Role of Employee Competency on Performance
Role of Employee Competency on Performance
Competent employees are the main resource for an organization in acquiring a competitive advantage. Land, buildings, or materials do not contribute to the organizational productivity, rather, it is ‘people capital’ which runs the organization and produces value from existing resources. The best source for the organizational competitive advantage lies with its employees. Strategies, business models, products and services can all be copied by competitors, but talented and competent employees represent a sustainable source of differentiation.
Human assets are critical resources for an organization and the organization to be successful in its functioning requires the organizational employees to be competent and effective employees. The performance of the employees as well as the organizational performance and success depend on the employees’ competencies. Competencies enable the employees of the organization to have a clear understanding of the behaviours to be shown at the workplace and the levels of performance expected in order to achieve organizational results. They provide the employees with an indication of the behaviours and actions which are required at the workplace and which are valued, recognized, and rewarded.
‘Competency’ has its origins in the Latin word ‘competentia’ which means ‘is authorized to judge’ as well as ‘has the right to speak’. The competency approach to human resource management (HRM) is not new. Competency is widely used across the organization and is embedded in all HRM functions, such as planning, recruitment, performance management, and employee development. Competencies are determined by the occupational roles and responsibilities, and the complexity of duties outlined in job descriptions. Employees need to demonstrate competencies in the organization for succeeding in their job. Fig 1 shows effect of competencies on the employee and the organizational performance.
Fig 1 Effect of competencies on performance
Competency is a measurable pattern of skills, knowledge, abilities, behaviours and other characteristics needed by the employees to perform and fulfill their job responsibilities. Competencies are important for (i) ensuring organizational success, (ii) enhancing employees’ contribution, performance, (iii) measuring job responsibilities and organizational citizenship behaviours, such as communication, teamwork and collaboration, and (iv) illustrating how well the employees perform their job both as individual employee as well as in a team environment.
Employees’ competencies are normally considered as a wide comprehensive-holistic concept of employees’ job performance. The concept has two components namely (i) professional competency (the individual’s own potential), and (ii) workplace competency (organizational specific requirements for job) both operates to achieve the full on-job performance.
A competency is generally defined as a combination of skills, knowledge, attributes and behaviours which enables an individual to perform a task or an activity successfully within a given job. Competencies are observable behaviours which can be measured and evaluated, and thus are essential in terms of defining job requirements. Competency is theorized in terms of job knowledge, skills and attitudes. It refers to the underlying ‘aspects of the employees’, which ‘enable them to be competent’, despite advancement in technological, innovation over the past few decades have improved work and job performance and satisfaction respectively. The critical significances of the employee cannot be under-estimated since human resource forms the bases for the effective execution of the new systems and technologies. Hence, a competent and competitive workforce is an essential factor, if the organization is to survive in this rapidly changing environment. Competency is to provide the organization with the opportunity to develop programs and process to recruit, motivate and retain employee with capabilities. it increases the organization’s competitive advantage over others.
The knowledge, which employees gain from schools, universities, or training institutes, is normally focused on disciplinary expertise and it is expected to help them in performing actions which contribute to the achievement of the organizational objectives. In other words, employees are expected to demonstrate technical competencies for their performance at the workplace. Individual engagements such as creativity, collaboration, and complexity are also deemed necessary for employees to succeed in their job. These individual commitments are known as non-technical competencies or behavioural competencies. Both the technical and behavioural competencies are needed to make the employees to fulfill their role at the workplace.
Employees’ competencies mean the whole of internal and diverse qualities of the employees which operate in an integral way as a base for their successful performance in specific context. The competencies have generally four components namely (i) scientific competency, (ii) practical competency, (iii) personal competency, and (iv) social competency. The scientific competency is the theoretical scientific and empirical knowledge, which allows the employees to understand parts of reality, interprets its meaning and define possibilities of intervention. The practical competency is the structured methodological knowledge and empirical procedures, which allows actuation over defined parts of reality. The personal competency consists of the qualities which allow having a clear consciousness of reality, situating the truth as major reference to regulate performance with positive values. The social competency consists of qualities which allow the right and productive relationship with social and natural environment based on positive social values.
