How to create competency framework that fuels your business

In World War II, the U.S. Army Air Corps did something different that helped them win.   
The Axis firepower, on the opposite side, had swelled and become more lethal. Only innovation could help defeat it.   
So, the Americans selected and trained fighter pilots based on what they “did” rather than what they “should do”. They looked for flying competency.    
Researchers asked good pilots a simple question: How do you act and behave while flying exceptionally? – And a list of qualities was handed over to recruiters.    
Such a competency-based approach supported:   
A) the American strategy of creating a modern, offensive force   
B) to achieve the goal of winning the war  
Centuries ago, the Romans used this approach too: they recorded qualities of excellent commanders in action. These profiles, that fit well with the kingdom’s policy of conquest and expansion, were then used to select soldiers.  
The Romans, powered by competency-based human resource management, conquered kingdoms across continents to establish a dominant empire.   
‘The soldier has a right to competent command’: the Romans held fast to this maxim.   
How can you use competency today to achieve business goals?  
Following the American victory, John Flanagan who was part of the air force’s task force, took the competency approach to General Motors, writes Dave Ulrich in ‘HR from the Outside in”.  
A competency-based approach to managing people and organizations can yield the desired outcome, but only when linked with your company’s vision, strategy and goals. Without this synergy, the resulting misalignment may increase costs, reduce efficiency among people and prevent teamwork.   
What is competency?
A competency is an underlying characteristic of an individual that is causally related to criterion-referenced effective and/or superior performance in a job or situation.
– Lyle M. Spencer, Jr. and Signe M. Spencer in ‘Competence at Work
Spencer & Spencer explain various aspects of the definition:   



Underlying characteristic means competency is a fairly deep and enduring part of a person’s personality and can predict behavior in a wide variety of situations and job tasks.   
Causally related means that a competency causes or predicts behavior and performance.  
  Criterion-referenced means that the competency actually predicts who does something well or poorly, as measured on a specific criterion or standard. Examples of criteria are the dollar volume of sales for salespeople or the number of clients who stay “dry” for alcohol-abuse counselors.  



Further, they suggest several types of competencies:     

1. Motives    
The things a person consistently thinks about or wants that cause action. McClelland defines motive as a recurrent concern for a goal state, or condition, appearing in fantasy, which drives, directs and selects behaviors of the individual.   
Example – achievement-motivated people set challenging goals for themselves    
2. Traits  
Physical characteristics and consistent responses to situations or information.   
Example – listening to others before responding in a discussion  
3. Self-Concept  
A person’s attitudes, values, or self-image  
Example – self-confidence   
4. Knowledge  
Information a person has in a specific content area. The authors claim that many knowledge tests measure rote memory, while they must focus on the ability to find information.   
Example – A sales manager having knowledge of industry regulations
Many knowledge tests measure rote memory…Memory of specific facts is less important than knowing which facts exist that are relevant to a specific problem, and where to find them when needed.
Lyle M. Spencer, Jr. and Signe M. Spencer in ‘Competence at Work
5. Skill  
The ability to perform a certain physical or mental task. The authors say that mental or cognitive skill competencies include “analytic thinking” (processing knowledge and data, determining cause and effect, organizing data and plans) and “conceptual thinking” (recognizing patterns in complex data).  
Example: A market analyst’s ability to identify market trends and suggest a roadmap



Skill
Competency


The ability to perform a certain physical or mental task: Lyle M. Spencer, Jr. and Signe M. Spencer
A cluster of knowledge, skills and personal attributes that affects a major part of one’s job: Parry


Can be divided into hard and soft skills
Different types include core/individual, threshold/differentiating and technical/behavioral


Example: the ability to play piano
Example: remaining calm while performing before an audience



Spencer & Spencer suggest that while knowledge and skill competencies tend to be visible, self-concept, trait and motive competencies are more “deeper” and “central to personality”.  
In addition, surface knowledge and skill competencies are easier to develop than motive and trait competencies, which are more difficult to assess and develop.  
Organizations should select for core motive and trait competencies and teach the knowledge and skills required to do specific jobs as that is more cost-effective.”
–  Lyle M. Spencer, Jr. and Signe M. Spencer in ‘Competence at Work
 
Whereas, Parry has suggested a more universal definition of competency: a cluster of knowledge, skills and personal attributes that affects a major part of one’s job that:  
– Correlates with performance on the job  
– Can be measured against well-accepted standards  
– Can be improved via training and development  
Threshold vs differentiating competencies  
Moreover, Spencer & Spencer categorize competencies into threshold and differentiating:   

