The Transformation to Competency-Based HR Management

Overview

This book has been about transforming HR management from a traditional work- or job-based system into one that is competency based. A competency-based approach reinvents HR departments and functions, making them more organizationally responsive and aligned with strategic objectives.[1] It can help to leverage the strengths of individuals and unleash their potential in a way that is less likely to occur in a work-based system.

Traditional approaches to HR management do not seem to be effective anymore. Using activities or jobs as the foundation for work design is increasingly out of touch with the competitive needs of organizations. In contrast, competency-based HR management can focus attention on discovering, applying, and making use of the differences between exemplary and fully successful performers. That can possibly lead to quantum leaps in productivity improvement. Our approach is based on the principle that organizations should match people to work rather than vice versa.

But no change of this magnitude can be made without effort. Organizations need a plan. Developing and implementing that plan is the focus of this chapter, which addresses the following questions:

• How can the HR department become competency based?
• What model can guide this transformation, and how is it applied?
• How can HR practitioners become competent in applying this new approach?

[1]For further discussion on HR effectiveness, see Joinson (2000); and Wright McMahan, Snell, and Gerhart (2001).

Making the HR Function Competency Based

Managers who plan to reinvent their HR functions on a competency-based foundation have their work cut out for them. There are no text-books to guide HR practitioners in using such an approach. And it may fly in the face of common and familiar business practices. In other words, being on the cutting edge leads to challenges that are not easily resolved.

The first place to start is with HR practitioners themselves. They must be briefed on competency identification, modeling, and assessment. They must be guided toward an understanding of the differences between competencies and work activities and between competency models and job descriptions. When they realize the possible benefits of a competency-based HR function, both to the organization and to themselves, they will lend their support to exploring and advocating such a transformation.

There are two key issues to keep in mind during early discussions on transforming the HR function. First, HR practitioners themselves are often the most vocal opponents of changing the systems in their own organization. That should not be too surprising. They have learned what to do and how to do it in a certain way. Challenging the status quo is not easy. Second, transforming HR from a work-based to a competency-based approach does not have to be an all-or-nothing proposition. HR practitioners may need to consider which functional areas will benefit most from the use of competency-based practices. Those areas should be chosen according to their strategic significance for the organization's success. It is also worth emphasizing that changing the entire HR function is much more difficult than focusing on one or two HR components, or specific job categories, work areas, or company sites. Often the most effective approach is to start small, achieve a quick success, and then leverage the credibility and measurable benefits gained from that success to demonstrate the value of the effort.

Transforming the HR Department

In other chapters, we have noted that models can help to conceptualize the implementation of competency-based processes. However, there is no one model for formulating and implementing a competency-based approach to HR management. Each organization has its unique corporate culture, and senior managers differ in their awareness of HR practices, the sophistication of their approaches, and their willingness to experiment. The model depicted in Figure 14 therefore provides only general guidelines for formulating and implementing a competency-based approach to HR management.

Figure 14: A Model for Transforming the HR Function

Step 1: Build awareness

Most HR practitioners are familiar with the traditional work-based approach to HR management. They know that work analysis, which leads to such products as job descriptions and job specifications, is the foundation for all HR efforts. From work analysis and its products, they derive recruitment and selection strategies, training needs, career paths, employee performance management systems, compensation and reward systems, and other HR efforts. But fewer practitioners are familiar with the history and techniques of competency identification, modeling, and assessment.

Consequently, an important starting point is to build awareness. HR practitioners should attend workshops, classes, or conferences on competency modeling or invite external consultants to discuss competency-based HR management in the organization. They can circulate white papers, explore the topic in department staff meetings, collect information about the benefits realized by other organizations from using a competency-based approach to HR, and encourage other stakeholders to read about competency modeling. Taking these actions does much to cast HR practitioners as true leaders for human capital in their organization.

After this step is completed, meaningful discussions can begin on the possible value of a competency-based approach to HR management.

Form 4: Assessing the HR Function

Directions: Use this worksheet to collect perceptions about the HR function from managers and workers.
1. What is the organization doing particularly well in managing its human resources?
2. What could the organization do to improve its management of human resources?
3. If you could magically transform the organization's HR efforts into something that meets your greatest expectations and supports the organization's strategic objectives, what would you change and why?

