The Business Case for Competencies

Background

In 1996, the American Compensation Association (now WorldAtWork) sponsored a research study titled “Raising the Bar – Using Competencies to Enhance Employee Performance”.  It was authored by Michael Thompson of the Hay Group, Dr. Edward Gubman of Hewitt Associates, Sandra O’Neal of Towers Perrin (now Towers Watson), and Darrell Cira of William M. Mercer Inc. (now Mercer) The results were published in a 76-page booklet, which has been long out of print. I recently discovered and re-read a copy I had filed away. What is interesting is that most of the findings are still relevant and insightful today..

To get a sense of how business and human resources strategy might impact decisions about competency applications, the research team had asked participating companies to state their primary business strategy objectives, how their HR strategies support these objectives and the intended purpose of implementing competency-based applications.

An Overview of Findings

This comprehensive research project 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 at responding organizations. Competency-based human resources applications were relatively new; many respondents said it was too early to judge whether competencies had fulfilled their potential as a means to improve employee performance and, ultimately, enhance business results. However, respondents’ attitudes toward competencies were largely positive, and a large majority of respondents wanted to expand the role of competencies within their organizations.

HR Strategies that Best Support Business Strategy

Keeping in mind the nature of the sample, which limited the ability to draw widespread conclusions about the workplace in general, it was still possible to identify important conclusions based on the data. 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 tailored 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 indicate 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 inform 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 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 had more than one competency-based HR application. (See Figure 1.) 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 sample, 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. (See Figure 2.) 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; recall that McClelland’s early work with competencies was to examine them for selec­tion purposes.

ovierview-fig2

These findings should not be interpreted as a prescrip­tion for the order in which to install competencies. The researchers have observed many organizations that started competencies in different areas of HR and then gradually worked 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 areas are ap­proached but how these applications ultimately are in­tegrated and linked to business strategy.

  • It is too early to tell how effective competen­cies are. The newness of many competency-based ap­plications in this sample means that the ultimate suc­cess or failure of these applications -and their integra­tion -remains to be seen. Among those respondents who felt comfortable passing judgment, reaction to the effec­tiveness of competencies was largely positive.”

Questions for discussion: 

Which findings are still valid? What has changed since this study was published? What has not changed? What do you envision for the future? Challenges and opportunities?

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Google’s approach to competency-based talent management

imagesOver the years, there has been much ink spilled over the recruiting practices at Google. The company is now very well known for having successfully implemented a talent management strategy that permeates all levels of the organization — from top executives to entry-level employees – and attracts the very best talent on the market.

Even in its early stages, the company understood the importance of engagement and motivation as performance drivers and competitive advantages. But building engagement and retaining top talent is no easy feat. Many organizations continue to believe that compensation and benefits are key to achieving these goals; yet, there is a new generation on the marketplace and while affording a certain lifestyle is certainly important to them, it is far from being the main criteria for selecting an employer, much less exhibiting superior performance in their job.

A Forbes article explains how, decades ago, Google decided to give every employee 10-15% free time to work on pet projects. Not financial incentives, but the opportunity to show their skills and work on projects of interest of them. This ties in nicely with McClelland’s need theory, which claims that humans possess three main needs, or motives – Achievement, Affiliation and Power – each of which dictate specific behaviors in the workplace.

Capitalizing on the achievement motive as a primary driver, employees used this free time to come up with new business ideas and projects, thereby supporting the organization’s growth, innovative competitiveness and overall success.

This talent-focused culture for which Google is now known is, of course, funded today by a budget that very few companies have the privilege to manipulate. Yet, Google’s success (with respect to talent management) isn’t entirely the result of large HR investments.

Let’s take a closer look.

A culture of competency

Google has long understood that it needs skilled, driven and innovative bar-raisers to outperform its competition and to that end, has managed to change the way its employees work in order to build a culture that attracts and retains the very best.

Forbes’ mini case study reveals that to support this new culture, Google goes through a process of identifying critical positions in the organization – those very job roles where performance can differentiate them from their competitors – and emphasizing the search for top performers in these roles. Not for every job function in the organization, but for positions that make a difference in Google’s environment.

But finding top performers, even if only for a handful of roles, is easier said than done. After all, there is really no way of knowing if a person is “right” for the job unless they get a fair chance at proving it. At the very best, an employee may have demonstrated certain skills in a given role, under a specific scope of constraints and responsibilities, but a true top performer is developed with the idea that motivation is key to raising the bar.

For Google, this meant allowing employees to work, one day a week, on projects of interest to them, a strategy that not only motivated employees to prove their skills and demonstrate the extent of their contributions to Google’s success, but also allowed the company to remain on the cutting edge of the competition as a result.

Of course, we are not implying that this “pet project” solution can work for any organization, particularly if your company is struggling with an inadequate workforce-to-workload ratio. What we are saying however is that you need to identify the key roles in your organization, along with the competencies (skills, behaviors, knowledge, interests, motives, etc.) required to perform in these jobs, and then provide your employees the latitude and flexibility they need to outperform.

For optimal results, think clarity and transparency

Defining competencies is key to executing your company’s strategy and reaching your long-range goals. But the essential first step consists in establishing clear directions, and ensuring that your strategic directions are communicated to your workforce. Transparency is the only way to gain the support of your employees, and build a coherent team that works toward achieving the same objectives.

