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Competency Management

This chapter contains information about competency management. Here you can find out about the goals, language competencies and competency profiles. Furthermore, we take you into how competency management can be performed, e.g. by integration into the HR cycle. In addition you will find complete competency sets of behavioural indicators and development suggestions. 360 degree feedback can be used as a tool for competency management but this is not necessary. Other methods such as discussions, workshops and self-assessment tools are also useful.

  • Competency Management Objectives.
    Look before you leap. It is important to know why you are introducing competency management and what you want to achieve with it. Often it is introduced as a fashionable tool copied from another organisation. By really knowing what you want to achieve, you can design the right system for your organisation.
  • Strategic competentencies.
    What would you like your organisation to excel in? Make sure that the strategic competencies are anchored in the competency profiles and end up in the bloodstream of the organisation.
  • Integratie in HR Management Cycle.
    In order to safeguard competency management it is essential to integrate it into the HR Management Cycle, the annual discussions/conversations that managers have with employees. 360 ​​degree feedback can play a role in this and strengthen the organisation.

Competency Management Objectives

Look before you leap. It is important to know why you are introducing competency management and what you want to achieve with it. Often it is introduced as a fashionable tool copied from another organisation. By really knowing what you want to achieve, you can design the right system for your organisation.

Competency Management

While there are many definitions of competency management, we use these:

“Competency management is a form of human resource management, in which an explicit link is established with the strategic policy of the organisation. , with the emphasis on developing effective employee and organisational unit behaviour so that they achieve better results and help to achieve organisational goals.”

This combines two dimensions: the strategic, with the promise that competency management of a company can strengthen competitiveness, and the development-oriented, where competency management provides a tool [for] employee development. Thus, the ‘hard’ side of the results-focused is combined with the ‘soft’ side of the development of people.

Goals at the organisational level

It is good to think about why you want to implement competency management. The main reason, in my opinion, should be to maintain or improve the level of competencies. It is important to realise that. If it is going well now, it is really not absolutely necessary to implement competency management.
You see competency management being implemented mostly in larger organisations with two or more layers of management. With the competency management the highest management layer can clearly anchor its strategic choices in the communication between employees and the second layer of management. In that sense it is a means to steer the employee behaviour in order to delegate well.

Besides improving the competencies it is sometimes called a ‘culture change’ goal. By talking about behaviour, for example, ‘results-focused’ of ‘entrepreneurship’ one hopes that the culture will change.

However, in my opinion, I do not think the implementation of competency management is the best way to achieve a cultural change. It is somewhat indirect. There are better methods of doing this, with more focus on the desired change. Competency management is more focused to stimulate wider effective behaviour in a permanent, ongoing way.

Secondary Goals

These important secondary goals are often mentioned: that all HR tools are aligned closely and speak ONE language. In my opinion, those should never be the main goals. That the HR tools such as selection, appraisal and flow are aligned, can be established in other ways. The reason then would be that it is more efficient, cheaper or better performed.
Speaking ONE language is useful, but frankly it is a bit presumptuous for a competency framework to be named as that language. You already speak Dutch after all and hopefully some other languages. What matters is that managers of all levels can make it clear what behaviour they want to see, for example in front of clients. It also creates a clear framework for employees. Giving feedback, not only during the HR cycle, is also a part of competency management. This is often a change that is needed for competency management to succeed.

Establishing competency management goals

The general goal of competency management will be:

  • We want to perform well on a number of strategic competencies which are important to us .
  • We want provide managers and employees with a tool to focus on this work, by aiming for results and effective behaviour.
  • We want to give direction to employees with their job role development.
  • We think this will work better and more efficiently when the HR tools are aligned.
    •  

This can be freely adapted to the situation.

Prerequisites

  • The basic HR processes are good (structure).
  • There is an open culture to some extent.
  • A basic HR cycle is present/available.
  • The span of control for managers is maximum 20 employees.
  • There are no re-organisations or change processes during implementation.

It is beneficial to reflect on the preconditions for the introduction of competency management in addition to the goals/objectives. Due to the fact that this introduction requires much attention of managers and employees. It is not useful to get started in all situations, but it is advisable to first create the preconditions.
To begin with, the basic HR processes must be well equipped, such as administrative processes, job descriptions and working conditions. It also helps if the orientation work processes and vocational training are already good. You make a welder more accurate, but if he can not weld, it remains three times nothing. If there is still much to be gained there, HR should be focusing on that.

