Human Resource Management
Competency Management.
AMITABHA SENGUPTA 1
IIM [Link]
1. What defines talent and quality of hire? Is an education from
a premium institute always synonymous with high-calibre
talent?
2. Is the HR analytics data presented by Calculus robust for
talent management decisions by the industry?
3. What new features can be built into Calculus to meet the
talent management needs of the industry?
4. Should [Link] diversify to create a more representative
database for Calculus? What are the merits and demerits of
such a strategy?
AMITABHA SENGUPTA 2
IIM [Link]
The “quality of hire” concept was equally unclear, with organizations using
measures of tenure, early exit, performance on the job, and sometimes even P-
O fit (“the compatibility between people and the organizations in which they
work”)9, as definitions. However, the impact of a poor hire was well
documented—one in five new hires was termed regrettable, resulting in high
costs because of poor recruitment. A suggested and commonly reported
measure of quality of hire was formulated by Business Management Daily in
2010as follows11:
Quality of hire = (PR + HP + HR)
N
where:
PR = Average performance review rating of new hires
HP = Percentage of new hires reaching acceptable productivity levels within
the prescribed time period HR = Percentage of new hires retained after one
year
N = Number of indicators (3)
AMITABHA SENGUPTA 3
IIM [Link]
WHAT IS TALENT
Lepak and Snell developed the contingent configurational view in the
context of strategic human resource management, and demonstrated
that specific HR systems depend on the uniqueness of the human capital.
They defined four categories of employees based on uniqueness, the
value of their skill sets, and their contribution to the organization.
1. Knowledge-based employment—both knowledgeable and unique
2. Job-based employment—strategic value but limited uniqueness
3. Contract employment—neither strategically important nor unique
4. Partnerships/alliances—unique but of insufficient strategic value to
employ internally
"Examining the Human Resource Architecture: The Relationships among Human Capital,
Employment, and Human Resource Configurations," Journal of Management 28, no. 4 (2002):
517–543. AMITABHA SENGUPTA 4
IIM [Link]
WHAT IS TALENT
Talent segmentation approaches sometimes classified talent along
the dimensions of difficulty-to-replace and value-added. The
difficulty-to-replace dimension was thus linked with the labour-
market factors and the value-added dimension was a customer-
related factor.
As per this segmentation criteria, a lower quadrant talent could be
redesigned or outsourced. However, for the same skill sets, the
labour environment may have shifted the segmentation to a
different quadrant. This framework essentially made it possible to
do the segmentation of talent specific to each organization and
the environment it operated in, by considering the “economic
geography of talent.”
AMITABHA SENGUPTA 5
COMPETENCY :
EVOLUTION OF THE CONCEPT
In 1960 David McClelland’s landmark article in the American
Psychologist asserted that companies should hire people based
upon competencies rather than test scores.
In 1973 McClelland developed new methods to predict human
performance for US Information Agency. Objective was to
eliminate the potential biases of traditional intelligence and
aptitude testing.
AMITABHA SENGUPTA 6
COMPETENCY MAPPING:
EVOLUTION OF THE CONCEPT
In an Article published in American Psychologist in 1973 , David
McClelland provided data to claim that
1. Traditional achievement and intelligence score may not be able to
predict job success.
2. Need to profile the exact competencies required to perform the given
job effectively.
Douglas Brey and his associates at AT&T gave evidence that the
competencies can be accessed through assessment centers and on the
job success can be predicted to certain extent.
AMITABHA SENGUPTA 7
COMPETENCY MAPPING:
EVOLUTION OF THE CONCEPT
A technique called Behaviour Event Interviewing (BEI) was
developed by McBer to map the competencies.
Increased recognition of the limitations of performance
appraisal in predicting future performance shifted focus to
potential appraisal and assessment centers in seventies.
In India Assessment centers became an integral part of the
HRD plan of L&T in 1975.
