Competency-Based HR Planning


Human resource planning is a necessary first step for aligning HR with the organization's strategic goals and objectives. HR planning assesses the supply of existing human talent, determines current needs, and forecasts future demand for talent in the organization. By comparing current supply to both current need and future demand, the HR professional can discern the gap between the organization's people and the competencies needed to achieve the organization's strategic goals and objectives in the present and the future. These gaps guide the development and performance of HR department activities as well as suggest the HR responsibilities of operating managers.

This chapter provides an overview of HR planning and addresses the following key questions:

  • What is HR planning?
  • How is HR planning traditionally carried out?
  • How can HR planning become competency based?
  • What are the advantages and challenges of a competency-based approach to HR planning?
  • When should HR planning be competency based, and when should it be handled traditionally?
  • What model can guide competency-based HR planning, and how is it implemented?

By addressing these questions, this chapter explains how traditional HR planning efforts can be transformed through a competency-based approach. Such an approach is not always appropriate, however, and we will review situations in which a change is suitable and what it involves.

HR Planning Defined

HR planning has traditionally been defined as "the process of anticipating and making provision for the movement of people into, within, and out of an organization" (Sherman, Bohlander, & Snell, 1998, p. 124). The purpose of HR planning is to effectively utilize the resources represented by these people in order to realize the organization's goals.

The traditional view of HR planning is that the organization should forecast, based on history, the head count needed to replace the people who leave the organization. HR planning as traditionally practiced focuses attention on quantity, the number of people, rather than the quality, or underlying characteristics (that is, the talents or competencies), of people.

In a different sense, it is also possible to understand HR planning as the strategic business plan that guides the HR department or function, which clarifies the mission and purpose of the department or function, its goals and objectives, current strengths and weaknesses, possible threats and opportunities, and long-term strategy (Rothwell & Kazanas, 2003). HR planning serves as a guide for an organization's HR policies, programs, and procedures; it is an important part of the organization's overall business plan. Combining strategy and HR planning creates a greater capacity for change (Ulrich 1992). The challenge, however, as Brockbank (1999, in Kesler, 2000) pointed out, continues to be identifying ways in which to link HR plans and business strategy.

Interest in HR planning has increased greatly in recent years. Rothwell and Sredl (2000) suggest reasons such as the importance of people and their competencies to an organization, challenges created as people affect plans that apply to them; and the wide effect of HR plans on the entire organization. HR planning cannot effectively be accomplished if it is aligned or linked with the business, yet done in isolation as separate human resource efforts (Walker, 1994). Widespread downsizing has prompted growing attention to the qualitative difference in people, since some people are, for instance, simply more creative propuctive than others.

It should be emphasized, however, that HR leadership is essential no matter how HR planning is defined. The top HR official, usually a vice president, plays a role in ensuring that the organization adopts a proactive, rather than a reactive, stance in winning the war for talent (Rothwell, Prescott, & Taylor, 1998). Competency-based HR planning can play an important part in giving the HR leader what he or she needs in order to exert that important leadership role.

Traditional HR Planning

HR planning has its roots in military personnel planning. Initially, the U.S. military faced the challenge of ensuring stable staffing levels as some people concluded their tours of duty and left the military and others advanced through the ranks. The goal at that time was to determine the quantity of people sufficient to meet replacement needs and thereby maintain staffing levels in different job categories, at different levels of the organization, and in different locations.

Defense contractors adopted this military focus on head count. They carried over the philosophy of equating head count to production levels and, in turn, linking production levels to competitive success as measured by achievement of the organization's measurable strategic goals and objectives. This approach seemed to work well until the 1960s. At that time, three trends began to emerge that affected the success of traditional HR planning:

The traditional approach to HR planning begins with an assessment of the current supply of people at each level and of the current demand at each level and then proceeds to balancing supply and demand. The HR function performs balancing through such actions as recruitment, hiring, development, and reduction. The traditional focus of HR planning, however, has been on taking action with people rather than on achieving results.

To make the point more dramatically, and perhaps controversially, many organizations operate as if they were simply recruiting to "fill slots" or maintain the head count as vacancies occur. Recruiters concentrate on sourcing people whose perceived competencies appear to match the qualifications in job specifications and whose work experience and education make them appear qualified to carry out the work activities listed on a job description for a targeted job opening.

[1]For further information on HR planning, see Rothwell and Kazanas (1994, which also offers a historical perspective; 2003) and Rothwell and Sredl (2000).

Making HR Planning Competency Based

Transforming HR planning to a competency basis requires a major paradigm shift in the way HR planners think about organizations and people. They must rethink what they are doing, why they are doing it, and how they should do it.

Putting a competency-based HR planning system in place begins with building the awareness of the organization's decision makers. Since they control the organization's resources, they must be convinced that the benefits of competency-based HR planning will outweigh the costs associated with the change. Often, that requires a simple leap of faith. After all, if Edison had waited to see a lightbulb before he invented one, we would all still be in the dark. If decision makers demand solid costbenefit projections or evidence that other organizations achieved competitive success by moving to competency-based HR planning, then the effort may be dead. There are few published case studies of organizations that achieved this switchover for all aspects of HR. (And those who have them would have a valuable secret weapon they would not be willing to share.)

