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.

Get the Most from Your Competency Models: Understand All Competency Models Are Not the Same

Since their inception 40 years ago, competency models have progressed through distinct stages, in sync with changes in organizations. As a result, there are many types of competency models, each appropriate for a specific task. But we treat them as if they are the same. 

To get the most value from this valuable tool, we need to understand and recognize the differences in the meaning of “competency.” In the last blog post I described the roots of competencies.  In this post I will describe how they have evolved, and the best use of the various competency modeling methods.

Proliferation of Competency Modeling Methods: Moving from Clarity To Confusion

Corporations have wanted competency models since about 1990. Since they can genuinely drive business results and shape culture, organizations were willing to pay for competency models. As a result, consultants got in the competency modeling business in a big way.  

Initially, competency models were only developed for high-leverage jobs such as sales executives and leaders. A $250,000 competency research project carried out over two months was a good investment because individuals in these jobs drive organizational results.  Further, interpersonal (e.g., teamwork) and intrapersonal (e.g., multi-tasking) savvy are very important in these sorts of jobs and the behavioral event interview (BEI) method was exceptionally good at capturing these capabilities. 

Competency models soon began to trickle down to other job-families. Different methods of developing competency models also proliferated. Consultants argued that their methods were unique and better. 

Many consultants used executive interviews to understand competencies.  Often, the interviews started with organizational strategy and then inquired about the human capability needed to achieve the strategy. These capabilities became the organization’s competency model.

Some used focus groups to quickly capture ideas about competencies from leaders or incumbents. Often the focus groups learned about competency models and then generated examples of behaviors that achieved exceptional results.  Synthesis of these behaviors led to a competency model.

Other methods were clearly cheaper.  An organization could purchase a standard dictionary, or a card deck, of possible competencies. By thinking about the target job, it was just a matter of picking the right cards.  Using this tool, a professional could build model in an hour.

Competency models were also published and compared. Some noticed that leadership models from different organizations were quite similar. Would you go to the trouble of building a model if 80% of  competencies are the same in all organizations? 

Standardized competency models were developed. These models were built by integrating many competency models (research) or using on someone’s ideas of what it takes to be a successful employee or leader (theory). These standard models describe good management and leadership, but note how far we have moved from research to unlock the unconscious secrets to high performance! Many of the competency models were simply theories described in behavioral terms.

Ultimately, confusion reigned.  Everyone was talking about competency models, but in fact they were talking about different things.  There was (and still is) no agreement on the meaning of “competency.” 

Some large organizations (e.g., AT&T) had hundreds of unrelated competency models built with different methods and with different underlying assumptions! Many organizations became overwhelmed.  Some went so far as to ban competency models, at least temporarily.

Where We Are Now:  Many Methods to Address Multiple Challenges

Was this a fad or something else? Three things have happened:

• We learned a lot about the inter- and intra- personal capabilities required for key positions; many leadership competencies are better understood. For example, nearly everyone in business now talks about “emotional intelligence.”  Daniel Goleman, who coined the term, trained under McClelland at Harvard, and notes that this inter-and intra-personal intelligence was influenced by competency research
• The idea of a competency changed and became vague.  Whereas competency was defined as “a pattern of thought or behavior that differentiated average from superior performance,” now it more generally means behavioral performance expectations. Beyond that, there is little agreement about the definition of competency
• We went too far.  We started to think that competencies are the only human capabilities that matter. This is clearly a mistake. Many professional jobs do not rely heavily on inter- and intra- personal capabilities  If you are hiring, developing, promoting or rewarding an engineer, use skills or tasks! 

Competencies are clearly not a fad.  After 40 years, i am confident that competencies are a key and useful tool for Talent Management. 

With the benefit of hindsight, we should have a more sophisticated understanding of competency models and what they can do for your organization’s performance. We should recognize that competency models built using different methods have different sweet spots. As a starting point, here is summary of the various modeling methods and situations when they are best used. I welcome your thoughts and additions.

