Competency Management:

Reasonable expectations, strategic considerations and success factors Executive Summary

Competency management can empower the individual and provide vital work force decision support to management. But implementing this process takes some care and planning. Done well, it is a powerful business process that includes everyone in the logicchain that relates goals, responsibilities, expectations, learning and growth.

Director Competency Management Solutions

Hank Riehl

MARCH 2006

Competency Management: Reasonable expectations, strategic considerations and success factors

What is competency management? Some background Competency management: A mind-set, a sense of accountability, a competency focus Why implement competency management? What if you could raise organization-wide productivity? Productivity: The big payback The software component: A skill inventory Master Skill Library How does the data support our desired productivity payback? Weve got the data now, how do we use it? Summary

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Competency Management: Reasonable expectations, strategic considerations and success factors

What is competency management?

Much is being written and discussed concerning competency management. It is sometimes described as:

Simply a new version of the age-old skill inventory concept; or The ultimate solution to work force planning and management; or Anything and everything in between.
SkillSoft views competency management as a way to help businesses manage their employees skills and knowledge more eectively. It is designed to allow your team members assess to their talents, allows them to manage their careers and even determine training needs. SkillSoft sees competency management as an approach to tying corporate objectives to learning by creating a direct link between jobs, competencies and business objectives.

Some background
Consider the old clich about buying a drill. You dont buy a drill because you want a drill. You buy a drill because you want holes. The same goes for people. You dont hire people because you just want them. You hire them for their talents, their competencies. But isnt it odd that in world where technology plays such a key role, sta development, deployment and hiring decisions are still made largely on gut feel. We apply rigorous value and payback analyses to decisions about software, hardware, furniture and facilities; but we employ no rigorous decision support when it comes to our most costly asset, our people. Sta costs usually dwarf other asset costs, but we allocate stang funds with very little decision-making rigor. Many industries require individuals to possess very specic technical competencies, but very little is done to formally catalog or track those competencies to business advantage. For the most part, we do not view sta competencies as strategic assets, to be molded and developed to meet the future needs of the business plan. Yes, people are important, but it is their competencies that are the real substance of success. We make two assertions for you to consider.

Most people are capable of far more than we ask of them. When properly motivated, most will willingly provide far more.
If one believes these assertions to be largely true, the question next becomes, how does one aect change to get people to willingly give more? Competency management may oer that means.

Competency management: A mind-set, a sense of accountability, a competency focus

Competency management is about instilling change - real change - into the organizational mind-set and value-set. It is a conscious strategy, laid-out and endorsed from the highest management levels. It is about competencies, sta prociency in those competencies and how competencies relate to the organizations overall goals. The competency management organizational objectives are to:

Competency Management: Reasonable expectations, strategic considerations and success factors

Instill greater responsibility into the individual for his/her own development of valued skills, and provide the informational resources to dene, measure and achieve that development;

Instill greater accountability in managers and supervisors for their subordinates aggregate skill set; Provide top management with consistent, strategic decision-support criteria for sta learning and development,
deployment, outsourcing and hiring tactics. The idea of competency management is the creation of an environment where individual prociency in vital skills is measured, fed-back, valued, acted-upon, nurtured and molded. It involves universal recognition that sta prociency is the real substance of success, and changing the culture to appreciate, act upon and benet from this fact.

Why implement competency management?

In its barest essence, competency management methods identify each member of your work forces prociencies and skill gaps, and point each person to pertinent learning and development solutions to overcome those skill gaps. When competency management is implemented with strong top-management commitment, a strong message is received in the ranks that competencies help dene personal value as individual contributors. When competencies are openly cataloged, people set out to upgrade their abilities; resulting in a more talented, more productive sta.

What if you could raise organization-wide productivity?

When one hears skill inventory, it conjures up images of projects that have been tried (usually without real success) many times before. Traditionally, skill inventory initiatives were instituted to provide training needs analyses or job and pay grade analyses. These eorts were usually sponsored by the training or HR functions; oering little perceived value to other parts of the organization. They required participation of the many to solve the problems of the few; not usually a recipe for success. The disappointment in these initiatives has not been due to the methods, per se, but in the lack of top level commitment and the initiatives narrow objectives. The tactics were sound but the strategy was awed. Competency management employs the same techniques as the skill inventory initiatives sponsored by training and HR organizations over the years, but with dierent ownership and with much wider organizational benet, and hence, wider buy-in.

Productivity: The big payback

Competency management instills a fundamental change in the organizational mind-set that can improve organizationwide productivity tremendously, yielding annual payback of hundreds-of-thousands, even millions, of dollars. How? Consider an organization with a professional sta of 1,000, with an annual payroll of $70 million. If that sta became just one percent more productive, that amounts to an annual return of $700,000. So, how does competency management help achieve productivity gains?

Staers competencies are on record. Therefore, theyll be much more aggressive taking personal responsibility to
self-direct their learning and improvement.

