How Competencies Drive Performance Improvement

It is probably safe to assume that, unless we are mentally or psychologically challenged, each of us wants to improve our performance and the competencies that will help us perform. So why is it so difficult for organizations to achieve high levels of individual and organizational performance? There are many factors that influence performance. The development of competencies is, in a broader sense, also about improving performance. As employees and managers working to build additional competencies, it may be helpful to understand some of the key concepts about performance improvement and management.

“Systems thinking” has been found in recent years to be a good way to analyze and solve human and organizational performance problems. Books such as ‘The Fifth Discipline” and “Improving Performance” have helped foster this belief. We can think about each of us being a human performance system. This graphic depicts the various components of this “system in which we receive inputs, and then utilize our competencies to generate outputs. 

In a business setting, the inputs we receive come from our customers and environment, internal or external. We also need clear direction on what is required, access to resources and minimal interference. As the performer, we need the necessary competencies (which include attitude and motivation). There needs to be appropriate consequences for our output. We should receive positive consequences or rewards, e.g. a pat on the back for “doing it right” and negative consequences for not doing it right. The standards or criteria for evaluating performance must be consistent and sound. Is the same “benchmark” or measurement applied to each person? And, finally, do we receive timely, adequate and appropriate feedback on how we did?

This same system applies to the performance of a group of individuals who make up a team or an entire organization. Only this time, individuals need to work together to produce output, and issues such as group processes, strategy, information flow and work processes must be managed in order for the team to be productive.

The disciplines of “organizational development” and “performance technology” utilize models like these to help analyze human and organizational performance problems, and improve performance. “Performance management” utilizes the same principles, but focuses on specific organizational and human resource processes such as goal setting, performance appraisal and pay for performance. Career planning, succession planning and progress reviews are often included. Relating back to the performance models, you can see the importance of providing clear direction, selecting and developing competent employees, providing appropriate consequences and frequent feedback.

The ultimate goal of organization development, performance technology and performance management is the same – to improve performance. Developing your own competencies, or those of others, is one of the most important requirements of performance improvement. (In fact, it is depicted as the center of both performance models.) Although the focus of our Competency Development Guide book is on developing competencies, understanding the entire human performance system may give you added appreciation for the importance of receiving clear direction on what is expected of you, obtaining feedback of how you are doing, etc.

In summary, developing additional competencies will not guarantee an improvement in performance. Other factors contribute to performance. If you have management responsibilities, pay attention to all of the factors so you’re able to create an environment where people are motivated to utilize their competencies. The ideas and tools contained in the Competency Development Guide can help you develop the competencies you need to manage the performance of yourself and others.

What examples do you have of job competency models or competency-based performance management systems producing substantial improvements in organizational results?

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Develop Organizational Effectiveness and Development

ORGANIZATION DEVELOPMENT AND CHANGE LEADERSHIP is one of eighteen competencies in Workitect’s competency model for human resources professionals working in a global environment. The model was originally developed by Workitect for a global organization. It is one of four competencies in the Strategic BUSINESS PARTNERING Competencies cluster.  Resources for developing the competency are listed in the 166-page Resource Guide for Developing Global HR Competencies.

HR_Cvr_CompetenciesChart

The competency addresses the ongoing challenge of managing change. Change is a painful process for most people and it is generally the ‘people’ component that is most challenging in all change initiatives. It is therefore critical that Human Resources be available to help, from the initial analysis and design phases through all stages of the change process. As impartial facilitators, the Human Resource team can help to ensure a smooth and positive process, that any changes are consistent with company’s culture and that the interests of the organization and people are taken into consideration.

In SHRM’s HR Competency Model, this competency would be similar to Behavioral Competency #5 (Consultation) and Domain 2, Functional Area #6 (Organizational Effectiveness & Development).

Definition of this competency: Effectively communicates core values and behavioural standards; monitors and facilitates internal communications; disseminates necessary information to appropriate parties; develops the organization’s image within local community.

An employee demonstrating this competency:

Process analysis and redesign

  • Analyzes and redesigns organizational and business processes to ensure maximum efficiency, increased effectiveness and lasting impact.

Change Management

  • Manages change to create a positive environment emphasizing the benefits of the changes.
  • Oversees smooth and progressive transactions to change initiatives.

Culture redesign

  • Manages and promotes organizational culture redesign efforts to ensure that the changes meet organizational objectives with respect to the organization’s brand, employee performance and customer expectations.

