Competency based superior performance and organizational effectiveness

Abstract

Purpose The purpose of this paper is to explore the relationship between competency-based performance management and organizational effectiveness (OE). It signifies the importance of developing competency-based performance concept in organizations. Since conventional performance management systems (PMSs) are diminishing and as organizations are looking for breakthrough PMSs, this research attempted to fill the gap from stakeholder’s perspective – employee, manager and organization in devising new approach in PMS. Design/methodology/approach The research design involved developing scale for “competency-based superior performance” and validating scale for “organizational effectiveness,” The data for this survey are collected from 292 respondents through structured questionnaire. Hypotheses depicting aforementioned relationships were empirically tested in the context of competency-based performance practices in organizations based in India. Structural equation modeling (SEM) technique was used for data analysis. Findings The empirical results provide methods to accelerate the performance management initiatives based on a leadership competency model (LCM), which are necessary for building performance culture in the organization. The paper contributes by developing a new scale for measuring competency-based performance practices. The scale for OE is revisited. A positive relationship between competency-based superior performance and OE with productivity, adaptability and flexibility has been empirically confirmed using SEM. Research limitations/implications The paper limits the performance measurement concept using leadership competencies. Practical implications The developed model will act as a building block for performance measurement in organizations. This paper promotes LCM to be applied in creating a performance-based culture. Originality/value This is a unique attempt to test the relationship between competency-based performance management and OE.