Top performers who seek to put their skills to use for your company’s success can only show you what they can accomplish if you allow them to understand your goals and participate in the process of getting there. Getting your bar-raisers to the table is a critical part of creating a truly high-performing and motivating culture because without transparency, even your best employee will resolve to only doing what is required of them. That is exactly what Google managed to avoid by granting employees the chance to actively participate in idea generation and process creation activities.

The result of this effort is an integrated workforce and human resource systems that promote and reward talent and outperformance, not to mention enhanced accountability and innovation. And while the bottom-line benefits include increased productivity and higher profits, the true value of a competency-based approach to talent management is a lot more powerful.

Implementing a transparent, competency-based approach will renew your company, uncovering startling energy and synergies that can give you the responsive, competitive edge you need. But you first need to know which competencies are needed to take you to this next level. And that’s what competency modeling aims to accomplish.

The following white paper presents all the benefits of this system, along with the steps to move forward.

We also invite you to browse our blog for many more articles on applying a competency-based talent management system to various HR applications within your organization.

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Creating Competency Based Talent Management Processes

Air CanadaCompetency modeling has received its fair share of criticism over the years, particularly with respect to the level of complexity involved in the process of adapting these models to the many HR-related needs of large organizations. There’s no denying that developing customized competency models that can be applied across many HR applications and a growing multitude of job roles is an arduous challenge; one that requires time, resources and commitment.

Yet, as many organizations continue to focus on education and experience when assessing candidates for a job role, more and more studies show that acquired skills and past experience no longer support organizations’ need to adapt to a modern, rapidly changing, global environment. As groundbreaking technologies make their way into our professional lives at a pace faster than most companies can adapt to, can the simple fact of having learned a certain skill – often years, if not decades, prior – guarantee a company’s future success?

Online resources and public workshops, such as our 3-day Building Competency Models workshop, are effective at educating and training individuals and small teams on the benefits and process of developing job competency models and HR applications. But large organizations tend to deal with very complex and unique issues, and each situation is difficult to address with generic documentation or in a public workshop.

A truly customized program caters to the special needs of an organization, with one-on-one or small group consulting, highly technical competencies, and solutions to address unique organizational issues.

Furthermore, a customized consulting approach can better evaluate and improve on past or existing model building approaches. By focusing on the strategy and implementation of specific applications, companies gain a superior edge in achieving synergy across teams, and ensure consistency in applying model-building methodology.

Case in Point: In late 2012, this large Canadian-based company looked for a consultative competency-modeling workshop that could be built upon its own internal data, and tailored to different segments of its HR department, for a variety of applications. It was also seeking guidance on current best practices for organizations with similar challenges.

Their performance management program already included competencies, but the company was hoping to use Workitect’s dictionary and resources to further refine its models by job role (individual contributor, manager, director level) and branches (sales, marketing, law, finance, human resources, etc.), in addition to separating competencies between generic levels and specialty jobs.

Their competency model had been developed for performance management applications, with 5 core and 17 branch competencies, through a 360-review process for leaders. The response from this process had however been slightly negative and as such, the HR team had been given the mandate to remove ‘behaviors’ from performance management. This eventually resulted in competencies being officially removed from all performance management assessments the following year.

A few years later, the company decided to re-introduce ‘behaviors,’ but this time by incorporating Leadership Competencies and Corporate Values into its performance management program. Competencies were developed in house, and some branches even launched their own competency-based initiatives. A specific group hired consultants to develop branch competencies by level and use assessments, while another moved to implement a series of workshops focused on the development of leadership skills, based on the Learning Organization theory (The Fifth Discipline, Peter Senge).

However, these leadership competencies were not correlated to the many HR applications, and the company was then looking for experienced consultants to help integrate its HR processes to all aspects of workforce management: recruiting, performance management, professional development, succession planning, etc.

When the company came to us at Workitect, the team was already equipped with a project plan and timeline. The company requested that the workshop be customized to ensure that its HR professionals gained a thorough understanding of various competency modeling approaches, but also that, from a recruiting perspective, they learned how to extract critical competencies required for positions from the intake session with hiring manager, as well as how to select the right behavioral competency questions for interviews.

In order of priority, the company wanted to focus on:

  1. Succession planning
  2. Leadership development
  3. Assessment and selection decisions
  4. 360° feedback instruments
  5. Training design and development
  6. On boarding
  7. Performance management, review and appraisal

The company also requested consulting on using competency models to the benefit of optimizing client consultations and interventions, e.g., rightsizing, learning programs, job descriptions, leadership development, employee/candidate assessment, etc.  The company needed to provide its key players with a ‘toolkit’ that could be used for designing processes and solutions for its clients.

Process Using the basis of our 3-day competency-modeling workshop, we modified the content to focus more on the implementation and integration of various competency-modeling approaches to different applications within the organization.

Twelve participants attended the workshop; 1/3 of which were HR advisors, 1/3 covered key areas such as recruitment and talent acquisition, and 1/3 focused on development and succession planning. This group covered the entry and employee lifecycle within a company.