AMITABHA SENGUPTA 8
Competency mapping:
Evolution of the concept
Since then, 30 years of research has proven:
• In every job some people perform much more
effectively than others
• Superior performers use different approaches and
behaviors than do average performers
• In complex jobs, superior performers deliver about 50%
more productivity than average performers (this varies
with the complexity and scope of the job)
AMITABHA SENGUPTA 9
DEFINITION OF A COMPETENCY
An underlying characteristic required for performing a
given task, activity or role successfully can be considered
as competency.
AMITABHA SENGUPTA 10
COMPETENCY :
SOME OTHER DEFINITIONS
United Nations Industrial Development
Organization (2002)
“A competency is a set of skills, related knowledge and
attributes that allow an individual to successfully
perform a task or an activity within a specific function or
job.”
RANKIN (2002)
“Competencies are definition of skills and behaviors that
organizations expect their staff to practice in wor
MANSFIELD (1997)
“Underlying characteristics of a person that results in
effective a superior performance.”
AMITABHA SENGUPTA 11
WHAT ARE COMPETENCIES?
Any characteristic of a person that differentiates outstanding from more typical
performance in a given job, role, organization or culture.
Necessary but Acquired
not sufficient Skill capability
Knowledge
Social Role, Values
}
Distinguish Self-Image Deeper seated
effective traits and
performance
Trait motives
Motive
AMITABHA SENGUPTA 12
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DEFINITION OF COMPETENCY ELEMENTS
Skill:
An individual’s behavioural demonstration of proficiency or
expertise- the ability to do something well. Examples:
effectively interviewing and selecting the best job applicant;
assigning work clearly and effectively.
Knowledge:
Usable information that an individual has in a particular area.
Examples: understanding the art and science of management,
understanding what motivates other people.
Social Role:
how one sees himself interacting with others- the outer self. It
reflects a person’s values, including what he or she believes it
is important to do. Examples- being a leader or a follower,
either initiating change or resisting it.
AMITABHA SENGUPTA 14
DEFINITION OF COMPETENCY ELEMENTS
Self –image:
It is an individual’s conception of his or her identity, personality or
worth as a person- the inner self. Examples seeing oneself as a
leader, or as a motivator and a developer of people.
Traits:
These are relatively enduring characteristics of an individual’s
behaviour- a personal characteristics. Examples- being a good
listener, having a sense of urgency.
Motive:
They are thoughts in a particular area- (achievement, affiliation,
power) that drive, direct and select behaviour.
“Recurrent concern for a goal state or condition, appearing in
fantasy, which drives, directs and selects behaviour of the
individual.” ( McClelland)
AMITABHA SENGUPTA 15
COMPETENCY BASED HUMAN RESOURCES MANAGEMENT
The concept of competency is immediately related to the
key strategic goal of HRM – winning and developing highly
competent people who will achieve their goals quickly and
thus will maximally increase their input into achieving the
goals of the company .
Competency-based management is a new trend in human
resource management that emphasizes specific
competencies used in a given job, allowing for more
individualized management and more individual
competency development within career paths. From this
perspective, competencies are specific to the companies and
the jobs .
AMITABHA SENGUPTA 16
COMPETENCY BASED HUMAN RESOURCES MANAGEMENT
The concept of employees being the most important
resource of the organizations has been well recognized both
in theory and practice. Especially in the new knowledge-
based economy it is the knowledge of the employees that
will provide the competitive advantage and not the other
resources .
Researchers have also recognized that competency-based
approach is specially significant for the firms offering
knowledge intensive services. Emphasis on development of
competencies and a strong knowledge base are the key
characteristics of knowledge intensive firms.
AMITABHA SENGUPTA 17
COMPETENCY BASED HUMAN RESOURCES MANAGEMENT
Traditional job-based HRM does not provide the answers to the
questions like
1. How to simplify and integrate HR practices?
2. How to prompt employees to be innovative and take risk?
3. How to transform the organizational strategies into employee
performance?
4. How to transform HRM from an administrative to strategic
function?
5. How to from the functional structure especially when the
concept of job position is disappearing?
Application of competency-based approach provides answers to
these questions .
AMITABHA SENGUPTA 18
COMPETENCY BASED HUMAN RESOURCES MANAGEMENT
While traditional HR is based on task-analysis and job
description to determine the character of the process of
recruitment and selection, induction, training,
performance appraisal and employee development, the
competency-based HR relies on identifying and
developing the employee competencies to enable them
to perform their jobs effectively.
