You are on page 1of 21

Competency Management

A Report
Submitted to

Prof. Ajay Majumdar

In partial fulfilment of the requirements of the course


On 02/03/2009

Tarun Daga (B08039)
Noshin Mamsa (B08040)

1| Page
Executive Summary

Organisations have faced big changes over the past decades brought about by
trends like globalisation, technological innovation, restructuring and outsourcing.
As a result, compared to their counterparts a few decades ago, organisations
are now flatter, more flexible, more efficient, more customer oriented, more
focused on short-term performance, and more distanced from their employees,
who no longer view job security and loyalty as part of the employment contract .
In a continuously changing environment, organisations can no longer cope
without continually developing their competencies and human resources.

2| Page
Table Of Contents

Serial Number Content Page Number

1 Competency Management 4

2 What is Competency 5

3| Page

3 Evolution 6

4 Competencies 7

5 Rating Competencies 8

6 The Need 9

7 Benefits 10

8 Example of Competency 10
Development Process
9 Key Outcomes 11

10 Evaluation of Performance 11
& Key Tools
11 Best Practices 12

12 Performance & Talent 13

13 Global Challenges 15

Competency Management

At its most basic, competency management is a people asset audit. Anyone who
embraces the principles of human capital management knows that the skills,
knowledge, and experience contained within an organization constitute some of

4| Page
its key resources. In order to leverage them effectively, organizations need to
have a comprehensive understanding of what and where they are. But
competency management is more than just a human capital inventory exercise.
In fact, it underpins several other human capital initiatives - like succession
planning and organizational development - and at a strategic level, it gives
companies the insight they need for effective workforce planning.

The Competency Framework Comprises Multiple “families “of competencies:

5U = Universal Competencies: universal competencies needed by

every individual to be effective in today’s work environment. Examples
may include:

• Resolving Conflict
• Emotional Intelligence
• Team Skills

M = Management Competencies: business management competencies

necessary to execute management (not positional) functions. Examples
may include:

• Managing Projects
• Performance Measurement
• Managing a Budget

L = Leadership Competencies: competencies necessary to execute

leadership (not positional) functions. Examples include:

• Strategic Planning
• Strategy to Execution
• Building Partnerships
• Change Management

MCF = Mission Critical Function (MCF) Competencies: specific

technical competencies necessary to successfully execute a given Mission
Critical Function (e.g., Supervision, Acquisition Management,

5| Page
What Is Competency Management
Competence management is the way in which organizations manage the
competencies of the corporation, the groups and the individuals. It has the
primary objective to define, and continuously maintain competencies, according
to the objectives of the corporation. A competency is ways to put in practice
some knowledge, know-how and also attitudes, inside a specific context.
Competence management is becoming more and more important: competence
has been well recognized as extremely important for the achievement of
company goals, complimentary to, for instance, core business processes,
customer relationships, and financial issues and so on.

Our current thinking is that competence management can be organized

according to four kinds of process (i.e. inside each one, several processes may

• Competence identification, i.e. when and how to identify and to define

competencies required (in the present or in the future) to carry out tasks,
missions, strategies; how competence is represented is included here.
• Competence assessment, i.e. (i) when and how to identify and to define
competence acquired by individuals and/or (ii) when and how an
enterprise can decide that an employee (or an individual) has acquired
specific competencies; how the relationships between individuals and
required competencies are represented is included here.
• Competence acquisition, i.e. how an enterprise can decide about how to
acquire some competencies in a planned way and when; Competence
usage, i.e. how to use the information or knowledge about the
competencies produced and transformed by identification, assessment
and acquisition processes; for instance, how to identify gaps between
require and acquired competencies, who should attend required training,
how finding key employees (i.e. holding key competencies) and so on.

Figure 1: Competence Management Process Architecture

6| Page
Evolution of Competency Management
Competency Management Systems (CMS) are a direct evolution of the Learning
Management System (LMS). The LMS is typically a web-based tool that allows
access to learning resources. Competency Management Systems tend to have a
more multidimensional and comprehensive approach and include tools such as
competency management, skills-gap analysis, succession planning, as well as
competency analysis and profiling. The CMS tends to focus more on creating an
environment of sustainable competency in addition to entering and tracking
learning resources in software.

Competency Management Systems are based on the adult learning and

occupational task analysis principles, such as DACUM that identify the business
processes in a company and break them down into tasks. These tasks are what
an individual needs to know to do their job.