I welcome your thoughts and additions.

Charley Morrow

Sage Assessments

The Nerd Competency Model: What We Can Learn?

Are you a Dweeb, Geek, Nerd or Dork?

Spend time surfing the web and you will find this Venn diagram describing the overlapping capabilities of the “not-cool” kids.   

It is fun, but recently, I had a serious conversation about it.

A friend of mine, who has a doctorate in theoretical physics from Harvard, is burning out from teaching.  Looking at the model, she said “I’m not a nerd. I’m not obsessed enough—I don’t want to spend 90 hours a week perfecting technology.”  However, she is smart; she enjoys doing complex math.  She will probably change to a career that requires lot of smarts but less obsession and people skills. 

I was surprised this internet joke provided insights!  But, upon reflection, we can we learn a few things from this model: 

1. Human performance is based on a mix of capabilities. Intelligence is never enough to be successful! Tech innovators like Mark Zuckerberg are smart, obsessed, and lack social grace.  Change one of these capabilities and you don't get the full package
2. Sometimes lower or even negative capabilities are important for success.  Consider McClelland and Burnham’s seminal finding that the most successful leaders are concerned with power--relationships and influence.  A corporate leader will only be successful if the concern for power is tempered with inhibition.  Similarly, they found that leaders that are overly concerned with relationships make poor leaders
3. The competencies underlying performance are not always obvious.  A nuanced understanding of competencies helps.   If you want to develop leadership in general, you can develop a general competency model.  If you want to develop specific types of leaders, you will be more successful if you fully research the model

Engagement and the Employee Value Proposition

Speak to many consultants and you may hear the suggestion that engagement is a free resource that you should tap and that you should always engage your work-force more—for better results. I encourage you to question this assumption. I don’t think much in life is completely “free.” There is an element of reciprocity involved in all relationships—even employer-employee relationships. Dilbert offers some wisdom about this.

Different Takes on the Psychological Contract 

A psychological contract exists between employers and employees. Historically, the contract was a reciprocity of “lifetime pay and benefits in exchange for loyalty.” This month's HBR has an important article by Tamara Erickson that explains how this contract can be understood by generational differences (e.g., Baby-boomer v. Generation-X). I agree with Tamara.

It is more important, however, that the psychological contract reflects the talent management strategy. This contract is critical to understanding links between employee engagement, talent management, and leadership. In this post, I will describe these links in more depth.

Since the early 1990s, HR pundits have argued about the “new” employer-employee value proposition. The arguments goes something like this: large organizations in a more stable business environment offered continuing employment, pay and retirement in exchange for employees’ on-going loyalty and effort. As the pace of global and organizational change has increased, unfortunately this implicit agreement has been broken. The pundits, however, are still arguing about what will replace the old contract. 

The arguments about the psychological contract can be replaced with a question: “what does your organization need from employees to be successful and what does it offer in return?”   

Fundamentally, the psychological contract is about the employee value proposition.  This value proposition has two points of view: the employers and the employees.  Both must be balanced. Employees must feel like they are getting a reasonably equitable deal, or they will disengage or leave. My colleague Amy Bladen wrote about this in the the April edition of Leadership Excellence (read the article here)

The universal employee value proposition is gone.  In its place are a number of employee value propositions that vary according to organizational strategy, employee class (some employees are more critical to organizational success) and generation.

Organizations can literally balance and harmonize the employers and employees value proposition—try using two columns and write some words.  Be careful, the reciprocal relationship in employee engagement is nuanced! It is important to think about what your organization needs as well as what your employees, or classes of employees, need.  When thinking about your employees’ needs, it must be from their point of view.

Reciprocity and trust are critical to building employee engagement.  Without trust for their leaders and organizational direction employee have no foundation for inspiration let alone energy for achieving the vision.