As a part of the larger ACA research study on competency-based human resource management practices, 60 organizations with and in the process of developing staffing applications that were competency based provided details related to their practices on a separate questionnaire. Asked if they had a formal workforce planning process directed toward organizational needs, assessing, forecasting, and deploying the workforce, 59% indicated that such a planning process was in place. Of those who used formal planning processes, 69% responded that competencies were used in making decisions associated with the planning (Raising the Bar, 1996).

In a study conducted by Schoonover, Schoonover, Nemerov, and Ehly (2000), 29% of the 300 respondents rated the use of competencies in their strategic HR planning as either "effective" or "very effective"; however, there was a correlation between the level of sophistication of the implementers and the level of perceived effectiveness.

Competency-based HR planning requires, as a first step, that decision makers articulate the organization's strategic goals or business objectives. Every organization exists for at least one purpose. For instance, a business exists to make a profit; a government agency exists to meet a social need; and a charitable organization exists to offer services that other organizations do not offer. The organization's goals or objectives must be translated into desired organizational outputs or results.

Workers support the achievement of their organization's strategic goals or business objectives. Competency-based HR planning requires practitioners to determine the quantity and quality of work that must be performed to support achievement of their organization's strategic goals or business objectives, the conditions and methods of work performance, who should perform it, and what worker characteristics will result in successful performance.

To move to a competency-driven HR planning process, planners must establish and maintain a human resource management system in which to store, update, and, most important, instantaneously access information about workers' competencies. An information management system must display clearly the expertise available in the organization. It should go beyond the old-style "skill inventory" and become a "competency inventory" that catalogs and enables easy access to what people can do and the results they can achieve, not, for example, as in many skill inventories, their educational credentials. After all, educational credentials may not be directly related to organizational results.

Companies are developing methods of tracking competencies and then using the information and models created with software programs and human capital development applications, spreadsheets, and even paper when making important business decisions involving HR functions such as recruiting, training, and succession planning. Virtual Inc., a small integrated management-marketing firm based in Wakefield, Massachusetts, developed a matrix of skills and competencies to assist in hiring and training to meet the specific and continuously changing needs of the organization (Greengard, 2001).

After decision makers determine the organization's required competencies, they must compare their needs to the current workforce and develop a plan to acquire the competencies that are lacking (Gendron, 1996). PepsiCo India uses a model that tracks the competencies for each position through a period of 3 years, so that individuals who are hired have the needed competencies at the time of hiring, but also have the ability to acquire the competencies that will likely define their positions in the future (Chowdhury, 1999).

The Advantages and Challenges of Competency Based HR Planning

There are several key advantages to creating and using a competency-based approach to HR planning.

First, competencies are the most important foundational requirement for human performance. It thus makes increasing sense in today's business world to think in terms of competencies—which speak to a qualitative view of talent—rather than in terms of head count or work activities. People are unique. People's talents vary, and some people are simply more talented at some things than other people. It makes sense for the decision makers in an organization to know where to find that unique talent when they need it on short notice to address real-time, unique business needs or problems.

Second, a competency-based approach improves the specificity of HR planning. Quantitative approaches, based on head count, do not direct attention to the sought-after results. Quantitative approaches focus on the accoutrements associated with ability—academic degrees, certifications, credits, or job titles and responsibilities—not on the measurable results people have achieved or have the potential to achieve in the future. Form 2 illustrates the traditional information included in a skill inventory. Compare that to the information included in a competency inventory, as shown in Form 3.

Of course, when an organization's decision makers decide to pursue a competency-based approach to HR planning, they face unique challenges.

First, leaders must understand the costs and benefits associated with implementing and maintaining a competency-based HR system. They will usually want to know what immediate payoffs or benefits can be derived from a competency-based approach that could not be obtained from a traditional one.

Second, leaders must commit the resources needed to identify the organization's strategic objectives, outputs, or results and the outputs, results, characteristics, work activities, and tasks performed by its workers. That usually requires devoting staff time to the effort. External consulting may also be necessary.

Form 2: Traditional Worker Skills Inventory Questionnaire

Employee's name


Employee's work location


Current position


Current job title


Telephone number


E-mail address



Job title




Date position held (from/to)



Education and training completed (summarize briefly here)


High school


Undergraduate education, college or university


Degree earned






Other education or training completed (list all)



Certifications held


Certifying body


Date granted


Expiration date








Licenses held


Licensing body









Describe your career objectives below:

HR planners and organization leaders will have to think about HR planning in new ways. They must make the transition from a strictly quantitative approach to one that incorporates qualitative measures of talent.

Form 3: Worker Competency Inventory Questionnaire

Employee's name


Employee's work location


Current position


Current job title


Telephone number


E-mail address




Strength Rating

Context Indicator


1. Reading comprehension


2. Reading speed


3. Reading accuracy


4. Sentence composition


5. Operation of a six-function calculator


6. Mathematical analysis (three-step situations)




Strength Rating

Context Indicator















Certifying body

Date granted


Expiration date









Licensing body


Date granted


Expiration date










Strength Rating

Context Indicator


1. Flexibility


2. Team leadership


3. Work group leadership


4. Team membership


5. Motivation to achieve


6. Interpersonal functioning




Strength Rating

Context Indicator


1. Laboratory technique in microbiology


2. Laboratory safety awareness


3. Laboratory safety knowledge


4. Laboratory safety practice


5. Electrical system design


6. Electrical system troubleshooting



















Deciding on Competency Based or Traditional HR Planning

Before the leaders of an organization commit to competency-based HR planning, they must weigh a number of issues, but they do not have to make an all-or-nothing decision. They may decide to use a competency-based approach to HR planning in some parts or at some levels of the organization, while they may continue to use a traditional approach in other parts of the organization.

