I am part of a start-up company that is majority-owned by a Japanese trading house and set up in joint venture with a leading Indian private sector bank. I am on deputation from the Indian bank and handling the setting up of the new company, which will deal in financial services (i.e., extending loans for two-wheeler finance). We want to design an effective performance management system. I have a concern here, as my Japanese counterparts are insisting on using the competency model only for the promotions, and performance criteria for the paying of the performance bonus; whereas I want to use both the competency and performance criteria for the promotion as well as for the performance incentive. This is leading to tension between two promoters. Kindly advise on the solution to this.
While it is efficient to combine the related areas of performance and competency into one dialogue, it is becoming a common practice to separate the two discussions. In fact, they are quite distinct in tone, time frame, and purpose. The performance session, with its evaluative and monetary component, is often a bit uneasy, deals with a short-term time frame, and is meant to assess and reward recent achievement. In contrast, the competency area focuses on long-term career pathing and the skills and developmental movements required for promotional success. In a combined discussion, the former often eclipses the latter.
As businesses increasingly value the role of human capital in a rapidly changing and competitive future, they are realizing the need for a separate career pathing dialogue as input into human capital resource planning. With the performance session and monetary concerns in the past, the stand-alone competency session provides an opportunity for the employee and manager to more freely discuss career plans, promotional steps and the acquisition of necessary skills for success. Thus, the competency session provides a long-range planning tool for senior management, supplying, in aggregate, an inventory of all current and future skills resident in its human capital, and the resulting development, training, and outside hiring programs needed to deliver the total skills required to meet future goals.
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