Getting Past Competency Chaos - Korn Ferry
Getting past competency chaos A crucial step on the path to talent management value realization. www.kornferryinstitute.com
1 Introduction In pursuing the promise of HR technology an organization must also overcome the inevitable pitfalls standing in the way of those promises. We welcome you to use what you learn here to assess your organization’s current level of maturity and align your talent management strategies to surmount one of the most important immediate hurdles you face—that of competency chaos. Your reward will be technology that works better and acceleration down the path toward talent management value realization. In 2005, while discussing the emergence of tools to support strategic HR capabilities, research analysts from the Gartner Group noted: The interests of four diverse communities—executives, IT, HR and vendors—are coming together to support the emergence of a new suite of human capital management applications, which we call talent management application suites (TMAS)1. While vendors and IT managers have their own motives for pursuing integrated suites, for business and human resources executives the demand for TMAS is driven by a need to gain maximum value from human assets. The decisions made by managers about people are increasingly viewed as crucial to building a ready supply of the right talent for organizations competing in a knowledge economy. This vision of managers armed with the information needed to make better talent decisions—that will add real value in the drive for enterprise performance and sustainability—is the primary reason for the significant investments organizations have been making in these application suites. 1 Gartner’s Dec 2007 research publication – ID Number: G00152102: Unlocking the Strategic Value From Talent Management Application Investments by James Holincheck.
GETTING PAST COMPETENCY CHAOS 2 The problem. The need to make better talent decisions has, indeed, been the objective of recent talent management technology implementations. Yet this goal has proven illusive. In a rush to automate talent management processes and put sophisticated tools in place, organizations have overlooked factors that lead to the realization of strategic return on these investments. Instead, they have inadvertently exposed themselves to risks associated with getting poor data faster to make quick and inappropriate decisions. To understand the current state of affairs with today’s talent management application suites and the persistent obstacles to using this technology more strategically, it’s helpful to look at previous research presented on the topic. Figure 1 shows a typical architecture for a talent management application suite, as identified by the pioneering research from the Gartner Group’s report in 2005.2 Figure 1 Talent management applications Compensation management ERP / HRMS / External sources Source: Gartner (May 2005) Jim Holincheck Gartner’s June 2005 research publication – ID Number: G00126407 Talent Management Application Suites Can Enhance Workforce Effectiveness by James Holincheck. Data sources Competency management Integration broker 2 Learning management Succession planning Career development Performance management Workforce acquisition Web presentation / Portal / Self-service / Mgmt. reporting Workforce planning Knowledge management Content management Business process mgmt. Talent management application suite architecture.
3 This research, updated in 2007, states: Customers talk about implementing talent management applications to support strategic human capital management. However, much of what has been implemented focuses on automating what was previously done on paper or in Microsoft Word documents or Excel spreadsheets.3 Holincheck goes on to list some of the key reasons for this more tactical reality of most implementations. The lack of integration between talent management applications can cause many issues for companies in gaining strategic value from their investments. From an IT point of view, there is shared data that is used across the multiple applications that must be kept in sync. A core HRMS solution (personnel, payroll and benefits administration) typically provides the system of record for basic employee and organizational hierarchy data. However, competency models, job profiles and individual talent profile data are typically not stored in the core HRMS. It is stored in each talent management application. Thus, if several vendors are used for talent management applications, then these vendors need to integrate with another vendor to ensure that this data stays in sync. The analysis of talent data should drive decisions on how to best leverage talent to achieve specific business outcomes. The lack of consistent and integrated talent profile data makes it difficult to analyze and use strategically. However, it is just this type of analysis that is the key to unlocking the strategic value of talent management investments. 3 Gartner RAS Core Research Note G00152102, Unlocking the Strategic Value From Talent Management Application Investments, James Holincheck, 26 December 2007.
