Competency Management-cracking The Code

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Com p tale etency nt m man a agem hav e be nagem en ent com pen initi t is cen e cr ding tral a i tive t ica sk C t omp ills sho l in ligh s, whic o h rtag and eten t o f the e. a c imform roadma ies prov ide p fo anc stan e. Su r eff man dar ec cc a can gement essful c tive per ds ex o e plan ecute t nsures mpeten that he c , an c y omp d e tion any mploye al ch guides b t es h al skill u sho lenges e way o siness r r o tage add gan f ski izare s, ll und ssed. Th and lea readin e erst d ss, e e orga rsh an tenc y m d and s nizatio ip are ana the gem ucceed ns that co in en be v mpetit ion t will be compeiewe f or s d as lead sho c rt, c omp employ arce tal ers in stra ent ers et tegy and for c encies d of cho ice. omp o In etiti ne righ t are ve a dva ntag a e.

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In practice, many organizations get stuck using competencies because they lack basic guidelines. For example, a logistics vice president received negative feedback about a lack of career development options. Her corrective action plan involved building a competency model and mapping development options to it.

pete ncie s road tanda s prov ide perf map rds o com rman for ef and a pete ce. S fecti n ensu cy m ucce ve res t anag ssful can exec hat e e ute t mpl ment o addr businehe comp yees a ess o ss pl rgan an anny izati d chal onal leng es. Simultaneously, the customer service organization decided to assess its employees’ skills, and developed a model that primarily focused on systems and products. The HR function built a leadership model for recruitment and development that focused on key behaviors of superior performers, while the sales organization decided to assess its reps on the key customer activities critical for success. Models, tools, and processes were built internally as well as purchased. These important business initiatives incrementally and steadily added up. This bottoms-up approach to competencies, by group, function, and division, eventually led to chaos. There was no best practice, standards, or agreement on the approach. This

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particular organization soon had more than 300 competency models and 1,000 distinct competencies. Competency management is difficult because competencies are confusing. There are fundamental disagreements about what competencies mean and how to use them. For example, are they about skills, job tasks, or characteristics of superior performance? Given multiple alternative approaches to competencies, how does one select them? There are two common ways of dealing with the lack of agreement. The first approach is avoidance, which characterizes the business example above. Here, each organization treats competencies in their own way. As noted, this tactical approach leads to disconnected silos, and alternative approaches are not reconciled. Another approach acknowledges differences and seeks agreement about definitions and models through governance. The problem with this approach is that legitimate disagreement exists regarding competencies. Reaching agreement on what a competency means and how it can be applied directly is a recipe for endless debate.

Reaching an integrated approach We need an approach to competency management that can reconcile the disagreement about meanings and go beyond avoidance. In this way, different answers about competencies can be correct if placed within a strategic framework. In this view, clarifying competencies requires rethinking competency management as involving three strategies, not just one. The term “competency” is similar in concept to the word “game.” There are various types of competencies that involve different sets of rules, scoring, and outcomes. To make sense of competencies, we first need to start from core business objectives, and work backwards. As a first step in understanding what competencies mean, there needs to be a more strategic view of the business purposes that competencies serve.

Cracking the code of competencies and competency management requires starting with what is required, from a people perspective, for organizations to be successful. First, organizations need a plan for competence for today and tomorrow; they need to know that their employees (and future employees) in their varied roles can execute organizational strategy. Second, organizations need to continually drive superior levels of performance and leadership behaviors. They need to identify the behaviors of their best performers and duplicate them to drive higher productivity at all levels of the organization. Finally, organizations must stand out from their peers and gain customer loyalty through outstanding products and services. Organizational competencies that drive brand must

be expected and inspected. If the organization wants to be known for a high level of customer service, there are specific competencies that need to be managed and demonstrated as part of the organization’s daily practice. In short, effective competency management means having three coactive and complementary strategies—competence, productivity, and brand. If we start with these business imperatives and work backwards, different views about competencies will make much more sense, and we’ll achieve significantly more business impact. Each business objective requires different competency model approaches, tools, and metrics. Managing, prioritizing, and aligning all three levels are necessary for effective competency management.

So to address the questions of what a competency is and how best to implement a competency management strategy, the proper approach is to first ask, “What is your current plan?” and then prioritize around competence, productivity, or brand. In other words, ask how are you improving current or future execution, achieving higher performance levels, and enhancing your organizational value? Competence requires job models of the skills, knowledge, attributes, and desired results needed to do the work. Increasing productivity and leadership behaviors requires superior performer models by role that detail the differences between superior and average performers with the organization. Competitive advantage requires communicating, expecting, and inspecting a set of core company values, beliefs,

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and engagement models that differentiate the organization and define its brand. If we agree that competencies matter in different ways to meet different business objectives, a critical issue is how they should matter in any specific organization. In other words, we need an approach that helps us prioritize competency-related activities and weighs the return of going one direction versus another. Many companies, for example, are focused currently on

High pete ncy perform man ance orga s a t g wor nizat rategie ement i k if they onal lev s at the seni are o el on or m wne ly anag d by eme nt. com

the competency management of the top 10 percent of leaders in their companies. From a holistic perspective, how do we evaluate this investment against others?

