Using Competencies To Enhance Employee Performance

Several years ago, a study conducted by four large HR consulting firms* demonstrated the connection competencies make with business strategy, the techniques organizations use to build competency models, and the similarities and differences among com­petency-based human resources applications.

The nature of the sample lim­ited the ability to draw widespread conclusions about the workplace in general. But it was still possible to identify im­portant conclusions based on the data. Based on our own research and experience in the field, most are still valid in 2018.

Following are the key findings of this research effort:

• Competencies are used to “raise the bar” on employee performance. Respondents said “raising the bar” is a key objective of competencies, as opposed to using competencies to establish a baseline for perfor­mance. Also, respondents tailor their HR applications to focus on individual performance. Competencies are defined thoroughly (often using high performers and functional experts as a primary source of input), and they often are supported with scaled levels to illustrate in­creasing levels of proficiency. This provides individuals with detailed road maps for increasing their capabilities incrementally.

For staffing applications, competencies are used to hire, place and promote people with the right capabili­ties to help the organization gain competitive advantage. For training and development, competencies are used to identify gaps in each participating employee’s capa­bilities so these gaps can be remedied. For performance management, competencies and results are assessed side by side, reminding employees that how they do things is as important as what they do. For compensation, both competencies and results impact base pay decisions to reward performance and competency development.

Competencies are used to focus on an organization’s culture and values. Many respondents indicated they use competency-based applications to communicate values to the work force and to build the proper culture for success. While these issues may ap­pear somewhat removed from the bottom line, it appears that many organizations recognize the importance of culture in achieving competitive advantage.

Business strategies drive competencies. Competency information comes from multiple sources, and strategy plays a key role in development. The most frequent source of information is senior management and strategic plans. The next most common sources of information are high performers and functional experts. These sources of information often are used in com­bination.

Competencies focus on how performance re­sults are achieved. Competencies are behavioral mod­els that are built upon skills, knowledge and personal attributes. Furthermore, all attributes of competencies should be observable and measurable, and they must contribute to enhanced employee performance and, in turn, organizational success.

Today’s competency applications are evolu­tionary, not revolutionary. This finding is supported by several observations. First, it appears that many competency-based approaches are treated as add-ons and they are not leading to radical adjustments in HR processes. Sec­ond, with regard to specific HR applications, managers continue to make the lion’s share of performance man­agement and compensation decisions. Furthermore, with the exception of the use of behaviorally anchored rating scales, base salary adjustments under competency-based systems are largely made in a traditional fashion. Finally, for staffing purposes, competencies are rarely used when checking references or as the sole basis for rejecting candidates.

Competencies provide a framework for integrating HR applications. Integrating HR applications is a desired outcome for many organizations. Many respondents have more than one competency-based HR application. Those who have applications in place for more than a year desire to expand compe­tencies into additional HR areas. Lessons learned in one area of competency-based HR should be applied to other competency applications.

Compensation is the least common and new­est application. Compensation is the least cited appli­cation in this study, performance management is the most cited application, and staffing and training and de­velopment are in between. Staffing applications tend to be oldest, followed by performance management, train­ing and development, and compensation applications. This may imply that staffing applications represent starting points for many organizations that are interested in competencies. Compensation is seen as an application that can be added once other applications are in place. One reason for why staffing applications are older may be historical; David McClelland and McBer’s early work with competencies was to examine them for selec­tion purposes.

These findings should not be interpreted as a prescrip­tion for the order in which to install competencies.  Many organizations start competencies in different areas of HR and then gradually work their way to other areas. In fact, many organizations also work on more than one application at once. The key is not the order in which applications are developed, but how these applications ultimately are in­tegrated and linked to business strategy.

* Hay Group, Aon Hewitt, Towers Perrin, and Mercer. The American Compensation Association (now WorldAtWork) sponsored this research study, titled “Raising the Bar – Using Competencies to Enhance Employee Performance”.  

You are invited to join a LinkedIn group that I manage, Competency-Based Talent Management Our members would welcome your involvement in the group.

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Build Models With Input From Job-Holders


Observation of Job Holders

Observation of job holders can be helpful in developing competency models, if a limited duration of observation will permit observing highly effective behaviors. For most professional and managerial jobs this is not the case. Job holders demonstrate their most effective behaviors infrequently, and the presence of an observer may affect the behavior of the job holder and others being observed concurrently. In addition, much significant behavior may involve thought processes that are not directly observable.

But if effective behaviors occur frequently and can be seen or heard, observation may be a useful tool to include when building a competency model. For example, it may be possible to listen in on customer service representatives as they respond to calls from customers. Observation may also be useful when studying jobs that involve physical skill or dexterity.

When using observation, plan to observe several superior performing job holders for a set period of time (e.g., 2 hours each). Take notes on what you see and hear. If possible, set aside 15 minutes to discuss your observations with the person you observed. You can compare your observations with a set of generic competencies and behavioral indicators, like the Checklist for Noting Themes in Structured Interviews that appears in the Building Competency Models workshop workbook.

Surveys of Job Holders

A survey of job holders can be useful if you wish to validate a set of job tasks identified in Job Analysis Interviews or in a Resource Panel. On the survey, job holders can be asked to rate how often they demonstrate each task, as in the following rating scale.





Rarely or Never



Very Often

Less than once per month

Once a month to once a week

Two to five times a week

Six or more times a week

Job holders can also be asked to rate how important each task is to effective job performance, as in the following rating scale:






Of Some Importance


Very Important

By tabulating the ratings, you can calculate average frequency and importance ratings for each task.

It is not as useful to have job holders rate competencies and behavioral indicators. If, as is typically the case, the competencies have been defined to reflect superior performance, in an average sample of job holders, only a minority will actually demonstrate any competency or behavioral indicator. Yet because of the general human tendency to evaluate oneself highly, most job holders will rate themselves highly on most behaviors.

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