COMPETENCY BASED HRM
M.Saravanan, Assistant Professor, PG Dept of International Business, Sree
NarayanaGuru College, Coimbatore – !" "#$
It is imperative for any organisation to align the employee behaviors to the strategic
objectives for sustained success.
Human capital is the most important resource for any organisation in the globalised and
skill based economies around the world. How the organisation leverages this resource
will ultimately decide if it can achieve its strategic objectives. It is imperative for any
organisation to align the employee behaviors to the strategic objectives for sustained
Competency based Human Resource Management is being increasingly recognized as an
effective way of talent management over the previously adopted ob!description related
It involves a transition from the traditional way of managing human resources based on
what people have "e.g. #ualifications$ to what people can do "performance$. %he
advantages of using the competency based framework for Human Resource sub!systems
such as &election' (romotion' %raining and )evelopment' (erformance Management'
Career and &uccession (lanning' Compensation' etc. are* !
Provide a systems approach to human resource activities and mae them more
It is a well known fact that best results are obtained when interrelated and co!ordinated
elements are dealt with as a system rather that as single' independent elements. +,tending
this approach to Human resource activities on the basis of Competencies brings out the
synergy between different subsystems by reinforcing each other and minimizes the
needless overlaps and contradictions if they were treated independently.
Provide a common "an#ua#e to human resource activities !or easy imp"ementation
-s organizations go flatter on account of technology and better management practices'
the need for employee self!assisted career development is identified as the key to a
motivated workforce and a learning organisation. %he competency based approach to
Human resource management helps people understand this aspect much better by
providing an organisation wide common language to understand different roles and
responsibilities and how they can grow to fulfill their aspirations.
Provide mana#ement a vie$ o! avai"a%"e and re&uired competency "eve"
Management can view the competency profile of the work force to identify the gap
between available and re#uired competency levels to either meet current strategic
objectives or make new strategic objectives. %he Competency based framework helps in
identifying the intervention needed and in what form to achieve these strategic objectives.
Many models have been developed by eminent scholars on how to implement the
competency based human resources management framework. .ipro/s Competency based
framework has been studied and salient features have been mentioned.
Many organizations are using competencies as the means for identifying and developing
talent. However' unless the competency framework is well planned and defined'
organizations will not have the proper foundation for developing and implementing a
system of human resource programs and initiatives for renewal and sustained success.
.hen implemented effectively' it is fully e#uipped to inculcate the desired employee
behaviours and profoundly improve the human resource activities to leverage people
power for sustained organizational success.
Competency( The Modern Approach
0S*ill is not'ing but a mere 'oar+ of gol+, till it is set to ,or*.0 ! Henry 1' (art 2
.e often wonder why some people are more successful while some are not. .hat is it
that 3ill 4ates has that makes him prove all his critics wrong every time they say he is
doomed and his company has become obsolete5 .hat is it that makes &teve obs rise like
a phoeni, whenever life takes an une,pected turn trying to pull him down5 .hat is it that
made Ratan %ata resuscitate %ata group when everybody thought otherwise and defy all
the critics of family owned businesses by not only being able to maintain its position in
this competitive market but also strengthen its position by making foreign ac#uisition at
the time when Indian companies couldn/t even think of foreign ac#uisitions5 How
individual successes result in the success of the organization5 %he traits common to all
these people are knowledge' skills and ability i.e. /competencies/. In order to ensure a
sustained success and growth it is essential to identify' develop and reward such
Competencies are knowledge' skills and attitudes "6&-$ and most importantly behaviors
that enables one to perform a job and that correlates with performance on the job' that can
be measured against well accepted standards' and that can be improved via training and
development. 7nlike skills and knowledge competencies reflect individual ability to
perform on a job' taking into cognizance the skills' knowledge and ability of the
individual. +ffectively' competencies translate the strategic vision and goal of the
organization into behavioral actions that employees must display.
Competency Based HR )*S Traditiona" HR
%his approach to human resources management is based on job analysis and Management
by 8bjective "M38$. %hese approach results in HR functional areas to be planned in
accordance to the job re#uirements in terms of skills and knowledge.
Competency Based Approach
- person/s cognitive and physical abilities can seldom e,plain the job performance9
instead the job performance depends on behavioral patterns like attitude' motivation'
interpersonal skills etc. In!fact people are on the basis of their #ualifications but are fired
due to non!performance. %his approach focuses on the skills' knowledge re#uired to do a
particular job in addition to the attitude and ability to do the job. Competency!based
human resource systems provide both the structure and discipline to help bring out the
best effort in people' and ultimately the best performance for the organization. It involves
a transition from traditional way of managing HR based on what people have
"#ualifications$ to what people can do "performance$. Industry psychologists have
identified the /big five/ personality dimensions which affect job performance*
e,traversion' emotional stability:neuroticism' agreeableness' conscientiousness' and
openness to e,perience.
