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Abstract

Competence at work refers to the general evaluation of how individual employees (or teams of employees) contribute to the overall goals of the organization. Most typically, this evaluation is based on the judgments of some person (most often a direct supervisor), and formal evaluations are accompanied by documented ratings as well as feedback and discussion about ways in which to improve. Assessments of competence are often the basis for decisions about pay raises and promotions, but they can also be used as criterion measures against which to validate selection techniques. Underlying many of the purposes is the need to assess competence so as to help employees improve their performance on the job.

Outline

The Concept of Competence at Work
Measurement and Assessment of Competence
Barriers to Effective Assessment
Reaction to Assessments
Developing and Improving Competence
Conclusion

1. The Concept Of Competence At Work

An organization, whether private or public sector, hires employees to help the organization reach its goals. It is unusual, however, for every person hired to contribute to those goals equally, so it is important that we be able to assess the contribution of each employee (or group of employees) in the organization. There are a number of reasons why it is important that we are able to assess contributions in this way. One reason that is critical for employee selection is that we must be able to develop a criterion measure against which to validate selection techniques. That is, for legal as well as practical reasons, it is important to know that the persons selected with a given technique will be those most likely to contribute to the organization’s goals. But from a broader organizational perspective, we must be able to assess competence so that we can help employees to improve and expand the contributions they make to organizational goals. This is possible if we can assess relative strengths and weaknesses and then provide feedback about how to correct those weaknesses, and if we can demonstrate how improvements are tied to rewards such as pay increases, so that we can reward the employees accordingly. This requires that (a) we can define competence and the nature of that contribution and (b) we can assign some score or value to the contribution of each employee such that we can make some type of comparison across time and across employees.

The most traditional approach to defining competence at work is based on job analysis. That is, the purpose of job analysis is to specify what an employee is expected to do on the job, and the definition of competence on the job should probably be related to those requirements. But it is difficult to define competencies on the basis of specific tasks or operations carried out by employees. Such an approach would become extremely cumbersome given that we rarely have multiple employees on different jobs performing similar tasks. Thus, it makes more sense to define competencies in terms of more broadly defined contributions that underlie multiple tasks. As a result, in many cases, competencies are defined in terms of traits or characteristics of individuals that are believed to lead to success on a number of jobs. Furthermore, although a major portion of an employee’s contribution will probably come in areas related to his or her job requirements, an employee can certainly make other types of contributions as well.

Any organization has certain tasks that must be carried out for the good of the organization such as employees being willing to help each other solve problems and employees volunteering to put in extra hours when crises arise. Any employee behaviors that make the workplace more pleasant are valuable. Yet none of these things is part of anyone’s formal job description. Some scholars refer to these kinds of behaviors as organizational citizenship behaviors, whereas others simply refer to them as examples of contextual performance. Regardless of what they are called, they represent part of an employee’s potential contribution to the organization’s goals, and they are part of any complete definition of competence. Although there has been disagreement over whether these things should be part of any evaluation of competence, most experts agree that these behaviors are considered when evaluation decisions are being made.

Finally, the operational definition of competence, usually expressed in terms of an evaluation instrument, can be stated in several different ways. The assumption that competence should be based on job analysis would lead to evaluation systems that focus on tasks that are to be carried out by the employees or on behaviors that employees should exhibit to be effective on the job. Others argue that the behaviors themselves are not as important as the outcomes of those behaviors. For example, we may be interested in whether salespeople follow up on sales calls, but what we really care about is whether or not they make the sales. Therefore, some have suggested that we define competency and assess contributions in terms of observable outcomes such as units produced and sales volume.

This approach can work only when the outcomes involved are under the direct control of the employees, and systems based on outcomes tend to work better when they are tied to specific goals that the employees must accomplish. That is, the exact nature of the contribution should be specified and should serve as a goal the employees try to reach during some time period. We could, for example, set a sales goal of 10,000 units or of $1 million. This would then define what we mean as competence at work; it would mean meeting that goal.

This approach has the benefit of defining expectations in the clearest of terms, and it allows employees to judge how well they are doing. It also makes the entire process somewhat less subjective (although the nature and level of goals are typically negotiable), and this should make it more acceptable to all parties involved. But this approach is not without its problems. It is critical that the organization state goals and objectives in the right terms and not just in terms that can be easily quantified. Otherwise, the organization runs the risk of having all of its employees meet their goals while the organization itself fails to meet its goals.

