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Executive Competency Models: Do They Really Add Value?

Authors: Katherine Thomas, HR Consultant, Hay Group, Graham Mole, Director of HR Development, Willis Group
First published: 2002

Many organisations boast, as part of their portfolio of development tools, one or more competency models. Executives are not exempt in this regard; in explicit recognition of the fact that roles at the highest levels of seniority require some distinct and separate attributes, it is not unusual to find a stand-alone model of leadership competencies in organisations. Yet an executive competency model is often a costly beast. Quite apart from the actual development costs incurred and often because of the requirement for consulting support, the opportunity costs can be phenomenal. Whatever methodology is used to identify and model competencies, it will be necessary to examine executive behaviours in some depth, and this will inevitably require a significant amount of executive and practitioner time.

In view of the costs of developing executive competency models, one might expect to achieve some very real returns once these have been completed, not least because of the potential contribution of such competencies to executive development processes. Sadly, nothing is further from the truth. It is far more common to see a model consigned to the annals of HR history, referred to by no-one bar a handful of HR zealots, than to experience competencies being used as the foundation for executive assessment and development.

What are the things that can go wrong?

The notion of competencies is hardly new. Yet, despite the passing of nearly 30 years since David McClelland first described the importance of behaviours in predicting job success, and 20 years since Boyatzis's seminal book, The Competent Manager (Boyatzis, 1982), we continue to struggle with ways to derive real value from their insights and those of the many others who have followed. Why do we keep getting it wrong? Is the idea of competency conceptually flawed, or is it an implementation issue? We tend towards the view that the failure lies in faulty implementation, not in the concept of competency. There is a minefield of risks associated with competency development and implementation that, at worst - and all too often - lead to competencies being consigned to the burgeoning waste-basket of management fads and panaceas (Gill and Whittle, 1993).

The blights that inevitably (and rightly) lead to dismissal of competencies by the very group for whom they were intended, include:

Failure to provide explicit links between competencies and business objectives.
Failure to demonstrate links between competencies and future business priorities. (See Cockerill, 1989).
Using language that resonates only with a few HR cognoscenti, and not with those in the organisation as a whole.
Not ensuring that the competencies are described in terms of attributes that are both tangible and readily measurable. We take the view that well-articulated competencies should stand up as examples of very best practice job analysis (Kandola and Pearn, 1992).
Producing a long list of armchair-designed 'nice-to-haves', as opposed to a focused set of attributes that are explicitly associated with excellent performance.
Considering competencies as just one more item to be added to the current HR fashion rail, rather than as a constructive response to a real business requirement.

This assortment of sins has been extensively described (see, e.g., Woodruffe, 1992; Mole, 2000) so why do we keep falling into the traps? Perhaps the key is in the last bullet above. Competencies are too often seen as a panacea. When there are difficult people issues to be resolved (and few are more difficult and sensitive than those concerning executive capability), a low risk starting point (has often been) to suggest identifying the attributes that people require in order to be successful. The logic of beginning with this step is unquestionable, and if nothing else, the research exercise buys some time. But the really tough questions are ignored while the worthy team of researchers trawls through the organisation searching for answers.

In one highly successful retail bank that eventually used executive competencies to powerful effect, the movement to identify these competencies was 'launched' months, before anything concrete actually happened. The HR community was primed, and some valiant attempts were made by the project team to schedule consultation time in executive diaries. Lip service was duly paid to the initiative, but almost 9 months later, the team had little to show for its efforts. The executive model to which the HR community aspired remained, in the eyes of line managers, a nice-to-have fashion item, until the point at which it became clear that the bank was well-positioned to acquire a large competitor. Suddenly the business imperative for having a model was crystal clear: the business needed a robust framework for making executive appointment decisions following the acquisition and competencies were the answer. Suddenly, the mood changed as the HR supply-push was overtaken by the business demand-pull. After months of prevarication, one short and intensive research exercise successfully generated a model that lay at the heart of the subsequent restructuring process.

Why do these things go wrong?

If we know, on the basis of bitter experience, that there are many ways in which the best-intentioned competency researcher can trip up, why do we continually fail to avoid such pitfalls? Often, it boils down to the simple desire on the part of the competency design team to please; to accommodate the whims and preferences of others and to compromise their own professional judgement. This desire can result in one or more 'fudges' in connection with a number of design choices.

For example, at the most basic level, there is a choice that the design team needs to make about the level of consultation it intends to undertake. Consultation is a crucial element in the development process. If development of competencies is perceived (rightly or wrongly) as an ivory tower exercise, those in the business will have every reason to dismiss the outputs. However, they may be equally unwilling to contribute the time required for a more collaborative design process, particularly if there is any previous organisational experience (real or perceived) that HR initiatives start well and end up going nowhere. The researcher is left facing a dilemma - how to draw fully on collective experience and views regarding what the competencies should be, whilst at the same time trying to make minimal demands on executive time.