Numerous classifications for competencies have been given, but the most common categorization is the hard and soft skills orientation of competencies. The definitions of hard and soft skills can be distinguished as the hard technical skills of performing the job and the soft behavioural skills required in the workplace. Hard skills constitutes professional competency and they are determined by the organizational performance. They refer to the skills in the technical domain. These skills are associated with specific technical knowledge and they are task-oriented skills. Hard skills are primarily mental or cognitive in nature. The technical skills and knowledge contains a threshold as they represent a minimum level necessary for the employees to be able to perform a job with basic competence. Soft skills, on the other hand, are defined by personal features of the employees, their behaviour necessary for a good job performance, and can be professional, social, or conceptual. Soft skills are normally referred to as ‘people skills’, and are not easily taught although they are very much required in the working life. In fact such skills are often acquired as thee employees come into contact or utilize their skills in their daily or work environment.
Work-related competency is deemed important among professional employees in order to perform their job well as well as to achieve organizational competitive advantage. Thus, developing professional competencies is a critical activity in the organization. However, the term competency has no single definition. The definition of competency varies according to roles, positions and even organizations. Competencies are required to be defined before they are identified in organizations. Generally, competencies are demarcated as capabilities which help the organizations in achieving business and strategic objectives. This general definition, however, does not contain the concept of visibility, which is a necessary element for the employees’ performance to be perceived and evaluated.
Competencies are normally defined as the underlying characteristics of the employees which can be a motive, trait, skill, aspect of one’s self-image, social role, or a body of knowledge which they use. Another definition of competencies is that they are a means of being able to perform a work role to a defined standard with reference to real working environments.
For employees to be successful at the workplace, they need to learn and demonstrate the expected competencies. Hence, in the organization, it is necessary to identify the competencies. Some competencies such as creativity, intelligence, collaboration, and empathy are common competencies which are needed in all the employees of the organization. For the identification of competencies, the organization is required to have a competency framework.
One of the first frameworks of competencies is called Cambell’s model, which was followed by many other frameworks. The KSA (knowledge, skills, and attributes) framework of competency (Fig 2) is very popular in defining the competency concept. A competency is a set of skills, related knowledge and attributes which allow an individual employee to successfully perform a task or an activity within a specific function or job. The concept of competency is usually applied to define the whole of individual employee’s abilities, skills, behaviours and knowledge, oriented to effective performance in a particular working environment. The effective performance of the employees leads to the achievement of a high performance by the organization.
Fig 2 KSA framework of competency
A competency framework is an organizational instrument which broadly describes performance excellence within an organization. Such a framework generally includes a number of competencies which are to be applied to multiple occupational roles within the organization. Each competency defines, in generic terms, excellence in working behaviour. The competency framework establishes the benchmark for the employees for achieving the performance at the workplace. A competency framework is a means by which the organization communicates which behaviours are required, valued, recognized and rewarded with respect to specific occupational roles. It ensures that employees, in general, have a common understanding of the organization’s values and expected excellent performance behaviours.
The framework of the competency enables the organization to successfully align its employees’ skills, capabilities, and knowledge with the organizational priorities, resulting in improvement and efficiencies in its functioning. Hence, a well structured and well defined competency framework in the organization plays a key role in achieving the organizational goals and objectives. More specifically employees’ competencies ensure that (i) clear expectations are set and employees are guided as to how they can assume and reinforce workplace behaviours in line with the organizational mission and culture as well as the organizational goals and objectives, (ii) a shared language is created to describe what is needed and expected in the work environment, thereby providing for reliable and high quality performance employees’ output, (iii) the various aspects of the HRM functions can be integrated, enhancing consistency in human resource planning, recruitment, training and development, and performance management, and thereby contributing to the streamlining of human resource operations and ultimately to the efficiency gains, (iv) skills gaps of the employees are addressed, strengths are further developed and requirements for career progression are clarified, and (v) employees’ mobility within the organization, organizational change, and shaping of the organizational culture are promoted.