The final way in which competency has been defined at work is based on the presumed underlying traits and abilities needed to carry out the job. For example, regardless of the exact job duties, we might desire employees to demonstrate initiative on the job. Furthermore, we might believe that initiative will help those employees to carry out their assigned tasks and meet any meaningful goals. Defining competency and assessing performance in this way allows the organization to use one measurement instrument across a wide variety of jobs, and this is the most commonly found approach to assessing performance. Although this approach leads to the most subjective of evaluation systems with standards that are difficult to define, there is reason to believe that there are certain underlying traits (e.g., dependability) that truly do differentiate outstanding employees from merely competent employees.

Each of these approaches to defining competence at work has its advantages and disadvantages. Although no one approach is clearly the best, the definition used will drive many of the management initiatives undertaken by the organization, so it is a critical decision. Thus, the key is to understand the implications of each approach and then decide on which one is best for the particular organization.

2. Measurement And Assessment Of Competence

After the best working definition of competence is determined, the next major issue is determining how competence is to be measured. As noted previously, it is often not feasible to assess competence based directly on tasks performed. In addition, although there are instances where we can count units produced or monitor scrap rates, these instances are relatively rare, and as noted previously, the use of more objective measures can have the effect of focusing the employees’ attention on the wrong things. As a result, most organizations use some type of rating scale for assessing competence, and many organizations spend a great deal of time experimenting with new forms.

Unfortunately, there is little evidence that any one type of rating instrument provides consistently better outcomes than other types of instruments. Therefore, it makes sense for an organization to use what works best for the organization and not to pay a lot of attention to what others are using. This issue is further complicated by the fact that there is no clear consensus as to what should be the criterion in any evaluation of measurement techniques. Furthermore, it is probably more important to focus on performance management techniques to try to improve competence than to focus on appraisal techniques designed to better assess competence.

Some of the efforts to develop better rating instruments have focused on the nature of the actual rating scales or on the number of points on those scales and the anchors used. Others have focused on exactly what is being assessed—whether behaviors, traits, or outcomes. But these efforts were hampered, in part, by the fact that there was no consensus as to how one should go about evaluating appraisal systems.

For a long time, the focus of improving appraisals was on the reduction of rating errors. These errors include things such as halo error (i.e., when someone who is rated highly on one aspect of a job is rated highly on all other aspects of the job) and leniency (i.e., when employee evaluations are inflated to be higher than they should be), and it was assumed that if there were less halo error and leniency in a set of evaluations, these would better reflect the true levels of competence of the employees being evaluated. But there is no reason to believe that a set of ratings that are lower, or are less inter-correlated, are necessarily better. It became clear that these ‘‘errors’’ might not be errors at all and that, in any case, they were generally unrelated to the accuracy of the evaluations provided. Some scholars then began to assess rating accuracy directly. This made sense because it seemed reasonable to say that measures of competence were better if they accurately reflected the ‘‘true’’ levels of competence displayed by the employees. However, this approach requires a ‘‘true score’’ measure against which actual ratings can be compared, and such true scores are available only in laboratory settings.

More recently, it has become apparent that all of these efforts to reduce errors or improve accuracy are somewhat misplaced. In most organizations, the primary purpose of assessing competence is to allow employees to improve their levels of competence. In other words, the main purpose is to help employees improve the contributions they make to their organizations. Employees are more likely to improve if they perceive the assessment system as fair and accurate. To the extent that rating accuracy and the absence of what have been called rating errors can lead to perception of fairness and accuracy, these efforts are important. But they are important only as a means of getting to the ultimate goal—improvement.

Finally, there is the problem of how to deal with contextual performance when assessing competence. As noted previously, contextual performance refers to behaviors that benefit the organization but are not part of any employee’s formal job requirements. The challenge here is not in deciding how to measure contextual performance (there are several scales available) but rather in deciding whether or not contextual performance should be assessed. If these behaviors are included as part of a formal evaluation system, they will no longer be examples of contextual performance and instead will be part of the job duties. Would that be fair? Unfortunately, we do not have an answer yet.