Competency!based models help in the organization to*
)rive business results
Retain key talent
Raise the bar0 of individual and organizational performance
Integrate cultures following a merger
Increase in competitive advantage
%here are two basic models of competencies* %echnical and 3ehavioral. %his follows
from the Ice!3erg model of competency given by 3oyatzis' where the tip of the ice!berg
forms the technical skills and knowledge which can be easily trained and developed
while the surface is the behavioral competencies like social role' self! image' motivation'
attitude which are very difficult to be developed. Hence it makes more sense to recruit for
these competencies rather than trying to develop them. However' job rotations'
multiskilling would help in developing behaviors that result in a superior performance.
Competency Based Approach in )arious HR Su%systems
Competency+%ased Recruitment , Se"ection* %his method focuses on performance
rather than the job content. %he technical competencies are measured by #ualifications
while behavioral competencies by several process of interviewing or through assessment
Competency+%ased 'ntervie$in#* -s opposed to the traditional approach in this method
the interview is not focused on technicalities of the job but the candidate is judged on the
basis of behavioral competencies. In this approach the candidate/s can demonstrate his
behavior/s:attitude in the workplace by answering #uestions related to how he dealt with
situations in the past. %his is better than the traditional approach as*
Competencies are more related to the job than the previous work!e,perience. -lso' a
better performance in the previous job does not ensure a better performance.
Competencies are more linked to job performance rather than situational behaviors which
the candidate can even fake
Competencies are not restricted to e-perience
Competency+%ased Per!ormance Mana#ement* In this approach the feedback on the
performance of employees are given not only in terms of how much goal is achieved but
also what behaviors should be adopted to achieve the set targets. 8ne of the reasons why
M38 failed is because of the sole consideration on the failure or achievement of the
target without telling them why they failed or succeeded. 3ased on the performance the
employees are given training and development if they lack in the competencies re#uisite
for the job or if the performance of the employee I good then he is given subse#uent
training to achieve the competencies for the ne,t higher post.
Competency+%ased Trainin# , Deve"opment* In this the candidate is given training on
the competencies that he is lacking which gives him confidence and hence improve job
performance. However' the limitation to this approach in training is that unless proper
methods are given on how to proceed with the training the trainers tend to go back to the
old method of teaching. -lso' it is effective only when less number of competencies is
linked with the job performance.
Career P"annin# , Succession P"annin#* Competency based approach helps an
employee is able to track his career growth in an organization. %he complete dictionary of
the job will enumerate all the desired competencies for a job and the re#uired competency
level "RC;$. %he employee can thus understand his status in terms of competency and
performance based on the gaps between RC; and the current competency level "CC;$.
3ased on the gap assessment the management decides the training and development
programs for the individual.
Hay Mc%er Mode"
It is championed by behavioral scientists. (roponents of this model believe that behaviors
are the driving force behind an individual/s ability to perform and therefore' behavioral
assessment becomes important indicators in employee selection' development and
.unctiona" and Ro"e Competencies
8rganizations like )acum "Canada$' %he Management Chartered Institute "76$ believe
that there are other factors' besides behaviors that are e#ually important determining
factors to individual/s ability to perform. %hese are translated into <unctional
competencies and Role competencies.
+lliot ac#ues provides a normative model of effective hierarchical organizations with an
emphasis on competencies. %he elements include the present and potential competencies
of individuals along the dimensions of cognitive capacity' valuing the work' and non!
(eter &enge/s approach to a whole organization competency model is captured in his
notion of the 0learning organization.0 Its essential characteristics include nurturing the
growth of new capabilities' transformational learning for survival' leadership by
communities of servant leaders' learning through performance and practice' and the
inseparability of process and content.
Campion/s model' which applies to professional work' suggests that teams composed of
individuals with complementary competencies are more effective and have higher levels
of job satisfaction than teams whose members have the same competency sets. %his is
especially true for work that is comple, and varied in scope. <or routine work' the benefit
of heterogeneous team member competencies is less noticeable.
Traditiona" Person+0o% Match Mode"
%his model assumes that employees have jobs with specific and identifiable tasks. ob!
based staffing is measurement and assessment driven. %his model works best with
organizations defined by stable environments.
