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Competency-Based Talent Management

Stephen C. Schoonover, M.D. President, Schoonover Associates

Portions of this article are copyrighted to Salary.com, Inc. and are used under license.

2011 Schoonover Associates. All rights reserved.

Competency-Based Talent Management

Contents
Contents......................................................................................................................................... i List of Figures ................................................................................................................................ i Executive Summary ...................................................................................................................... 1 What Are Competencies and Why Are They Important? .............................................................. 1 Why the Interest in Competencies? .............................................................................................. 2 How Competency Models Are Structured ..................................................................................... 3 An Integrated Approach to Talent Management ........................................................................... 5 Changing Roles of Manager and Employee ................................................................................. 7 The Future: What to Expect .......................................................................................................... 7

List of Figures
Figure 1 Customer Responsiveness ............................................................................................. 1 Figure 2 Organizational Contributions of Competencies .............................................................. 3 Figure 3 Schoonover Associates Competency Framework .......................................................... 4 Figure 4 Competency Implementation System ............................................................................. 6

2011 Schoonover Associates. All rights reserved.

Competency-Based Talent Management

Executive Summary
Competencies are behaviors that excellent performers exhibit much more consistently than average performers. They answer the question, What does an excellent performer look like in a particular work setting? If the setting changes, so do the competencies. Therefore, competencies are statements about a collection of observable behaviors, called behavioral indicators, that are linked to a particular context and require no inference or assumptions. How employees do their jobs now represents the competitive edge in all work settings, and competencies provide the roadman. When we know what is required for excellent performance in a job or role, we can select, motivate, develop, and reward employees to perform at that level. And when employees are at optimal performance, so is the organization. Most organizations frame their competencies using discrete models, or groups of behaviors bounded by a defined work setting and organized by themes or topics. The nature of models depends on whether the organization is defining success for the company, a function, a role or career level, or a job. We call these core, functional, role, and job competencies, respectively. Competencies can provide the linkage for developing a truly integrated human resource system, an emerging area with the potential to produce significant improvement in organizational effectiveness. Selected organizations are rigorously collecting and analyzing competency evidence to create a more data-driven approach for implementing talent management processes. And organizations that use competency-based approaches are more likely to view performance management as the cornerstone of an overall performance development process that also includes the following. Hiring and selection Team assessment Development and career planning Coaching and mentoring Self-directed team learning Courseware focused on competency development

For many organizations, competency-based talent management also means a change in the roles typically played by managers and employees. The managers role can become one of coach and facilitator. And the employee often becomes a more active partner who takes much more responsibility for his or her development. We see competency use expanding significantly over the next decade, especially as organizations become more aware of best practices and see the power of using competencies as an integrating vehicle for all talent management systems.

2011 Schoonover Associates. All rights reserved.

Competency-Based Talent Management

What Are Competencies and Why Are They Important?


While competencies have become a mainstream concept, there is much confusion about how to define them. Current definitions run the gamut from the key capabilities of an entire organization to job knowledge or technical performance criteria. Among most professionals in the field, however, the basic definition of competencies has remained relatively unchanged for the past 25 years. Competencies are those behaviors that excellent performers exhibit much more consistently than average performers. In defining what competencies are, it is also important to understand what competencies are not. Competencies are not a psychological construct. For example, there is no single behavior that could be termed customer responsiveness. The competency called customer responsiveness is a grouping of behaviors that, taken together, describe how an employee demonstrates customer responsiveness through behavior on the job in a particular work context. So, competencies answer the question, What does an excellent performer look like in a particular work setting? If the work setting changes, so do the competencies. Competencies, therefore, are a collection of observable behavior statements linked to a particular context that require no inference or assumptions. The statementstypically referred to as behavioral indicatorsare grouped according to a central message or theme, which becomes the title of the competency and is captured in the definition. Most competencies are presented in the form of a model, or grouping of several other competencies merged into a profile or profiles. Figure 1 presents an example of a competency for customer responsiveness. Figure 1 Customer Responsiveness Definition: Demonstrates consistent, focused actions to ensure high levels of customer satisfaction. Asks questions to clarify customer requirements. Takes a variety of actions to meet customers needs as required until needs are met. Responds to customers with an appropriate level of urgency. Builds confidence in customers that their needs are given the highest priority. In most organizations, competencies typically exclude baseline behaviorsthose that are common to average and excellent performers. The overriding reason for excluding baseline behaviors is to maintain a focus on excellence. Most organizations that use competency-based human resource systems are trying to drive excellent, not average, performance. Thus identifying baseline behaviors runs the risk of encouraging average performance or, at a minimum, wasting development time on behaviors that most members of the work force are already exhibiting. Competencies are important because they enable us to provide employees with a roadmap of the kinds of behaviors that will result in excellent performance. How employees do their jobs now represents the competitive edge for organizations in all work settings. Excellent customer service and total quality performance can happen only when attention is paid to how employees

2011 Schoonover Associates. All rights reserved.

Competency-Based Talent Management

carry out their tasks. When we know the competencies required for excellent performance in a job or role, we can select, motivate, develop, and reward employees to perform at that level. And when we have employees performing at an optimum level, we maximize the overall performance of the organization.