3. Barriers To Effective Assessment

The solution to better assessment probably does not lie with the nature of the rating system used. Instead, the key component is the rater, that is, the person carrying out the evaluation of the employee’s competence. Specifically, there are two issues involved. First, the rater must have the ability to provide fair and accurate evaluations. Second, and perhaps more important, the rater must be motivated to provide fair and accurate ratings. In other words, the rater must be able to recognize truly outstanding employees and then to make that recognition part of the public record.

Of course, the entire issue of what constitutes ‘‘fair and accurate ratings’’ is not a simple matter. We can define fair and accurate ratings as those that correctly describe employees’ strengths and weaknesses and that assign the highest rating to the best performer, the next highest rating to the next best performer, and so on. There has been a great deal of research and discussion about how to determine rating accuracy, and many complicated formulas have been developed to help assess accuracy. However, the perception that a set of ratings is accurate is probably more important than the actual formula used to assess accuracy. It is this perception that will be critical for employees’ belief as to whether a set of ratings is fair.

Attempts to improve rater ability have generally focused on training raters to be better judges. Consistent with the earlier view that reducing rating errors would lead to better evaluations, there was a great deal of interest in developing training programs to help raters reduce these errors. This interest gave way to developing training programs designed to help raters make more accurate ratings, usually referred to as ‘‘frame of reference’’ training. These programs emphasize helping raters to understand what constitutes good and poor performance in each area of competence being assessed. They are generally well received and have been found to improve rating accuracy in carefully controlled settings.

A different approach to improving rater ability deals with keeping performance logs or diaries. Formal appraisals are usually conducted no more than once or twice a year. Therefore, a rater must be able to recall the behaviors of each employee over a period of at least 6 months to provide accurate and meaningful evaluations. Clearly, if a rater ‘‘forgets’’ an incident, that incident cannot become part of the employee’s evaluation. If the rater forgets enough of these critical behaviors, the evaluation will become less accurate. Furthermore, if there were some tendency to forget incidents involving good performance, the employee who received the evaluation would perceive it as unfair even though the rater was providing the fairest evaluation possible. A simple solution to this problem is to have the rater keep a diary or incident log over the evaluation period. The rater writes down (or somehow notes) every incident of good or poor performance and then uses this record to make an evaluation later. Although raters do not always keep these diaries as conscientiously as they should, there is evidence that such diaries are effective when they are used.

But even if the rater has the ability to provide fair and accurate evaluations, he or she might not always choose to act on that ability. Rater motivation is much more complex and less well understood than is rater ability. Why would a rater choose to be inaccurate? There are many reasons. Raters are human and so are prone to human biases. Many will favor people they like over people they dislike. Other forms of potential bias are along the lines of race, gender, and even age. Also, a rater may assign a lower rating than should be assigned just to establish his or her power to do so. Organizational policies and bureaucratic procedures may also make it easier for the rater to assign an inaccurate rating in some cases.

Raters will do what is in their own best interests.

Assuming that they have the ability to provide fair and accurate ratings, they will actually do so only when they believe that either they will be rewarded for doing so or, at least, that they will not be punished for doing so. Organizational policies play a large role in this decision. For example, in some organizations, raters are required to provide excessive documentation if they give someone a truly outstanding evaluation. Faced with this requirement, raters may simply decide that it makes more sense to give a slightly lower evaluation.

In conclusion, raters are probably much more critical to the process of evaluating competence than is the instrument used. Raters must be trained, or otherwise helped, so that they have the ability to provide fair and accurate ratings, and policies must be such that raters will also be motivated to provide those ratings. If raters are capable of being fair and accurate as well as motivated to be fair and accurate, the employees will be more likely to perceive the ratings as fair and accurate. Employees’ reactions to these ratings, however, are critical to the effective management of performance at work.

4. Reaction To Assessments

As noted previously, the ultimate purpose of assessing competence at work is to motivate employees to improve their performance on the job and so increase their contributions to the organization. The issues of rater ability and motivation were discussed, and these factors are relevant for the employees as well. However, the question of employees’ ability to improve performance relates more to selection and training activities in the organization and is not discussed in this research paper. The issue of employee motivation to improve, on the other hand, is central to any discussion of assessing and improving competence at work.

Following an evaluation, the desired outcome is for the employee to take the feedback he or she receives and to work to improve. If the feedback is positive (the employee is generally doing fine), this may require maintaining effort coupled with some refinement of where to allocate effort. This is typically not a problem. However, when the feedback is more negative (the employee needs real improvement), there are a number of problems that can occur.

