Unlocking the Value of Competencies: A Look at Competency-based Management

For those of you that are new to the concept of competencies, let me start by defining what a competency is in relation to human resource (HR) management activities, such as recruiting, learning, performance management, and succession planning.

According to Wikipedia, a competency is the state or quality of being adequately or well qualified physically (and intellectually) to perform a specific task or role. To explain further, a competency is a set of defined behaviors that provide a structured guide enabling the identification, evaluation, and development of the required behaviors of individual employees. Competencies can be defined for job, business, or management activities. 

A competency can also be seen as a combination of knowledge, skills, and behaviors used to improve performance. For instance, a management competency may include emotional intelligence and skills in influence and negotiation.

So how are competencies used? There are four main areas within an HR organization where a competency-based management approach can be used:

1. Recruiting—A competency-based recruiting approach relies on using a series of assessment tools to identify not only a candidate’s technical skills, but also his or her behavioral capabilities. This approach relies on building complex job profiles that look at the responsibilities and activities of the job and the competencies required to accomplish them. A competency-based recruiting approach aims to help support valid (and fair) hiring decisions.
   
2. Learning/Training—A competency-based approach to learning/training employees is important, as an organization needs a common language set to achieve and assess desired learning outcomes. Competencies provide the learner with a clear roadmap and the navigational tools necessary to move expeditiously toward his or her goals.
   
3. Performance Management—Integrating competencies within the performance management process supports feedback to employees on both “what” they have accomplished and “how” their work was performed (using competencies for providing feedback).
   
4. Succession Planning—Measuring competencies is a key component of effective succession planning. The ability to measure competencies for individuals and jobs stored in a competency database or library is critical for not only quickly identifying potential future replacements for specific roles, but also in planning career progression for individuals within the organization.

Before we can truly understand how these competencies are used (in depth), we need to know what competencies we need to define, and for which position/roles, etc. Though an organization can try determining these competencies or related skills on its own, having a guideline or starting point is generally recommended. Many organizations turn to competency dictionaries or libraries as a basis for building their competency-based management programs.

Competency-based Management Approach
A competency-based management approach is a methodology that standardizes and integrates all HR activities based on competencies that support the organization’s goals. This approach helps HR professionals understand the performance capabilities of the organization and how to effectively match employees with specific skills with the desired roles/tasks.

Figure 1. Competency-based Management Approach

Competency Modeling/Profiling
The starting point for successfully managing a talent pipeline must begin with building a foundation—by taking a competency-based management approach to workforce development. This is done by first identifying the unique combination of knowledge, skills, abilities, attitudes, characteristics, and competencies required to effectively perform a specific role within an organization and then organizing them into a competency model/profile (also called a competency dictionary or competency set/group).

Filling an organization’s competency library with characteristics that are key to progression within the organization (e.g., creativity, the ability to influence others, or time management) and then integrating those competencies into the organization’s HR processes enhances the company’s strategic business value. Once a set of competencies has been identified, they can then be applied at the recruitment stage and throughout an employee's career—for appraisal, training, and reward purposes. These competencies can also be used and re-used (with periodic but minor updates) over time.

Competency profiling can be divided into four main categories:

• Job competency profiling—profiling based on the specific tasks of a particular job (e.g., hiring, negotiations)
• Role competency profiling—profiling based on the part an individual employee plays in the organization's overall success (e.g., management)
• Functional competency profiling—profiling based on the skills an employee requires to perform a particular function for the business (e.g., marketing, finance)
• Core competency profiling—profiling based on the competencies that every employee should have in keeping with the overall values and vision of the organization (e.g., loyalty)

The creation of these groups of competencies allows for a clear understanding of the end goals as well as defines the expectations for employees or leaders for successfully achieving those goals. This common language and competency model also provides a baseline that facilitates communication between managers, teams, and leaders.

There are plenty of resources available online that can help organizations get started on their competency models. For example, HRSG, a provider of competency-based services, sells its competency dictionary to hundreds of companies around the world. The competency dictionary not only can be used as is, but can also be fully customized (to reflect the unique culture and vision of an organization). Some other consulting firms that specialize in competencies are identified at the end of this article.

Competency Mapping and Evaluation
Competency mapping is a process in which an organization assesses and determines the strengths of an individual employee. It generally examines two areas: emotional intelligence and the individual’s strengths in areas such as team structure, leadership, and decision making.

