Transforming Work: Strategic HR and Competency Models

In recent weeks, I’ve blogged about competency models: why they matter, how they were invented, and how they have evolved.

In this final post of this series, I want to discuss one of the most useful types of competency models: enterprise competency models. These models have changed HR to be much more capable of contributing to strategy and support a radical change in how we think of work and jobs.  I’ll also explain why strategic HR models will become even more important in the coming years.

Enterprise Competency Models: Replacing Research with Theories

One of the most significant developments in the competency revolution was the emergence of enterprise competency models. These models outline behavioral or leadership styles that everyone in a company (or all company managers) should demonstrate. 

Enterprise competency models demonstrate a theory of the behaviors needed to implement the organization’s strategy. In other words, the competency model is a summary and vision of the company’s strategy, articulated in terms of how employees should relate and work.

The model ensures that employee and leader styles reflect organizational needs. For example, key competencies could be:
•    Collaboration, if integrated products are central to an organization’s success
•    Customer focus, if the organization is focused on sales
•    Innovation, in a fast-paced technology company.

As with other competency modeling methods, competencies are described by observable behavioral indicators, such as:

Asks questions to determine customer’s point of view before making decisions.

Enterprise competency models are an evolutionary step for managers. Management has always defined organizational structure and jobs. Competency models extend this responsibility into another aspect of the organization.  This top down approach is, however, quite different from the research-based models that “discovered” the underlying success factors for a job.  It is also quite different from a detailed task or job analysis which are considered the starting point for most legally defensible HR processes.

Of course, there are weaknesses. 

An important concern is that managers’ theories are difficult to test. If an organization is not successful, is the competency model to blame? How long does it take to implement strategy?  How can we improve a competency model if it can’t be validated?

These models can also over-generalize the importance of a competency.  Consider decisiveness, a competency that appears in many models. It’s true that managers who postpone or avoid decisions are ineffective. It is also true, however, that managers who make decisions too quickly squelch innovation and creativity.  As a result, being decisive often sub-optimizes decisions. 

Because there is no way to test the competency model, “pet theories” tend to appear in the models. The risk is that theory-based models can be wrong, and they are rarely tested.

To Transform Work, Tell Employees How to Behave

When HR/Talent departments were largely concerned with jobs and tasks, the function was bureaucratic and pigeonholed. The focus was on providing a stock of qualified people to complete required tasks.

Competency models allow HR and talent departments to manage employees’ general interpersonal and intrapersonal style by describing, rating, and even incenting specific behaviors.

This is revolutionary. Consider a typical competency: develops networks across divisions. This is really a tool for culture change; the behaviors associated with networking describe an expectation that employees exchange ideas and information with other divisions. Ultimately, adopting this competency would reduce the silo-ism that is a problem in many organizations.

Today, organizational leaders have a powerful way to describe how they expect people to relate to one another, and even how they relate to themselves. By articulating competency models, and linking HR/Talent systems to the described behaviors, organizations have a new set of tools for shaping how employees manage themselves, how they relate to each other, and how they relate to customers. 

A new era has begun. By describing, rating, and incenting behavioral performance, HR has the potential to evolve into a real business partner.

The End of Task Management

If a company manages its expectation of behaviors using a competency model, and determines the results using performance management (i.e., a Results-Oriented Work Environment, or ROWE), the change is considerable. Jobs, which are task lists, are less important.

As jobs become less important, HR will be able to focus on business results and become a business partner. The idea of supplying human resources becomes less important, while the idea of talent management becomes critical.

Integrating HR Systems with Competencies

There are many ways to direct and encourage behavior. Too often, the methods a company uses to direct and encourage behaviors aren’t integrated. As a result, the organization ends up encouraging different, or even conflicting, behaviors.

An enterprise competency model provides a general theory of employee success that can be used for a variety of systems:
•    Staffing/selection
•    Succession planning
•    Compensation
•    Development/training
•    Performance management.

An enterprise competency model reflects strategy and links all the major HR systems.

The Future

Today, a typical large organization has seven separate databases related to human resources. This makes it difficult to create a single integrated environment for analytics, reporting, and decision-making. In the coming years, many organizations plan to integrate these databases into one Human Resources Information System (HRIS).

As companies integrate various HR applications, competencies will be at the center of the solution. While the HRIS platform is important, it is the content, and the decisions made with the information, that will be the critical components. In other words, the competency model that provides the architecture of the system will be the real key to business success.  

Strategic HR/Talent professionals should be prepared to align competencies with the strategy of the organization. If you want to have a unique and differentiated strategy, I would encourage you to consider a unique and differentiated enterprise competency model.   If your organization is following the same strategies as others in your industry, it’s appropriate to buy an off-the shelf competency model. Most organizations, however, will want a competency model that represents their unique strategy.

In Summary: Using Competency Models

The so called “competency revolution,” as some call it, has come a long way in 40 years.  McClelland and his protégés, who initially proposed competency are almost historical figures. Their initial methods have been adapted to keep pace with changes in work and technology.  The standard of research based models to uncover unconscious competencies for a single job have been replaced with theories of personal success that span an entire enterprise.

In the process of this adaption, many fine methods of competency modeling have been developed.  I do find it interesting that few HR professionals consider the many approaches to competency modeling and the strengths and weaknesses of each.

This six week  review of competency models has emphasized that different competency development methods yield very different information, and that each is appropriate to a specific task. I expect that integrated HRIS platforms will force us to be more specific about differences in competency models. While I expect that enterprise competency models will become paramount, other methods will remain very useful.