A fairly typical reaction to negative feedback is simply to ignore the feedback. An employee might decide that the feedback is not fair or that the poor performance is somehow not the employee’s fault. In any case, no improvement will follow this reaction. For the chances of acceptance to be high, the evaluation on which the feedback is based must be perceived as fair. That is, the evaluation itself must be seen as fair, and the procedures used by the rater to develop that evaluation must be seen as fair. In addition, the feedback must be delivered in a constructive way that does not threaten the self-esteem of the employee. Finally, the feedback should focus on the behaviors at work rather than on the person. Research suggests that feedback is not nearly as effective in changing behavior as is typically assumed, so it is critical that the employee accepts the feedback and works to improve.

During recent years, there has been a great deal of interest in a particular approach to competence assessment that is concerned with the issue of feedback. Multisource assessments, more commonly referred to as ‘‘360 degree appraisals,’’ were designed to provide employees with feedback from peers, subordinates, and superiors and to compare this feedback with their own self-assessments. The assumption underlying this approach is that various individuals who have different relationships with an employee will focus on different behaviors. By providing feedback from all of the various sources, the employee should have a clearer picture of his or her strengths and weaknesses. There is actually little research about the effectiveness of 360 degree appraisals, and the results of the research that does exist are somewhat mixed. Nonetheless, the notion that individuals from various perspectives might have different views of an employee’s competence, and that all of these may be useful, is an interesting idea.

5. Developing And Improving Competence

The penultimate goal of assessing competence is to improve competence. In truth, the ultimate goal of the process is to improve the performance of the entire organization. This must begin, however, with helping employees to accept and act on feedback. Once the employee is motivated to improve, the organization can take steps to aid in that improvement. In fact, if the organization does not take some steps in this direction, it is unlikely that real change will occur.

For example, if it is important to build and develop competence, feedback needs to be a regular thing. That is, feedback about performance should not occur just once or twice a year; it should occur constantly. Whenever an employee exhibits desirable or undesirable behavior on the job, someone should note this; in the case of undesirable behavior, the employee should also be told how to improve. Having supervisors set improvement goals with employees and regularly monitor progress toward those goals is also essential for real improvement. It is also important that supervisors and managers be constantly aware of cases where they might actually be punishing employees who perform well. A classic example is asking an employee to perform a ‘‘rush job’’ and then ‘‘rewarding’’ that employee by assigning him or her an additional job to perform.

It is hoped that if all individual employees improve their level of competence on the job, the organization as a whole will somehow be more effective. The truth is that this upward aggregation of improvement is not inevitable and requires close monitoring. Management, at the highest levels, must ensure that the goals and directions set for individual employees at every level are consistent with, and supportive of, the organization’s strategic goals. Therefore, it is critical that organizational goals be set with some recognition of the human resources available to meet them and that tactics for improving competence consider how improvement can help to serve those strategic goals. It is also important for high-level managers to recognize that they must be able to leverage the competence they have. That is, if an organization has extremely creative employees, its managers should pursue strategies that emphasize the importance of creativity. In this way, an organization can ensure that improvements in individual competence can translate to improvements in organizational effectiveness.

6. Conclusion

An organization improves its effectiveness by improving the competence of individual employees at work so that these individuals can make greater contributions to the organization’s strategic goals. This process begins with the definition of competence at work and what exactly is included in that definition. Once a definition is selected, the organization must develop the means by which to determine the current level of employee competence versus where the employee needs to be. Although this might sound simple, there are a number of barriers to effective assessment. Some of them stem from the characteristics of the persons doing the assessment, whereas others stem from organizational policies that may (unintentionally) make this assessment more difficult.

But it is not enough to develop sound assessment techniques. Those assessments must be fed back to the employee in ways that will encourage him or her to work toward improvement. Organizational policies related to goal setting and regular feedback can help to ensure that this occurs. In addition, it is important to coordinate goals and incentives at every level in the organization so that improved competence at the individual level can translate to improved organizational effectiveness.

References:

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Murphy, K. R., & Cleveland, J. N. (1995). Understanding performance appraisal: Social, organizational, and goalbased perspectives. Thousand Oaks, CA: Sage.

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