It is often argued that there must be some openness for competency management to succeed. That is certainly true. Managers should be able to speak about the behaviour of employees and employees should be receptive to that. On the other hand, 360 degree feedback and competency management should certainly be ensuring openness! However, it certainly does not work in an atmosphere of distrust.

Competency management presupposes the existence of a HR cycle, a series of regular appraisal and assessment interviews. If they do not exist, you can of course aim to implement these directly and simultaneously with competency management, but you will notice that people find that difficult. You are better off implementing a cycle and then strengthen it with competencies two or three years later.

Would you as a manager rather be able to personally give feedback and to coach yourself on the behaviour of employees, then the span of control must not be too large. Up to a maximum of twelve it usually works, but I have never seen it work above twenty.

Due to the implementation of competency management taking up so much attention, there should not be many other simultaneous processes that require attention. Imagine what you as a middle manager have to endure in a year. Does competency management fit in with this? Are they enthusiastic about it? At twice a “YES” you can start it, but with one “yes, but…” I would reconsider.

The business case for competency management

Business cases are always difficult to prepare, especially for HR managers. There are often many estimates/assumptions at it’s basis. But the core of the business case is this: In times when it comes down to it, organisations which survive have flexible and well equipped processes. This applies to all processes, such as marketing, production, but also for HR processes. A better organised HR process has the following advantages:

  • Your organisation has strengthened its strategic competencies.
  • Your customers notice that they are approached well.
  • You employ better people
  • You dismiss frequently under performing people earlier
  • Employees know better what is expected of them and perform better.

What this annually provides for the organisation? Make an estimate!

The costs are generally easier. As a rule of thumb is that the introduction costs around 500 euros per manager and 100 euros per employee, somewhat depending on how you approach it. And if employees are given the opportunity to follow workshops, another 100 euros per employee is added to this. So with 10 managers and 200 employees you’re soon looking at an investment of 30,000 euros. After its introduction the management of it does not any more or is not much more expensive than a normal HR process. Stronger still, by alignment it may be more efficient and economical. And that’s probably where your profits are!

Strategic competencies

What would you like your organisation to excel in? Make sure that the strategic competencies are anchored in the competency profiles and end up in the bloodstream of the organisation.

The importance of strategic competencies

Being ‘different’, setting yourself apart from the competition is of vital importance for many organisations. By being different, doing other things, offering different production or services, you are meaningful for your main stakeholders. The book Blue Ocean Strategy by Chan Kim and Mauborgne provides a clear justification for this. It is not beating the competition that is important to do better each time, but successful organisations are just that, very different from the competition.
That being different, is also reflected in the behaviour of employees. And that is contagious: when you are surrounded by enthusiastic, innovative people, you go along with it (when everyone is moody with customers you are also). It then becomes a characteristic of the group, rather than of individuals. And then they are very difficult to copy. They are in the bloodstream of the organisation and thus give long term benefits. Currently, for example, everybody is watching Apple and Google. However, it is questionable whether it is wise to want to copy their successes. If at all possible.

Current competencies

Change appears to be generally difficult. A major challenge in identifying strategic competencies is correctly examining where the real strength of the organisation and the employees lies. It is easier to strengthen, expand and exploit these than to develop totally new competencies. It is therefore worthwhile to investigate what exactly is going well now. That’s quite a ‘mind shift’ for many managers. Often we focus on issues that aren’t going well, which should be doing better. We are going to change, achieve a culture change! And that is often very inspiring to pursue, but also very frustrating to implement. Examining existing skills and competencies is less sexy but much simpler. This is being recognised more and more at the level of the individual by trainers and coaches and it’s just the same at the organisational level.

Analysing strong competencies

We are often blind to the water we swim in, so it is sometimes an eye-opener to examine where the strength of the organization lies. This is actually quite simple, with a success factor analysis. This method resembles the STAR method in which a number of critical situations is examined. You examine what someone did to turn this critical situation into a success.
You do the same at the organisational level: what were the biggest successes of the organisation over the past few years. You examine and research these successes to learn from them. You do that by exposing the underlying principles. You then name these principles as a strategic advantage. Often the behaviour of employees of the organisation underlie these, but sometimes there are also other factors at play.

Competencies for the future?

Prahalad and Hamel’s approach is thought out more from the strategy of the organisation. They argue that as an organisation you can determine which strategic goals you set for the future. Who do you want to be, that is the question. They look at an organisation as a set of competencies and recommend that those competencies be strengthened.
This sentence in their article explains it well:

“Think of a diversified company as a tree, the trunk and major limbs are core products, smaller branches as business units, leaves and fruit as end products. Nourishing and stabilizing everything is the root system: core competencies.”