Strate#y Based Mode"
%his model assumes that employees have roles defined by the organization/s strategic
goals. Role!based staffing is strategy driven. .ork is fle,ibly defined and often carried
out in a flattened' decentralized or matri, structure. %his model functions most effectively
in organizations in competitive' comple, or highly stressed environments
The Strate#y Deve"opment Mode"
%his model assumes that employees with broad' potentially strategic 0attributes0 will
create their own roles which interact to produce the organization/s strategy. .ork is
constantly evolving within a network of organizational relationships. %his model is
described in terms of organizations in chaotic' unpredictable' or very rapidly changing
It takes planning and commitment to implement a fully!elaborated and integrated
competency based human resource management system.
Deve"opin# the Business Case
%he most important aspect in implementing competency based human resource
management system is that there must be a compelling need and will to change. It is not
sufficient for the organization/s human resource or training professionals to see the need9
leaders of the organisation must also see the benefits and be willing to champion the
initiative. ;ikewise' employees must understand how the program will benefit them both
in their current jobs' as well as in advancing their careers.
Deve"opin# the Strate#y
- staged approach for developing and implementing and implementing competency
models is often the preferred way. -s the first major challenge the organization must
decide to what level the competencies will be defined. <or e,ample' will it be sufficient
to define the common core competencies for everyone in the organization' or do specific
competencies have to be developed for particular classifications and levels' functions' or
jobs5 %he answer to this #uestion hinges on how the competencies will be used. <or
e,ample' to staff particular positions' competencies should be defined for the job. 8n the
other hand' for appointments to level' competencies need only be defined at the core or
The 1ipro 1ay
%he team conducted a study of the competency based framework in place in .ipro
08ur overall purpose is to help each person develop his:her skills and e,perience to the
fullest. In this way' you will be able to more effectively advance your careers with .ipro'
and the business will gain the competitive edge it needs to succeed as we move ahead to
achieve our vision.0
1ipro3s Competency Dictionary
75 Business A$areness
3uilding and Maintaining Relationships
Cross cultural -wareness
8ral Communication &kills
.ritten Communication &kills
(lanning and )elivery
Concern for +,cellence
Customer &ervice 8rientation
4lobal %hinking and -cting
%he following two leadership competencies have been illustrated as an e,ample !
Cha""en#es o! Competency+%ased Approach
6ac o! !rame$ors + -s the approach is very new and it/s very difficult
sometimes to define competencies related to a particular job hence
implementation gets difficult.
<ocus on macro concepts "transferable skills$ to the neglect of functional skills
Comple,ity of the terms related to competencies.
Over"appin# competencies + Many a time the terms mean the same but are
defined differently i.e. It is very difficult to differentiate the terms.
%he difficulty in defining and measuring competencies along with the problem of
keeping records up to date.
&ince the model involves development of only those competencies that is inherent
to the job this means that the employee is not being developed overall.
Conc"usion + 1hy is it the Ri#ht Approach<
%he importance of competency based HRM is increasingly being accepted as an
e,planation of superior performance. %his is based on the fact that the performance of an
employee is based on not only is skills or knowledge but is also a function of internal and
e,ternal environment. <rom the Indian conte,t' companies are increasingly becoming
aware of the importance and an article on 0competency profiling0 in 3usiness %oday
"=>>>' uly$' reported the steps Indian organizations are taking with respect to
competency based HR practices. ;?%' &mithkline 3eecham Consumer Healthcare'
(epsiCo' Hughes +scort' (?4' Modi @ero,' I%C' Mahindra ? Mahindra are some of the
companies using competency profiling in either of their HR application.
Research conducted in =>>>!2AAA by three leading (erformance Management companies
worldwide' indicate that competency!based practices are an integral tool for 0talent
management'0 shareholder return' and value creation. %he three studies "independently
conducted$ concluded that companies using competency!based HR programs returned
between 2A ! BA percent more to shareholders than companies using the traditional
method "job descriptions' salary grades' unaligned HR systems$. ;?% Infotech is one of
the ten companies in the world to get the (CMM level C certification. )r )evendra Dath'
e,ecutive vice president of ;?% Infotech asserts that competency!based HR is the
essence of good HR. 0It is the dream of all HR people that everything in the organization
be linked through the competency matri,. Competency for every role is well!defined
"technical as well as behavioral$' even at the time of recruitment and succession
planning'0 he says' adding that once people are shown a particular career path' they
should be e#uipped with the skills to reach that particular position. -nd this is enabled by