An example of a competency management system is the Competency Analysis

Profile (CAP). Originally developed by TTG Systems, CAP is based on over 30
years of thought leadership studies which examine how adults learn and how
they translate job knowledge to perform work tasks that meet their
organization’s standards.

What is the Competency Management System (CMS)?

CMS is an Agency-wide application used to measure and monitor the Agency's
knowledge base. CMS helps the Agency match the talents and strengths of their
employees with the positions that can best utilize those skills.

CAP helps to break down jobs into their critical processes and skills, which
employees must perform everyday to standard in order to ensure employee
safety, regulatory compliance, and company productivity. The CAP system can
be used to:

• Define the success measures of a company and how they translate to key
performance indicators.
• Identify those processes or tasks that are critical to achieving results.
• Design task knowledge and supervisor observation questions that clearly
reflect the competence standards from a must-know and must-
demonstrate perspective.
• Inventory training resources and align the right resources to the right task.
• Group processes into jobs and job families.
• Align jobs with organization units.

7| Page
What is CMS used for?

CMS is used for:

• Human Capital Management

• CMS ensures NASA has the competencies needed to complete its mission.
• Integrated Business Processes
• CMS provides a frame of reference to map business objectives to
• Employee Development
• CMS helps define training, development and knowledge areas for
• Expertise Locator
• CMS eases the search for expertise and knowledge within the Agency's
• Knowledge Management
• CMS creates communities of practice, a valuable resource for knowledge
• Communication Tool
• CMS provides a consistent language and framework for communications.
What is CMS not used for?

CMS is not used for:

• Job Selection
• CMS is not designed or used as an Agency employment and selection
• Pay Setting
• Grade and pay are determined by employees' duties and responsibilities
defined through the job analysis and classification process, not through
• Performance Evaluation
• An employee's performance evaluation is based on responsibilities and
performance, not information in CMS.
• Task/Work Assignments

8| Page
• CMS provides supervisors with limited information about an employee - it
does not capture everything a supervisor would need to assign a
particular task or job.

What are Competencies?

Competency: Attributes, knowledge, skills, abilities, or other characteristics that

contribute to successful job performance.
Technical Competency: Specific knowledge and skills needed to be able to
perform one's job effectively
• Job specific and relate to success in a given job or job family e.g.,
knowledge of accounting principles, knowledge of human resource law
and practice
• Focus on the job
Behavioral Competency: Behavioral competencies describe what is required
to be successful in an organization
Behaviours, knowledge, skills, abilities, and other characteristics that contribute
to individual success in the organization
• Can apply to all (or most) jobs in an organization or be specific to a job
family, career level or position e.g., teamwork and cooperation,
• Focus on the person
• Are not part of the job description

There are two groupings of competencies in CMS: Position Competencies and

Employee Portfolios. Position competencies identify competency needs of each
position to meet the organization's mission, regardless of the incumbent.
Employee portfolios are tied to an individual's skills, knowledge and expertise.
There are TWO groupings of competencies in CMS:
PositionCompetencies EmployeePortfolios(Your Story)
• Tied to an individual’s skills,
• The competency needs of each knowledge and expertise
position to meet the • Knowledge that one can readily
organization’s mission, regardless apply without extensive refresher
of the incumbent training
• Assigned by supervisors and • Can include NASA competencies,
managers for the positions of not specifically related to your
their direct reports current job position
• Have a primary competency – the • Can also include skills and
competency that is most often personal experience from
utilized for that position previous jobs or education
• Often have other required

9| Page
Rating Competencies
Competency Management can be rated in the following three ways:
1. Use a short rating scale and optional comment for simple competency
assessments: "Needs Improvement" to "Exceeds Expectations".
2. Rate detailed behavioral descriptions of the levels of competency
demonstration and optional comments.
3. Use a sophisticated matrix to rate competencies using different
dimensions and weights. For example, how well was the competency
demonstrated, how frequently was it demonstrated, how important is it,
Different types of ratings for different competencies can be used, so that one
can mix and match to suit needs.

Ultimately, a company's core competencies help define and sustain competitive

advantage. Competency Management is critical for assessing employee
performance, identifying opportunities for training and development, and
cultivating talent pools.