GETTING PAST COMPETENCY CHAOS Overcoming competency chaos: A crucial step on the path to value realization. The Gartner research points to a number of factors preventing organizations from getting strategic value from their talent management applications. Chief among these is the difficulty organizations face in effectively developing, deploying, and integrating competency libraries and job profiles across disparate systems. The need to improve talent decisions and the effective use of human assets are the primary goals of the talent management application suite. Every day, decisions are made in the areas of selection, performance and pay, development, succession, and promotion. All of these require a common taxonomy to describe the skills and behaviors, or competencies, that drive organizational performance. When used effectively, competencies are more than a mere library of desired traits. Rather, sets of competencies are assembled into competency models, or job profiles, that accurately describe successful performance in critical roles. These job profiles become the basis for making more sophisticated and effective decisions about talent. As demonstrated by the Gartner study, the importance of competencies and job profiles to strategic talent management is well documented. Yet, organizations continue to stumble when implementing competencies for a wide variety of reasons. Some of the most common challenges are: Lack of stakeholder and constituent buy-in to competency models which often occurs when the relevant stakeholders are not involved in the initial design or when their unique needs are not addressed in the job profiles that are created. Lack of a process for updating and keeping competency models current as the organization changes. Lack of appropriate competency governance processes and policies which often results in the demise of the view of competencies as a fair and objective tool. Failure to integrate competencies and profiles into critical business and talent management processes. Little consideration for how competency models and competency content need to integrate with various talent management technology platforms. Designing competency models without the end use in mind. Using competency models designed for one purpose to try to fit another resulting in the need to adjust models after the fact. Lack of a single system for managing competency content and making it accessible to all users so that changes to the competencies are made as they happen in all locations. Lack of a plan to execute against the competency models and successfully ensure that they lead to real behavior change in the organization. 4
5 Defining competency chaos. Imagine different business or functional groups having various definitions for the accounting codes used to manage expenses and run a business. At the center of most of these problems is a condition called competency chaos. Competency chaos is the situation that arises when different parts of an organization create their own sets of competency content to match their specific HR needs. In other words, competency chaos is the state of confusion that reigns when different parts of an organization independently define and use the same or similar competencies in different ways. Competency chaos can happen for many reasons. In one organization, three different departments defined their own competencies, with the result being three different definitions for “communication skills.” In another, the conversion of job descriptions created a far too diverse competency catalog. In a third, a central competency model was identified, but some departments felt it didn’t quite work for them, so they redefined the competencies to suit their specific needs. The consequence is that each part of the organization has its own set of definitions for the content that should serve as the foundation of the common talent management systems. Imagine different business or functional groups having various definitions for the accounting codes used to manage expenses and run a business. That would certainly create accounting chaos. In turn, this would doom any ambitions an organization might have to make smart financial decisions based on a comprehensive and accurate accounting of the overall financial position of the enterprise. In a similar way, competency chaos jeopardizes the successful implementation of talent management systems and weakens their promise to provide an organization with a solid plan to manage its human capital as an asset.
GETTING PAST COMPETENCY CHAOS Deceptive complexity. One factor that contributes to the deficiencies of competency management is the appearance that implementation is simple. Talent management system vendors focus on their applications and assume that their clients can develop their own set of competencies. They generally provide support only for finished competency profiles mapped to organizational positions. In addition, just about every talent management technology vendor and human capital consulting firm professes the ability to do competency modeling, but many of them lack grounding in the art and science of building proper models and profiles and fail to understand the necessary talent management perspective. Because many organizations believe that competencies are simple, they think they can create and implement a competency-based solution by gathering a group of people to brainstorm a set of competencies in an afternoon. While that process may elicit a list of desirable traits, in many cases those traits are statements of altruistic vision and have little connection to the business strategy and, as a result, do nothing to improve business results. Without a well-defined direction emanating from a clear competency strategy, the benefits of an aligned workforce are never realized. What makes implementing competencies so difficult? There are many factors that contribute. Among them: Many different uses and views of the same competencies. Competencies can be applied in many ways within an organization, just as they are used in many ways in systems—as a basis for interviewing candidates for an open position, underlying a skills inventory, to define development needs—different groups have different, usually overlapping needs, and the result is a legacy of different approaches and levels of quality. Many different types of competencies. Competencies work in different ways and do different things. In addition, there are many ways of looking at competencies. For example: Core competencies describe the culture and behaviors of an organization. Level-based competencies refer to those competencies shared by people at specific levels of an organization (e.g., managerial, leadership). Functional competencies refer to competencies, usually behavioral, shared by individuals in a particular function. Technical competencies refer to the technical skills necessary to get a job done. Career path competencies identify the developmental competencies needed for a future position. 6