Using select generic competencies from the Workitect dictionary, the team focused on defining key competencies that were suited to their needs and reality, including:

  • Providing motivational support
  • Fostering teamwork/empowering others
  • Managing change
  • Interpersonal effectiveness (influence)
  • Analytical/forward/Strategic thinking
  • Fostering innovation
  • Customer/Results orientation
  • Decisiveness and self-confidence
  • Adaptability
  • Flexibility
  • Personal accountability
  • Personal credibility

Implementation The implementation process was handled internally, with Workitect’s consulting advice and plan. The company began the process with live sessions to senior management teams, followed by “people manager” training, both with very positive feedback from attendees.

Let Us Help You

Workitect is a leading provider of competency-based talent development systems, tools and programs. We use “job competency assessment” to identify the characteristics of superior performers in key jobs in an organization. These characteristics, or competencies, become “blueprints” for outstanding job performance. Competencies include personal characteristics, motives, knowledge, and behavioral skills. Job competency models are the foundation of an integrated talent management system that includes selection, performance management, succession planning, and leadership development.

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Executive Power: A Form of Bullying or Effective Leadership?

CEOWhen Marissa Mayer took over the leadership at Yahoo!, headlines of radical changes to strategy, direction and company policies flooded the papers. She came on board taking charge, and making sure everyone knew that it would be her way or the highway.

Many senior executives who assume control of a company feel that it is important to come in with a bang. It asserts leadership, and demonstrates that the status quo will no longer be tolerated. Things are about to change.

Typically, this behavior is exerted with good intentions; often, the new executive has a vision and a strategy, and intends to make it happen as fast as possible to prove his/her worth to the board in this new role. But is it really effective?

The leadership competency: Empowerment as a driver of change

There are several types of leaders and thus, many different characteristics to describe leadership. While subjective in nature, it is up to the organization to determine the type of leader it seeks in a given role, depending on the main task at hand.

Yet, despite the laundry list of competencies to be mastered to become a truly efficient leader for any sort of change to occur successfully within an organization, employees need to be given reasons to “want” to change.

Barking orders and demands at employees may help establish who’s in control, but it isn’t likely to encourage employees to desire change, and much less to support the company’s growth and success.

Rather, in today’s environment, CEOs and senior executives would generate much better results by joining the workforce as a team member, enlisting every person’s opinion and expertise in furthering the company, and empowering them with responsibilities to make it happen.

Can leadership be taught, or is it all a matter of personality type?

There is a great debate raging on about whether or not leadership – good leadership – can be taught. While some individuals are indeed natural born leaders, knowing exactly how to exert positive influence and assemble the troops, does this mean that leadership skills are purely genetic?

In October 2013, William F. Roth, Ph.D wrote an article for ISPI’s magazine, Performance Improvement, in which he presented some findings from Blakeslee’s The Right Brain:

“According to the theory of left-brain or right-brain dominance, each side of the brain controls a different type of thinking. Left-brain oriented people are considered to be better at such things as logic, language, critical thinking and numbers. Right-brain-oriented people are considered to be better at dealing with people, at reading and expressing emotions, at thinking intuitively, and at tasks calling for creativity.”

By those findings, it may appear that leadership is a matter of genetics.

In contrast, a New York Times article claims that leadership qualities “are developed through attitude, habit and discipline — factors that are within your control.” The author asserts that many good leaders have in fact become as such by observing other effective leaders, and learning what made them great. A simple process on its own, but this also implies that the individual must have the competence to properly assess not only a circumstance (or environment), but also the individuals involved in the event.

The bottom line is that effective leadership is a product of genetics and skills, knowledge, and personal characteristics (competencies).

But, if Yahoo! succeeded in dethroning Google as the leading search engine, can we simply look at Marissa Mayer’s competencies to determine the secret behind Yahoo!’s success? Or should we not also observe every other variable at play, including Google’s own leadership, and the competencies that contributed to its success?

Conditioning, education and rewards

The truth is, to become an effective leader, one must possess an ensemble of characteristics: competencies dealing with people, with business, and self-management as shown in this competency “dictionary”.

Workitect Competency Dictionary

Source: http://www.workitect.com/Products-and-Licenses/workitect-competency-dictionary-license.html

If research has shown that genetic patterns can be changed, given the right set of circumstances – incentive, understanding, conditioning and education – then organizations can indeed develop very effective leaders, with the right coaching, training curriculum, assessment processes, rewards program, and talent management systems.

When looking for a new leader, it is important to begin by defining the ideal leader for the role through a customized job competency model. This will help you accurately assess candidates based on both acquired competencies and the ability to learn new competencies, because remember that some self-management competencies such as Personal Credibility are difficult to be developed through a training program. It is therefore those individuals who already possess the characteristics that cannot be taught that are most likely to succeed.

For more information on leadership competencies or to get started on a leadership competency model, we invite you to use our Competency Dictionary and other competency development tools, or contact us for a private consultation.

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Succession planning strategy can hurt company competitiveness

C-suite succession planning strategy can hurt company competitivenessLast March, we wrote about the benefits and challenges of using competency models for succession planning and mentoring leaders. In today’s employment environment, where there is a clear shortage of skilled workers, the practice of succession planning has however evolved beyond the grooming of future senior executives to include the development of employee skills at every level of the organization.

By understanding the advantages of building competency models for entry or mid-level employees, companies can learn to adequately cope with an increasing number of lateral moves – e.g., an employee transferring to a different function, a different team or a different geography.

It is indeed critical to grasp the idea that in most lateral moves, the employee’s job responsibilities and environment change, thus affording the employee new opportunities. Concurrently, it affords the company the opportunity to build upon its workforce, provide growth paths, and engage employees.