Competency-based HR planning is advisable when the organization's leaders are willing to experiment with innovative or new methods. This may be entirely appropriate when qualitative approaches would be particularly helpful in meeting the need for talent. For instance, in a research and development department, individual talents may be far more important than head count. In such a situation, the potential payoffs of competency-based HR planning may outweigh the sizable costs of installing it.

An organization that is competing in a rapidly changing environment may have the most need for competency-based HR planning. A high-tech firm such as Microsoft or Intel is highly dependent on first-rate talent that can be found and used quickly and appropriately. Qualitative responses to competitive challenges must be mobilized quickly to head off disaster. Indeed, a competency-based HR planning approach may be more appropriate than a traditional approach that focuses on head count and relies on superficial approximations of talent or other indicators of accomplishment that are not clearly linked to the past or potential work results of individuals.

Competency-based HR planning may be more appropriate in an organization with a large population of professional, technical, or managerial employees. In those work categories, the quantity of the work-force is far less important than the quality of its available talent. Qualitative differences in talents such as interpersonal skill, emotional intelligence, and other, less tangible associations with creative ability may be key to success.

In organizations or departments that must assemble special teams to work on ill-defined and extremely difficult problems, a competencybased HR planning approach may be far more suitable to long-term results. For instance, in a high-end consulting firm, success may depend on the organization's ability to field a dream team of consultants on short notice to meet a unique challenge. Locating a certain number of consultants is less important than finding the most effective team of consultants who can work together to help the client solve a problem.

Organizations that rely on matrix management may benefit from a competency-based HR planning approach. Matrix management encourages cross-functional sharing and is somewhat complex in nature. In effect, leadership is diffuse. One manager may be responsible for a project, while another is responsible for daily supervision. Selecting and maintaining the right mix of leadership talent is essential to nurturing future talent.

A competency-based approach may also be appropriate for organizations that rely heavily on abstract competencies, such as interpersonal skill or achievement motivation. In a sales organization, for example, work results may hinge on a salesperson's ability to consult with clients and achieve complex solutions to difficult problems. Making the sale may require substantial industry knowledge. In that case, a competency-based HR planning approach would be preferable to a traditional approach.

But not all organizations are appropriate environments for competency-based HR planning. The success of a competency-based approach requires leaders who are willing to add a qualitative aspect to their quantitative mind-sets and are open to rethinking what they mean by "performance", especially when the work to be accomplished is strategic to the organization's success. Decision makers also need to adopt an understanding of competencies. Those who believe that competencies pertain only to knowledge components would not be adequate advocates for a competency-based HR planning system.

Creating, implementing, and maintaining a competency-based HR planning system each requires resources, and leaders must be willing to make the necessary sustained commitment. Of course, leaders in some organizations may prefer to use a competency-based HR planning approach selectively. In departments that perform more routine or repetitive work that is not of strategic importance, a traditional approach may continue to be used. The circumstances in each organization will usually provide clues to how or if competency-based HR planning should be used.

A Model for Competency Based HR Planning

What model might be helpful in guiding competency-based HR planning? This section addresses that question. Consult the model in Figure 3; then read about each step in the following subsections.

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Figure 3: Implementing Competency-Based HR Planning

Implementing the Model

The model shown in Figure 3 should generally lend itself to step-by-step implementation. There is one exception: If an organization's decision makers do not use a formal approach to HR planning, they may need a deeper understanding of the processes involved in implementing each step. Experienced HR planners will already know most of the following information. However, they may need to be briefed on the need to shift from a purely quantitative to the combined quantitative and qualitative approach utilized in competency-based HR planning.

Step 1: Create a system development plan

A plan is necessary for transforming a traditional HR planning system to a competency-based approach. A well-thought-out system development plan is an essential starting point.

Sometimes practitioners do not recognize the need to put a macrolevel plan in place before briefing the organization's leaders to gain support for the transformation. In other words, there must be a plan in order to plan. Senior leaders need to know the work, time, and resources they must commit in order to achieve the project's objectives. The remaining steps in this model provide the framework for the macrolevel plan, and the plan represents the major content for the senior leadership briefing session. As soon as leaders understand and endorse the approach, HR planners can proceed to later steps of the model.

As with any well-conceived project, the objectives must be clearly stated and effectively communicated from inception. HR planners may begin to establish the project objectives by answering questions such as the following:

  • Will the system accommodate HR planning for all work units in the organization or for only certain ones (for example, finance, engineering, research, distribution)?
  • What will be the early, intermediate, and long-term outputs and benefits of creating and maintaining a competency-based HR planning system?
  • Is the purpose of the new HR planning system to ensure adequate human resources only for specific projects, development teams, and so forth, or will it address organization-wide competency needs?
  • What HR planning life cycle will the new or reinvented system accommodate?
  • How much emphasis will the system place on head count, and how much on competencies?

