Performance management is made up of two very different systems, and you have to understand each one before you can solve both.
The first aspect is performance acceleration: how do team leaders get more performance from their team members? The solution is not a feedback system or a goal alignment system. Goals and feedback don’t help us solve the problem of how do you do more, better work next week — they don’t accelerate performance. The solution is actually pretty straightforward: the team leader talking to the team member about near-term future work.
The second part of performance management is performance measurement: how do we reliably measure the differential levels of performance of every single team member within the organization? Ratings don’t do this, because humans are unreliable raters of each other. Goals don’t do this, either.
Performance acceleration and performance measurement are two distinct challenges, and if you try to solve both problems with the same tool — whether that’s goals, feedback, ratings, or competencies — you end up doing both acceleration and measurement badly. We need to separate them out and solve each problem individually – that’s the only way to solve them both well.