Regrettably, our experience also tells us that deep consultation could take place with every one of the current incumbents in the roles that are to be covered by the model and still be inadequate. Competencies that deliver value, particularly when the context of their use is executive development, are those that incorporate an element of 'stretch', or aspiration (Spencer et al., 1992; Sparrow and Bognanno, 1993). Current job incumbents may be the least well-equipped to articulate the behaviours that would move them upwards from current levels of performance (whatever these are). So the best that the consultation process can deliver is an output that describes the competencies exemplified by today's most successful employees. Whilst not a complete waste of time by any means, few would argue that this output justifies the investment required.

A second dilemma facing the worthy competency researcher is that of the specific versus the generic. On one hand, it may seem reasonable to assert that some distinctive - possibly even unique- attributes, characteristics and behaviours will be associated with any one given role. On the other hand, there are only so many competencies that are relevant to high performance, no matter what the role or organisation, as evidenced by the industry that has grown up around provision of 'pick and mix' competency dictionaries. The issue here is about finding a happy medium between providing enough meaning and specificity to enable a competency model to ring true for its users, while at the same ensuring that the model is parsimonious and adequately covers a variety of roles or "job families".

The third key dilemma for competency researchers is that of simplicity versus complexity. On the face of it, most people prefer (or say they prefer) simplicity as a general principle. However, trying to apply this principle, particularly within the arena of competency definition, can become a minefield. The tendency to describe more rather than less when it comes to the multi-faceted aspects of one's own exciting and valuable role is hard to resist. And these multiple facets will vary amongst the population of those consulted as part of the competency research. Those who have contributed to the competency research process generally, and not unreasonably, expect to see elements they recognise in the final output. The challenge for the researcher is to develop a model that is meaningful to its users and contributors, whilst at the same time, simple and succinct. And this challenge increases with the size of the population covered and the diversity of the roles that are consequently included.

As if these were not enough, there is one more dilemma to be overcome and this concerns how much or little detail of the final 'product' to share with the overall organisation. No matter how tempting it is for the competency researcher to assume that others will share his or her fascination with the detail underpinning each competency in the model, the over-riding rule here is that less is more. The logic which states that individuals need competencies to be clearly articulated if they are going to stand any chance of applying and developing them is unassailable. However, this requirement is rarely, if ever, satisfied by simply circulating the full competency model to all users. Hours are wasted deliberating over format (glossy binder/booklet/swanky gadget and so on) and delivery channels for such communication. The real challenge is to encourage individuals to focus on the behaviours that make the difference, and this - as learning theorists rightly argue - is far more than simply telling them what these behaviours are.

How can competencies be used to deliver real organisational benefits?

From our work in and with organisations, we have made a few general observations about those that appear to get the best from their competency models:

Competency models are effective at both a macro and a micro level. Many organisations are well-practised at developing competency-based tools that assist people in their individual development; fewer are expert at gathering and using collective information on existing competency strengths and areas of exposure. For those that do so best, this macro-perspective is about much more than deciding whether or not a training course on, say, influencing skills would be widely relevant. Instead, such information on organisational capability can play a significant part in identifying sources of competitive differentiation, and therefore in shaping future organisational direction.
Competencies are properly contextualised. That is, any given strength or development need is viewed in the light of whatever aspects of the individual's role (either current or likely future) make this competency relevant. It is not enough to call for a strength in, say, logical thinking; unless the elements of a role that require strong logical thinking are clear, this capacity may be irrelevant, or at worst, impede high performance.
Competencies are never an end in their own right, but a means to an end, and that end is always high performance. In other words, competencies, when used effectively, are no more than a vehicle - a language that can be used as part of discussions about what is required of people and how they might enhance their effectiveness. It is truly astonishing how often this utterly obvious point gets overlooked.
Competencies provide an integrative framework for other activities. Effective competency models do not stand alone alongside other business and HR functions. If they are well-grounded, they will inform practices in a number of areas - recruitment and selection, performance management, assessment, succession planning, career planning as well as training and development - and sometimes even compensation and benefits.
There is absolute clarity of the line of sight between competencies and the priorities of the business. The organisations that are most successful in this regard have learned that it is impossible to over-emphasise the strategic imperatives that lie at the heart of a competency model. And this means providing a rationale for each and every competency included in the model.

So what does getting the best out of a competency models actually involve?

For Individual Executives:

Ask any executive whether competencies have played a significant part in driving his or her organisation's performance, and only a handful will respond in the enthusiastic affirmative. Given what we believe to be the positive relationship between properly researched competencies and organisational performance, this is extremely disappointing.