Succession planning or retention strategy? It doesn’t matter; it’s a win-win.

The fact of the matter is, despite a declining unemployment rate, most of the recent improvement has stemmed from workers dropping out of, or never entering, the labor force due to weak job opportunities.

A recent article from the Economic Policy Institute states that if the 3.4 million “missing workers” (those jobless workers who would be in the labor force if job opportunities were stronger) were in the labor force looking for work, the unemployment rate would be 9.4%, instead of 7.4%. In other words, the labor market remains extremely weak by historical standards.

We continue to believe that this environment is caused by the fact that many “workers” lack the right skills. And if hiring isn’t a possibility for many companies, due to weak demand for non-essential goods and services, more education and training to help workers make lateral job transitions could be the best way to boost productivity.

To achieve this increased productivity at the same staffing levels (or what we like to call ‘the art of doing more with less’), companies need to find ways to not only retain their high-potential workers, but also to motivate them to develop competencies that serve the organization’s main objectives by granting them access to better-suited – and possibly higher-paying – roles.

Giving your workforce the opportunity to succeed

A typical corporate scenario of job advancement consists in personnel internally distributing an opening, or job posting, and giving its employees the chance to apply.

But more often than not, employees who may be interested in this position – and worse, those who would have the competencies to become top performers in this function – have never had, until then, the chance to review the skills required to access this role, much less given the opportunity to develop and demonstrate those skills.

What we observe as a result is the company admitting to not being able to find suitable talent in-house, and investing considerable sums to recruit externally a new candidate who may or may not succeed. What’s more, at the other end of the equation, in-house employees feel betrayed, and lose their motivation to remain an actively invested part of an organization that fails to recognize their potential or that does not provide sufficient opportunities for development and advancement.

Organizations would have a lot more to gain from developing and implementing competency models, and making those available for consultation to all employees. Managers could then use these models in their regular discussions with their staff, particularly at the time of performance evaluations, to create a career path “progression map”, develop skills, retain employees, and keep motivation high.

Not convinced your organization needs competency models?

There are several valid reasons to include competency modeling in your talent management strategies, but one key issue that indicates a need for competency-based succession planning systems is poor promotion or placement outcomes. In simpler words: when too many people hired, promoted or transferred to new responsibilities fail or quit.

For instance, your organization may have promoted the best salesperson to sales manager or the best technical professional to supervisor, only to find out that this employee lacks essential interpersonal understanding and influence skills.

From line worker to supervisor to manager to director to vice president… an employee may exhibit signs of top performance at some of these levels, and fail at others. The reason is that these positions require very different sets of competencies. Your best technical expert may be your worst manager but until you have the right tools to accurately assess 1) the skills each job role requires and 2) the skills each worker possesses and has the ability/interest to develop, you cannot continue promoting and hiring, and hoping for the best. Your HR ROI depends on it.

In her Forbes article “What Employers Need To Know About The Class of 2012,” Jacquelyn Smith cites a recent study that shows that the majority of graduating students are looking for career advancement over anything else. Creating career paths through competency models is not something most companies do well, and most employees don’t understand how to move either horizontally or vertically in an organization.

To boost productivity and minimize turnover, your company must make clear how and where your employees can move on their career path…. or you not only risk losing them to a competitor, you jeopardize the success ratio of your talent management strategy – whether that is at the recruiting, promoting or retention level.

Learn more about Workitect’s approach to competency-based succession planning.

For more information on building competency models for your organization, we invite you to attend of our workshops or contact us for a tailored strategy.

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Change management needs a competency framework

Change management and the need for competencyChange is inevitable. Whether it is planned or reactive, change typically occurs as a necessity to rapidly evolving frameworks across all industries, around the globe. An organization’s ability to implement change successfully is key to competitiveness and a highly valuable differentiator.

But managing and executing change in the workplace takes very specific skills and a thorough understanding of all the elements that have, will and may affect the company and its employees once the need for change has been acknowledged.

Recognizing the change management competency in your employees

The change management competency refers to the behaviors and skills required to anticipate the need for change, as well as to successfully implement and promote acceptance of change. Individuals who possess this competency constantly expect and welcome change, and adapt to it with little effort or disturbances in performance.

While change management is a critical competency at all levels of the company, it is particularly true for the C-suite because for change to be successful, it must be embedded in the culture and core values of the organization, and communicated effectively and convincingly to all employees.

Many individuals are reluctant to change, often due to fear of the unknown and the discomfort of the learning curve ahead. It is imperative for organizations to understand the normalcy of this behavior, and factor in the inevitable push back from a certain number of employees when attempting to implement change.

Accordingly, identifying and developing advocates for change is one of the most important steps of change management, as these are the employees who will help you not only implement change, but also promote it across your entire workforce. Organizations must seek those very individuals who, regardless of their function, exhibit the characteristics and behaviors of the change management competency, which include:

  • A thorough understanding of the company’s goals and limitations
  • Great awareness of industry developments
  • A desire to continuously improve processes and optimize results
  • A deep attachment (or engagement) to the company, culture and values
  • An inclination to providing support in transition periods
  • A record of above-average performance

The ability to recognize the need for change shouldn’t be confused with the constant pointing out of weak areas within the organization, the latter of which may prove to be more of the result of a dissatisfied employee. Rather, an employee who possesses the change management competency will come to the table with solutions and valid reasoning for wanting to implement change. The intent of the behavior is therefore extremely important to assess to identify true change advocates.