Why the Interest in Competencies?


Contrary to the perceptions of many human resource professionals, competencies are not a new concept. Competency-based human resource practices have been in use for decades, but principally as assessment and development tools. Only recently have competencies emerged as a broad-based human resource tool for many organizations. Its not hard to understand why. Our experience and discussions with other organizations indicate competencies are viewed by many as the answer to a problemhow to manage and motivate employees effectively in a new work environment characterized by the following. Greater focus on integration and improvement of work processes. Increased demands on people to acquire and demonstrate new behaviors and skills. A reduction in the number of traditional jobs and the elimination of career paths and ladders. An increased focus on teamwork and team performance. A focus on the organizations people as the source of competitive advantage and superior performance.

Organizations that stay the course in implementing competency-based systems most commonly report they have done the following. Raised the performance bar. Because competencies are based on the behaviors that distinguish excellent performers, the goals set for individuals are higher than before. This increases everyones performance level. Helped align individual behavior with business strategies. Organizations that are relentless in linking their competency models to the organizations strategic values report that individuals actual behaviors are better aligned with these values. Just as important, individuals see this linkage. Supported a new, more collaborative employeremployee contract. In most organizations, gone are the days when employees are promised job security and fair pay in exchange for loyalty and a fair days work. Many organizations are looking to replace this old contract with a new oneone in which the organization provides individuals with the opportunity to develop and use new skills and knowledge in exchange for their loyalty and labor. For these organizations, competency-based human resource systems provide a vehicle for assessing needs and developing the necessary competencies. Changed the measure of success. For organizations looking to de-emphasize ladderclimbing and title acquisition, competencies have introduced a new way to measure success. While broadbanding tends to de-emphasize titles and levels, it fails to offer a replacement for them. Competencies can provide a substitute measure or indicator of an individuals growth and performance success. Provided a spark for creating and sustaining a culture of learning. Many organizations believe that competencies enable them to develop and sustain a culture where people want to learn and develop. Competencies can help clearly identify a roadmap for success,

2011 Schoonover Associates. All rights reserved.

Competency-Based Talent Management

provide tools for self-development, and reward employees when they acquire and demonstrate the mastery of relevant competencies. While these typical outcomes provide substantive benefits to organizations, competency-based approaches to talent management offer an even more diverse range of advantages for organizations (see Figure 2). Figure 2 Organizational Contributions of Competencies Characteristic External representation of motives that drive individuals to work Representation of context-driven success factors (e.g., boundary conditions) Focus on person and work performance requirements vs. job accountabilities (i.e., an engine for change) Focus on factors that produce superior results Appropriate balance between what (goals and job accountabilities) and how for performance factors Definitions of the critical few behavioral factors for success Clear, observable criteria for assessment and development Common behavioral factors required for implementing talent management applications/processes The means by which individuals can develop and improve behavioral targets through support materials linked to competencies Simple, commonly shared language for coaching conversations A more encompassing set of performance criteria Metrics for evaluating effectiveness Positive Impact Motivation Alignment Performance Excellence Balance Focus Objectivity Integration Distribution Fair, Supportive Feedback Holistic Measurability

How Competency Models Are Structured


Most organizations frame their competencies using discrete models. Models are groups of behaviors bounded by a defined work setting (such as job, role, and/or function) and organized according to themes or topics (competencies) to make understanding and assessment easier. The nature of models varies depending on whether the organization is defining success for the following. The overall company (that is, the business strategy and/or desired corporate culture). A specific function (for example, human resources, finance, sales).

2011 Schoonover Associates. All rights reserved.

Competency-Based Talent Management

A given role or career level (for example, strategist, integrator, team leader, or individual contributor). A specific job.

Schoonover Associates calls these core, functional, role, and job competencies, respectively. Figure 3 depicts Schoonover Associates competency framework indicating how competencies vary by both career band or role and functional specialty. Figure 3 Schoonover Associates Competency Framework

Core Organizational Competencies


Required for excellence across all levels and functions

Leadership Competencies
Success factors that differentiate performance across levels (e.g., first-level, mid-level, executive)

Functional Competencies
Success factors that distinguish performance in separate functions
Human Resources Sales / Business Development Manufacturing Research and Development Supply Chain

Information Technology

A number of factors influence which model or part of a model an organization chooses to use in various applications. Factors include how the competencies will be applied and the resources the organization has for developing and applying them. In general, the more specific the model, the more powerfully it can be used to focus and develop people. However, highly specific models are also more costly to develop and maintain. Often, organizations create a core and leadership model to communicate the organizations mission, vision, and values, and to ensure total organizational alignment. To provide for more powerful performance development, organizations often create functional or role-based models in highly leverageable areas. Few organizations develop models for all jobs or levels and functions. Whatever the nature of the model or models developed by an organization, most organizations place a premium on brevity. They typically emphasize the five to ten most important competencies for each model.