This metaphor suggests that Prahalad is mainly talking about competencies on an organisational level, which can be anchored in the behaviour of employees of the organisation. In the Netherlands competencies seem to be primarily about behaviour but with strategic competencies, it does not need to be about this. The port of Rotterdam, for example, has a strategic location, but that has more to do with the Mass river and the Ruhr area, than with the competencies of the port workers.

Determine future strategic competencies

In my experience, scenario analysis helps to clarify what competencies are needed in the future, on an organisational and behavioural level. From some scenarios you once again distill the critical situations in which it is required to be successful. Often you see that this also provides an increase in current successes.

It works as follows: How will the world look in three to five years time? What important developments are there? Which opportunities and threats can we identify for the organisation? What scenarios can we follow ourselves? Really think about a film script with your organisation in the lead role. What happens in practice? How does the organisation respond to this specifically?

Then you can ask the question: “What behaviour must we (management, employees) effectively manage to deal with these new challenges?” This helps to make it specific. I often experience that this offers many managers eye-openers for the senior management.

Often one or two new competencies arise from these choices in addition to current qualities or competencies. These are often not absent, but should be strengthened. Competences which then emerge are, for example, innovative ability, building of international networks, achieving higher quality.
Following that it is of course all about achieving these wonderful wishes in practice.

Further reading: The Core Competence of the Corporation, Prahalad & Hamel

Integration in HR Management Cycle

For the safeguarding of competency management is it essential to integrate it into the HR cycle, the annual series of discussions that managers have with employees. 360 degree feedback can play a role in this and in strengthen the organisation. Competency management also means simply managing the competency development of employees. Maybe this is old wine in new bottles, but the HR management cycle and the discussions with and coaching by managers is essential for this. In the implementation is therefore wise to have a good connection/alignment with the HR management cycle. And the good thing is that this is quite easy to achieve. Indeed more importantly, by aligning all elements in the HR management cycle properly, a practical and powerful system emerges.

Integrating competencies into selection procedures

It is obviously useful to ensure that new employees at least have the talent and motivation for the main strategic and functional competencies. By naming the main competencies for each job position and by training selectors and managers to in the Criterion Based Interview. This is also called the STAR or behavioural-based interview. STAR stands for Situation, Task, Action and Result. The core of this approach is that you ask specific examples of situations where the applicant has demonstrated these competencies in the interview.

This is known to most HR officers/staff, it should be included in their training. But for many managers this kind of questioning of job candidates is still an eye-opener. It is best practice here is that “anchors” can be determined from each competency. These are prototypical examples of possible responses from candidates. Which stories convince you as the selector and do how you weigh that. When there are many applicants and selectors, this is a good method to objectify the selection. Personality and competency tests can also enhance the selection process.

Integrate competencies in coaching and performance appraisals

Integrate competencies in coaching and performance appraisals by the manager ensuring that managers actually coach their employees on developing the right competency, is the main challenge competency management. If that goes well, the competencies of employees will develop. If this remains a mere formality, a ritual dance, then you can forget that competency management actually becomes meaningful for employees. You will also achieve no effects of competency management at the organisational level. My advice is also then to reserve the largest part of the competency management budget for this aspect.

Often you will see that a lot of time and money is invested in the competency framework itself. However, since the largest gains can be achieved here, it is also obvious that most of the budget is to be reserved for this. Often, this is in the form of training and coaching, where managers learn what behaviour is desired, how they can give feedback to this and coach employees to grow and develop the desired behavior. Appraisal and assessment discussions are thereby usually the dessert rather than the pièce de résistance. My advice is, to put at least as much emphasis on feedback and coaching, and then the performance appraisals usually follow automatically.

Integrate competencies into education and training

Finally, it is useful to examine all training and education for their contribution to the development of functional and strategic competencies. In much training knowledge development is central, but behavioural characteristics are also often central to training. Just start going through all the training courses and discuss with the (external) trainers in which way these courses can play a role in the development of competencies. The courses can often be adapted. It is of course possible to deploy many training courses aimed at specific competencies, this certainly applies to soft skills such as networks, customer focus, or negotiation. You can then see if the competencies are sufficiently covered in the training courses. You can often identify your gaps, especially in the strategic competencies. The final step is then to ensure that training courses will be established aimed at these competencies.

Integrate competencies in compensation & benefits and career development

However this is rare in the Netherlands, it is certainly worthwhile to investigate to what extent Compensation and Benefits plans and career development can contribute to developing the correct competencies at the right level.