Leadership skills are only but a small token of the change management competency, for without support or a profound understanding of the need for change, a leader can easily steer your employees in the wrong direction, thus serving as a barrier to change.

The role of the organization in communicating and managing change

Of course, identifying your key change management personnel isn’t, by itself, going to guarantee a successful transition. Your organization must develop reinforcement programs to reward behaviors that support the change, and otherwise work to minimize resistance.

To effectively manage change, companies must:

  1. Define the change and every implication at all levels of the organization
  2. Develop an implementation plan and stress-test it with key personnel
  3. Establish a reinforcement strategy to facilitate the transition
  4. Communicate the change, the reasons for the change, the internal and external impacts, as well as the execution plan, to all employees
  5. Provide tools and resources to support employees through the transition

Remember that when implementing change, you should anticipate a drop in motivation and performance from some employees. To minimize these side effects on your bottom line, you need to ensure that you have properly identified your advocates for change by defining the parameters of the change management competency for your situation, and tasking them with the responsibility to promote and support the transition. Read more in Gaining Commitment to Organizational Change.

Click here to read the chapter in the Competency Development Guide on developing the Managing Change competency.

Click here for the definition, behaviors by role and level of proficiency for Managing Change from Workitect’s Competency Dictionary.

 

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Why your talent management is key to organizational success

42-25498443bAs we enter the third quarter of 2014, most organizations are preparing to kickstart the financial planning process for 2015. If your intentions are to gather a few key executives, discuss the competitive landscape, review market demand, trends and innovations, and develop strategies based on these findings, you should probably expect to encounter a few challenges.

Why? Simple: Your chances of success are driven by your employees’ ability to adequately execute the strategies you develop, because even the best course of action or the most accurate market analysis cannot yield the right results if you do not have the talent to execute it with precision.

Companies cannot afford to overlook talent, particularly in the current economic environment. It is now more than ever critical to consider your workforce’s ability to take on new challenges and adapt to changing directions before deciding on the very strategies that will take you where you want to go.

To do so, companies need to get HR involved in their annual planning exercise: first to provide a precise account of the skills, competencies and expertise readily available in-house, and then to identify any gap that need to be remedied in order to support the goals and strategic direction of the organization going forward.

By enlisting HR’s expertise in planning for the year ahead, companies grant themselves the opportunity to optimize the effectiveness of their strategies, as well as the organization’s competitiveness and overall performance.

Talent as a key differentiator

Talent has become the ultimate differentiator and a critical source of competitiveness for organizations around the globe. Nevertheless, very few executives grasp the intricate dynamics of talent development and business strategy. In fact, a survey conducted for The Talent Imperative states that “fewer than one in ten executives from midsized private companies say their talent strategies are intimately aligned with overall strategic planning.”

According to the study and a supporting Forbes article, if talent is often overlooked as a source of competitive advantage it is simply because it isn’t made a priority at the C-suite level. Rather, executives seek out new market opportunities, without first evaluating if their current workforce can support these ventures. Such a course of action typically translates into sub-par results because, as previously mentioned, it is your workforce’s ability to execute your strategies that is key to success… and a healthy bottom line.

Executives must stop assuming that their employees will be able to adapt and perform in exact alignment to the strategies they develop, but it is still HR’s job to plead that case, to demonstrate the importance of accurate workforce assessment and effective development programs in achieving your organization’s objectives over time.

Before adopting a new course of action, you must therefore:

  1. Conduct an accurate assessment of your employees’ competencies – this can only be achieved with an objective and effective performance evaluation process.
  2. Identify what (if anything) is lacking and how to fill that gap to achieve your goals – this requires transparent top-down and bottom-up communications to understand the strategic direction of the organization, as well as the potential/motivators of your workforce.
  3. Implement a talent development strategy based on your findings – assuming you have clear channels of communication and objective performance assessors.

5 steps to injecting talent into your corporate objectives

If you agree with the above, then you already know that the characteristics of your current talent pool, along with your talent development and career mobility programs, should be key influencers of your top-level objectives. Developing strategies is one thing; executing them is another.

To ensure that your workforce possesses the skills, competencies and drive needed to propel the organization forward, HR must work with other executives to:

  1. Identify the roles and positions where performance can differentiate your organization from its competitors
  2. Establish metrics to define what success looks like in these roles, as well as how performance should be measured
  3. Fill those positions (recruiting or developing) with the right talent with the help of competency models that accurately identify the skills, knowledge, and personal characteristics of the top performers
  4. Develop targeted training and performance optimization programs that are aligned to your organizational goals and talent pool
  5. Enhance engagement and motivation by improving communication with respect to these goals and by building career paths for your employees

We recommend competency modeling as a basis for achieving this because a competency framework supports the idea that results are tied to performance. Not only does it ensure that the right people with the right skills are placed in the right roles, but a competency-based talent management process also facilitates career-pathing, promotes engagement, and fosters skills development; all of which serve to improve bottom-line performance and minimize turnover costs.

We invite you to read this white paper to learn how an integrated, competency-based HR system can serve various applications for selection, succession planning, career pathing, performance management, and training, as well as serve as a key tool to drive organizational change.