2011 Schoonover Associates. All rights reserved.

Marketing

Finance

Competency-Based Talent Management

An Integrated Approach to Talent Management


Competency models are not ends in themselves. They are simply a means to an enda set of standards to drive human resource processes. The goal for most organizations is a more effective, productive work force. Increasingly, organizations are concluding that, to develop a more effective and productive work force, it is necessary to align and integrate its human resource systems. Too often, an organizations human resource systems have been developed without regard to either the ultimate business strategy or to other human resource systems. The result has been a poorly focusedor even confusedworkforce. Though competencies were originally developed to focus training and development efforts, organizations have begun to use competencies in virtually every human resource domain. More and more organizations are looking to build competencies into each and every practicea key attraction to competencies. Competencies can provide the linkage for developing a truly integrated human resource system. By viewing the entire range of human resource practices as a set of closely related activities, companies can do the following. Align human performance systems design with other process improvements or reengineering interventions. Identify conflicts, synergies, and redundancies among various performance development processes. Clarify, communicate, and continuously improve the performance development system.

Figure 4 illustrates how competencies link to larger organizational issues and a range of talent management applications. Through hiring and selection, organizations can use behavioral-event interviewing techniques and scoring checklists to identify individuals who have the competencies needed to be successful in the organization. In general, the greatest effort is devoted to identifying individuals with competencies in areas considered to be difficult to develop or in areas where immediate success is required. When integrated into the learning, development, and career planning processes, competencies have been used in a variety of ways. Competency-based curriculum design has been a mainstream practice for many years. In addition, many organizations have used career planning across bands or roles. More recently, competencies have been used to develop initiatives ranging from multisource feedback and assessment to coaching tools and comprehensive learning frameworks. Through the performance management process, organizations can clearly communicate the behaviors important to individual success. They can also help individuals see how well they demonstrate the competencies and develop plans for individual improvement. Competency-based human resource planning is an emerging area with potential for producing significant improvement in organizational effectiveness. Currently, firms are using competencies primarily in the following situations. Succession planning (e.g., to rank candidates according to competencies for a targeted position; to create bench strength; or to focus development of high-potential talent). Management resource reviews (e.g., evaluating total team talent for strengths, vulnerabilities, and development needs). Staffing decisions.

2011 Schoonover Associates. All rights reserved.

Competency-Based Talent Management

Figure 4 Competency Implementation System

However, selected organizations are increasingly collecting and analyzing competency evidence more rigorously to create a more data-driven approach for implementing talent management processes. Finally, through the compensation systems, organizations can reward individuals for demonstrating and developing the competencies the organization says are important to success. In other words, the organization can reinforce what it says with some tangible action. Perhaps the most important distinction between competency-based performance management systems and conventional systems is one of underlying philosophy. Many organizations with conventional performance management approaches focus performance management narrowly on operational goals and/or the steps that lead up to and include performance appraisal. By contrast, organizations that use competency-based approaches to performance management are more likely to view performance management as the foundation for a systematic approach to leveraging human resources and as the cornerstone of an overall performance development process that also includes the following. Hiring and selection Team assessment Development and career planning Coaching and mentoring Self-directed team learning

2011 Schoonover Associates. All rights reserved.

Competency-Based Talent Management

Courseware focused on competency development

Changing Roles of Manager and Employee


For many organizations, competency-based talent management also means a change in the roles typically played by managers and employees. In a conventional performance development process, the manager is typically viewed as a supervisor or counselor. In a competency-based approach, the managers role can be changed to one of coach and facilitator. Managers commit themselves to providing employees with formal training, coaching, and competency development activities. The employees role changes, too. In conventional systems, the employee plays a somewhat passive role. In many competency-based approaches, however, the employee is expected to become a more active partner who takes much more responsibility for his or her development. Competencies provide a clear road map of accountabilities and opportunities for personal change. No longer does the employee need to wait for the manager to define expectations and create development plans. Expectations are specified by the competencies; strengths and weaknesses can be determined through team feedback; and individual action plans can be created without relying on the manager. Managers can actand be seen by employeesas resources, offering ongoing feedback and helping to ensure continued progress toward achieving company goals. For many organizations, this role change is critical to future success, since increasing spans of control often make it impossible to manage employees the old way.