7 Competencies can also be categorized as threshold vs. differentiating. While these categorizations are not similar to those above, they are important considerations. Threshold competencies are like “table stakes”; they refer to the competencies that are necessary, but they don’t separate high performers from average performers. Differentiating competencies, on the other hand, do just that. They are the competencies that are exhibited by “A” players that are not demonstrated by “B” or “C” performers. These competencies are discussed in greater detail later in this paper. Different levels of granularity. Certain processes (e.g., selection) use competencies as a whole, while other processes (e.g., development) focus on competencies at the behavior level. General enough to be comparable for succession planning but specific enough to be relevant, clear, and measurable. Different uses for competencies place different demands on competency profiles. Competencies are best understood and adopted when they speak directly to an individual, but yield the best analytics when they can be used to aggregate comparisons across the organization. Emotionally charged because they are the basis of performance and pay. Because of their tie to performance and pay, it is natural for every constituency to try to adjust the competencies to fit their strengths. “Gaming” the system may be natural, but it can wreak havoc with an attempt to leverage competencies to generate prescriptive or predictive analytics. Need for objectivity and fairness. Because of their tie to performance and pay, it is critical that the competencies are perceived as objective and fair. This can only happen is a measure of inter-rater reliability if introduced. If that is not the case, “easy graders” will cause further grumblings of inequity and undercut the utilization and perceived value of the system. Competency chaos and the fractured nature of competency integration across an enterprise is not the fault of the systems, process, and data tools. In fact without the proper competencies
GETTING PAST COMPETENCY CHAOS the systems, process, and tools can’t progress and mature. As more organizations seek to evolve their talent strategies and realize value from their talent management initiatives, the imperative to squarely address the competency foundation and minimize competency chaos is increasing. In short, the payoff from talent management strategies is often stalled by the lack of a coherent, competencybased foundation, for both aligning talent strategy with business strategy and enabling execution of that strategy through a focus on the performance behaviors most essential to strategy success. To paraphrase Winston Churchill, “[Competencies] are the worst form of [talent management] except when you compare the alternatives.” Solution So how does an organization create a comprehensive competency strategy, avoid competency chaos, and avert the risk of the rush to automate? The chart below depicts the current landscape of today’s maturing talent management strategies, avoiding competency chaos, and advancing to a vision of Enterprise Talent Management Value Realization. While it suggests the use of technology application tools, it is obvious that more than technology is needed if the strategic vision is to be realized. Because many talent management strategies are relatively immature, and because competency chaos is a frequent impediment to their success, an approach is needed that accelerates more immediate returns on talent management initiatives. This approach would: Reflect a realistic view of current conditions pertaining to technology, competency content, and talent management decision processes. Balance the attention on technology tools with attention to key implementation barriers such as the foundation of competency content that is needed to define the behaviors essential for strategy success. Quickly define the scope for an early win where competency alignment within one or more talent management processes would lead to better talent decisions and more desirable outcomes. Continue the process of gradually resolving competency chaos so talent management applications can capture the accurate and consistent data needed for better talent decisions and lay a rock-solid foundation for greater integration in the future. 8
9 Figure 2 Vision for automation, but immature strategy; simplistic and ineffective competency models with effective implementation in terms of executive commitment and execution excellence for enterprise adoption. Vision for business impact, sound strategy, and solid integrated competency models and profiles; combining automation with effective implementation in terms of executive commitment and execution excellence for enterprise adoption. Well-oiled HR machine. Mature competency strategy with enterprise talent management value realization. Competency strategy start-up. Strategic vision without impact. Vision for automation, but immature strategy; simplistic and ineffective competency models with ineffective implementation. Vision for business impact, sound strategy, and solid competency models and profiles; uses automation but with ineffective implementation. Low Implementation effectiveness High From competency chaos to talent management value realization. Low High In short, a Competency Strategy needs to be developed, complete with a road map and timetable that outlines the conditions required for success. As part of the strategy, an optimal framework will be established that captures the core leadership capabilities required at different levels in the enterprise, the key functional capabilities needed to further develop the functional profiles at different leadership levels, and the core business skills required across the organization. At the same time, it will ensure that the resulting output is simple and easy to use. This approach will make it easy to map existing success profiles and to create new job profiles in different parts of the business. In a rapidly changing business environment, roles and jobs will change, disappear, and be newly created, so the competency framework must be flexible and enable an organization to continue to apply the framework as its business evolves. A strong conceptual approach to helping organizations build an enterprise-wide, integrated capability framework is illustrated.
