We strongly recommend that you do not mix a competency assessment for self-directed learning and career planning with TRADITIONAL performance management.

The difference between performance reviews and competency based assessment

In general, traditional performance reviews are used to look backward and see what people have done. We call this “looking back”.

A competency assessment is designed to see what capabilities someone has compared to what they need in order to promote a growth mindset and development. We call this “looking forward.”

Steps to follow if your organization uses an annual performance review (looking back)

 If your organization is still doing traditional annual performance appraisals, and you try to use competency assessment data against people (for example, determining who gets a promotion), you will eliminate all future honesty, and any data you get will be flawed. This is especially problematic for organizations doing assessments in the talent management system. It is human nature to inflate your assessment given that the data is co-mingled in a system used for pay and promotion, resulting in a development plan that is not representative of what you need, and won't help you close skill gaps.

You must ensure the competency assessment process is used only for growth and development – NOT for keeping score.

Therefore, don’t assess competency right before your annual review. Do it afterwards in a separate system.

Often performance reviews include identification of development goals. They may focus on general areas for upskilling and reskilling. That’s fine. Let’s call that the development strategy.

If you complete the competency assessment process after that review, you enable people to create the granular development tactics and plans that support the strategy. That is, they will identify their actual skill gaps are and what specific development activities to pursue. Then they will be working their plan, incrementally adding new activities to iteratively close their gaps all year long.

By the time they get to the next annual review, they actually will be better, because they’ve been actively taking charge of their learning throughout the year.

Steps to follow if your organization uses new feedback approaches (looking forward)

If you haven’t noticed, there is a major shift away from traditional performance management to new growth mindset approaches for performance feedback that looks forward.  And the elimination of the performance appraisal is the best thing that ever happened to competency models! Why? Because it eliminates any time constraints about when a capability assessment can be performed and eliminates any perceived confusion on the behalf of HR about the differences between the two.

When performance appraisals are replaced with regular real-time coaching and feedback, competency assessments and associated development plans provide the analytics and structure for manager/employee conversations. It makes it easier for managers to coach. 

This feedback approach drives agility – change in strategy and priorities can be quickly communicated and supported through the competency model.  Regular use of this data translates into clear expectations, and regular employee skill development and career planning progress.

With the speed skills are changing, the impact of the 4th Industrial Revolution, including changes from digitization, automation, and artificial intelligence, more and more organizations will realize that the traditional methods can no longer keep up. You need a performance approach that drives a culture of learning and a development habit to make a difference.