The Future: What to Expect


Although the structure and content of competencies has received significant attention in recent years, organizations have focused less on translation into talent management applications and implementation strategies. Recent studies by various groups focusing on this topic highlight that competency applications vary widely. Most organizations start with developmental and hiring interventions and progress toward more formal applications such as performance management, succession planning, and compensation. Our own studies of competency initiatives indicate that successful programs use more integrated approaches to competency implementation; provide tools and job aids to managers and team members; and apply structured change management principles during rollout. Clearly an individual practitioner can take the initiative to adapt existing competencies as his or her own standards for assessment and development. However, implementing competencies in multiple applications across an enterprise constitutes a large-scale change and requires significant resources and time. In other words, clarifying the critical success factors or competencies required for the success of individuals is a necessary, but not sufficient aspect of organizational transformation. Individuals and organizations too often focus on defining the specific behaviors that support excellence, neglecting barriers to change such as cultural, structural, process, and learning systems issues. In practice, six key factors characterize settings that support successful longterm implementation of competencies.

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Competency-Based Talent Management

Relevance. Approaches that work answer specific, well articulated, highly felt needs of users, employing tools and approaches that have practical, day-to-day impact. In other words, lasting implementations are customer-driven. Alignment. Competencies are designed with the intent to support the organizations vision, strategy, and key capabilities. In the most successful settings, they are actively applied to help individuals understand how their own behavior supports vision and strategies. Integration. Competency initiatives that produce the most significant change are applied systemically across a range of human capital management processes. Impact correlates with the number of applications encompassed in a common framework. Distribution. Competency standards alone have little impact. They must be actively communicated and highly accessible (often on Web portals or within IT applications). Practicality. Competency models and systems frequently fail because they are too complex or require an unsustainable level of sponsorship or program support. Implementations that work best focus on the development of simple models embedded in tools that can be applied day to day by users with relatively little ongoing support. Acculturation. Installing competencies should result in a significant, lasting organizational change. Too often organizations define and introduce new standards without a plan for sustainability. Competency programs that work become part of the culture and the mindset of leaders through repeated application and refinement over a significant period (years, not months). Competencies become a philosophy for raising the bar, producing accountability and empowerment, and ensuring continuous feedback and development.

As with all large-scale change initiatives, successful implementation of competencies depends primarily on designing and sustaining a consistent process. Failure to make a major impact is frequent. In contrast, initiatives that work consistently include a series of stages and typical activities. In practice, even effective implementations are never a linear process marked by steady progress. Rather, most competency programs encounter typical stumbling blocks during rollout. Often, initial optimism is followed by sagging commitment in the face of competing priorities. If early adopters are identified and enlisted to apply competencies and if early successes are communicated widely, programs commonly make significant, early impact. Wider effects generally require the support of an organized change team and operational sponsors who bridge inevitable setbacks in application. Finally, predicting the future is a risky business, but in this case our crystal ball seems very clear. We believe that more and more organizations will be implementing competency-based applications, and that organizations with existing models will be looking for more effective ways to deploy them for greater overall impact. The reasons are self-evident. As organizations get the last ounce of productivity improvement out of business process reengineering, they will need to turn to the asset they have ignored over the past decade, the human asset, if they are to gain greater productivity enhancements. Competency-based human resources systems have the capacity actually to drive organizational change rather than simply to enable it to take place. Competency development provides a useful alternative to the job progression that many organizations are seeking as they delayer, broadband, and otherwise de-emphasize the job.

2011 Schoonover Associates. All rights reserved.

Competency-Based Talent Management

Competency-based tools offer a more effective method for targeting and leveraging a broad range of self-directed activities that actually produce personal change. First is the need to streamline the model-building process. In the past, organizations spent thousands of dollars and countless hours of staff time creating competency models without any tools or processes for applying them. This was a waste of time and money. For competency-based systems to become more widely used, organizations must be able to develop models faster, and at a fraction of the cost. This is why Schoonover Associates often prefers to use its process of rapid model prototyping. It enables organizations to spend the majority of time and effort where it belongs: on tools, processes, and implementation. Second, organizations need effective practices for implementing competency-based systems. Too often, models are not translated into practical applications that can be sustained. Simple, user-friendly tools must provide help for managers and individuals with their day-to-day human resource problems and opportunities. Third, organizations need to focus most attention not on model content, nor how to document or handle the employee record or data, but on what will optimize human behavior changefully motivated, self-directed employees and managers who can conduct thoroughly expressed, collaborative, continuous coaching conversations.

It is necessary, however, to navigate some potential obstacles to widespread use.

These obstacles are being overcome as more and more organizations develop and implement competency-based human resources systems. We see competency use expanding significantly over the next decade, especially as organizations become more aware of best practices and see the power of using competencies as an integrating vehicle for all talent management systems.

2011 Schoonover Associates. All rights reserved.