The relationship between competencies and performance is indirect. As employees increase their proficiency levels, their performance outputs would generally be expected to improve. Organizations whose employees have high proficiency levels are organizations that would be expected to have superior organizational performance. However, this is not always the case. An individual may possess the required knowledge, skills, abilities, and behaviors but may be performing at a lower level than expected due to various factors, e.g., personal problems, lack of focus, job dissatisfaction, negative reaction to organizational change, lack of organizational resources, etc.

Employees are rated on performance in relation to how well they have accomplished the tasks set out in their performance plans. Performance plans establish specific tasks and expectations for various positions and employee grade levels and this is the basis for performance evaluation.