Evaluating

  • Evaluates the effectiveness of current HR programs and practices and integrates competencies into all HR programs.
  • Applies cost/benefit principles in deciding on best approaches to work.
  • Performs appropriate information gathering intervention (in-depth interviews, surveys, focus groups, etc.) to determine organizational issues and needs.

Innovating

  • Produces strategic and creative solutions.
  • Thinks “outside the box” when addressing issues.

PRACTICING THIS COMPETENCY

As a Team Member

  • Look for opportunities to get involved in change initiatives, as early as possible in the planning and analysis phase, especially with regards to people issues.
  • Offer to help evaluate the various options, considering the ramifications on people and the Values and Culture Characteristics.Explore ways to integrate core, leadership and function specific competencies (where available) into all Human Resource’s programs.
  • Be prepared to suggest creative solutions to problems, both within Human Resources and to your internal customers where appropriate, and especially where it concerns people.
  • Offer to be part of data gathering groups, where objective evaluations are required.

As a Team Leader

  • Demonstrate positive change management/facilitation skills with your own team.
  • Use a specific change opportunity in Human Resources to demonstrate all of the elements and skills required in a change initiative.
  • Assign members of your team to assist internal customers with change initiatives, overseeing and coaching their involvement where necessary.
  • Be prepared to evaluate every Human Resource’s program to make sure that it is relevant and effective, and make changes where necessary.

OBTAINING FEEDBACK

  • Each time you try out a new change management process (e.g., for planning, team decision making, team problem solving) hold a session with the team to discuss what went well and what could be done differently and better in the future.
  • If you are a manager, ask the people who work for you what you can do to help foster innovation, both within the department and through cooperation with other groups.

LEARNING FROM EXPERTS

  • Volunteer to serve on a cross-functional team charged with implementing change. Observe what the team leader does and keep of list of ideas to apply in your own department.
  • Interview someone who has successfully led an organization/department through change. Consider people outside of your own organization, as well as people within it. Ask the person to walk you through the process he/she led. Find out how the person approached this situation and what he/she specifically did. Ask about problems that were encountered and how they were addressed.
  • Interview someone who successfully developed or sponsored the development of a significant innovation. Consider people both within and outside of your organization. Ask for a detailed account of what the person did and how. Make a list of ideas that you can implement yourself.

COACHING SUGGESTIONS FOR MANAGERS

If you are coaching someone who is trying to develop this competency, you can:

  • Assign the person to work on a team headed by a consultant or internal leader who is skilled in change management.
  • Help the person develop a plan for working with his/her department to implement change. Think through the resources and support this person will need. Try to anticipate and develop contingency plans for problems that may be encountered.
  • Make yourself available on a regular basis to discuss how the change management efforts are progressing.
  • Provide opportunities for training in areas such as problem solving and change management.
  • Provide opportunities for training in technical skills needed for innovation in a particular area.
  • Assign the person to teams involved in developing innovations or in implementing change.
  • Recognize and reward innovative behavior.

 SAMPLE DEVELOPMENT GOALS

  • By March 15, I will hold a meeting with the employees in my department, to review the overall direction of the division and identify what our department needs to do differently to implement this dition and to develop a plan for change.
  • By April 10, I will identify a new group problem-solving method and try it out in my department.
  • By May 1, I will read The Dance of Change, by Peter Senge and develop a list of ideas to try out in my department.
  • By May 3, I will complete the AMA self study course in creative problem solving and prepare a list of ideas that I can apply in my own work.
  • During the spring, I will volunteer to serve on an improvement team and contribute actively.
  • By July 14, I will form a team to identify and implement improvements in our employee orientation process.

External resources (books, online and self-study courses) for developing this competencies.

Roadmaps for developing seventeen additional competencies are contained in Workitect’s Resource Guide for Developing Global HR Competencies, a companion to Workitect’s Competency Development Guide.                  

Read the Table of Contents for the HR Competencies Development Guide. Purchase the Guide.

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When companies select CEOs in their late 40s.

CEOGenerational changes are occurring  in the executive suite as more companies hire chiefs in their late 40s.                        

Generation X is moving into the corner office, bringing a different style to the way companies are run. So begins a recent article in the Wall Street Journal. Here are a few of the highlights from that article and possible implications for HR professionals.