From the Employers Point of View    

Different organizations need different types of employee engagement and as such the value proposition varies with corporate strategy. To some organizations retaining employees is critical; to others only a few years of intense effort is needed. Yet others need to retain customers and as such employee engagement with the customer is critical. Others rely on employee innovation and skill as the strategy. The list could go on—ask yourself "what does your organization really need from its employees?" In all likelihood you will need different types of engagement from different classes of employees, so you may also ask "are there groups of employees that need to have a special type of engagement?"

Some organizations have a business model based on "employee churn." Life insurance sales organizations have a reputation for paying largely on commission and accepting that a large percentage of employees will leave when they cannot make ends meet. Employee churn is a reasonable business model. Life-insurance sales organizations need producers and they can use churn to find the one out of ten applicants who can actually sell life insurance to strangers (versus selling to family and friends). 

Other organizations have an up-or-out value proposition. These organizations often provide great opportunities a highly stimulating environment and these organizations benefit from hiring younger employees with alacrity. If employees run out of engagement in a few years, more can be hired.

Companies pursuing a product innovation strategy often rely upon skilled employees who have a deep understanding of their product--for example consulting, technology and pharmaceutical firms. In these companies the value proposition has to do with retention and reward of the key talent that enables the innovation-- for example expert consultants, critical skill engineers and R&D/Commercialization professionals. Again, employee value proposition should vary with strategy. 

Also some employees, within an organization, need to be especially engaged.  Consider actuaries in the life insurance industry.  Few life insurance companies want actuary turnover—the few individuals can accurately predict mortality to set insurance rates are rare and critical to a business success.  While high turnover of sales representatives is acceptable, actuary turnover is not. 

Organizations, for cultural reasons, often have a general employee value proposition. Thus, some life insurance companies may overlook low engagement or high turnover. In many pharmaceutical companies, retention-tactics are applied to all employees; these tactics, such as higher pay, lead to higher HR costs.

From the Employees Point of View   
Employees view the world through their own eyes.  As the Tamara Erickson's article highlights, Gen-X employees believe that their employer seems them as “replaceable,” and this colors their interpretation of corporate life. Baby-boomers are more likely to believe in the old psychological contract and act accordingly.

Employees will engage in any organization, even those with a churn or an up-or-out employee value proposition. However, the value proposition must be transparent to earn engagement. 

A leader can build trust if he or she is transparent about the employee value proposition.  I consider transparency to be part of being authenticity. A young and ambition prospective employee is likely to join a leader who says “I’m going to give you an opportunity and it will be challenging. You will learn a lot that will be useful in your career.  If you are successful you are likely to make some reasonable money.”  If, however, the employee value proposition is not made clear some new hires will have other expectations and be disappointed.  This is the basis of the realistic job preview. 

High potential employees may have another worldview.  They may, realistically, see themselves as having more opportunities than typical employees.  As such, they may require more opportunities or compensation in return for their engagement and loyalty.

Implications for HR and Leaders
The challenge for organizations is to understand the links between the value propositions and strategy and then to make the contract explicit. This becomes more difficult when you have multiple value propositions in the same organization. This is where front-line leadership comes in; supervisors need to authentically relate to employees and build trust on the basis of reciprocity. Organizations need to ask themselves:

• "Are our managerial ranks are up to this task?” 
• “Does the organization support supervisors to have authentic relationships with employees?”

As ever, I would like to hear your thoughts.  Does your organization have an aligned employee value proposition? Does your organization have multiple value propositions for different employee classes, or should it?

Charley Morrow

www.SageAssessments.com

Measuring Employee Engagement

As employers realize that they have “engagement issues,” many are trying to quickly assess the state of their workforce. Many will buy a “ready to go” survey that includes an engagement index. This is fine, but there are lots of options.  I will write about a few.