GETTING PAST COMPETENCY CHAOS Why an enterprise competency structure is critical. The number and types of functional models and job families vary by organization. Inevitably, there is a struggle to balance between the desire to create broadband functions and the need to get competencies closest to the position so they are relevant to the job they attempt to describe. The number of functions may also help to determine the competencies used in specific models. For example, a recent report, “The Role of Competencies in Driving Financial Performance,” states that “Because financial services companies tend to be stove-piped into distinct functional business units, [a good] communication [competency] breaks down these large barriers, and makes individuals more effective and gives them greater perspective.” The most critical determinant of the optimal framework for competency models is their link to business performance. Competencies are the embodiment of the organization’s business strategy through its people. Research shows that when managers identify the competencies required for high performance, they are right approximately half of the time. The problem is that they don’t know which half! Ultimately, the ability (through research) to predict which capabilities are the most critical to performance allows for smaller, simpler, and more targeted models. 10
11 Business analytics to link talent decisions to business outcomes. The final step in Talent Management Value Realization is when an organization is able to take full advantage of their competency modeling efforts by conducting advanced analytical research. At that point, they can link competencies with organizational outcomes that matter, such as profitability, increased revenues, customer satisfaction, and employee engagement. When organizations can develop a process to determine which dimensions of performance (competencies, behaviors) predict each critical strategic objective or outcome, they can achieve the real business impact of the initiative. A business impact analysis can help organizations determine: Which competencies best differentiate “A” players from “C” players. Which behaviors have the greatest overall impact on outcomes such as productivity, customer service, and employee engagement. Where efforts should be focused to gain the greatest performance improvement. Where key business strategies or initiatives may be at risk due to talent constraints. This analysis can use statistical methodologies to examine the ratings from a group of individuals to determine the competencies and behaviors that have the most significant impact on key outcomes. For example, if an organization wants to identify those competencies most closely associated with individual productivity, the analysis would examine the relationship between competency ratings from feedback surveys and individual productivity data obtained from the organization. The resulting analysis would generate relativeimportance weights for the competencies included in the survey as they relate to productivity. The figures that follow show actual data from a PDI professional services client. This helped them determine the competencies that were most critical for differentiating “A” vs. “C” performers.
GETTING PAST COMPETENCY CHAOS 12 Figure 3 Predicting utilization. Maximum performance requirements. { Improve processes. 17.5% Manage the work effectively. 11.9% Share information. 10.4% Create effective plans. 9.0% Think broadly. 8.3% Show initiative and commitment. 7.7% Understand and resolve issues. 7.6% Seek customer satisfaction. 7.5% Collaborate/team membership. 6.5% Readily adapt. 5.9% Demonstrate credibility. 4.5% Relate well to others. 3.2% Consultant utilization A vs. C performer differentiators. { Relative competency importance. Figure 4 Behavior importance/process improvement. Competency 9.5% Carefully monitors the accuracy and quality of work methods and outputs. 13.1% Addresses process breakdowns with speed and thoroughness. 55.6% Identifies ways to streamline and/or improve efficiency of work. 21.7% Criterion 17.5% Utilization Collaborates with others to enhance work processes or structures. Consultant utilization Behaviors
13 Building a competency strategy. To avoid competency chaos and achieve Talent Management Value Realization, six conditions must be met: One: Clear vision. Two: Aligned strategy. Three: Solid foundation. Four: Executive commitment. Five: Execution excellence. Six: Ongoing management and governance. Clear vision – a view into a future where integrated human capital management processes reliably yield the information and talent decisions needed to ensure a supply of superior leaders who will drive improved performance. This includes an understanding of how each of the talent management processes will be addressed and the associated competency requirements. This also includes a clear vision of the projected culture of the organization and the message that the competencies should send when they are presented to the organization. In addition, it includes a clear link to business outcomes, both for stakeholder buy-in and to evaluate impact. Aligned strategy – a solid understanding of the outcomes desired from the organization’s business strategies and their alignment with a maturing talent management strategy and Information Technology systems integration strategy. Based on the organization’s vision, the behaviors and experiences most crucial to addressing its business needs are clearly linked (by competencies) to integrated human capital management processes. Solid foundation – a strong competency management foundation supported by reliable data sources. This becomes the basis for integration of talent management applications and enables strategic, enterprisewide impact.