In our experience, the executives who have got the best out of the competency models defined in their organisations have done four things effectively:

Held their colleagues in HR to account. Executives who understand the critical causal link between their behaviours and the results they deliver are typically also intensely interested in the competencies defined in their organisations. As the key user group, they ask three fundamental questions of the model(s) in place:
- Does this reflect the strategic priorities of my business? In other words, would using these competencies result in my delivering my business goals?
- Are these competencies stretching and aspirational?
- Does the manner in which the competencies are described resonate with me?
If the answer to any of the above questions is 'no', the organisation is failing its executives, through not articulating a fundamental component of what leads to high performance. And those in HR need to know so that this lack of clarity can be resolved.
Reviewed the overall set of executive competencies alongside the particular challenges of their own role. With almost any competency model, it is likely to be the case that, at any given time, an executive will be experiencing challenges and working in environments that render some competencies more relevant and important than others. Successful development is about focus: becoming master of a small number of trades, rather than jack of them all.
Been honest about themselves. Self-awareness is the critical starting point for any development of real value. But such self-awareness can be in short supply among executives for a number of reasons, not least of all, the increasing difficulty experienced by colleagues in providing feedback to those at more senior levels. A key problem here is that individuals will typically assess their intended behaviours, rather than what they actually do. All too often, there is a disconnect. One important way to close this gap between intent and fact is to ask close colleagues about their perceptions and experience of one's behaviour. And of course, the most powerful messages can be drawn from such feedback when this comes from the full range of possible perspectives: one's boss, direct reports, peers, customers and so on. Such messages are frequently the best possible foundation for decisions on how to focus development efforts.
Not taken the easiest developmental route. Tangible skills and knowledge, whilst clearly important throughout one's career, are less clearly and fully predictive of success with increasing seniority. Conversely, behaviours (that is, competencies) become increasingly important. Yet, because the notion of developing skills and knowledge is often much more tangible, familiar and less personally threatening than making more fundamental behavioural changes, it is the former that often takes precedence. Focusing on competencies may well be the riskier and more painful alternative, but this is certainly where the greatest rewards tend to lie for executives.

For organisations:

If we take into account the millions of development euros, pounds and dollars that have been poured into competency identification over the years, we might sadly conclude that competencies have had their day. However, that would overlook three salient points. The first is that, from many years of research into numerous occupations, the inarguable finding emerges that some people are significantly better at performing their jobs than others (Cook, 1991). The second is that people who are significantly more effective than others do things differently from those others. The third is that people are much more successful when they are very clear about what is expected of them. Properly developed competencies identify both the manner in which success is achieved and the means of doing so.

So before giving up on competencies and turning with feigned enthusiasm to the latest management fad, let us offer the following summary of those things which we believe enable the most effective use of executive competency models:

1Know what it is that competencies are expected to deliver. If the model has been developed to describe the behaviours that will increase shareholder value, you should be able to state precisely how they will do that. If you cannot, you have not done sufficient research or development for your organisation.
Look at what can be achieved in future, rather than what has been achieved in the past. The most successful organisations are the ones that constantly work to identify new opportunities and to stay ahead of the game. The principles governing success in these circumstances are equally applicable when it comes to competencies - these must focus on the future, rather than harking to past glories. It is far better to be almost right about the future, than completely right about the past.
The moment that a competency model starts to look jaded, it will cease to deliver value. This does not necessarily mean that an 'out with the old, in with the new' approach has to be adopted, but it certainly does mean that the competencies need to be refreshed and renewed, just as often as the priorities of the organisation.
Give users what they need and no more. Top line competency definitions are frequently quite adequate for the broader population - keep the accompanying levels and indicators for the edification of the application design team.
Do not assume that a competency model in isolation will deliver value. As with any other set of expectations - and this is what the model represents for individuals in an organisation - the messages need to be articulated and then reinforced over and over and over again. Such reinforcement takes many forms. It is often most powerful when informal; seeing someone else do something to good effect is a key source of development for all human beings (Bandura, 1977). But it also needs be formal. A competency model may be technically outstanding, but if the performance management process only pays attention to financial outcomes, such competencies are likely to be of academic interest at best.
Competencies are no substitute for good management. They are an additional tool to assist managers in the challenge of articulating what is required in a changing world, and supporting people's development accordingly. They should form part of the continuous dialogue that managers in the most successful companies have with their people about how they will deliver excellent results. But this dialogue needs to be happening in the first place if competencies are to have any impact at all.

Ten years ago, Boam and Sparrow (1992) said this:

"It is not surprising that the appetite of organizations to find out more about competency approaches has grown. Unfortunately, these wonderful tools have been largely the preserve of individual academics and consultants. Perhaps as a result, there seems to have been a perfect negative correlation between the increasing interest and published work on 'competency approaches' and the level of confidence that managers have in writings of the experts."