10 | P a g e
The Need For Competency Management

A competency management framework is recommended if the organisation

faces the following organizational challenges or needs:

• A System Focus to allow all involved in the system to cooperate with

clarity and vision, a shared understanding of leadership, and a common
currency of language.
• Recruitment and Hiring to ensure new employees are able to present
the characteristics that will foster success for your company.
• Staff Deployment to assist in the matching of people with jobs.
• Performance Management to measure results against job expectations
promotes growth, improve performance or prepare for career moves.
• Succession planning to identify, prepare and select potential leaders for
future roles.
• System-Sponsored Employee Development to develop needs
assessments, provide data for planning, and establish the resources that
must be secured.
• Human Resources Management to provide a consistent approach and
common language for the integration of human resource management

Benefits of Competency Management

• Establishes standards of performance that distinguish average from

exemplary performance aligned to support the organization’s business
• Provides in-depth information about current, as well as future predictors of
performance on the job, which assists to increase job.
• Satisfaction by providing employees with a clear vision about what the
performance expectations are for them.
• Creates standardized training and development programs to address skills
• Provides the means for employees to substantiate their qualifications for
their job.
• Provides the means for organizations to effectively manage competency
vitality at all levels within the organization.

An example of Competency Development Process

GeoLearning’s Competency Development Process

Phase 1: Develop the Project Plan

• Establish Requirements/Parameters

11 | P a g e
• Identify the Key Players/Stakeholders
• Assemble the Project Team
• Develop the Project Work Plan
• Develop the Implementation Plan

Phase 2: Analysis
• Establish the Criteria
(Standards of Performance)
• Conduct Behavioral Event Interviews
• Obtain preliminary information.
• Obtain performance information.

Phase 3: Planning
• Validate the Established Criteria
• Validate content relative to reliability and validity with Subject Matter Experts.
• Obtain performance information.

Phase 4: Development
• Construct Competency Development System
• Create the Competency Dictionary
• Create the Competency Development System

Phase 5: Technology Integration

• Integrate the competency content with competency management technology
• Test the application
Phase 6: Implement
• Implement the competency management system with the organization.
Phase 7: Evaluate
• Evaluate the competency management system.

Key Outcomes Of Competency Management

• Achievement of business goals.

• The organization’s employees use the competency application.
• Positive results for client surveys.
• Positive formative feedback from training programs

Critical Success factors

• Competencies must produce outcomes that are consistent with the
organization’s business needs.
• There must be a single point of contact to act as a sponsor or driver
who can leverage the project.
• There is a need for end-user ownership (employees must view that
this is for them and will assist them to be successful with their on-

12 | P a g e
the-job performance and enable them to substantiate their
qualifications on the job).
• Must be simple so that employees can access and use easily.
• Must be flexible so that it can complement existing human
performance management systems within the organization.

Evaluation Of Performance & Competency Management

The comparison of the different instruments used in practice confirms the
assumption that there is no instrument like the other. Even though the
instruments differ in the construction and the process there are several
approaches which are the same in all instruments. The performance evaluation
is mostly based on a management by objectives in which the targets are set
according to the SMART rule. The objectives are weighted so that the employee
does know which target is of high priority. However, the achievement of the
objectives is evaluated by scales which differ in each instrument. Concerning the
competency evaluation the empirical analysis shows that the degree of the
description of the competencies varies widely. Whereas some instruments
provide an exact explanation of what to evaluate others do give occasion for own
interpretation. Having a look at the linkage between the performance and the
salary it appears that small and medium-sized companies do grant incentive
payments according to the perception of the superior whereas the large
companies do determine the incentive more on a calculative basis.
The elaborated best practice criteria showed that there are no best practice
methods for all the items within an instrument but for the process. The most
important thing while constructing and implementing a new instrument is the
inclusion of the line management. In addition, the competencies to evaluate
should always represent the company’s philosophy. Furthermore, the evaluation
has to be done fair and efficient and has to be transparent.
There is no clear best practice criteria for the scale applied within the
evaluations. However, a scale with a gradation of 5 seems to be most
appropriate. Further, the scale should consist of letters as numbers can be
considered as school grades. In addition, the evaluators have to be trained how
to apply the instrument and should talk to each other in order to diminish gaps in
the understanding of how to apply the scale. Finally, the evaluations should be
conducted regularly in order to prove the development.

13 | P a g e
Graph:Instruments to measure performance and competency

Best Practices for Competency Management

Ensuring your staffs has the proper skills and competencies to consistently
perform the tasks required of them are sometimes a daunting challenge.
Managing and tracking individual skill levels in regulated environments is a
continuous process. World-class organizations use competencies to articulate
and leverage exceptional organizational performance. From a value-added
perspective, competency-based management systems enable the realization of
business strategy and provide a distinctive, enduring advantage for the

1. Integrate competencies into training and development programs.

2. Assess and build team competencies.

3. Reengineer performance management processes with competencies that

account for the highest performance variance.