Other system design issues and their subsequent objectives should also be raised at the outset of project planning. For instance, will decision makers also want to establish a competency inventory system as part of the project?

The project manager must also accurately assess the organization's environment and develop an estimate of the organization's ability to create, implement, and maintain the system. Answers to questions such as the following may be useful:

  • Do senior and other key leaders have a clear conception of the organization's short- and long-term strategic goals or business objectives? Can they name the measurable outputs or results that lead to the organization's success? Do members of the leadership team agree on these items? If not, can they reach agreement on these issues, which affect the direction of the HR planning system?
  • Are workers' outputs or results clearly identified through a formal job analysis process? Have worker competencies been identified for key organizational results areas? Is performance management based on competencies? What other roles do competencies play in the organization? If work tasks and competencies are not now available or understood by key leaders, is the transition possible, and how long will it take?
  • Are the necessary sustainable human capabilities available—internally or externally—to ensure the creation, implementation, and maintenance of the system?
  • Does the organization have the management information resources needed to support a competency-based HR planning system? Planning to meet the new system's information management needs must be a high priority at the earliest stages of development. If the organization's management information staff cannot provide the needed support, use of other resources (for example, software or contractors) must be assured.
  • Is a correct mix of human capabilities available to the project manager for as long as is necessary to ensure the system's long-term viability?
  • Will resources be available to complete the collection and analyses that produce the needed system inputs, such as data on work tasks, competencies, outputs, or results?
  • What is the probability that the persons assigned to work on the project can show immediate results that are important to the organization's senior leaders?

A project plan should be straightforward and easily understood. You might want to consider using the following guidelines for preparing the microlevel project plan:

  • Begin with identifying the project tasks, which are the actions that must be taken in order to achieve the project objectives. In the first draft plan, which becomes the foundation for the leadership briefing session, these actions can be broadly stated. Later, they must be made sufficiently detailed and measurable to help guide project operations.
  • Specify the resources required to complete each project task.
  • Clarify the specific output or result expected from each project action.
  • Source assistance from other organizations or persons as needed for successful completion of tasks.
  • Set a targeted completion date for each action step.

Both macrolevel and microlevel system plans are essential for formulating and implementing a competency-based HR planning approach. This investment is well worth the cost involved.

Step 2: Deliver senior management briefing

Although each organizational setting is unique, the project sponsor might find it necessary to include the following key objectives in a senior management briefing session on competency-based HR planning. If the organization has an established HR planning system, the briefing should emphasize the benefits of reinventing the existing system. If the organization has no formalized HR planning the briefing should begin with an explanation of what it is, how organizations are using it, and the benefits those organizations derive from it. From there, it will be possible to compare and contrast the traditional HR planning approach to a competency-based approach.

The following list of topics can help to guide a senior management briefing:

  • What is HR planning, and how can it benefit the organization?
  • How is HR planning carried out?
  • What resources are needed to establish and maintain an HR planning system?
  • Why are planning systems based on head count no longer adequate to ensure many organizations the talent they need for success?
  • How are the terms job/work competence and competency defined operationally for employees and the organization?
  • What is competency-based HR planning, and how does it differ from traditional HR planning?
  • What are the benefits to the organization of using competencybased HR planning?
  • What general project plan will help the organization develop, implement, and maintain a competency-based HR planning system?
  • What are the costs involved in implementing this plan? Do the costs outweigh the benefits of having the system in place and successfully running?
  • What applications within the organization immediately come to mind as initial outputs of the competency-based HR planning system described earlier? What strategic impact will these results have on the organization?
  • Do decision makers have any questions or comments about changing to a competency-based HR planning approach?
  • Are the organization's leaders willing to support a pilot test of a competency-based system at this time? (Note: The briefing facilitator should insist that senior leaders give the project manager a "go" or "no go" decision at this stage.)

Next steps in the briefing might include the following:

  • Summarize the briefing content and leaders' agreements up to this point. On an easel chart page, write the key points and agreements, the specific actions each party will take, and the resources that will be assigned to achieve the project objectives.
  • Establish a specific target completion date for each project stage or deliverable.
  • Establish guidelines for cross-communication among project participants.
  • Set a date for reviewing project progress with the leaders or management group.

It is most important that the project manager establish open communication with the organization's leaders and other key stakeholders who are involved with the project. Involvement encourages commitment, which is necessary for project success. Thank the participants for their attention, time, and support.

Step 3: Brief operations managers and users

The objective of this step is to ensure that those who will be most affected by the new HR planning system—the users or customers of the HR planning system—are actively engaged in planning it. Human resource management systems must always be customer focused, and customers of the HR planning system must be involved in planning and implementing it.

We suggest that this briefing, which covers many of the same issues presented to senior managers, take place shortly after their briefing, if organizational circumstances permit. The major reason for this is that leadership decisions regarding the project will determine the information presented to managers and other users.