AMITABHA SENGUPTA 19
COMPETENCY BASED HUMAN RESOURCES MANAGEMENT
The universal main purpose of using competency-based
approach to HRM include
1. to provide essential competencies-of individuals, of
organizations, and the whole society to ensure high quality of
living and work
2. to achieve a high level of effectiveness and competitiveness
3. to provide and develop individual's abilities to perform
professional work and thus enable them to be self-fulfilled,
provide for their families and live a decent life
4. to adjust competencies as per changing needs.
Sienkiewicz et al (2014) Competency Based Human Resource Management:
Life Long Learning Perspective
AMITABHA SENGUPTA 20
SOME COMPETENCY
TERMINOLOGIES
Competency Mapping
It is a process of identification of the competencies required to
perform successfully a given job or role or a set of tasks at a given
point of time.
It consists of breaking a given role or job into its constituent
tasks or activities and identifying the competencies (technical,
managerial, behavioral, conceptual knowledge and attitude and
skills, etc) needed to perform the same successfully.
AMITABHA SENGUPTA 21
SOME COMPETENCY TERMINOLOGIES
Competency Map.
A competency map is a list of an individual’s competencies
that represent the factors most critical to success in given jobs,
departments, organizations, or industries that are part of the
individual’s current career plan.
Competency Model
A competency model is usually a narrative description of job
competencies for an identifiable group of people. In other
words, it is a single set of competencies for a job or family of
jobs (e.g. all managerial jobs at a certain level).
AMITABHA SENGUPTA 22
LEADERSHIP COMPETENCY MODELS EXAMPLE
AMITABHA SENGUPTA 23
A SALES EXECUTIVE COMPETENCY MODEL
AMITABHA SENGUPTA 24
SOME COMPETENCY TERMINOLOGIES
Competency dictionary:
A competency dictionary would have a number of competencies listed
along with their meaning and behavioural indicators which make their
identification easy. Needless to say, competency dictionaries are the
product of industry studies and research and should ideally be
subjected to continual refinement to ensure their relevance in
changing times. Some competencies listed in a dictionary are generic
and are applicable for a wide cross section of professionals working in
various capacities often cutting across industry sectors, while some
competencies are specific to a particular position relating to a
particular industry. There could also be competency dictionaries
specific to organizations.
At a very basic form, a dictionary may comprise a list of competencies
with their meanings and a few behavioural indicators—both positive
and negative.
]
AMITABHA SENGUPTA 25
ARE SOME COMPONENTS MORE
IMPORTANT THAN OTHERS?
It is safe to say that all five elements are important. However,
depending on the job role and the context, some components
can become more important than the rest and would carry
higher weightage in an assessment.
For example, for knowledge workers, knowledge and skill are
very important. However, while hiring for entry-level technical
positions in a large organization with a well-defined induction
process and an elaborate and robust learning and development
(L&D), personality factors (the first three in Table 1.1) assume
significance. On the contrary, for small organizations without a
strong L&D function, it would be expected that incumbents for
similar positions should have some knowledge and hands-on
experience. Therefore, weightage on knowledge and skill
would be higher. For managerial positions, weightage would
normally be less for technical skills and knowledge. Personality
factors and behavioural skills would assume greater
significance.
AMITABHA SENGUPTA 26
TYPES OF COMPETENCIES
1. Generic versus specific competencies:
Generic competencies are applicable to a wide range of positions,
for example, for all managers across different organizations and
industries, whereas specific competencies in contrast are
applicable only for a particular position in a given industry, for
example, general manager (materials) for a company belonging
to the FMCG industry. Specific competencies would vary from
industry to industry. The general manager (materials) from an
FMCG company will not fit into a similar role in the steel
industry.
The specific competencies are different for different positions, so
the general manager (materials) will not be able to fit into the
role of general manager (sales) in the same company.