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Five Types of Competency Characteristics to Predict Future Success

There are many ways to define competencies but in sum, they can be referred to as the very characteristics causally related to criterion-referenced effective and/or superior performance in a job or situation.

Let’s note that a characteristic is not a competency, unless it predicts something meaningful in the real world, such as behavior or performance, hence the ‘causally related’ segment of our definition.

Psychologist William James said the first rule for scientists should be that “A difference which makes no difference is no difference.” A characteristic that makes no difference in performance is not a competency, and should therefore not be used to evaluate people. A competency must be a fairly deep and enduring part of a person’s personality, sufficiently so that it can be used to predict behavior in a wide variety of situations and job tasks.

The causal relationship of competencies in job performance management can be illustrated as such:5 Types of Competency Characteristics to Predict Future Success
But a competency must also be criterion-referenced, which means that it actually predicts who does something well or poorly, as measured by a specific criterion or standard.

Depending on the performance criterion they serve to predict, competencies can be categorized as ‘threshold’, which refers to the basic essential skills that a person must possess to produce at least the minimal output required by a job role, or ‘differentiating’, which distinguish superior from average performers.

Here are 5 types of competency characteristics to understand, identify and measure in your workforce, in order to better assess your employees’ current and potential output.

1. Motive

Last month, we wrote about the importance for employers and managers to be able to determine motive in their staff, as they more accurately predict job performance thank acquired skills and education. The things a person consistently thinks about or desires are drivers of behavior and, ultimately, performance. They determine and explain a person’s actions in the workplace or in a given situation. For instance, achievement-motivated people consistently set challenging goals for themselves, take personal responsibility for accomplishing them, and use feedback to improve on a continuous basis. And while performance management supports the alignment of an individual’s professional development to overall corporate results, it must also factor in the motives behind this person’s actions to understand past behavior and provide the right incentives to superior future performance.

2. Traits

Traits are those consistent physical and behavioral responses to situations or information. For example, reaction time and good eyesight are physical trait competencies of combat pilots. In a 2013 research paper, Routledge reminds us that the extent to which traits actually translate into actual behavior depends, at least in part, on how structured or regulated the situation is. But to predict performance in a workplace environment, traits should be viewed as intrinsic behaviors that people will exhibit without close supervision. Bear in mind however that traits are closely correlated to motives. An individual may choose to activate the necessary traits for a job role at any specific moment, depending on their underlying motive. Since every position comes with behavioral expectations from management, an employee with the motive or aspiration to access higher roles within the organization could choose to develop or exhibit the very traits required to perform in this role, even if they are not aligned with their personal preferences.

3. Self-Concept

Self-concept refers to our personal attitudes, values and self-image. It is the belief of how effective we can be in a particular situation. Psychology tells us that there are four categories of self-concept: the perceived self, the ideal self, one’s self esteem, and a set of social identities. Each of these elements plays a crucial role in understanding how self-concept relates to energizing, directing, and sustaining organizational behavior. After all, a person’s values are respondent or reactive motives that predict what he or she will do in a situation. For example, someone who values being in management, but does not intrinsically like or spontaneously think about influencing others at the motive level, may attain a managerial position, but then fail. If self-concept is partly developed from feedback from others (the very feedback that is then used to shape a person’s actions and behaviors), effective managers know how to accurately identify their employees’ concepts of self in order to:

  • Align these perceptions to the needs of the organization by assigning employees to the appropriate job tasks
  • Provide the right feedback to help employees achieve their ‘ideal selves’ – the driver or motive to performance

This form of motivation, which is achieved through consistent feedback, rewards and incentives, serve to increase the probability of the expected behavior in the future.

4. Knowledge

Knowledge consists in the information a person has in specific content areas. While the definition may appear to be quite simple and straight forward, knowledge is a complex competency. Scores on knowledge tests often fail to predict work performance because they fail to measure knowledge and skills in the ways that are actually used on the job. Many knowledge tests measure remote memory, when what is really important is the ability to find information. 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. Knowledge at best predicts what someone can do, not what he or she will do. So once again, knowledge alone cannot accurately predict an employee’s output or performance but rather, it must be interpreted as part of a whole, along with motive, traits, self-concept and skills, to name a few. It refers to the basic requirements to attain a given job role, but cannot be the sole criterion to recruiting.

5. Skill

Skill is the ability to perform a certain physical or mental task. For example, a dentist’s physical skill to fill a tooth without damaging the nerve, or a computer programmer’s ability to organize 50,000 lines of code in logical sequential order. 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). We’ve already discussed the difference between skills and competencies; skills refer to a person’s ability to learn in order to accomplish a task. They are acquired through education and hard work, and can be regarded as somewhat tangible. Competencies extend a bit further to include the behaviors, motives and knowledge required to utilize those skills to produce the desired results. They can therefore be defined as a group of measurable traits that allow an organization to assess an individual’s probability of superior performance, with respect to the skills he/she already possesses. Like knowledge, skills are often perceived as the ultimate requirements to attain a given job role, but they do not guarantee future results.

Hitting the bull’s eye: A customized competency model to performance

multiple-level-art_wht_bkgBuilding a competency model requires more than listing the traits or motives desired within a certain job role. An “off-the-shelf” model is likely to fail to recognize the unique aspects of your company’s unique strategy, culture and values. These generic tools are critical to the competency modeling process, as a starting point in your development process, but competency modeling should also look inward, at where your specific organization is, what it intends to accomplish, your competitive landscape, and the obstacles that may stand in your way over time.