We suggest that this briefing session address issues such as the following:

  • What is HR planning, and how can it benefit the organization?
  • How is HR planning carried out?
  • Why are HR planning systems based on head count no longer sufficient to ensure certain organizations the talent they need for success?
  • How are the terms job/work competence and competency defined?
  • What is competency-based HR planning, and how does it differ from traditional HR planning?
  • What are the benefits to the organization and to users when a competency-based HR planning approach is used?
  • What general project plan will help the organization develop, implement, and maintain a competency-based HR planning system? This plan should contain an overview of the key project steps, with special emphasis on the need to complete work analysis if that information is not yet available. It is essential that system users understand that statements of the outputs or results, work tasks, and the required competencies are prerequisites to competency-based HR planning. Their support in securing these components is critical to project success.
  • What resources are needed for implementing the plan? What resources may be needed from participants to create, implement, and maintain the system?
  • What applications within the organization immediately come to mind as initial outputs of the competency-based HR planning system described earlier? What strategic impact will these results have on the organization?
  • What questions or comments do the participants have about what they heard about the project plan?
  • Are participants willing to support a pilot test of a competencybased HR system in their work units as senior leaders have determined? (Note: At this time, the briefing facilitator should communicate the decisions of senior managers regarding their participation if he or she has not already done so.)

Next steps for this briefing might include the following:

  • Summarize the briefing content and participants' agreements up to this point. On an easel chart page, write the key points and agreements, the specific actions each party will take, and the resources that will be assigned to achieve the project objectives.
  • Establish a specific target completion date for each project stage or deliverable, per the preferences of senior leaders.
  • Establish guidelines for cross-communication among the participants and with the project manager, per agreements with senior leaders.
  • Set a date for reviewing project progress with the participants and confirm other dates or commitments as appropriate.
  • Be sure to thank the participants for their attention, time, and support.

Step 4: Identify the organization's strategic goals, business objectives, and outputs or results

Many people equate HR planning to the related process of organizational strategic planning. Consequently, it is easy to make the case that HR planning must be done with an awareness of where the organization is today and where it hopes to be in the future. Setting business objectives in today's global business environment is like looking into a crystal ball and then throwing the dice. Predictions are often unreliable and may be greatly influenced by chance events. That points to the need for flexible HR planning that can readily accommodate change.

The organization's strategic objectives and desired results are the foundation of HR planning. Analysis of the organization's results determines the results workers should produce for internal and external customers. How specifically should those results be expressed? That depends on several factors. The size of the organization is one consideration. Another is the number of results provided to external and internal customers. The practitioner must carefully manage the degree of grading in the lists of results so that they will be useful in later stages of the project.

These lists should give HR planners (and project managers) a deeper understanding of the resources necessary to achieve project results. HR planners may wish to bear in mind that all workers in an organization are "strategic" relative to their contributions to the organization's strategic success. If the contribution is assessed as inadequate, managers should seriously consider whether the person should complete the assigned work.

In summary, every organization exists for the purpose of producing outputs or results that are needed (or perceived as needed) by its customers. The organization's strategic objectives drive the results it will produce and deliver to its customers and determine the timetable for delivery. The organization's human resources produce these results, either directly or indirectly, so in order to plan the appropriate HR competency mix, HR planners and other HR leaders must start by ascertaining the organization's current situation or competitive position and the results its leaders hope to achieve in the future. Otherwise, the HR planning system will have no justifiable foundation on which to base actions such as recruitment, selection, training, and staff assignment.

The organization's results are interpreted to clarify the results workers must produce to ensure organizational success. In some cases, these results might be the same as those desired from the organization; in others, they will be only indirectly related. The information identified and organized in this step of the model provides the input for the next step: identifying the work activities that produce the necessary results.

Step 5: Identify tasks and work activities

In this step, we attempt to understand the work completed by the organization's workers by identifying the tasks they complete to achieve results that meet the time and quality requirements they are given. Analysts often organize tasks into a hierarchy of macrolevel and microlevel tasks. In a similar manner, meaningful collections of tasks are clustered to form work activities.

Figure 4 illustrates the dynamic relationships that exist among a desired organizational result, a work activity, a macrolevel task, a microlevel task, worker competencies, and the outputs or results expected of the worker. It also underscores the importance of performing a thorough work analysis before attempting to identify the competencies necessary for achieving the desired performance and thus the required work results.

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Figure 4: Dynamic Relationships

A key point warrants emphasis here. The definitions of macrolevel and microlevel and the detail required for an effective work analysis depend on the answers to several questions. Why is the work analysis being done? How will the results be used? What results will be most useful for the purposes at hand? What are the preferences of the HR planner or work analyst? What is the exact nature of the work to be analyzed, and to what level of detail will it be analyzed? Consequently, it is difficult to provide specific advice for this step of the HR planning system process.[2]

The "Develop A CurriculUM" (DACUM) method is one excellent approach to the identification of current work activities and tasks (Norton, 1997). Created by the vocational education specialists at Ohio State University, DACUM provides rapid, accurate analysis of work completed for a given job by using a disciplined, focus group approach with job experts. The process has been improved over the years by its founders and committed users. The method's two key advantages are that (1) it provides rich results when a limited amount of time is available for collecting information and (2) it has a form of built-in endorsement from the organization's senior leaders, since the focus group includes job experts and managers. These two factors make DACUM a highly appealing method for completing work analyses.[3]

In summary, the identification both of organizational and worker results and of the tasks and work activities workers perform must be focused on helping planners to design a user-friendly HR planning system that is easy to maintain as the work changes. That often requires system planners, analysts, and their clients to revisit their methods of collecting data for the system and the amount of detail they include. Collecting all details inevitably leads to disappointment. It is important to experiment to determine the level that is appropriate for users and to build the system to meet their needs.