GETTING PAST COMPETENCY CHAOS This requires a consistent and duplication-free competency library, a set of consistent competency profiles, and an underlying rationale that will support business analytics. The content must be simple enough to adopt and use on an everyday basis and strong enough to support its objectives. Most often this will include a clear framework that parallels the organizational structure, including the number of hierarchical levels and functional delineations. This will serve as the foundation for all competency component development, use, and lifespan management. To paraphrase Albert Einstein, “Make [the competencies] as simple as possible, but not simpler.” Executive commitment – clear direction from executive management will help ensure that managers and employees get involved early and often so that they understand the value in doing things differently. Execution excellence – the best talent management applications implemented with the best processes will not achieve desired business outcomes if managers and employees don’t know where to start, or if they find the process too hard to use. In addition to skillful project management, successful execution requires a simple implementation process that addresses technology and infrastructure issues, competency foundation requirements, and organization/people concerns. It must make the new leadership “brand” memorable, measure the engagement, and reinforce the message whenever and wherever necessary. Ongoing management and governance – the more effective the competency implementation, the more susceptible it will be for each group that wants to tailor the models and profiles to fit its specific needs. This is a fast track to competency chaos. It is imperative that policies and business rules are put in place to protect the integrity of the competency system and the resulting data. Clear and strong governance of competency content is essential to the continued usefulness of your talent management system. In addition, a system of record for managing, updating, accessing, time-stamping, and sharing all competency data must be integrated into the governance plan. Without such a system, different versions will inevitably appear and a proper audit of the application of profiles will be virtually impossible. Finally, the organization will need a plan for managing and updating competency content to keep it alive. Competency content needs to evolve as the business strategy evolves. Inadequate supervision of the changes needed or the lessons learned from the use of the competency models will, at best, render them irrelevant and, at worst, guide behavior that will be inconsistent with the company’s direction. By charting a path that meets these conditions, an organization will be able to more quickly move from the efficiency gains of technology automation into the arena of alignment of performance behaviors with strategy execution needs which is required for Talent Management Value Realization. 14
15 Specific approach. Overcoming competency chaos for Talent Management Value Realization may seem difficult. To make it easier, we recommend a three-step process that considers the current maturity of the organization’s talent management strategies. One: Figure out where we are now. How mature are our current talent management strategies? What’s our existing business need and vision for Talent Management Value Realization? What Talent Management Applications and IT Systems do we have in place and how well aligned are they? What are our competency assets and how can they be put together to create a cohesive foundation? Where do we have gaps? What level of executive commitment is there to overcome barriers and realize success? Two: Determine where we need to go. What is required to support development and learning systems? What about selection readiness assessment? What is needed to stand up to the scrutiny of pay for performance or succession planning and promotion decisions? What kind of competency framework will we need to minimize overlap, redundancy, and chaos? Three: Build a strategy road map. What is the foundational architecture? What do we need first? What’s needed for a quick win? What more will be needed? What is our timeframe? The following table suggests five levels of maturity in competency implementation (paralleling the model/structure outlined by Carnegie Mellon in their CMM-P)1 that can be used to diagnose and assess the current level of your organization. It also suggests the conditions that should be present to move from one level of maturity to the next. Using this table, organizations can create a specific agenda to sequentially progress toward greater maturity.
GETTING PAST COMPETENCY CHAOS 16 For example, in moving toward Talent Management Value Realization, an organization must start with a strategy that has the end result in mind. If the goal is a system to identify, differentiate, and develop talent for better decisions of all types—selection, promotion, development, and succession – then an integrated talent management system will be needed with organization-wide analytics based on an aligned set of standards for all processes from recruitment to retirement. This means better tools to: Build, customize, and manage a single, consistent competency and model library. Structure those competency models to provide both vertical an
Level-based competencies refer to those competencies shared by people at specific levels of an organization (e.g., managerial, leadership). Functional competencies refer to competencies, usually behavioral, shared by individuals in a particular function. Technical competencies refer to the technical skills necessary to get a job done.
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UNESCO EDUCATION SECTOR 5 Systems thinking competency Anticipatory competency Normative competency Strategic competency Collaboration competency Critical thinking Self-awareness competency Integrated problem-solving competency Promotion of key competencies for sustainability ESD enables all individuals to contribute to achieving the SDGs by equipping them
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