Competency Management: Reasonable expectations, strategic considerations and success factors

Supervisors become more attuned to their subordinates needs and accountable for their subordinates talents, Top management benets from quantied, consistent information with which to make strategic stang decisions. Hiring, training, outsourcing and work force deployment decisions are made with greater precision.

contributions and learning. Management support of continuous learning and improvement reinforces and feeds the cycle.

The software component: A skill inventory

A successful competency management initiative requires an enabling skill inventory and decision-support software system. A common mistake is to over-emphasize the importance of your software selection and skimp on the organizational, strategic planning aspects of the initiative. You are almost guaranteed failure if you follow that easy course. Competency management is more about aecting cultural and value changes to yield big productivity gains than it is about putting in a skills software package. In fact, competency management software requires little more than an up-to-date, easy-to-use skill inventory application. Once the repository is populated, employee skill-by-skill prociency-levels can be compared with their corresponding jobs desired prociency-levels to derive skill gaps. Then layer in learning events associated with skills in which an employee has gaps to create development plans. SkillSofts SkillView, one of the Enterprise Learning Connections, is designed to help businesses manage their employees skills and knowledge more eectively.

Competency Management: Reasonable expectations, strategic considerations and success factors

Core SkillView Data

PROFICIENCY RATING
SKILLS LIBRARY

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JOB PROFILE

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0=No Ability 1=Basic 2=Competent 3=Advanced 4=Expert

IMPORTANCE SCALE
1=Low 2=Modest 3=Critical

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EMPLOYEE PROFILE

LEARNING ASSETS

Master Skill Library

Competencies should represent those skill-or-knowledge items deemed vital to organizational success. There are four general types of skills: 1. Technical: Relating to domain-specic technical concepts, methods, tools and platforms 2. Supervisory: Enabling one to eectively supervise others 3. Interpersonal: Enabling staers to communicate and interact eectively 4. General Business: Line-of-business, support infrastructure

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JOB CANDIDATE PROFILE

Competency Management: Reasonable expectations, strategic considerations and success factors

Many organizations prefer to implement technical skills only in their competency management initiatives. Technical skills are observable, demonstrable and/or testable. The other skill-types are softer, more subjective, and harder to condently quantify competence. Technical skills may be very generalCOBOL programming, for example; or very specic, such as creating calculated columns in SQL Select statements. The granularity trade-o is greater decision-making detail at the cost of a larger skill dictionary. A common mistake is to dene everything everyone does in the master skill library. The more purposeful objective should be to dene everything that anyone does that is really needed to track for strategic and tactical decision-support purposes. There have been some implementations with thousands of skills in the master skill library and hundreds in any given job or employee prole. While this approach may be literally correct, it is simply too unwieldy to deploy to a wide population. We would describe that scenario as a perfect example of analysis paralysis. There is no absolute correct number of skills, but SkillSoft believes strongly that fewer are better. Dont have thousands when hundreds will do. Dont have hundreds when scores will do. One simply has to nd where to draw that line. We like the following advicedont try to justify why we should include a skill. Try to justify why we should not include that skill. (It isnt strategic, it is routine or mainstream.) A favorite example would be using the organizations e-mail system. This is something that everybody does. And some are better at it than others. But would this be a criterion for hiring someone; promoting them; placing them on a project team? We think not. Dont bother tracking the routine. Concentrate on the strategic dierentiators.
Proficiency rating

Competency ratings are a simple scale or gradient; describing lesser to greater competency. It could be as simple as beginner; intermediate; expert. Or, there could be six or eight levels dened, each describing a slightly more-capable degree of expertise.
Job profiles (desired ability)

Here we perform two steps. First, we collect the subset of skills from the master skill library that is germane to the particular job in question. Second, for each of those skills, we assign the target or desired level of ability from the prociency scale. A given jobs skill-by-skill collection of assigned ratings is that jobs skill prole, which becomes the competency benchmark of that job for comparison purposes.
Employee profiles (actual ability)

In similar fashion, employees report on their actual level of ability in each skill. This is typically performed as a self-assessment process (typically reviewed by ones supervisor). Or in a more rigorous approach, a 360-degree style, or multi-rater approach to employee proles, where a variety of assessments on an individual are aggregated into one consensus or resolved prole. A given employees skill-by-skill collection of ratings is his/her skill prole. Comparing an employees skill prole to his/her

Competency Management: Reasonable expectations, strategic considerations and success factors

Skill Gap Reporting

EMPLOYEE PROFILE

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SKILL GAPS

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EMPLOYEE DEVELOPMENT PLAN

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JOB PROFILE

LEARNING ASSETS

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corresponding job prole is how we determine skill gaps, i.e., in which skills is an employee less-procient than the jobs target? Employee self-assessments have been shown to be mostly accurate. People are generally trusting and honest. But prevailing culture can have an inuence. Validation techniques include:

Supervisory review and sign o Peer review Client review 360-degree (multi-rater) assessments
Learning available to close skill gaps