Threshold Competencies   

These are the bare minimum competencies that everyone in a role needs to be minimally effective at. This doesn’t separate a performer from a non-performer.   
Example: Researching skills of a content writer   

Differentiating competencies  

These are what sets performers apart from average workers.   
Example: Setting goals higher than what is required for a role   

Personal attributes are more influential factors in predicting job success than knowledge and skills: research by David McClelland 

Technical vs behavioral competencies  
Daniel Goleman , who developed the emotional competency framework, has found that behavioral competencies enabled superior performance on a job.  

Technical competencies

These are required to perform a job and deliver products and/or services within a specialized area, explains Mahesh Kuruba , a consultant, in ‘Role Competency Matrix’ .   
Example: knowledge of HTML for a developer

Behavioral competencies  

These include:   
– Interpersonal competency of working with others to achieve the desired objective  
– Communication   
– Problem solving   
– Accountability   
Core competency of an organization
C ore competencies are the collective learning in the organization, especially how to coordinate diverse production skills and integrate multiple streams of technologies…Core competence is communication, involvement, and a deep commitment to working across organizational boundaries.
–  C.K. Prahalad and Gary Hamel in Harvard Business Review
Competency at the organization level is defined in the form of core competency. Organizational competencies are a “synergistic blending” of the core competencies that each of their employees brings to their work every day, explains Kuruba.    
A Harvard Business Review article suggests three tests to identify core competencies in a company:  

It provides potential access to a wide variety of markets 
It should make a significant contribution to the perceived customer benefits of the end product
It should be difficult for competitors to imitate



 Fragment your core competencies by communicating them across the company and linking them with department, team, project and individual competencies   
Set up a strategic architecture that aligns with core competencies   
Measure individual competencies against the core competencies  
Track your own and the competitors’ performance with focus on unexpected successes, and poor performance where you should have done well, advises Peter Drucker, management consultant.


Features of competency
All personal attributes are not necessarily competencies. They must lead to “effective performance and contribute for success on a job,” suggests Capgemini India Chairman Srinivas R. Kandula in ‘ Competency-based Human Resource Management’ .

He identifies essential elements of a competency:   

They must be demonstrable  
They must be transferable  
They must be relevant to the positions, job families and to the organization  
They must be characteristic of employees who are responsible for effective performance on a job  
They should have a measure of predictability  
They should be measurable and amenable to standardization  
They should be developed, imparted and nurtured


Step-by-step guide to link competencies with business goals  
Two of the top five challenges facing organizations are aligning people strategies to business objectives and driving cultural change, according to a survey by Human Resource Executive.     
To ensure tighter alignment, Development Dimensions International (DDI) advises using well-defined competencies that are “aligned with business priorities and relevant to each person’s role level”.   
The competencies could be used “as a metric against which every individual can be selected, developed, and evaluated” fairly and consistently. Further, they can aid in translating company values into employee behaviors, DDI suggests.   
Yet, only 19% of organizations that utilize competencies say that competencies and business goals are aligned, according to a study by Brandon Hall Group, a research firm. 

Organizations having fully developed competency management programs are:  

55% more likely than other organizations to have increased revenue over the past year 
45% more likely to have increased customer retention over the past year 
41% more likely to have increased market penetration over the past year 
41% more likely to have increased customer satisfaction over the past year
37% more likely to have increased employee engagement over the past year

Source: Brandon Hall Group Competency Planning and Management Study

To drive the alignment better, DDI advises integrated talent management which enables HR processes to be aligned to business objectives as well as to each other. Bersin and Associates have found this approach to increase revenue, lower turnover among high performers and increase the ability to “develop great leaders”.    The approach, when used for competence management,  starts with identifying the business strategy and then tying competencies to it.  
According to Seema Sanghi in ‘The Handbook of Competency Mapping’ , a competency model can be an effective way of communicating to the workforce the values of the senior management and what people should focus on in their own behavior.  
Organizations must strive for competency management. “It is the process—or set of processes—for acquiring, developing, nurturing, and managing competencies to foster superior employee and workforce performance…it is obvious that competency management is crucial to business success,” writes Kuruba.   