The competency framework in the organization (Fig 3) generally includes (i) core values, (ii) core competencies, and (iii) functional competencies. The competencies describe the occupational roles which are associated with the competencies. These roles refer to the primary purpose of and the relationship between jobs. Depending upon the varied nature of the work in the organization, there are a number of core competencies and functional competencies in the organization. Generally many of the competencies are shared across several positions in the organization and a standardized approach ensures more effective and efficient HRM in the organization management. The occupational roles broadly associated with the three components of the competency framework are described below.
Core values – They are principles which influence employees’ actions and the choices they make. They are ethical standards which are based on the standards of the conduct followed in the organization and are to be upheld by all the employees. They underlie work ethics, actions and interactions. In an ever changing environment, core values remain constant. Examples of core values are integrity, professionalism, and respect for diversity etc. Core values have their definitions, expectations, and the respective behavioural indicators. They outline specific traits which all the employees are expected to demonstrate during their association with the organization and which includes compliance with the organizational regulations and rules and applicable policies.
Core competencies – They provide the foundation of the framework, describing behaviours to be displayed by all the employees of the organization. They are defined by occupational roles for a given job. Core competencies apply to all the employees irrespective of their grade and function and, for example, include communication, teamwork, planning and organizing, and achieving results etc. These competencies are required to be defined in the organization for setting out the organizational expectations, and the respective behavioural indicators, outlining specific traits which all the employees are expected to demonstrate during their association with the organization. The expected competency level is linked to a given occupational role and is based on the area of expertise and the seniority of the role. Every core competency requires compliance with the organizational regulations and rules and applicable policies.
Functional competencies – These competencies are defined by duties and responsibilities assumed by the employee for a given job. Functional competencies are often referred to as ‘job specific competencies’ since they outline the areas of competence within specific job functions. Example of the functional competencies include leading and supervising, analytical thinking, knowledge sharing and learning, judgement/decision making, technical/scientific credibility, change management, commitment to continuous process improvement, partnership building, customer orientation, persuasion and influencing, and resilience etc. Based on the job complexity and level of responsibility, and the seniority of the occupational role, on an average of three to five functional competencies are normally assigned to a given job. All of the functional competencies require compliance with the organizational regulations and rules and applicable policies.
Fig 3 Organizational competency framework
Employees’ competencies lead to (i) individual excellence, (ii) inter-personal excellence, (iii) operational excellence, (iv) leadership excellence, and (v) organizational excellence (Fig 3). In each of these competencies clusters, there are competencies with a leadership dimension.
Individual excellence – It means how the employees manage themselves and their approach to work as individual. Competencies which are needed for individual excellence include accountability and integrity, innovation and creativity, problem solving and decision making, and self-awareness etc.
Inter-personal excellence – It means how effectively the employees communicate with others, work as a team, and manage conflict or difference. Competencies which are needed for inter-personal excellence include collaboration and teamwork, conflict management, interpersonal art of speaking, and presenting written communications etc.
Operational excellence – It means how efficiently and successfully employees execute their job and achieve their objectives. Competencies which are needed for operational excellence, include job knowledge, knowledge of technology involved, information and technology (IT), planning and prioritization process, workplace management, and organizational policies and procedures etc.
Leadership excellence – It means how well employees recruit, develop, and manage individuals and their team as a whole. Competencies which are needed for leadership excellence include building of effective teams, recruiting and staffing, developing employees, and managing and measuring work etc.
Organizational excellence – It means how well the employees contribute to the mission and objectives of the organization. Competencies which are needed for organizational excellence include change and resilience, customer focus, organizational insight, equity, and strategic planning ability etc.
Relationship between HRM practices and employee competencies
There is a close relationship between HRM practices and employee competencies. It is a well established fact that the HRM practices can influence organizational performance through improvement of employees’ competencies. The main objective of the HRM practices is to ensure that the employees obtain competencies during their course of employment. In a well managed organization, HRM practices are utilized to develop the employees’ competencies. HRM practices in such organization are designed to be oriented towards building employees’ competencies. The HRM practices contribute both to the hard competencies skills associated with specific technical knowledge and task-oriented skills as well as to the soft competencies skills which are often associated with interpersonal and emotional skills.