Step 2: Make the business case and align HR objectives with the organization's strategic objectives

Before decision makers can be convinced to invest sizable amounts of time, money, and effort in adopting (or even experimenting with) competency-based HR management, they must see its value. It is easier to understand the business case when they see evidence of what is going well—and not going well—with the organization's approach to managing human resources. One way to do that is to ask managers and employees about the HR function. Form 4 can be used to organize their answers. The information gained through answers to these questions will provide excellent feedback on HR efforts.[2]

Step 3: Select the HR functions that are to become competency based

Large, complex organizations are usually unable to implement competency-based HR management in every HR function. It is essential to be selective and apply change efforts on a smaller scale. Use Form 5 to decide which areas—for example, planning, selection, training, or development—would realize the greatest benefits from a competency-based approach.

Form 5: Selecting Which HR Functions Should Become Competency Based

Directions: Use this worksheet to organize your thinking and that of key stakeholders on selective implementation of competency-based HR management.
1. Which HR functions would benefit most from a competency-based approach?
2. Explain the reasons for your answer. Describe your vision of the newly transformed HR function if it were installed according to your ideas.

Step 4: Find a change champion

Although the support of senior executives is important, HR practitioners should seize the initiative in reinventing their own function. They are perhaps the ones most able to recognize the signs that a department needs to be revitalized. For example, do managers complain that the HR function is not responsive to their needs? Are HR directors frequently replaced? Do employees give each other knowing glances when someone brings up the topic of HR?

If resources are not available in the HR department, however, senior leaders or operating managers can also champion the initiative.

Step 5: Build ownership for the change effort

Transforming HR management to a competency-based approach requires the support of many people. Senior executives, HR practitioners, operating managers, and workers must all feel that they own the effort.

The Whole Systems Transformation Conference is one method of developing ownership. The conference can last several days and involves a cross section of people from the organization. After a review of internal and external trends as they affect the workforce, participants form small groups, consider external trends and their organizational impact, evaluate the existing HR function, and identify the challenges involved in aligning HR practices with the organization's strategic objectives. They then prepare a written report for management in which they specify which HR components should be reinvented, explain the reasons for their choices, and clarify the role of competency-based HR management in achieving strategic objectives. HR practitioners can maintain the momentum generated at the conference by setting up electronic bulletin boards and commissioning task forces to investigate best practices, and their costs and benefits, in other organizations.[3]

Step 6: Devise a communication strategy to support the effort

A major undertaking such as this requires constant communication. Stakeholders must be informed about what is happening, why it is important, what it means, how it will affect them, and what the organization will gain from it. Ongoing communication ensures continued involvement and develops ownership in the change effort.

Step 7: Develop a competency model for HR practitioners, managers, and workers

Many competency studies address HR management, operating management, and various employee job categories. The goal in this step is to ask all key stakeholders to consider the effects of a competency-based approach on the roles, competencies, and work outputs or results expected of HR practitioners, operating managers, and workers. Use Form 6 to organize the answers to this question.

Step 8: Educate HR practitioners, operating managers, and workers about their roles in the competency-based process

People cannot be expected to change their performance if they do not have the knowledge, skills, or attitudes to do so. Employee education is a necessary part of the move from a work-based to a competency-based approach. Use Form 7 to organize your thinking on educating HR practitioners, operating managers, workers, and other key stakeholders.

Step 9: Plan a pilot project

Plan to pilot test the competency-based approach in one or two HR functions. Executive or management development is a good area in which to begin, for several reasons. Conducting competency modeling with managers introduces an important stakeholder group to competency-based HR management, and their support is essential to extending competency-based practices to other HR efforts. Another option for pilot testing is the employee recruitment and selection function. This is a major, highly visible area of HR practice and is familiar to almost everyone in the organization. Actions taken here can be widely communicated. Developing awareness across the organization is an important part of the pilot project.

Form 6: Expected Roles, Competencies, and Outputs

Directions: Use this worksheet to record the expected roles, competencies, and outputs of HR practitioners, operating managers, and workers in a competency-based HR management system. Explain how they differ from those of a traditional approach.
1. For HR practitioners:
2. For operating managers:
3. For workers:

The pilot project plan should specify the following:

• What will happen
• Who will be involved and what they will do
• The timeline for accomplishing the project outputs or results
• The method of assessing the results
• The means of communicating the results to others in the organization

At this point, you should also think ahead to evaluating the pilot project. For example, what kind of information would be most persuasive to decision makers, and how should it be collected? What HR problems will be addressed by a competency-based approach? Begin collecting metrics for measuring the impact of each problem and establish a means of tracking improvements.

Step 10: Implement the pilot project

Actual implementation requires the involvement of a full-time manager who will oversee the pilot effort on a daily basis, tracking outcomes against project objectives and ensuring that the initiative stays on course. Failure with a pilot project will probably mean the end of the proposed competency-based effort. Therefore, the manager assigned to the project should have the credibility to command support and be given the resources needed to achieve success. The project manager should keep key stakeholders informed of measurable project results as pilot implementation proceeds and take steps to publicize the effort, within and, possibly, outside the organization.