Learning events reside in the repository as the solutions to skill gaps. They could be any resource or activity recommended to further develop prociency. The learning events repository acts as an online resource guide. Not necessarily events per

Competency Management: Reasonable expectations, strategic considerations and success factors

se, learning events could be books, tutorials, online courses, instructor-led classes, conferences, user groups, even lunch with a subject-matter-expert; anything deemed helpful in skill development. Learning events are linked to competencies on a many-to-many basis.
Decision-support from the populated repository

With a populated competency management repository, vital decision support and strategic planning information becomes available using consistent, quantied data.
Employee skill gap reports; Employee development plans

Show each member of a work force where he/she needs development and what he/she should do about it. What learning titles will provide the greatest benet?
Roll-up (aggregate) skill gap analysis; Competency distributions

Where are we under-skilled? What is our bench strength? Where are our risks?
Learning and course requirements

Who needs what training? Why? What non-training solutions are available?
Skill set searches

Who meets some specic combination of prociencies? (i.e., expert at this and very good at that)
Succession planning; Career planning

What peoples talents align well with the requirements of this job? What jobs align well with my talents?

How does the data support our desired productivity payback?

1. Greater personal development responsibility Employees know their skill gaps and receive their development plans. Staers see their competencies, dene their value and take personal responsibility for their growth. A more procient sta is a more productive sta. 2. Improved return on your training dollar Group-based skill gap data helps prioritize training and development dollars to the areas of most critical need and greatest payback. Find people needing a specic course to optimize class size in instructor-led events. 3. Optimized return on your labor Dollar Software-enabled skill set searches help match the right talent to the need; neither over- nor under-skilling in your stang decisions. 4. More value for your recruiting dollar Maintaining competency data on contractors and applicants helps make better, more informed, outsourcing and hiring decisions. Competency management is about not just keeping track of skills, but changing attitudes, values and responsibility throughout the organization using skill and competency data as the change agents. It is the software that catalogs and organizes this information for business advantage; but it is managements use of this information that denes competency

Competency Management: Reasonable expectations, strategic considerations and success factors

management - what messages they send; what support they provide; what recognition they demonstrate; what followthrough they exhibit.

Weve got the data now, how do we use it

This is a high risk area for competency management initiatives, where stated objectives and day-to-day use can disconnect. Management can quickly lose the condence of the sta if they make use of skill-based data in ways dierent from their stated intentions. Top management sponsors must be diligent that competency-based data is used only for the purposes that had been expressed to the sta. Most believe that a very open policy toward the information is the healthiest for an organization wishing to improve productivity by instilling new competency awareness. This does not necessarily mean everyone should view each others competencies. But employees should be able to freely view and alter their skill proles, and generate their skill-gap and development plan reports. Most organizations would even encourage employees to compare themselves with proles of other jobs, to support individual career-planning. This approach treats information as a positive means of creating personal responsibility and initiative. Combining competency management with your formal performance appraisal process (for promotions, salary actions, etc.) takes great care. Most, including SkillSoft, contend that competency management and performance management processes should be kept separate. It is quite dierent to determine whether one has the prociencies to do ones job (competency management) and to determine whether one uses ones prociencies productively to achieve desired results (performance management). The vast majority of organizations that have succeeded with competency management have laid explicit, conscious strategies to divorce skills systems from the formal performance appraisal process. You cannot expect honesty when asking people to tell you their capabilities if they believe that information will used in promotion and salary decisions (or worse, against them for layos). And if honesty (accuracy) is compromised, the data becomes far less useful for any purpose.

Summary
Competency management goes to the very core of the organization; instilling competence and contribution as the cultures value-set. Competency management:

Pushes accountability and responsibility back onto staers for their personal growth and development. Staers know
exactly where they stand and exactly what to do to enhance their worth; and development accordingly;

Enables supervisors to become more accountable for their peoples abilities, and foster their subordinates learning Enables top line management to view the organization in terms of its total skill-set, allowing them to truly engineer
the sta to meet the business mission. Competency management oers high rewards to the organization that implements it in a thoughtful, committed fashion.

Competency Management: Reasonable expectations, strategic considerations and success factors

Even small productivity percentage gains translate into huge dollar returns. The messages that competency management sends to the sta and the values it instills are positive and healthy.
The questions we suggest you ask and answer in your investigations are:

1. What are our competency management business objectives? 2. What changes do we wish to aect? 3. What payback do we expect? 4. What information do we really need to collect to support the business objectives? 5. Have we carefully laid out sta communication programs? 6. Is what we are telling sta consistent with what we plan to do? 7. Is everybody on board? 8. Do we really have the resolve to stick with it? 9. Will we keep the repository up-to-date (once or twice a year) and rene it as changing business conditions dictate? 10. Have we chosen an easy-to-implement, easy-to-use competency management software tool that supports our need with a minimum of overhead? 11. Does our software vendor have a vision about competency management?