Step 6: Identify competencies

Although we discussed competency identification in chapter 2, we believe it is essential to review the meaning of competent job (or work) performance and the definition of the word competency.

What constitutes competent performance? It is performance that meets or exceeds a job's requirements and produces outputs at the level of quality expected within the constraints of internal and external organizational environments. This definition requires users to adopt broad parameters when judging whether an individual is competent. Note that competent performance, although centered on worker attributes, is influenced both by the expectations of other people about the quality of the work and by the individual's willingness to address the constraints imposed by organizational context. Small wonder that leaders, managers, and employees alike have struggled with the notion of competence and competent performance for many years. This definition is not perfect, but it is important that an organization's leaders consider their concepts of competent performance when they decide to establish competency-based HR planning.

How do we define the word competency? Perhaps the best definition is the classic one. A competency is an underlying characteristic (motive, trait, skill, aspect of self-image, social role, body of knowledge) that an employee uses and that results in effective or superior performance (Boyatzis, 1982; Klemp, 1980).

A worker characteristic is a competency only if its use can be shown to contribute directly to successful work performance. Many perceptions of certain human characteristics as essential to successful work performance do not stand up to rigorous competency identification methods. That is one reason why an open-ended, or traditional, focus group approach is usually unsatisfactory for competency identification purposes. If an organization adopts a competency-based foundation for its HR planning system, decision makers must be prepared to provide highly valid and reliable lists of the required competencies for the duration of planning. We should note here that competency lists for all levels of the organization should include abstract (for example, patience, perseverance, customer awareness) as well as concrete competencies, since work of any kind requires the effective application of both.[4]

Successful competency identification relies on the following information:

  • A thorough understanding of the organization's strategic business objectives
  • The current and future work outputs or results to be achieved by the organization
  • The outputs or results expected of the worker group under investigation, and how those outputs or results support the achievement of organizational objectives
  • The major work tasks that must be performed in order to achieve the required outputs or results

This information must be available for use before competency identification begins. Recall that these components are the outcomes of Step 4 of the model shown in Figure 2. The components must be investigated in this order if valid and reliable competency identification results are to be obtained.

After competency identification is completed, managers of the workers under investigation and appropriate organizational leaders must endorse the competency lists and their definitions. A general rule to follow is, the more strategic the work, the higher the level of endorsement must be.

Two other questions deserve the attention of those who are considering competency-based HR planning. Is awareness of the competencies that distinguish fully successful from exemplary performance of value to the organization? And if so, for which types of work should differentiating competencies be identified? By knowing the competencies that distinguish an exemplary performer from a fully successful one, it is possible to help all workers who do the same job achieve beyond the fully successful level. Deciding to identify the competencies of exemplary performers will greatly affect the competency identification methods the organization will eventually use (see Dubois & Rothwell, 2000). Although the decision to identify exemplary worker competencies expands the scope of the competency identification initiative, doing so can help the organization direct HR requirements toward achieving exemplary performance. The importance the organization's leaders place on having this capability directly affects how much they are willing to invest in getting those results. HR planners should be keenly aware of this option.

To summarize, competency identification must be an outgrowth of the organization's earlier work to identify its desired strategic results, the relationship of those results to business success, and the connection between worker results and organizational success. After these facts are known, work analyses must identify and verify the tasks workers perform and pinpoint the results expected of them, at a given level of quality, within the constraints of the organization. The information gained in Steps 6 and 7 completes the foundation for competency identification and verification.

Step 7: Determine and evaluate competency supply and demand

At this point in the model, valid and reliable work analysis data should be available. That information should include an estimate of the competencies required for organizational work. It is now time to determine and evaluate the competency pool (or competency supply) among the organization's workers. It is also time to forecast demand for competencies based on current and projected organizational needs. Approaches to completing this step of the model vary according to the scope of the competencybased HR planning system. Certainly a competency-based system for an organization requires more work than does a limited system for only one department or job category. This discussion of supply and demand therefore is somewhat general, so that it may apply to many different situations in which competency-based HR planning might be used.

First, we will examine the supply side of the equation. Supply in this context means the availability of worker competencies that are tied to organizational success. After an organization's strategic objectives have been clarified and the desired results are clear, the competencies required to achieve those outputs can be assessed. In its broadest sense, the following question remains: What is the availability of strategic competencies within the current employee competency pool?

Availability is determined by completing a competency assessment process (CAP). A CAP determines which employees, in what performance context, have which competencies of strategic importance, with what amount of performance experience, and to what level of performance strength. Several CAPs are used in organizations today. The HR planner must decide which type of CAP would best serve the competency data needs of the organization and help to establish a competencybased HR planning system. Considerable literature on many methods of competency assessment is readily available.[5] If this is a new practice area for you, we suggest that you consult one or more references for specific guidance on using competency assessment.

