What are competency-based performance appraisal systems?
Competency-based performance appraisal systems are gaining popularity among organizations due to the challenges faced by today’s business environment. Research indicates using competencies makes a difference in obtaining employee commitment. Business leaders have recognized that to remain competitive, they must figure out how their people need to think and what they need to do. Market factors contributing to the increasing need for a competency model include: • The presence of uncertainty, constant change and a service environment where knowing what the customer wants is critical • The resulting need for unity, innovation, and a quick response capability • Globalization • The demand by Generation X employees for a reason to care about the company Linking human capital. Using competencies as a performance measure is a way of linking human capital to business strategy. As hoped, this direct linkage also affects organizational performance. Companies that link the management of their human
