Using Competencies To Enhance Employee Performance

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

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

Following are the key findings of this research effort:

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

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

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

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

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

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

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

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

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

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

You are invited to join a LinkedIn group that I manage, Competency-Based Talent Management https://www.linkedin.com/groups/3714316 Our members would welcome your involvement in the group.

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