4. Determine the return-on-investment or economic value of competency


5. Implement competency-based organizational transformation and change


6. Assess and develop leadership competencies.

7. Recruit and select top performers.

14 | P a g e
8. Implement succession planning and executive development processes.

9. Strengthen functional or technical competencies.

10.Link individual or team-based competencies with core competencies and

strategic intent.

11.Design and implement a comprehensive competency-based system

architecture and process.

Performance & Talent Management

The Executive Perspective

An organization makes a tremendous investment in its workforce. In fact,

employees consume a staggering 70% of a typical company's budget. So it is of
utmost importance that the business is getting the absolute most out of its
substantial investment in people

To implement Competency Management the Company can:

15 | P a g e
• Get everyone focused on the work that's most critical to the
business. How to take a well-crafted business strategy and actually drive
it to execution?
By keeping the entire company focused on the things that contribute most
to the company's success.
• Improve the efficiency of operations. The average employee spends
50% their time on non-productive work? It is important that the Company
plug this resource drain by making sure people are working at peak levels
of efficiency and effectiveness -
• Hold onto the top performers. A Company must retain its top
performers by making sure they stay both engaged and happy in their
work - plus appropriately rewarded for their stellar efforts.
• Weed out underperformers. Employees who simply aren't up to snuff
bleed precious resources from your company. Hence it’s important to
identify the weakest links in the organization so that appropriate
corrective actions can be taken.

The Manager’s Perspective

16 | P a g e
A manager wants to make sure that people are working on the right tasks at all
times. He also needs to be able to clearly communicate the company’s goals as
well as how the employees in charge can help achieve them. Not to mention
making sure that the staff is happy in their jobs and feeling justly rewarded for
their efforts.

To implement Competency Management the Company can:

Keep everyone focused on the work that makes a real difference to the
company. Most managers spend a great deal of time in one-on-one meetings
with employees getting updates on work in progress. It is important that the
Company tracks the goals of each individual employee, rolling them up into team
goals, and ultimately, company goals.
Boost the day-to-day productivity of staff.

Get consistent performance from the team all year long. Why wait for
company’s official once-a-year review period to begin tracking the performance
of people? The organisation can collect meaningful feedback on individuals
throughout the year, including 360-degree evaluations from other team

17 | P a g e
Reward your top employees for a job well done. At the end of the day, the
staffs just want to be recognized and fairly compensated for all their hard work.
Hence the organisation can create a true “pay-for-performance” environment.

The Employee’s Perspective

Interest in development of careers /goals of individuals is of prime importance

and hence the organisation must ensure that workers are rewarded handsomely.
The organisation can ensure the following for its employees:
Get fairly compensated for hard work. It is important to establish a true
“pay for performance” culture at the company to ensure that extra efforts get
noticed - and rewarded.
See career path more clearly.. The system should match your current skills
with potential future roles at the company, and then provide the guidance
required to get there.
Understand why work the matters. Employees feels more engaged in the job
if they know how their work related to the manager's goals and those of the

Global Challenges

18 | P a g e
With the global economy in flux, today’s businesses are beginning to rethink
their talent development strategies—and with good reason. Workforces
demographics are shifting as baby boomers retire, and the need to hire, retain,
or streamline to the most highly skilled employees is more critical than ever to
corporate success. Yet as companies focus more intently on delivering
knowledge and services, we also face a new challenge: How do we objectively
recognize the skills and competencies that make our workers desirable? Are
competency models even relevant anymore?
These are crucial questions to answer, primarily because your competency
model guides the end-to-end management of your organization’s talent base—
from performance assessments and goal achievement, to training and
development, workforce planning, and recruiting. More than any other
department, Human Resources (HR) has the power to leverage a well-built
competency plan to generate high-impact reports and analytics. This data
provides tremendous value to executives and significantly improves a company’s
ability to identify needed skills and attract key employees. Not surprisingly, then,
your competency model should be the cornerstone of your organization’s talent
development strategy. Here we offer ten best practices that help define
competencies today, craft an effective competency plan, and ultimately use that
plan intelligently in conjunction with the performance management system. The
result? The organisation is better equipped to engage, develop and retain the
greatest assets the company has—its employees.