We will provide a brief overview of the following common competency assessment methods: self-assessment, superior or "boss" assessment, peer and work expert assessment, customer or client assessment, certification or licensing assessment, and assessment centers.

Self-assessment is one approach to obtaining competency assessment information from employees, but of all the CAPs, it produces the least valid and reliable results. The major reason is that individuals often have inflated perceptions of their competencies. (In some cases, the reverse is true, and workers' perceptions of their abilities are lower than is accurate.) Readers experienced in the use of multirater competency assessment systems in organizations will be among the first to support this assertion. Although individuals are usually able to provide accurate assessments of their competency strengths in the proper rating direction (that is, whether they do or do not have the competency), they are rarely realistic in assessing how strongly they rate on a competency. Individuals sometimes erect protective walls around their egos, and that usually explains why their self-perceptions of competence differ from the ratings of others. Motivation, insight, consistency, and lack of understanding are some of the areas of concern with self-assessment (Cooper, 2000). Competency self-assessment has a place as long as it is properly employed. It is especially useful for obtaining initial assessment screenings with employees to determine the potential competency strengths of an employee group. After an initial competency pool is identified, additional assessment methods can be used to refine estimates of the competency strengths of those in the pool.

Other CAPs rely on external observers, who assess competencies in the context of the corporate culture or performance setting. It is common practice to use competency assessments made by employees' supervisors. These ratings are usually one component of an organization's employee performance management and appraisal system. Their reliability is based on several unspoken assumptions about supervisors: that they are qualified to make the assessments, that they will not be biased, that their contact with employees is frequent enough and of sufficient quality to enable accurate assessments, and that they are "work performance experts" who know how the competency should be applied and can thus provide valid assessments. Even though any one of these assumptions may be flawed, depending on a supervisor's judgment is a very popular approach. These assessments are often used to determine work assignments, areas for future development, and other work activities that affect the relationship between employee and employer. Therefore, it is advisable to remember the possible limitations of supervisor-based CAPs when the assessments are interpreted and used.

A CAP that relies on the judgment of expert work performers is usually valid for those assessed. In fact, many organizations depend heavily on expert judgment to identify the most critical competencies needed to perform the work. Generally speaking, the use of work experts to identify and assess competency is highly regarded by organization leaders.

The popularity of peer assessments has been growing in recent years, and with good reason. Research supports the view that peer assessments are perhaps the most valid and reliable means by which to assess individual competence (Lewin & Zwany, 1976a, 1976b; Kane & Lawler, 1978). Of course, the word peer means an individual who performs work identical or nearly identical to that of the person assessed. Many organizations administer peer review or peer assessment systems so that they may gain a view of an employee's performance other than the one offered by the supervisor, team facilitator, or leader.

Another CAP uses a worker's customers as a source of competency assessment. Although these data do provide insight into worker performance from those who count, the validity and reliability of the information could be limited by the extent of the contact between worker and customer. Customer opinions are also easily influenced by one failure. A customer can forget the employee's years of high performance and become fixated on one incidence of failure. For that reason, when they serve as the sole rationale, customer ratings or reviews of an employee's performance must be considered thoughtfully and verified with great care before any corrective action is taken.

Professional associations establish certification programs that assess and verify the competencies of practitioners. The objective of the programs is usually to build credibility for the profession. State and local government licensing agencies often require certification for those who apply to practice in their jurisdictions. In addition to written competency examinations, certification may also necessitate supervised professional practice. It is common, for example, to ask those requesting certification to provide letters of endorsement from professional colleagues, who often must be certified, or from employers or schools that provided training. Competency examination questions generally are developed and endorsed by persons recognized as experts in the subject area covered by the examination. Accordingly, this type of CAP is based on a peer assessment process.

Multirater competency assessment is an increasingly popular approach in organizations. Many variations are possible, depending on organizational setting, resources available, and other factors.

One such assessment occurs at the airline operations for United Parcel Service, headquartered in Louisville, Kentucky. Every six months, between 1,200 and 1,300 management employees participate in an automated 360- degree feedback process. Prior to participating in the evaluation process, participants receive training that describes the purpose and methods of the survey tool. Additional training on giving and receiving feedback is also provided. The Quality Performance Review, as it is called, measures key skills such as "customer focus, financial and internal business process knowledge, people skills, business values and leadership." Employees then develop goals based on the feedback provided during these reviews. Informal meetings, called Talk, Listen, Act, are also held to bring together supervisors and individuals directly reporting to them for discussions on work-related issues. ("Traveling Beyond 360-Degree Evaluations," 1999)

Multirater competency assessments provide very powerful feedback, while at the same time, administrative chores such as preparing, distributing, and tabulating the data are fairly easy (Cooper, 2000). In addition, multirater assessments produce comprehensive information, establish job performance requirements and accountability for performance improvement, identify expectations, and integrate 360-degree assessment results with other systems and subsystems. There are disadvantages, however, such as expense, lack of meaning if ratings are derived using criteria such as competencies that are not specific to the culture, and the overwhelming task of analyzing data from a large number of individuals (Rothwell, 2001).[6] Another area of concern is ensuring that the rater is qualified to assess competencies such as insight, consistency, and motivation (Cooper, 2000).