Large organizations often use some form of competency mapping in order to understand how to most effectively use the strongest competencies or qualities of its employees. They may also use competency mapping to analyze the combination of strengths in different employees to produce the most effective teams and the highest quality of work.

Of course there are two sides to this coin: management’s decision on the most suitable position for the employee (based on his or her skills, knowledge, etc.) and the chosen career path of the employee. The career path however is based on the position’s competency profile, and though some employees may already be suitable for positions that fall within their chosen career path, other employees may need to go through a series of positions (and training) within the organization to get there.

Some aspects of competencies can be difficult to identify and manage. Unlike skills and knowledge, things like personality traits, motivation, adaptability, and self-concept are often not as clear cut, and may require further assessment. Using interviews, surveys, and observations (including information on how individuals act, think, and feel while doing their jobs) can help employers unlock an employee’s potential value. During the recruitment process, behavioral assessments and behavioral-based interviewing techniques can be used to provide employers with valuable and specific data that allows them to predict future job–related behavior.

Employers may also conduct competency-based performance evaluations of their existing employees. The competency-based performance evaluation uses the competency profile of the particular job description together with the employee’s achievement of the preset target goals as the basis for assessing overall performance and development needs. Competencies can also help guide learning and career development plans.

Skill Gap Analysis (Career Development & Succession Planning)
Once a company understands that desired competencies are associated with specific positions or roles, it can influence the individualized training that employees receive. This is especially important in succession planning, where companies need to identify high-potential employees they will want to retain, move into critical positions, or consider for future leadership opportunities.

So understanding that each position or role is associated with a set of competencies (specific knowledge, skills, and behaviors), enables an organization to readily determine the gaps between what the employee possesses (competencies) and what they need to know/learn (objectives). The organization then assigns learning objectives—and develops suitable learning tools to achieve them. Once the employer has delivered the learning content via the appropriate or desired learning channel, (formal instructor-led training, online training, on-the-job training, etc.), the identified gaps are closed and the employee is more competent and motivated.
 

Figure 2. Competencies and Career Development and Training

Job Placement
Therefore, once an organization has identified a particular role, defined the competencies required, conducted the behavioral and performance assessments, uncovered the skill gaps, and delivered the relevant training, the employee is ready to embark on his or her new position or role within the organization. By not undertaking the competency-based approach (as outlined in figure 1), an organization may have an employee end up in a position for which he or she is not adequately qualified, leading to wasting of the employee’s time, and the company’s time and resources, and potentially costing the organization a lot of money. 

Benefits of Using a Competency-based Management Approach
So now that we understand a little more about building competency models/profiles, mapping competencies, and identifying skill gaps, let’s look at some of the overall benefits an organization can garner from using a competency-based management approach.

• Reduced turnover due to increased employee satisfaction (as position requirement and performance expectations are clear)
• Increased profits (due to competency-based training programs)

In addition, a competency-based management approach can achieve the following:

• Identify performance criteria to improve the accuracy and ease of the hiring and selection process
• Provide a standard for measuring employee competency
• Provide a framework for learning programs
• Define the required skills, traits, and attributes for all positions within the organization
• Identify or measure the gaps between requirements and capabilities
• and more . . .

Consultants and Vendor Solutions in this Space
Few organizations have internal staff with the expertise needed to create and manage a successful competency-based management program. There are, however, plenty of consultants and software providers that are skilled in helping companies design competency models to support their organization’s workforce development strategies. Consultants can also help companies to validate existing competency models, integrate existing models into a single model, or create a job skills inventory.

Here are a few of the consultants and service providers that organizations may want to consider when looking to address their competency needs:

Avilar—Formed in 1997, Avilar provides Web-based competency management and e-learning solutions for the corporate, government, and academic sectors.

HRSG—Launched in October 1989, HRSG develops innovative, customer-centered solutions to address the strategic HR needs across a wide range of government and industry. Its goal is to help organizations maximize their full potential by aligning their human resources with their strategic vision and goals.

Succession Wizard—Succession Wizard aims to simplify the whole succession planning process. It identifies potential succession gaps and assists in planning future staffing needs within an organization.

SSA Training—SSA Training provides training resources for business. Its line of “What Really Matters…” courses provide workshop-style development for an organization’s management team. It also offers competency cards that allow managers to identify critical competencies for interviewing, hiring, performance management, and personal employee development.