Wednesday, June 17, 2009

Future employability: The business case for competencies

The world is moving and evolving. Global competition, technological changes, leaner production cycles, and younger generations are driving change and innovation in the workplace. Product development cycles are being constantly shortened, bringing new products and services cheaper, faster, and with higher quality.

Despite the significant progress and advancement in all fields, the business environment faces major challenges: ethical issues are on the rise, resulting in crisis of the human, financial, and social systems. The world’s natural resources are gradually diminishing, and most countries struggle to improve democracy, and reduce poverty and inequalities.

Are the labor markets easily adapting to the current business environment?

Unfortunately, the answer is no. There is a lack of talent to respond to current and future business needs. Governments and organizations make a great effort to maintain a competent workforce but the labor markets fall behind. Leading organizations have understood the importance of having a competent workforce, and heavily invest in training and education, but even those organizations struggle to develop and maintain key competencies for their staff.

The 2008 ASTD’s State of the Industry report revealed that organizations are incorporating important efficiency gains, technology innovations, and maintain a sustained financial support to the workplace learning and performance function. The average direct learning expenditure per employee increased from $1,040 in 2006 to $1,103 in 2007, and the average number of training hours per employee increased from 35.1 in 2006 to 37.4 in 2007.

Furthermore, benchmarking organizations –a group of large Fortune 500 companies and public sector organizations, increased their proportion of their payroll to learning and performance activities, augmenting from 2.20 percent in 2006 to 2.70 percent in 2007. Despite the financial commitment and support, the education and training efforts prove to be ineffective to keep the pace with technology and process innovations.

Lack of preparation and obsolescence is present, and gradually restrains the organizations’ capability to change and renew. How to change this equation? Without any doubt governments, organizations, and individuals have to find new mechanisms to accelerate the adoption of new and critical competencies, fostering a culture for lifelong learning and performance; where individuals take an active role for increasing not only the skills required for today’s work, but also maximizing their ability to learn, to adapt to new situations, and to renew their personal, interpersonal, and technical competencies in order to achieve higher levels of performance and future employability.

Achieving employability by developing competencies

Individuals and organizations have gradually replaced the traditional paradigm of employment –especially new generations; instead of looking for a solid and stable place to work, young individuals focus on work that expose them to challenging work experiences and key learning that guarantee their future employability.

The new paradigm of employment relates job security with the acquisition of new competencies. The term employability aspires to create the conditions where people have the required knowledge, skills, and abilities to have a decent work that provides income to cover basic needs. Employability will ensure that individuals keep up with the accelerated pace of change and innovation.

Rather than focusing on acquiring tacit knowledge or narrowed skills, the competency approach shift the gear toward a more holistic and multidimensional model that effectively link personal, interpersonal, and technical skills to produce higher levels of performance.

Simply described, competencies are the combination of knowledge, skills, and abilities that when effectively applied, produce a successful performance in a defined function or activity. Competencies are observable, measurable, and can be developed to reinforce competitive advantages and future performance.

Dubois, D. & Rothwell, W. (2004) define competencies as the multi-dimensional characteristics linked to the desired level of performance “Competencies.. are the characteristics that individuals have and use in appropriate, consistent ways in order to achieve desired performance. These characteristics include knowledge, skills, aspects of self-image, social motives, traits, though patterns, mind-sets, and ways of thinking, feeling, and acting”. (p.16).

Mulder’s definition of competency (Brockmann, M. 2008) expands the term capability to the personal, interpersonal, functional, and organizational arenas: “Competence is the capability of a person or an organization to reach specific achievements. Personal competencies comprise: integrated performance-oriented capabilities, which consist of clusters of knowledge structures and also cognitive, interactive, affective and where necessary psychomotor capabilities, and attitudes and values, which are conditional for carrying out tasks, solving problems and more generally, effectively functioning in a certain profession, organization, position or role” (p.564)

The competency approach includes a multi-dimensional analysis at the individual, interpersonal, role, and industry levels; analyzing both, the competencies required to successfully perform on today’s environment, and also the competencies requires to successfully perform in the future.

The exercise requires visioning and anticipation; furthermore, it requires an active role of employees in the learning process. For example if a teacher sees his/her work as the process to transfer knowledge to students, the objective will be to be an effective, energetic and motivational speaker. Nonetheless, when we analyze this function in the future, probably there will not be teachers anymore, students will be learning by themselves from a wide variety of sources of information, changing the role from recipients to active learners. The functions and required competencies are completely different.

This example is a reality in today’s learning arena, where students are active learners and teachers are knowledge facilitators, whose main function is helping students learn, find solutions to problems, successfully adapt to changes, and effectively respond to unexpected situations.

Competencies are expressed in behaviors. For Green (1999) a behavior can be observed, described and measured. Dubois, D. & Rothwell, W. (2004) defined the term behavior as an observable and purposeful action: “A behavior is an observable action that is taken to achieve results or that contribute to an accomplishment” (p. 20).

When competencies are described in specific behaviors, they can be measured, allowing the identification of strengths and gaps at the individual, group, and organizational levels. If the process for measuring competencies is reliable and transparent, the information may support critical acquire/buy decisions to reinforce the organization’s competitive advantages.

Furthermore, when competencies are integrated into the human resources management processes –workforce planning, recruitment, selection, integration, onboarding, performance management, learning and development, compensation, succession planning, leadership development, etc., there’s a better connection and alignment of the organization’s strategy and objectives with day-to-day work performed by staff.

A study prepared by the Corporate Leadership Council (2006) demonstrated the link of competencies with business results. The study revealed that the top 20 organizations –measured in financial terms, had leadership competencies; furthermore, most of those organizations reported having aligned those competencies with key HR processes, such as succession planning, training and development, performance management, and long-term and short-term incentives. From the remaining companies, 73% reported having leadership competencies, and a fewer percentage reported the alignment of those competencies with key HR processes.

References
2008 ASTD State of the Industry Report. (November 2008). American Society for Training and Development. USA
Brockmann Michaela, Clarke Linda & Winch Christopher (2008). Knowledge, skills, competence: European divergences in vocational education and training (VET): The English, German and Dutch cases. Oxford Review of Education, vol. 34, n° 5, p. 547–567.
Corporate Leadership Council. (February 2006). Literature Key Findings: Transitioning to a Competency-based workforce. Washington, DC: Corporate Leadership Council. Dubois, D. & Rothwell, W. (2004).
Competency-Based Human Resources Management. Palo Alto, CA: Davies Black Publishing.
Green, P. (1999). Building Robust Competencies: Linking human resource systems to organizational strategies. San Francisco: Jossey-Bass.

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