HRM practices have a greater effect on organizational performance than on individual performance. Moreover, human resource development (HRD) encourages competency development by forming opportunities within the organization for employees to develop their competencies for both their own benefit and the benefit of the organization. The competency-based approach has become integral to the HRM practices since late 1980s and, presently the use of competency models to better integrate and have strategies with the human capital resources has become a trend for the organizations. Competency encompasses the knowledge, skills, abilities, traits and behaviours which allow the employees to perform a task within a specific function or job. In accordance with this approach, competencies are used as the basis for HRM practices in the organization.
Important HRM practices where competencies play important role are (i) recruitment, (ii) training and development, (iii) performance management, (iv) compensation management, and (v) career planning.
Recruitment – Competency based selection process is used for recruitment. Competencies are used in order to compare the capabilities of the candidate with the requirements of the position needed to be filled. Competency gaps form the basis for the recruitment. The purpose is to establish the ‘behaviours’ needed in a particular job and the extent to which these are possessed by different candidates. Matching employee competencies with the job requirements leads to selection of proper candidate.
Training and development – Competency gap analysis identifies the needed competencies and then linked with the equivalent training and development efforts. As an example if competency gap is of technical nature then the employee needs technical training and if the gap is related to the management practices then the employee needs management development training.
Performance management – In the present environment, performance is not only seen as ‘what’ (objectives) an employee achieves but also viewed as ‘how’ (competencies demonstrated) the job is carried out. For this, organizations generally use competency-based models as a part of their employee development. The objective here is to assess individuals’ strengths and weaknesses so that future development is identified. Employees’ performance is evaluated against job competency requirements as well as objectives.
Compensation management – Competency based compensation can help the organization to determine compensation on the basis of actual performance levels through the process measuring the actual competencies shown by the employees while performing their jobs. Competency based system can also help in designing a fair and equitable compensation system through an objective evaluation of competencies which contributes for an employee’s performance.
Career planning – The competency approach is an effective tool to be used as a criterion for career development. Competency-based career planning systems link competencies with the development activities, which help employees learn what they need for further development. They can review the needed competencies of all the positions and through comparison with the competencies they possess and identify potential positions and develop their career plans.
The best way of matching people and jobs is through the use of competency modeling. Competency models help the organization to take a more unified and coordinated approach in designing improvements to HRM practices, including job redesign, recruitment, organizational learning, career management, performance improvements and compensation systems. In implementing effective HRM practices, the introduction of competency building programs for each job or task is to be considered, as The employees’ competencies are usually linked to their job and, hence, to organizational performance.Hence, improving employee competencies improve both job and organizational performance and an organization needs to sharpen the competencies of the employees to support the organizational competitive strategy.
Case studies carried out in several organizations have demonstrated many benefits associated with the competency usage such as reduced training costs, reduced staff turnover, or increased employee productivity, hence performance. There are several reasons why the competency approach has the potential to surpass the other approaches for improving the organizational performance. Firstly, it is focused on behaviour; secondly it focuses on the behaviour of managers, on the things they really do instead of those they are to do or they say they do, thirdly it follows the Pareto principle (i.e. the 80/20 rule) and then it concentrates on the essential activities which lead to the success of the organization, finally it is connected not only with the efficiency of individuals, but with the efficiency of the whole department or the entire organization.
On the other hand, there is also a criticism of competency approach since it tends to be present or past focused. There are methods which help to develop strategic competency and competency for the future. It is essential to be oriented not only towards present day requirements for individual competency, but also foresee what competency is needed to determine the future success, also known as strategic competency. Model for the competency for the future usefulness is to include a visionary focus, entrepreneurial spirit, risk taking, system thinking, ability to communicate effectively at all levels, imagining new forms of partnership and alliances, and a deep appreciation of the strength of diversity which promotes creativity, innovation and organizational learning.