Assessment centers warrant special attention. They are often used to determine the development needs of high-potential candidates for senior leadership positions. They can also provide competency assessment for managers, supervisors, and individual contributors. These results may be used to help individuals improve performance or prepare for new work roles, to assess individual potential, or to determine which employees would be the "best fit" for specific work projects or roles. Recent evidence suggests that assessment centers are making a comeback for just these reasons (Jansen & Jongh, 1998). An assessment center can be an important element in a competency-based HR planning approach.

In the assessment center process, the persons who are being assessed perform work activities in simulated environments or future scenarios under the direct observation of trained assessors. Assessors are usually work experts, managers, or senior managers. If the work has strategic import to the organization, the chief executive officer or chief operating officer should be chosen as the observer. Participants typically are coached by their managers or mentors beforehand. After the experience, they are given both individual and group assessments and feedback on their performance, including action plans tailored to help build their competencies for current or future work. Assessment center results contain much useful information about current or potential performance in relation to the organization's future talent requirements.[7]

Earlier in this chapter we noted the importance of establishing a management information system that provides sufficient storage capability and allows competency pool data to be easily retrieved. This information is collected from employees through a competency inventory, so named to distinguish it from the traditional, and less useful, skill inventory. The purpose of a competency inventory is to enable the organization's decision makers to find talent quickly when it is needed to solve business problems. Its design therefore should be based on user needs and requirements. Time has become a strategic resource of greatest importance, and few organizations can afford the luxury of not knowing what talent is already available.[8] (For a further review on maintaining talent inventories, see Rothwell, 2001).

After a CAP has been completed, the information must be organized and then stored for easy retrieval and analysis. See Figure 5 for one example of how to organize the data. Other forms may be even more effective if they are grounded in the language used by managers and other decision makers.


Comp. 1

Comp. 2

Comp. 3

Comp. 4

Comp. 5

Comp. 6

















[*]Note: The letters in this column identify employees by department.

Figure 5: Summary of Competency Inventory Data Useful for HR Planning

Note that the table shell in Figure 5 is centered on key competencies targeted by decision makers for the purpose of competency-based HR planning. It notes employees and the context in which they applied the competencies. Their level of experience with the competency, and the strength of the competency, could also be made an element of the data profile. Of course, other or more detailed data useful for HR planning could be included in the inventory. The table shell in the figure is intended as a starting point.

Finally, the competency inventory should be tested against user needs. For example, the project manager could request specific information for users and observe how well the system performs.

Step 8: Pilot test the HR planning system

There is no real substitute for a pilot test of a competency-based HR planning approach. It will either demonstrate the value of the approach or point out the folly of the effort.

Here are some suggestions on pilot testing the new system:

  • Pilot tests should put strain on only the most elemental components of the planning system. For example, try completing a plan for a limited (noncomplex) project that affects a single work unit and allow elongated time frames for completing each step of the work.
  • Actively involve the HR planning customer in each step in the planning process.
  • Listen to customers' recommendations and agree to only those system changes that will not limit the system's applicability to any organization planning project.
  • Identify potential difficulties and make plans for roadblocks that could affect system performance and customer satisfaction.
  • Keep the organization's leaders informed about the project. Include mention of the benefits of the system and any other information that will encourage their continued support.
  • Work to ensure the user-friendliness of the new system.
  • Seek guidance from others, including the organization's leaders, when help is needed to resolve system constraints, concerns, or failures.
  • Promise only what can be delivered, and deliver what was promised.

[2]Much has been written on the topic of completing work analysis. See, for example, the classic by McCormick (1979); Carlisle (1998); Hartley (1999); and Schippmann (1999). For a review of issues related to defining competencies and completing competency modeling development projects through job analysis, see Byham and Moyer (1996) and Dubois (1993).

[3]For further review on the use of DACUM as a tool for competency assessment, see Rothwell (2001).

[4]Some of the more exhaustive works on the topic of identifying valid competencies for successful work performance are Spencer and Spencer (1993); Dubois (1993); and Dubois and Rothwell (2000).

[5]See, for example, Dubois and Rothwell (2000); Edwards and Ewen (1996); and Weiss and Hartle (1998).

[6]For detailed information on multirater competency assessment, see the discussion in Dubois and Rothwell (2000).

[7]For further information on assessment centers, see Spencer and Spencer (1993); Spychalski, Quinones, Gaugler, and Pohley (1997); Thornton (1992); and Thornton and Byham (1982).

[8]For more on competency-based information systems, see McShulskis (n.d.).


This chapter was devoted to a discussion of HR planning and the design and implementation of a competency-based HR planning system. The chapter opened by defining HR planning. We then explained traditional HR planning and explored approaches to making HR planning competency based. A competency-based approach has advantages and challenges, and we offered guidelines for determining when HR planning should become competency based and when it should be handled traditionally. We presented and explained an eight-step model to guide the formulation and installation of a competency-based HR planning system for an organization.

Competency-Based Human Resource Management
Competency-Based Human Resource Management
ISBN: 0891061746
EAN: 2147483647
Year: 2003
Pages: 139 © 2008-2020.
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