AMITABHA SENGUPTA 27
TYPES OF COMPETENCIES
2. Differentiating versus threshold competencies:
Competencies that differentiate superior performers from effective
or adequate performers are called differentiating competencies. In
contrast, threshold competencies are the ones that are possessed
by both superior and effective performers and therefore do not
differentiate between the two groups. All employees in a specific
job role should have the threshold competencies specified for the
role.
3. Behavioural versus functional competencies:
Competencies which are deeply connected with behaviour are
termed as behavioural competencies, whereas competencies
connected to technical, functional or domain expertise, which are
essentially cognitive in nature, are termed as functional
competencies
AMITABHA SENGUPTA 28
EXAMPLES OF SOME COMPETENCIES
Achievement orientation (ACH)
Concern for working well or for competing against a standard of
excellence (Past performance, objective measure, performance
of others, challenging goals, or what no one has ever done)
Levels
1. Sets challenging goals. Tries to surpass existing standards.
2. Finds new and better ways to do things.
3. Wants to take personal responsibility.
4. Seeks information and changes behaviour on feedback to
optimize performance.
5. Chooses experts rather than friends to work with.
AMITABHA SENGUPTA 29
EXAMPLES OF SOME COMPETENCIES
Analytical Thinking
Understanding a situation by breaking it into smaller pieces. Step by
step causal way.
Levels
1. Breaks down problems.
2. Sees basic relationships.
3. Sees multiple relationships.
4. Makes complex plans .
5.
AMITABHA SENGUPTA 30
EXAMPLES OF SOME COMPETENCIES
Self control. (SCT)
The ability to keep emotions under control or restrain negative
actions when tempted.
Levels
1. Loses control
2. Avoids stress.
3. Resists temptation.
4. Controls emotions.
5. Responds calmly.
6. Manages stress effectively.
7. Calms others.
AMITABHA SENGUPTA 31
COMPETENCY BASED PAY: ADVANTAGES
It provides an ongoing incentive to employees to enhance their ability
to perform their jobs. Employees are rewarded with salary increases
when they add new knowledge or skills or when they demonstrate
higher level competence on existing capabilities.
Advantages of competency based compensation:-
[Link] a basis of deciding on the compensation.
[Link] employees to develop their competencies further.
[Link] to a focus on totality of job rather than just what is achieved.
[Link] system fits every job.
AMITABHA SENGUPTA 32
COMPETENCY BASED PAY: DISADVANTAGES
The critics say that as soon as a firm begins paying
for nice to have characteristics divorced from job
accountabilities, that measure value added to the
firm, it loses control of the compensation system,
and makes way for corruption.
The problems include internal equity and potential
for misuse. How is one competency to be valued
against another? The fear is that the loudest , the
most influential, will see that their characteristics
are highly valued.
AMITABHA SENGUPTA 33
THE FOLLOWING ISSUES MAY INDICATE THE
NEED FOR A COMPETENCY BASED PAY
1. Inability to attract good employees
2. The perception that people with certain competencies add
more value to firm than those without them in identical jobs
3. The perception that job based pay systems are inappropriate
when change is so fast that the very concept of a stable job
may have lost all meanings. In these situations, a person
either has many jobs or roles or the person makes the job.
The value add to the organization is a function of the person’s
competencies.
4. The need for incentives to motivate employees to maintain
and enhance state of the art skills
5. A traditional job evaluation system that appears to reward
empire building with the very
AMITABHA SENGUPTA 34
HOW TO DEVELOP COMPETENCY BASED COMPENSATION
SYSTEM?
1. Identify Key factors
2. Determine relative percentages.
Performance based pay systems supplement base salary with
additional pay for organizational outputs: actual performance
results: economic benefits brought into the firm.
Competency based pay systems pay for individual input
characteristics, for the ability to add the economic value to the
organization at some future point of time. It is basically like
acquiring an asset.
AMITABHA SENGUPTA 35
HOW TO DEVELOP COMPETENCY BASED COMPENSATION
SYSTEM?
E(v) = A*p*DF
E(v)=the expected value of a candidate in money
A= the amount of economic value in rupees an individual’s
competency may bring the firm
p=the probability that the firm will get the amount
DF= the discount factor used to find the present value of a
benefit received at some future point in time.
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