We invite you to join us at any of our upcoming workshops to learn to develop a tailored competency dictionary, build a competency model in six steps, without external consultants, and adequately integrate off-the-shelf lists, such as PDI, Lominger, DDI, etc.

You will also learn how to successfully implement a sustainable competency system, which can be applied to almost every one of your HR processes, including succession planning, performance management, professional development, assessment, selection, retention, and many more.

Learn more here, or click here to register!

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Poor Talent Management Costing $Billions

Poor “Talent Adaptability” Costing $BillionsMost of us already know that high turnover rates can be extremely costly for companies – to the tune of some $10 billion a year in the U.S. alone. But a new study has revealed that poor “talent adaptability” – the ability for people to retrain for new skills or switch industries – is costing the global economy billions of dollars in lost productivity.

PwC had indeed conducted an extensive study, combining data from LinkedIn’s 277 million members with employer information from its database of people and performance metrics, which covers more than 2,600 employers across the globe, in order to determine how better alignment between talent and opportunity can drive economic growth.

Money talks: The facts aren’t always what they seem

According to Gallup, of the more than 100 million full-time workers in the U.S., only 30% are engaged and inspired at work, and roughly 20% are actively disengaged. It is in fact estimated that approximately 2 million Americans quit their jobs every month.

According to the Center for American Progress, the average cost to find a new employee for a non-specialized position that pays $50,000 per year can be as high as 20% of salary ($10,000. Not considering lost knowledge and productivity, it is clear that companies need to work intensely on retaining their staff, even if this means giving way to a 5% raise.

But is salary all that matters?

The most important question to ask yourself as an employer isn’t whether or not to acquiesce to a raise request from an average-performing employee, but rather to determine why your employees are quitting.

In its study, PwC found that out of all the reasons employees choose to leave their jobs, compensation only comes in third place, preceded by lack of career advancement opportunities and poor management/leadership. Other factors included boredom with responsibilities, work hours and lack of recognition.

Putting compensation aside, as it can be difficult for some companies to radically make a difference in that area, every one of the other reasons stated by exiting employees could have been avoided with the proper talent management strategy.

Remember: Talent doesn’t always come naturally. By investing in your workforce to develop their competencies, and rewarding them adequately for their achievements, you ensure your own success as a company.

The Millennial conundrum: Are your retention strategies tailored to your workforce demographics?

Data from the U.S. Bureau of Labor Statistics shows that the average tenure of employees – males and females, 25 to 64, combined – was approximately 5 years in 2012. This figure has been relatively stable over the past two decades, with slight variations along the way.

Yet, when we look at Millennials specifically, we see that this timeline drops to 1.5 years, despite the fact that most claim they would rather stay with their employers for 10+ years. Considering the wide gap between intent and reality, it is relatively safe to assume that if Millennials have earned a reputation of career instability, the blame may need to be shifted from employees to employers.

Last month, we discussed how to identify your employees’ real motivation to performance. The article mentioned how employers cannot assume that every employee aspires to an executive position and more and more, younger generations are instead looking for that perfect balance between professional accomplishment and personal well-being. But when it comes to retention strategies, Millennials do want to be boss; they want to have the power to choose rewards that are meaningful to them.

Where there’s a problem, there’s a solution

The real problem with turnover is that the majority of companies don’t really take the time to invest in their retention strategies until they suspect that key employees may be considering leaving. Too often however, it is by then too late to avoid the inevitable. And even if it did save you an employee, you have done nothing to rectify the situation for the future.

The solution to limit turnover entails a multi-step process that begins before recruiting takes place:

1.  Take a look around

Regardless of your short-term hiring intentions, it doesn’t mean that you cannot grow your workforce organically and plan for future hiring needs. As such, begin with a thorough assessment of your industry – trends, gaps, needs, etc. – and benchmark your company against your main competitors: What are you missing? What do you need to outperform? What advantages do they have over you? You over them? Once you have determined all of those elements, you will have a much clearer picture of the workforce you need to succeed looking forward.

2.  Design your path to success

Based on your findings, develop competency models for all the job roles across your company. In the process, sit down with your employees to discuss these models, and to take the pulse on areas that may need improvement. Not only are your employees your best source of data to accurately determine the competencies and behaviors required to succeed in their own jobs, but they will also feel appreciated and valued – a clear detractor to turnover.

3.  Recruiting, training and coaching

Even if you do not intend to hire more staff right away, your competency models are not wasted. Rather, use them against your latest performance evaluations to identify skill gaps and develop professional development programs for your employees. Remember that two of the main reasons workers leave their employers are boredom and lack of in-house opportunities. Your employees want to succeed and excel at what they do so give them the tools to better themselves and feel accomplished in their job.

*Note that while it may sound counterintuitive, research shows  the best way to keep them from leaving is to prepare them to do just that.

4.  Be the motivation

Good managers understand that their responsibilities don’t just reside in overseeing output and processes, but include all facets of leadership. If a great majority of workers who quit a job blame management, it is mainly because of a culture issue. To counter this, implement an executive program by which your managers are encouraged to help their subordinates achieve superior roles, and your recruiters are trained to identify workers who aspire to build a career, rather than just ‘fill a role’. The key is to motivate your employees to stay and plan their careers with your company; it is therefore crucial that you provide the tools and support to how they can achieve their goals with you.