Form 7: Educating Key Stakeholder Groups on Competency-Based HR Management

Directions: Use this worksheet to organize your ideas about educating key stakeholders.
Question	Describe the type of education that will enable key stakeholders to answer the questions.
1. What is a competency?
2. How are competencies identified? Modeled? Assessed or measured?
3. Why should the organization adopt a competency-based approach to HR management?
4. How is a competency-based approach different from the familiar traditional approach?
5. What will a competency-based approach mean for the organization? For individual employees?
6. What advantages will the organization gain from a competency-based approach? What advantages will individual employees gain?
7. What challenges will the organization experience in adopting a competency-based approach? What challenges will employees experience?

Step 11: Continuously evaluate pilot project results and make revisions as necessary

It is not enough simply to manage the pilot project. Information about its results must be collected. Decision makers will be reluctant to devote additional resources to broadscale implementation without seeing major benefits that outweigh the costs of implementing the project. For instance, can it be shown that a pilot effort directed toward recruitment and hiring actually led to successful hiring or raised the retention rate among staff? If directed toward executive and management development, did it improve performance or increase the organization's bench strength? Be sure to keep decision makers regularly informed by using a variety of means, such as a standing committee, listserv, or Website. Success has little impact if it is not demonstrated or publicized.

Continuing evaluation is also helpful in keeping the project on track. As implementation continues, the project manager should make any midcourse corrections necessary to maintain alignment with the desired objectives and goals.

[2]HR audits and scorecards can also be used to obtain results. For information on HR audits, see Becker, Huselid, and Ulrich (2001); for HR scorecards, see McConnell (2000).

[3]For an extensive review of the Whole Systems Transformation Conference, see Sullivan, Fairburn, and Rothwell (2002).

Developing Competence With the New Approach

It makes sense to reinvent the HR function through the use of a competency-based approach. Such an approach involves creating a competency model for HR practitioners, assessing individuals against that model, and identifying their developmental needs. Use Form 8 to determine the behavioral indicators linked to the required competencies. The assessment instrument in Form 9 helps to identify developmental needs for HR practitioners in your organization.

Form 8: Important HR Practitioner Competencies and Associated Behaviors

Directions: Use this worksheet to help you think through the specific behaviors associated with competencies related to competency-based HR management. Describe the observable behaviors HR practitioners would demonstrate when applying the competency outlined in the lefthand column.
HR practitioner competency	Observable behaviors
1. Revising the HR department mission to reflect a competency-based approach
2. Rethinking the organizational structure of the HR department in terms of a competency-based approach
3. Reviewing the qualifications of HR staff in terms of a competency-based approach
4. Applying competency-based HR planning
5. Applying competency-based employee recruitment
6. Applying competency-based employee selection
7. Applying competency-based employee training or education 8. Applying competency-based performance management
9. Applying competency-based employee development
10. Applying competency-based reward processes

Form 9: Assessing the Competency-Based HR Practitioner

Directions: Use this assessment instrument to determine how well HR practitioners in the HR function understand and can demonstrate competency-based HR. For each practitioner competency, indicate in column A its importance, using this scale: 1 = Not applicable 2 = Not at all important 3 = Somewhat important 4 = Important 5 = Very important Then in column B indicate the level of development needed, using this scale: 1 = Not applicable 2 = No need for development 3 = Some need for development 4 = Substantial need for development 5 = Great need for development
HR practitioner competency	(A) Importance of ability to demonstrate this competency (1–5)	(B) Level of development needed for this competency (1–5)
1. Revising the HR department mission to reflect a competency-based approach
2. Rethinking the organizational structure of the HR department in terms of a competency-based approach
3. Reviewing the qualifications of HR staff in terms of a competency-based approach
4. Applying competency-based HR planning
5. Applying competency-based employee recruitment
6. Applying competency-based employee selection
7. Applying competency-based employee training or education
8. Applying competency-based performance management
9. Applying competency-based employee development
10. Applying competency-based reward processes

The same basic approach used for the roles and competencies of operating managers and workers may also be examined in relation to the new approach. Simply consider these questions:

• What roles should managers and workers play, and which competencies are required when implementing competency-based HR management?
• How can the behaviors associated with these competencies be identified?

The answers to these questions can provide a starting point for organized processes by which managers, workers, and other key stakeholder groups can participate in the successful implementation of competency-based HR management.

Summary

If an organization is to be successful in moving from traditional workbased HR management to a system that is competency based, a plan is essential. This chapter provided guidelines for preparing such a plan and for developing competence among HR practitioners in applying the new approach.