Complementary strategies Let’s examine what is involved in developing an overall strategy and some success factors in each of three critical areas. Competence. Consistent execution and current and future skill readiness are critical to competence. One bad customer experience can cost an organization a customer. Errors on the battleground, in the hospital, and even on the shop floor can cost lives. Yet, competence is not simply about developing readiness, or having the skills, knowledge, and attributes to perform. Competence also involves the willingness and desire to perform. These fac-

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tors are influenced by the daily experience at work and the perceived nature of the organizational team. Competence requires developing skill and knowledge models that tie to current roles and anticipate future skill requirements. In a recent EMC Corporation survey of 1,000 information technology professionals, managers reported that only 33 percent of their existing workforce is adequately prepared to manage the expected growth in data storage. Similarly, a recent survey by Softscape identified that 86 percent of companies believe their workforce is not adequately prepared to meet future business goals. A common skills and competency language developed in alliance with schools and universities can help address the skills shortage that will affect most professions. The U.S. Commerce Department estimates that in the next 10 years, the United States will need 1.3 million new information technology workers—about 138,000 per year. While incompetence is a goingout-of-business strategy, surveys and statistics show that most companies and organizations are not managing competence effectively. A 2004 Conference Board survey found that 66 percent of workers do not connect with nor feel motivated to drive their employer’s business objectives. Similarly, a Towers Perrin survey of 90,000 workers found that 79 percent are not engaged in their work. Additionally, a United Kingdom survey estimates that 5 to 10 percent of workers are incompetent. Calculating a cost of incompetence based on such estimates is not difficult, but it is often overlooked. In medicine, the cost of preventable errors is estimated at $17 billion per year. From an individual employee perspective, competence means • I understand how my role fits within the organization’s key deliverables and processes. • I know what I need to do to support the business strategy. • I have the skills, knowledge, and values required to perform my role.

• I can perform my role effectively in a wide range of situations. • I am willing to go the extra mile for my organization. The competency management “playbook” for competence involves job and skill models, development processes, and metrics that address • the skill readiness of my workforce • where are we currently strong and where we need to improve • an assurance that employees understand their role in executing the business strategy and are aligned with business objectives • a strategy to build trust and employee engagement • skills needed within the next five years that we don’t currently have • a skill shortage strategy and implementation plan. Productivity. Achieving leadership in the organization and industry requires continually getting better and attaining superior performance. Competency management at this level involves identifying superior performance and getting more of it. A productivity strategy involves identifying those roles that offer significant return-on-investment when comparing average and superior performers. The productivity value of improving output from average to superior is viewed as a 48 percent increase in high-complexity jobs. Identifying roles that are good candidates for higher returns is an important step in getting buy-in for competency management activities. Competency management at the productivity level involves identifying the characteristics that differentiate superior performance. These characteristics then inform leadership competency models and selection as well as training and development. Six years ago, at EMC Corporation, a group of high-performing sales executives were placed in a new field-based productivity manager role that focused on driving increased productivity in the field through training and development. Superior performer models, mentoring programs, and role-based

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curricula were developed and used for competency assessment and development planning. After six years, the productivity manager program has expanded globally and is able to demonstrate links between increased training and development and revenue. Brand. Organizations that differentiate competence and productivity strategies have taken an important step in making business sense of competency management. However, some companies go further by creating a sustainable competitive advantage strategy based on their people. Competencies in this view are those values, principles, and methods that define the organization’s brand, such as service, innovation, and product leadership. Competitive differentiation through people happens by creating great teams. Companies that develop environments where their employees are highly motivated and want to go the extra distance to exceed customer needs gain advantages that are difficult to emulate. For example, because Southwest Airlines employees are highly motivated and productive, there are fewer employees needed per aircraft and higher service levels than the competition. All of the companies that rely on high-performance teams as part of their brand closely manage their culture with the same intensity as their business strategy. Valuing people is easy to proclaim in an organizational values statement. However, walking the talk and living out the values is extremely difficult with pressures for quarterly financial results. Companies that succeed are able to connect the dots of competence and productivity strategies by creating a culture of high performance based on commitment. Complete alignment with company goals is critical for innovation, consistent execution, and extraordinary customer service. In his book, Loyalty Rules, Fred Reichheld shows that a 5 percent improvement in customer retention rates yields a profit increase between 25 and 100 percent across a wide range of industries. Jeffrey Pfieffer,

in his writings, documents how companies that are successful in creating such high-performance cultures outperform the market and increase shareholder value by an average of $41,000 per employee. High-performance competency management strategies at the organizational level only work if they are owned by senior management, embodied in corporate policy, and managed on a daily basis. Such companies rely on all employees to be empowered and to continually improve what they do in order to do it better than anyone else. In summary, we as workforce development leaders need to reposition competencies as a necessary component of our organizations’ business plans. We have examined an approach to directly link competencies with core business requirements and strategy. Cracking the code of competency management involves treating competencies as more than a single “game,” and aligning competencies to their appropriate business objectives. Three suggested next steps include • prioritizing your organization’s key competency management business issues • reviewing your current plan to manage competence, productivity, and brand; identifying gaps, and quantifying and prioritizing the gaps that present the opportunity for the biggest organizational returns • developing an implementation plan and governance board to sustain competency management as a core business process. t+d Ernie Kahane is the director of learning strategy at EMC Corporation, and is on the advisory board at Intrepid Learning Solutions; [email protected].

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