5.  Get personal

As previously mentioned, newer generations of workers have voiced their desire for incentives and rewards that matter to them, and more and more ‘older’ workers have joined in, realizing how smaller things like an extra day off or flexible work arrangements can mean more than a 1% raise. But there’s an art to rewarding employees to improve performance, and the key is to make it personal. Why not offer a wide-ranging package of incentives, and let your employees chose what is most meaningful to them? You’d be surprised how much motivation can come from giving them the power to choose.

Of course, these steps have been simplified for the sake of space, but we have included several links to provide additional information on employee retention and talent management strategies. We also invite you to comment below or contact us with any question you may have.

Ready to take these first steps? Register to attend one of our upcoming workshops! Choose the location nearest you – Washington, Chicago or Fort Lauderdale – or let us come to you!

For a DIY solution, you’ll find a wide array of talent management tools and manuals on our website, as well as external links to studies and white papers that can further help you in the process.

Happy browsing, and hope to see you at one of our seminars!

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Eliminate HR? No problem? Not so fast.

Eliminate HR? No problem? Not so fast.	“Sometimes, the only thing worse than having an HR department is not having one.”

So begins a recent article published in the Careers section of the Wall Street Journal.

“Companies Say No to Having an HR Department”

“Employers Come Up With New Ways to Manage Hiring, Firing and Benefits”

There have been many articles written about the effectiveness of HR departments across the nation, the main criticism being that they have become inefficient in nature.

Yet, if HR has lost some of its appeal in eyes of line managers, the answer shouldn’t be to rid companies of its intrinsic value, but rather to identify the causes of this downfall. After all, when sales are down quarter over quarter, does a board choose to eliminate the sales department?

Why HR’s success is everyone’s business

One of the biggest challenges with some organizations is that HR is seen as a freestanding entity, controlling every facet of workforce management almost in an outsourced manner. Typically, when a manager obtains a green light to hire a new employee, he/she turns to HR with the expectation that it’ll know what to do to find that ideal candidate to fulfill the newly opened position.

But HR is no crystal ball. To do its job as intended, it requires input from those who know the company’s reality most: managers and executives. How can one reasonably expect anyone, regardless of their expertise in their given field, to have the ability to fill a position with no concrete knowledge of what success entails in this role?

The truth is, painting Human Resources as a silo at the service of the entire corporation is bound to lead to inefficiencies and excessive wastes of money… and talent. It is common knowledge that silos, in any part of the organization, should be eliminated, and HR should be invited to sit at the table regularly, if only to get a better pulse of where the company is heading and what it is lacking to get there.

If a company’s success depends on the quality and motivation of its employees, HR’s participation in your everyday processes means it can provide much needed expertise in terms of workforce planning, performance incentives and talent management to help ensure that every one of your projects accomplishes their intended objectives.

Without a HR Department….

To do without a Human Resources department, companies would need to first make sure they can accurately evaluate the cost of managers and other employees taking control of HR-related functions.

Granted, such a structure may promote accountability amongst your staff in charge and should, in theory, help optimize some of your talent management processes, but there is more to eliminating HR than what meets the eye.

Just think about potential liabilities and legalities, financial and managerial risks, missed opportunities with strategic deployments, conflict resolutions, etc. These are issues that no company can afford to neglect. If your organization has determined that it would best be served by cutting out ‘the middle man’ and attributing HR functions, such as recruiting, outsourcing, and succession planning, to its executives, there’s an important opportunity cost that must also be taken into consideration.

It may seem more efficient to let your existing managers handle the basic tasks that are often relayed to HR, but there’s a much bigger reason for the existence of a department dedicated to the expert management of your workforce.

A neglected source of profitability

Because it rarely deals directly with business development, HR is often perceived as an administrative cost center. Yet, when we consider that the cost of recruiting for a new position in this day and age has been reported to be approximately $3,500, wouldn’t it be important for your business’ profitability to ensure that you have the right experts working to minimize these costs?

And this is only one aspect of HR’s functions within an organization.

The HR Difference website describes HR’s true purpose as helping “make effective continues: “HR’s orientation is one of responsiveness to both immediate and long-term business needs, providing both operational excellence and strategic insight.”

In more specific terms, Human Resources deals with:

  • Recruiting and employment
  • Training and professional development
  • Remuneration and benefits
  • Internal policies and legalities
  • Culture and philosophy
  • Equality and diversity
  • Disciplinary and rewards programs
  • Corporate alignment and vision

This list is not exhaustive, but taking a good look at it may help you understand why relying on your managers to handle these tasks can be of great cost to your productivity. Do you really want your best executives to allocate so much of their time to these duties, for which they may not possess the right expertise and training?

In an upcoming article, we will discuss how you can streamline these processes to ensure profitability and value in your HR department.

In the meantime, we invite you to sign up to our newsletter to receive other materials designed to help you better understand, analyze and optimize your talent management processes.

BNA Guide to HR Benchmarks

http://www.bna.com/HR-Benchmarks-27417/

http://www.bna.com/uploadedFiles/Content/Products/Human_Resources/Reports/Guide%20to%20HR%20Benchmarks%202013_Web%20preview.pdf

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