of learning specific systems or software used internally which they might have no experience with, or other methods unique to the business. Any skills gaps can then be integrated into their development plans to ensure the right training and resources are made available.

Determining goals

New employees need to be clear on the goals and expectations the role comes with. These goals can be set in stone via objectives and key results (OKRs) and key performance indicators (KPIs) so that managers and the employee can track them in real-time.

Goals relating directly to their role, for instance, sales targets, can be understood more clearly through the use of data analytics and reporting. Managers can use these reports to track performance during the probation period to identify potential problems before they become insurmountable. 

Competency-based goals can also be tracked through these mechanisms. Abstract competencies such as communication skills and collaborative working can also be understood through the use of performance management tools. 

Key performance indicators which help managers track events and actions related to soft skills can drive decisions surrounding opportunities for training and learning.

A competency roadmap

Once goals are understood in the context of the new employee’s role and responsibilities, a roadmap can be formed to build upon competencies. This roadmap acts as a plan of action for the employee as they develop in their role, including any on the job training necessary to bring them up to speed. 

Consequently, businesses can make the best decisions about where resources are allocated and the way this will impact their organizational strategy. This roadmap can cover both short- and long-term training and development, from short online courses to help with university degree programs.

HR administration tools for competency-based onboarding

A competency-based performance management system can be facilitated through the use of a variety of HR administration tools that are integrated into the platform. These include:

Skills database

Understanding how individual skills fit into the broader skills distributed throughout the company can be achieved with a skills database. Existing skills and skill gaps can be identified so that resources are efficiently allocated.

Team members with stronger expertise related to the roles and responsibilities of the new hire can connect and help bring them up to speed. Skills such as communication, flexibility, leadership and time management can be tracked from the first day. These skills can be customized for each individual, their job role and the teams they belong to.

Automated onboarding processes

HR tools can be used to streamline the onboarding process, with custom templates and automation saving valuable time. These automated processes can help distribute the relevant documentation to new employees such as organizational policies and culture and relevant direct reports.

Setting development objectives via a Personal Development Plan (PDP)

Personal Development Plans allow HR leaders and managers to precisely articulate the course of action expected from the new employee. These plans help align employees with department and organizational objectives to make sure they are on the right track.

A PDP is a core aspect of an employee’s daily role and will help guide them through the probation period and beyond. As well as on the job training and other courses, this plan can include side projects and team-building tasks which the employee can participate in without eating into their personal time. 

Create supercharged training programs

The best teams I’ve encountered have one important thing in common: their team structure and processes cover a full range of distinct competencies necessary for success.

Jesse James Garrett, co-founder of Adaptive Path strategy and design consulting firm

Ongoing learning and training allows employees to develop their core competencies and add new skills to their talent stack. There are a wide variety of training programs and goals which can be used to supercharge employee skills, including:


Leadership competencies include strong future planning, effective strategic management and the ability to persuade and influence staff. Potential candidates for leadership positions can develop these competencies by learning how to better evaluate data to gain insights into the business and work on their public speaking skills.

Team building

Encouraging active participation and cooperation within a team can help employees develop the appropriate skills to strengthen relationships. Employees can further enhance their team building ability by helping colleagues outside their immediate working group. Peer and 360-degree feedback can then be used to assess the development of this core competency.


Communication skills are essential for any business. Strong communication skills can improve customer satisfaction and make collaborative working more effective. Training programs can be used to help individuals develop customer relationship management skills, structure their ideas with clear and concise language, and better understand the emotions and perspectives of others.

Evaluating competencies to better measure performance

Understanding how an employee’s competencies are developing in relation to their goals requires a system of data collection and analysis. Performance management tools allow managers and HR leaders to gather this data and break it down to the metrics which matter the most.

Using performance management software to gather and analyse competency-based data

In order for a competency-based performance management system to be effective, it needs to be operated with a degree of transparency and openness. As with performance management in general, feedback is crucial for ensuring that talent is nurtured along the right path. Data relating to performance and behaviours need to be collected by leadership and easily understood.

To this end, performance management software is a must. These tools allow managers and their direct reports to remain on the same page when it comes to understanding progress towards goals and objectives. Likewise, progress towards completion of training programs and other courses lets all parties involved know how competencies are developing.

Performance management tools that can help leaders identify, analyse and manage skills within the workforce include:

  • OKR and KPI tracking. Understand accomplishments and progress towards smart objectives through tracking key metrics for measuring success. Tie this data to feedback so employees can see where they need to correct course.
  • Performance leaderboards. Visibly celebrate great performance and the right behaviours with leaderboards. When linked to reward systems, these tools can help boost recognition and further motivate high performance.
  • Dashboards and reports. Customize performance dashboards to gain instant insight into the data which drives competency based performance management. Dashboards also help onboarding new hires as swiftly as possible, creating clarity around objectives and expectations.

Competencies and succession planning

To be a manager requires more than a title, a big office, and other outward symbols of rank. It requires competence and performance of a high order.

Peter Drucker, management consultant

The Harvard Business Review article, The High Cost of Poor Succession Planning, outlines the high costs of turnover paid by companies who fail to pay enough attention to their leadership pipelines and succession practices. In order to address these costs, the authors suggest that:

“Firms need to start succession planning well before they think they need to; make sure they identify and develop rising stars; appoint the most-promising executives to the board to help prepare them to take on the top job; and look at both internal and external candidates.”

Competency-based performance management provides business leaders, executives and HR managers the birds’ eye overview of the organization necessary to spot potential leaders and focus efforts on their development.