In general, younger Chief Executive Officers (aka CEOs) tend to:

  • Be more dedicated to keeping products and services relevant for the rising millennials projected to comprise 75% of the workforce by 2025.
  • Take more risks
  • React faster to sudden business shifts. Are more nimble and agile.
  • Favor a flatter organizational structure so they can make decisions faster
  • Be tech savvy and focused on technology

AND…they are more focused on talent management and development. According to    the article, Gen X CEOs:

  • Spend more time wooing and keeping younger staffers.
  • Delve deeper into hiring and retention.
  • Place more emphasis on human capital for long-term competitive advantage.
  • Look for better ways to balance work-life needs for all employees.
  • Emphasize setting of the culture of the organization.

Here are a few relevant quotes by contributors to the article:

  • “Talent acquisition and retention is a huge component of what we [new CEOs] need to think about. That is where you get to set the culture.”
  • “Businesses gain a greater recruiting advantage from their organizational culture than higher salaries or fast promotions.”
  • “Managing talent is a critical focus for the new CEOs because the contemporary economy heavily depends on service and knowledge workers, and corporate loyalty has faded as people change jobs more often.”
  • “Millennials, people in their mid-teens to mid-30s, have a different expectation of what they’re looking for in employers,” favor greater flexibility about where and when they work, and “their hearts want to be engaged.”

Featured in the article are new CEOs younger than 50 in McDonald’s, Harley Davidson, Microsoft, and Aqua America.

Implications for Human Resources 

Competencies and competency-based applications can be used to set and communicate an organization’s culture and values. Many organizations recognize the importance of culture in achieving competitive advantage. Executives can identify a competency framework that best reflects the characteristics of current and future employees, characteristics that are a good “fit” for the organization’s culture.

Human resources can build a competency architecture, models, and applications that are customized to the organization’s unique culture and strategy and that provide a framework for selecting, developing, and retaining talent. This can be accomplished with a methodology that doesn’t require complex software or off-the-shelf models. If a generic competency dictionary is used to facilitate the process, it should be seen by employees as practical, comprehensive, easy to work with (no more than 40 competencies), and written and organized in a way that is easily understood by all.

Workitect’s competency system is a blueprint for designing competency-based talent management applications that address the interests of the Gen X CEOs and employees described in this article.

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“How to Do HR Right” – FastCompany

Several years ago, the business magazine FastCompany published an article written by Keith Hammonds, titled “Why We Hate HR”.  It was posted in a previous Workitect blog, “Why Do Some Executives Hate HR?”  Most of the article describes where HR falls short in being an effective contributor to business results. The article also includes a list of five suggestions for improving the effectiveness of the human resource function.

Say the Right Thing. At the grand level, what HR tells employees has to match what the company actually believes; empty rhetoric only breeds discontent. And when it comes to the details of pay and benefits, explain clearly what’s being done and why. For example, asks consultant Dennis Ackley, “When you have a big deductible, do employees understand you’re focusing on big costs? Or do they just think HR is being annoying?”

Measure the Right Thing. Human resources isn’t taken seriously by top management because it can’t demonstrate its impact on the business. Statistics on hiring, turnover, and training measure activity but not value. So devise measurements that consider impact: When you trained people, did they learn anything that made them better workers? And connect that data to business-performance indicators-such as customer loyalty, quality, employee-replacement costs, and, ultimately, profitability.

Get rid of the “Social Workers.” After Libby Sartain arrived as chief people officer at Yahoo, she moved several HR staffers out–some because they didn’t have the right functional skills, but mostly because “they were stuck in the old-school way of doing things.” Human resources shouldn’t be about cutting costs, but it is all about business. The people who work there need to be both technically competent and sophisticated about the company’s strategy, competitors, and customers.

Serve the Business. Human-resources staffers walk a fine line: Employees see them as stooges for management, and management views them as annoying do-gooders representing employees. But “the best employee advocates are the ones who are concerned with advancing organizational and individual performance,” says Anthony Rucci of Cardinal Health. Represent management with integrity and honesty-and back employees in the name of improving the company’s capability.

 Make Value, Not Activity. University of Michigan professor Dave Ulrich, coauthor of The HR Value Proposition (Harvard Business School Press, 2005), says HR folks must create value for four groups: They need to foster competence and commitment among employees, develop the capabilities that allow managers to execute on strategy, help build relationships with customers, and create confidence among investors in the future value of the firm.

