A guest post by Josh Bersin – CEO, Bersin & Associates

Competencies are one of the most difficult and under-utilized part of performance management.  Bersin & Associates research shows that only 36% of organizations with performance management process rate their use of competencies “excellent” or “good.”

But we also found that effective use of competencies can have a huge impact:  organizations that rate themselves world-class in the use of competencies for performance management are 4-times as likely to have a strong performance-driven culture.

Why?  Because the process of identifying and implementing critical competencies in itself drives a clear understanding of what performance means, how to obtain it, and how to communicate it.

As you can read in our recently published research, thoughtful and strategic use of competencies can have a significant impact on financial performance.  A few of the highlights from our research with SuccessFactors on how the use of competencies affects financial performance:

* Competencies should be customized for your business and should focus on management and leadership-level skills, not just job requirements

* There are two types of job-level competencies:  “hygiene” competencies which establish the basic requirements for a job (ie. customer service), and “performance” driven competencies, which, if executed, will not only help an individual perform their job but will help them grow and excel.

These “performance” or “critical” competencies vary from company to company and industry to industry.  

Read more from our research with SuccessFactors.