1. Consolidate the core.

Core competencies apply to all employees and typically relate to the company's
high-level values. Examples include items such as communication, integrity, and
time management. Begin by taking an inventory of any existing core
competencies used in your company and consolidate down to a manageable list
of 10 to 15. Your final list should reflect the most high-impact competencies that
tie in well to your corporate culture.

2. Specialize.
With core competencies established, you can now delve into the detail of
functional competencies. As their name implies, these competencies are more
inclusive and apply to specific job functions. For example, functional HR
competencies might include those items that represent the basic tasks within
HR, such as employee relations, benefits, and compensation. Obviously, creating
these lists for each job function can be a daunting task. Start small, focusing on a
single department or on jobs that have the highest number of incumbents. Enlist
a sponsor to assist in the project—ideally someone with specific knowledge of
the department or job under discussion.

3. Develop profiles.
The next step is to use the information you’ve developed to draft competency
profiles. Each profile reflects a combination of the core and functional
competencies specific to a department or job. For example, a simplified profile
for an HR Manager II might list the following:
• Communication (core)
• Decision-making (core)
• Conflict resolution (core)
• Employee relations (functional)

19 | P a g e
• Compensation (functional)
• Hiring (functional)
How your company’s core competencies relate to all departments or jobs is up to
you. Remember, however, that limiting the overall number of competencies in a
profile will make performance appraisals more manageable. For the simplest
approach, start with one profile per high-level department. Over time, dig deeper
and develop profiles for each job code. The more profiles you develop, the more
efficient your performance management capabilities will become.

4. Set proficiency levels.

After completing the competency profiles, you might consider adding the next
level of detail: proficiency levels. For some organizations, this step is optional,
but those looking to generate greater success within an overall talent
development strategy should pay close attention. Why? Because proficiency
levels represent your company’s expectations for mastery across all of the
different competencies within a profile—and armed with this information,
employees are better prepared to make progress in their careers. Proficiency
levels will vary by position, and will also vary within the same position over
different job levels. Although counterintuitive, some proficiency level
expectations will actually decrease as the position becomes more strategic and
less tactical. This is particularly true for functional competencies. A vice
president within the HR department, for instance, might only require a basic skill
level for compensation, as the HR staff below the executive will likely deal with
compensation-related processes. Compiling these details is, no doubt, time-
consuming—but ultimately, the process is worthwhile if employees use the data
to develop their skills and become more valuable resources for the company

5. Don’t just assess competencies, develop employees.

Remember that your greatest assets are your employees. HR should assist
managers with identifying individual employee gaps and developing employees
one by one. Incorporate these gaps into performance appraisal reports, and use
the data to generate each employee’s personal development plan. After all, a
performance appraisal is simply a measurement of what has already happened;
development plans and follow-up action are the catalysts that actually improve
individuals’ performance, which should in turn positively influence the
organization’s overall performance.

6. Guide career development and succession plans.

In addition to assisting in individual development, competency performance data
can also be used to identify your high and low performers. This is where career
development plans come into play. Critical for all employees, these plans have
proven to further engage employees by giving them a clearer career path and a
commitment to their own development. In fact, with a straightforward picture of
their gaps in skills or competencies, employees can see a domino-like
progression of how to fill those gaps and move forward. An HR Manager II, for
example, can clearly see how further training in decision-making and
compensation might prepare her for an HR Manager III position.

10. Recruit with competency in mind.

While HR departments in today’s economy are certainly focused on developing
and retaining existing employees, we cannot disregard recruiting by any means.

20 | P a g e
All open positions should ideally use a competency profile along with the job
description as a starting point for locating both internal and external candidates.
When screening resumes, first look for candidates with all your key
competencies—and screen out those who do not make the grade. When
interviewing begins, design questions that deal with five to 10 target
competencies. This type of planning helps ensure that new hires come to the
table with the appropriate skill sets and proficiency levels for their jobs, making
performance management much easier down the road. Clearly, competencies
impact every phase in the employee lifecycle—from recruitment through career
development and beyond. While the legwork in defining and establishing
competency plans might be extensive, the end results hold tremendous potential
in terms of ramping up employee calibre, rating and building employee skills,
and identifying and bridging gaps. By combining a properly constructed
competency model with a full-featured performance management system, HR
departments can systematically generate, apply and leverage competency data
across a comprehensive talent development strategy, ultimately boosting
business results through a stronger, more productive workforce.

21 | P a g e