What sort of engagement is important for your organization?
There are many types of engagement. Consider, does your organization need better engagement with safety, with customers or with the mission of the organization? I have an engineer friend who tells me he always is engaged.  He loves his profession designing manufacturing controllers, but he has very stormy relationships with employers. As a result, this skilled and valuable engineer is constantly changing jobs.  If this personable guy had closer relationships with his boss and co-workers he might stick around. A focus on retention is missing in his employers. Be clear on what is strategically important to your organization.

Your organization may be more interested in engaging certain types of employees—high potentials, hard-to-staff skill groups, or generational groups (e.g., Boomers, Millennials). Knowing what is strategically important to your organization is critical to measuring engagement.

Surveys
Most organizations will choose a survey to understand workforce engagement. At first blush, this is an easy choice. Surveys results are easy to stratify by demographic category (such as age, education-level, or department). These stratifications allow fine grained review and comparison of different groups. This helps to target intervention and to provide useful feedback to managers.

Surveys, however, do require expertise to write, implement and interpret. The difficulty in developing surveys goes beyond the technical aspects of writing and implementing surveys. Surveys are difficult to write because they require the developer to understand the dimensions of workforce sentiment that are important to employees and the strategy well enough to ask intelligent questions.

“Census” surveys, which invite the entire population of employees to take part, are most common. In addition to the time it takes to have all employees take part in the survey, asking about engagement can raise employee expectations that “something is wrong,” or “something is going to change” around here. It is critical to act upon survey results; raised expectations can actually reduce engagement!

Standardized surveys, such as Gallup’s Q12, the Great Places To Work Institute’s Survey and Sage Assessment’s REALI-Index are easy solutions in that they are research based and have evolved through use in multiple organizations. They often include norms that allow you to compare your organization to others. Ultimately, comparisons within your company are more useful, but people are often curious about “how do we compare?”

Successful organizations have a unique strategy, which suggests a need to develop your own survey. Yet, this is time consuming and requires experience and skill in developing surveys. Perhaps the best balancing act is to use a standard survey and add a handful of custom questions to ensure that your specific culture and strategy are included in the survey.

Focus groups
Compared to surveys, focus groups are blunt instruments. But, not all projects call for razor sharp precision—sometimes a more general tool is needed. Stratification and contrasts are not really possible with focus groups, rather you learn about general sentiments. While surveys do extremely well at slicing data, focus groups allow a nuanced understanding of the issues that matter to employees. Focus groups can be easy to conduct-- and can give you a quick directional sense of engagement.

Surveys are primarily static questions to which employees respond. Focus groups are more generative— groups of employees can frame the issues that matter to them.

Years ago I ran focus groups at a large organization with very high engagement. Most employees in this pharmaceutical company truly believed they were working in alignment with the words of one of the founders: “… medicine is for the patient. It is not for the profits...” While consulting, I was genuinely impressed by the engagement in the organization. It was a joy to be in this organization—employees were excited about their work and excited about their organization.

In the midst of the scheduled focus groups, however, a key product was pulled from the market.  The media suggested the organization knowingly endangered patient safety by recklessly selling the product despite knowledge of deadly side-effects. The impact was immediately obvious in the focus groups. Focus groups were markedly different before and after the recall.  Individuals whose self concept was built on working for an ethical company were wracked with doubt. Suddenly, employees in focus groups started doubting the company, distrusting management and disengaging. Concerns about management were voiced.  The abrupt changes provided insights into how to proceed with a culture change initiative. I learned that informal focus groups tell you lots about engagement and they provide you with insights that you would never learn from a survey.

You can run a focus group of the key talent group to understand the engagement of small fractions of employees. This will provide you with insights into specific strata without a survey.

Remember Engagement, Not Measurement, Matters
Regardless of how you do it, I encourage you to understand engagement in your organization. I’m a measurement guy but I have to say the goal is not measurement.  The goal is to understand and improve engagement.  It is a mistake to focus too much on measurement perfection—what matters is engagement.

I’d like to hear about how you are measuring engagement. Please comment!

Charley Morrow
www.sageassessments.com