Related Reading: Teaching Guide for “Why We Hate HR” published by SHRM, “Why We (Shouldn’t) Hate HR”, HBR by Bill Taylor, June, 2010.

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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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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.

 

BUILDING COMPETENCY MODELS CERTIFICATION ON JULY 18-20, 2017 IN ARLINGTON, VIRGINIA

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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Optimize your performance management system

performance2Lately, there’s been a lot of press about the lack of value performance reviews bring to a talent management process. Some claim they are simply too subjective and that as a result, only serve a compensation purpose; while others say that because the process only takes place sporadically throughout the year, with little follow-up, it doesn’t help employees achieve better results.

In a recent post, we also acknowledged that performance reviews can indeed be time consuming for both managers and employees. Yet, our experience shows that the main reason why performance management systems rarely deliver on their intended promise is that management often fails to either 1) understand the true value and purpose of the reviews, or 2) utilize the process in an objective and result-driven manner… Or both.

What’s more, the very results that many companies seek to obtain from performance reviews are often quantitative (e.g., number of sales, revenue generated, etc.), whereas the real value of performance management resides in providing both a qualitative and quantitative assessment of an employee’s skills and competencies within an organizational context. In other words, companies primarily use performance reviews to determine compensation, rather than using them as strategies to generate additional value and optimize their output.

Let’s take a closer look.

The performance evaluation conundrum: Results or competencies?

One of the most common flaws of performance review processes is that they focus on evaluating workers’ quantitative output, rather than their competencies. There’s no denying that your workforce needs to generate value for your company, but are you evaluating your employees’ actual contribution to your success or focusing solely on financial results over which they may have very little to no control?

This line of questioning is critical as we move into a new era of workforce planning, one that is now past most of the hurts and pains caused by the financial crisis, which had many employees suffer the burden of additional responsibilities being assigned to them via employers’ cost-cutting strategies. And as we enter a brand new age of having to do more with less, it is even more critical to focus on the real value (i.e., current contribution and potential for future contribution) that your employees bring to your organization, rather than isolated financial targets.

A competency-based performance management system combines planning, management and appraisal of both performance and competencies by assessing not only results and accomplishments, but also the methods used to get there. This shift from evaluating quantitative results to rating desired behaviors and skills makes the performance management process more valuable in the sense that it becomes a tool to empower employees in their development of new skills, as well as a way to distinguish between ‘performers’ – one who executes as anticipated – and ‘bar raisers’ – one who contributes to the productivity, growth and competitiveness of your operations.

Many organizations shy away from a competency-based performance management system simply because it is easier to hold employees accountable for hitting or missing quantitative targets, rather than attempting to measure their qualitative input, especially when the bottom line is running thin.

But there is a big financial value in assessing overall contributions, as opposed to only focusing on specific financial results. An employee may be highly productive and provide great value for a company – be it in the form of peer motivation/inspiration or taking on additional responsibilities at no additional cost to the organization – but not necessarily hit his/her intended financial targets for the period under review. This ‘bar-raising’ behavior should be remarked and rewarded, as it may be contributing to maintaining a lower turnover ratio and/or overall human capital expenditures.

When you integrate competency models into your performance review process, it becomes easier to evaluate the metrics that really make a difference. Plus, it motivates employees by providing them with both feedback that takes notice of their input at many levels and opportunities to develop and advance; two distinct drivers of superior performance.

All things being equal: Past performance as a deterrer of future output

We cannot and won’t argue that past performance isn’t an important metric, or that it shouldn’t be included in a performance review process. But penalizing an employee for failure to meet a quantitative target may also come at a cost – as mentioned above, this employee may be adding tremendous value in other ways and not recognizing it can lead to a lack of motivation or desire to ‘go the extra mile’.

Where performance reviews solely or mainly based on past results fail is that they typically go on the assumption that management can predict an employee’s future performance based on what has been accomplished in the past. This ‘ceteris paribus’ assumption rarely bears any credibility in matters of human capital because while it is possible to draw fairly accurate conclusions when attempting to predict the behavior of individual X when placed in context Y, this assumes that we already know the characteristics of X and Y.

Yet, in an organizational context, these values (particularly Y – which can be time, operational processes, or workforce turnover, to name a few) are in constant movement. As a result, we are no longer attempting to predict the behavior of, say, an entry-level employee of 25 years of age with a college degree (etc.) to a specific environmental context. Rather, we are attempting to predict the behavior of an evolving individual as he/she experiences variations of Y, thereby making the ‘ceteris paribus’ assumption obsolete. It is therefore nonsensical to ‘bet it all’ on your managers’ ability to predict an employee’s future performance based on what has been observed in the past.

