Performance Management For Dummies
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To measure performance management behaviors, first cluster them into competencies. These are measurable clusters of knowledge, skills, and abilities (KSAs) that are critical in determining how results will be achieved. Examples of competencies are customer service, written or oral communication, creative thinking, and dependability.

Measuring two types of competencies

There are two main types of competencies.
  • Differentiating competencies are those that allow us to distinguish between average and superior performers.
  • Threshold competencies are those that everyone needs to display to do the job to a minimally adequate standard.
For example, for the position Information Technology (IT) Project Manager, a differentiating competency is process management. Process management is defined as “managing project activities.” For the same position, a threshold competency is change management. The change management competency includes knowledge of behavioral sciences, operational and relational skills, and sensitivity to motivators. Therefore, for an IT project manager to be truly effective, she has to possess process management and change management competencies.

Competencies should be defined in behavioral terms. Take the case of a professor teaching an online course. An important competency is “communication.” This competency is defined as the set of behaviors that enables a professor to convey information so that students are able to receive it and understand it. For example, one such behavior might be whether the professor is conveying information during preassigned times and dates. That is, if the professor is not present at the chat room at the prespecified dates and times, no communication is possible.

To understand the extent to which an employee possesses a competency, we measure key performance indicators — indicators or KPI for short.

Each indicator is an observable behavior that gives us information regarding the competency in question. In other words, we don’t measure the competency directly, but we measure indicators that tell us whether the competency is present or not.

The following figure shows the relationship between a competency and its indicators. A competency can have several indicators, and the figure shows a competency with five indicators. An indicator is a behavior that, if displayed, suggests that the competency is present. In the example of the competency "communication" for a professor teaching an online course, one indicator is whether the professor shows up at the chat room at the preestablished dates and times. Another behavioral indicator of this competency could be whether the responses provided by the professor address the questions asked by the students or whether the answers are only tangential to the questions asked.

competencies A competency and its behavioral indicators.

As another example, consider the two competencies that define good leadership: consideration and initiation structure. Consideration is the degree to which the leader looks after the well-being of his followers. Initiating structure is the degree to which the leader lays out task responsibilities. Here are five indicators whose presence would indicate the existence of the consideration competency:

  • Supports direct reports’ projects
  • Asks about the well-being of employees’ lives outside of work
  • Encourages direct reports to reach their established goals
  • Gets to know employees personally
  • Shows respect for employees’ work and personal lives

Describing competencies

To be most useful, a description of competencies must include the following components:
  • Definition of competency
  • Description of specific behavioral indicators that can be observed when someone demonstrates a competency effectively
  • Description of specific behaviors that are likely to occur when someone doesn’t demonstrate a competency effectively (what a competency is not)
  • List of suggestions for developing the competency in question
Using the competency “consideration,” let’s discuss the four essential elements in describing a competency. I define consideration like this: It is the degree to which a leader shows concern and respect for followers, looks out for their welfare, and expresses appreciation and support. Next, I list five indicators or behaviors that can be observed when a leader is exhibiting consideration leadership. Leaders who don’t show consideration may speak with direct reports only regarding task assignments, repeatedly keep employees late with no consideration of social lives, take no interest in an employee’s career goals, and assign tasks based only on current expertise. Finally, how do leaders develop the consideration competency? One suggestion would be to ask employees, on a regular basis, how their lives outside of work are going. This may lead to knowledge about an employee’s family and interests outside of work.

Compared to the measurement of results, the measurement of competencies is intrinsically judgmental. In other words, competencies are measured using data provided by individuals who make a judgment regarding the extent to which the competency is present. So, the behaviors displayed by the employees are observed and judged by raters such as the direct supervisor, peers, customers, the employee himself, and direct reports (for the case of managers). These possible raters constitute different performance touchpoints and are complementary sources of performance information.

Two types of systems are used to evaluate competencies: comparative systems and absolute systems. Comparative systems base the measurement on comparing employees with one other. Absolute systems base the measurement on comparing employees with a prespecified performance standard.

The following table lists the possible comparative and absolute systems that could be used.

Comparative and Absolute Systems to Measure Performance as Behaviors
Comparative Absolute
Simple rank order Essays
Alternation rank order Behavior checklists
Paired comparisons Graphic rating scales
Relative percentile
Forced distribution

About This Article

This article is from the book:

About the book author:

Herman Aguinis, PhD, is the Avram Tucker Distinguished Scholar and Professor of Management at The George Washington University School of Business in Washington, DC. He's been ranked among the top 100 most prolific and influential business and economics researchers in the world.

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