Sunday, January 24, 2010

Developing competencies during the economic downturn (Part I)

According to a report prepared by the International Labor Organization -ILO (2008), the development of competencies initiates a virtuous cycle that generates productivity improvements, better profits for organizations and better salaries for employees, the creation of more jobs, and the improvement of economic and social conditions for all.

The ILO revealed that countries that have properly aligned the development of competencies with key occupational sectors have achieved higher levels of productivity and higher levels of employment growth.

From the list of developing countries, Asia achieved the highest productivity levels. Asian countries (including China and India) increased their productivity by 40% from 1995 to 2005. Latin America and Caribbean countries raised their productivity by 6% from 1997 to 2007. During the same ten year period, Middle East countries have slightly decreased their productivity by 2%, while North Africa countries increased their productivity levels by 14%.

Productivity is defined as a relationship between inputs and outputs. When fewer inputs are required to produce an output there is an increase in productivity. Productivity can also be measured in economic terms, when the price of a product increases and production costs are maintained or reduced. The basis for measuring productivity utilized by the ILO was labor productivity, defined as output per unit of labor in terms of number of persons employed. To make a meaningful comparison between countries, GDP figures (in US dollars) were converted into comparable terms on the basis of purchasing power parity, which take into account differences in the price of a standard set of goods and services in different countries.

Focusing training efforts to improve productivity levels

Many organizations cut their investment on training during economic crisis. Although cost reduction measures have a positive short-term impact, in the long term these savings generate structural deficiencies difficult to solve. According to the Corporate Executive Board (2008), best organizations do not cut their G&A budgets. They improve cost discipline of their operational areas, protect learning investments, and make critical talent plays to emerge successful from difficult periods.

Competency-based learning interventions are an interesting option to develop critical skills during economic crisis because they are cost-effective, and focused “to deliver the best knowledge to the right person at the right time”. By including periods of instruction and periods of practical application, followed by individual and group reflection, individuals assimilate and internalize new learning and enhance their performance.

The competency approach shifts the importance to measuring outcomes rather than measuring the learning process involved. This approach recognizes that competencies can be acquired by different ways, and that competencies are applicable to other functions of similar nature, contributing to improve people’s future employability.

Competency-based learning interventions integrate the principles of the three classical learning theories: i) behaviorism which supports that the acquisition of new behavior is originated by external conditioning, ii) cognitivism which explains how brain-based learning processes occur through memory and prior knowledge, and iii) constructivism which emphasizes that learning involves constructing one’s knowledge from one’s experiences.

What are competencies?

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).

The competency approach allows portability and transferability. Competent employees are able to work in functions of similar nature. For example, a person who is competent to manage IT projects is able to work in a wide variety of jobs whose functions require managing resources to complete a task or deliver a service within defined parameters of time, cost, and quality --not only in the IT industry. In addition, if the person is certified by a trusted source, the person increases his/her future employability and career development opportunities.

A competency-based approach should be focused to the business

An effective competency based approach, is directly aligned with business needs, requiring business units to be not only participating, but guiding the identification and profiling process. Generic and off-the-shelve competency solutions do not provide the promised benefits, because they are not linked with the organization’s key business processes, and may become an additional administrative burden.

Origin and evolution of competencies

The origins of the competency movement can be traced back to the 1960’s when the USA, worried about the capacity of the Soviet Union to launch satellites into space, tried to improve its national education and training standards. Later in 1973, David McClelland published his seminal paper: “Testing for competence rather than for "intelligence" and started to spread the competency movement in organizations in the USA, the UK and other industrialized nations. McClelland supported that a person’s self motivation, results orientation, and self image have a bigger impact on performance than his/her intelligence level.

In the UK, Gilbert Jessup led the introduction of the vocational competency-based system. In the 1980’s, the UK government was worried that their training and development programs were lagging behind the changed job market, and established a national framework to oversee, rationalize and standardize the whole training and professional development sector in a competence- based format. Gilbert Jessup was appointed head of Curriculum design at the newly established National Centre for Vocational Training (NCVQ).

In the US a similar effort started in 1994, when both the United States Congress and the US President established the National Skill Standards Board (NSSB) under the National Skill Standards Act. The NSSB was created in response to many requests by business leaders to close the skills gap in the US workforce. The NSSB was tasked for building a national skills standards framework that included skill standards for key occupational sectors, assessments, and certifications. These skills were going to be identified by industry in full partnership with labor, civil rights groups, and community-based organizations. The standards would be based on high performance work and portable across industry sectors. Unfortunately, the effort was discontinued years later.

Nowadays competencies are commonly utilized in organizations. A study conducted by Hewitt Associates (2005) revealed that 73% of the 373 participating companies used competencies in their HR management processes. What is even more interesting was the positive correlation of competencies with financial results: organizations with better financial performance have effectively integrated competencies within their various HR management processes, including selection and recruitment, training and development, compensation, and talent management and leadership development.

How can organizations improve productivity levels with an integrated competency-based approach?

In organizations, when competencies are properly aligned with the mission, vision and key business processes, competencies become a powerful tool for enhancing the organization’s competitiveness. Particularly I would suggest the following five actions:

1. Map key business processes and identify critical indicators.
Analyze your mission and vision, and identify competencies required to perform key functions. Your competency model should be directly aligned with your key business processes and business priorities.

2. Profile functional and behavioral competencies for those key functions and critical indicators.
Profiling competencies and associated performance criteria/behaviors is a critical task. I suggest combining the functionalist and behavioral approaches. The functional analysis technique is used to identify functional competencies. These competencies describe what is required to successfully perform in a particular function (see example).
Behavioral competencies help to improve interpersonal relationships and individual effectiveness. Behavioral competencies complement functional competencies but do not substitute them (would you have surgery with a surgeon that effectively listens, builds bonds, and works in teams but that is not competent to perform critical surgery tasks?) (behavioral competencies examples).
When profiling competency behaviors, try to do it at a proper altitude level to provide direction of required performance but be careful not being too specific because your model may be limiting creativity.

3. Involve key staff in the identification and profiling of competencies.
These employees have been there for a long time and they know how to do the work. Furthermore, they will be natural change agents that will help to reinforce the implementation of competencies.

4. Use competencies in your learning plans.
Expand the traditional cognitive training events and develop meaningful learning interventions that take into account key learning principles from the behaviorist, cognitive and constructivist learning theories. Use a variety of learning resources to maximize learning retention and application. Integrate periods of instruction with periods of application ensuring individual and group internalization. Use competency-based case studies, on-the-job training, coaching and mentoring. Take advantage of experienced staff and assign them with key mentoring roles.

5. Develop a competency inventory of your staff and take advantage of your most competent staff.
Give your most competent employees challenging work, and assign them responsibilities for developing others. Provide them with special rewards and incentives.

Competencies open roads to productivity, employability, and sustainable development. The ability to identify needed competencies and the ability to develop those competencies will be key differentiators for future success of organizations, and future employability for individuals and communities.


· 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.
· Hewitt Associates (2005). Research Highlights: How the Top 20 Companies Grow Great Leaders. Downloaded Feb 2006 from
· International Labor Conference. (2008). Report V, Skills for improved productivity, employment growth and development. International Labor Office, Geneva, ISBN 978-92-2-119489-7 ISSN 0074-6681, First edition 2008
· Corporate Executive Board. (2008). Executive Guidance for 2009, “What the Best Companies Do”