Competency assessments to ensure organizational success

The success of competency models as a basis for performance reviews is that they work to describe emerging and anticipated skill requirements, rather than skills that have been effective in the past. As such, customized competency models allow you to rate an employee’s strengths (competencies, skills, behaviors and interests) in accordance with what is required for your organization to succeed going forward.

This process makes it a lot easier to optimize your workforce planning strategy, as it helps you determine whether or not an employee is

1)     Suited to the organizational culture and strategic direction

2)     Possesses the competencies to master his/her current role or the potential to develop skills required by a different role (one in which he/she would deliver more value)

But evaluating competencies does not only serve the needs of the organization; it also allows employees to feel valued within their professional environment, as they are given an opportunity for development and mobility, in accordance with their skills and interests.

We recently wrote that one of the most common myths of succession plans is that companies believe a successor has to be ready now. This also applies to your performance management system, on the basis that a viable top performer is developed with this very purpose in mind.

Granted, this has important implications for management, as it explicitly commits them to provide employees with formal training, coaching, and other competency development activities. But the rewards are significant. In fact, this sort of competency-based system uses the principles of the “self-directed change” theory, which holds that adults change only when they:

  • Feel it is in their own best interests to do so
  • Feel dissatisfied with their existing situation or level of performance
  • Are clear about a “desired” situation or level of performance
  • Are clear about action steps they can take to move from the actual to the desired situation or level of performance

So where do I start?

Implementing a competency-based performance review system from scratch is a complex process, but here is an overview of the steps involved:

  1. Design the core of the performance management process, including the objectives of the process, senior management expectations, frequency of performance discussions, etc.
  2. Determine weighting for performance on the competencies, and identify the competencies required for superior performance in present jobs.
  3. Train managers and employees in the new performance management process. The training should include all the information identified above, as well as the competencies used as part of the performance management system.
  4. Provide training in performance coaching to all supervisors, including how to assess employees on their “actual” levels of competence. Managers should be able to objectively explain the reasons for their ratings, and show that they have considered feedback from peers to establish the ratings.
  5. Organize formal sessions during which employees are given the opportunity to identify their “desired” levels of competence to meet their career goals.
  6. Implement or enhance corporate professional development tools and programs to ensure that employees are given the tools they need to develop the competencies they need to succeed in both their current and future job roles.
  7. Schedule regular coaching sessions during which developmental progress is evaluated.

Of course, these steps only serve as guidance. You can learn more about competency-based performance management on our website’s dedicated area, where you will find valuable articles and downloadable PDFs, or by contacting us for a private consultation.

If you are ready to start developing a competency-based system, we invite you to read more about our onsite workshops and consultancy support for building and implementing competency models for a variety of applications in your organization.

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What about Performance Management?

Performance is the true test of survival in the marketplace. High-performing employees contribute superior performance, giving your organization its main competitive advantage. You may have a world-class system in place to create those superior performers, but it’s only as good as the management and organizational objectives behind it.

Ask yourself: Are you so focused on revenue generation or another particular aspect of the business that you forget to nurture your best ambassadors – your employees?

 A system for sustainable growth

It’s important for any organization to have systems in place to identify, recognize, reward, and retain their top performers in order to achieve sustainable growth. An effective performance management system should encourage collaboration, teamwork and communication to identify:

  • Job performance standards and measures
  • Job behaviors required in accomplishing specific job tasks and meeting job responsibilities
  • Competencies demonstrated by average and superior performers in key jobs

CirclesGraphicResults equal rewards

The results of the performance management data you collect can be used for decisions concerning rewards, bonuses and other employee incentives. For example, competency and job behavior data are typically used for decisions about development. So, if an employee is appraised as lacking group leadership skills, they might be asked to attend a course in order to further develop this skill. And… skill-based compensation systems explicitly tie rewards to skills developed. That spells ‘Motivation’!

Invest in your best

Effective performance appraisals essentially turn on the proper use of each type of data given the system objectives and what degree of control employees have over their performance. Having a solid performance management system in place is truly an investment in the people who help drive revenue for your business – and their extra effort can differentiate good organizations from great ones.

To learn more on how we can help, please visit our website.

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