STEP 1: Identify your business goals and strategy  
Existing competencies may quickly become irrelevant or obsolete over time, believes Kuruba. Therefore, it is “imperative that managements view competency development as a strategic imperative that will drive its business goals”.  
A business model should consist of four elements, suggests Harvard Business School’s Clay Christensen . These are:   
 – a customer value proposition   
– a profit formula  
– key resources  
– key processes  
In any business strategy, people are more critical than the plan. Strategies can only be effectively implemented if organizations have a competent force of employees.
–  Seema Sanghi in ‘The Handbook of Competency Mapping
As an HR professional, you must consider “human resources from the outside in,” as suggested by Dave Ulrich.   
This involves focusing on the “business of the business”, which means understanding the context and setting in which the business operates, the expectations of key stakeholders and the strategies that give a company a unique competitive advantage, Ulrich writes in ‘HR from the Outside in”.  

Setting and understanding goals  

As an HR, you must be involved in and inform the goal setting process. Goals may follow the SMART framework: Specific, Measurable, Attainable, Realistic, and Time-bound.  
According to research by Edwin A. Locke and Gary P. Latham in American Psychologist :   

Highest or most difficult goals produced the highest levels of effort and performance  
Specific, difficult goals consistently led to higher performance than urging people to do their best  
Tight deadlines lead to a more rapid work pace than loose deadlines  
Making a public commitment to the goal enhances commitment, presumably because it makes one’s actions a matter of integrity in one’s own eyes and in those of others  

What’s more? It is not enough to mention the objectives in value terms alone, cautions Kuruba. “Business objectives must also clearly mention the business/industry segment and/or the geographies in which the organization is seeking to make an impact. They must state what must be achieved (in terms of revenue, market presence, etc.) and by when,” he writes.

Setting and understanding strategy  

While a goal is what you hope the outcome will be, a strategy tells what you are going to do to achieve it, according to Freek Vermeulen of London Business School .  
He says that a “real strategy” involves a clear set of choices that define what the firm is going to do and what it’s not going to do. 
Strategy is a unified, comprehensive and integrated plan that relates the strategic advantages of the firm to the challenges of the environment. It is designed to ensure that the basic objectives of the enterprise are achieved through proper execution by the organization. Businesses have strategies, a formal planning cycle, a mechanism is devised to devote the resources to it in the competitive environment. 
–  Jauch and Glueck
Further, organizations that planned for long-term sustainability were twice as likely to be good competency implementers than those who didn’t, suggests a McKinsey study.  
So, it’s essential to draw up a long-term strategy to achieve goals and vision. And the HR must be involved in their preparation and implementation.    
STEP 2: Identify roles and develop profiles for them    
This involves identifying the organizational functions that are critical to achieving business objectives.   
According to Kuruba, this helps decide the scope of the role competency matrix implementation: “whether to implement it organization-wide or in only business units that are regarded as critical-to-growth”.   
The identification of such roles can depend on “a commitment by business unit heads for supporting the program, the unit’s ability and willingness to risk a certain degree of disruption, the head of business unit’s understanding of the program and its methods, and employees’ willingness to participate.”  
STEP 3:  Identify competencies  required  
This involves the process of identifying the critical (or key) competencies and mapping them to roles, says Kuruba.     
Further, Sanghi suggests that the basis of generating competency models are processes.   
So, two questions need to be asked:   

What does the employee have to be able to do?   
 What does the employee have to know in order to do it?   

In addition, she claims that determining competencies is easier if the flow charts of the job processes are laid. “If the competencies are not related to specific process steps then the model is not valid,” she writes.   
Sources of competency information  
You can identify competencies by following a top-down approach, from general to specific:   
Competencies that are taken for granted  
→ Context-level  
1. Identify competencies which are assumed to be present in every employee  
Example: Honesty   
2. Identify competencies required by law  
Example: knowledge of regulations   
3. Find out industry-specific competencies. A good source for this can be certification programs.  
→ Organization-level 

Study the vision and mission statements of the organizations to understand its philosophy.   
Understand the work-group-level competencies. For instance, some departments within the organization may have their own vision and mission statements.   
Gauge the competencies carried as part of background information. “This provides whatever general business, industry or company information is required to meet job standards,” writes Sanghi.   

Position documentation  

Industry research – academic journals, publications and periodicals  
Vendor information – This includes vendor publications. “Such reference material can prove helpful for developing competencies for production jobs,” says Sanghi.   
Customer feedback  
Regulations  
Certification requirements – professional certification programs have standards and assessment processes which can be referred to for identifyin