Have the fortunes of competency models improved? Not really; we suspect that many organisations have adopted competency models since then, but that many more have either deliberately abandoned them or simply left them out in the cold to die. However, some organisations are, as we have shown, using them very successfully. We may therefore have to conclude with the somewhat Darwinian perspective that using competencies to significantly add value to their business operations is the preserve of highly competent organisations. The "bad workers" among organisations - the multitude of average and lower than average performers - will go on blaming their tools.

Where next?

We firmly believe, despite the problems we have cited in this chapter, that competencies can and should have a healthy and productive future - provided our warnings and advice on good implementation practice are heeded. For those interested in pursuing the idea of competencies, and here we are thinking particularly of senior HR executives, what steps should you now take? We recommend the following:

Assess the receptivity in your organisation. Assuming that you have already identified that competencies could bring benefits to your organisation, how open is your organisation to the idea? Remember that the investment both in bringing competencies into the world and implementing them is considerable, and you will have to compete against others' investment agendas. It almost goes without saying that you will need to be able to make a sound business case for competencies very early in the game. (Sadly, and incredibly, some HR executives don't take this vital first step). That means you will need a reasonably accurate estimate of the cost of developing a competency model, and of the benefits. It is invariably easier to assess the impact of competencies on HR operational costs, e.g., recruitment, assessment, training and development, than the savings to be gained in the wider organisation. For the latter, we'd expect most of the benefit arguments to be qualitative. In one company, the main benefit cited for competencies was their potential contribution to senior management succession planning. This proved a very powerful argument, given that the company had just suffered a traumatic succession crisis at the very top of the organisation. Something else, which ought go without saying, is that there is no point in starting the process of introducing competencies without the express approval and support of your Chief Executive. Hoping to hatch a competency model quietly within the confines of the HR department, prior to releasing it to the waiting world, will take you as far as Darwin's waiting room.
Assess the capability in your organisation. Developing an effective competency model, or set of models, is not a trivial pursuit. Like any good piece of research, this requires a definition of outcomes, a robust methodology, protracted and assiduous data collection, rigorous analysis and testing - and all before anything can be implemented. Do you already have the resources to do this within your organisation? The answer to this question is often that you have some of the resources, but not all. You may well need to supplement what you have with outside expertise, which means selecting a consulting partner with a proven track record in the field of competency development. This is not the place to advise on how to select a consultant, about which much has been written. We would simply emphasise proven track record as the crucial selection criterion. Many consultants would like the opportunity of developing competencies and would claim to have the expertise. Few, in our experience, have actually done it.
Assess others' experience of using competency models, first-hand. All HR executives network with their counterparts and peers in other organisations, in some way or other. We strongly recommend that you use those networks to find out who has competency models, how they researched and implemented them, and what value the models are delivering. If you can gain such information from people in your own industry and sector so much the better; their environments are likely to be similar to yours, and you will be able to detect factors which you judge as likely to either promote or inhibit the take-up of competencies in your own organisation.

Our conclusion is that competencies can and often do really add significant and sustainable value, as we hope we have amply shown. In organisations, as in the rest of life, there is nothing so practical as a good theory. The theoretical basis of competencies is well-tried and tested and, in our view, far more reliable than the tiresome, ungrounded offerings of the "instant success" school of HR consulting. The real problem lies in execution; turning a good idea into something valuable for, and valued by, one's organisation requires exceptional competence in implementation. The guidelines we have provided in this article should help you decide if you have that competence or, if you haven't, how to acquire it.

References

Bandura, A. (1977). Social Learning Theory. Englewood Cliffs, NJ: Prentice-Hall.

Boam, R. and Sparrow, P. (1992). The rise and rationale of competency-based approaches. In R. Boam and P. Sparrow (Eds.), Designing and Achieving Competency. London: McGraw-Hill. 3-15.

Boyatzis, R.E. (1982). The Competent Manager. New York: Wiley.

Cockerill, A. (1989). The kind of competence for rapid change. Personnel Management, September 1989, 52-56.

Cook, M. (1991). Personnel Selection and Productivity. Chichester: Wiley.

Gill, J. and Whittle, S. (1993). 'Management by panacea: Accounting for transience.' Journal of Management Studies, 30,2, 281-298.

Kandola, R. and Pearn, M. (1992). Identifying competencies. In R. Boam and P. Sparrow (Eds.), Designing and Achieving Competency. Maidenhead: McGraw-Hill. 31-49.

Mole, G.W. (2000). Managing Management Development. Buckingham: Open University Press.

Woodruffe, C. (1992). What is meant by a competency? In R. Boam and P. Sparrow (Eds.), Designing and Achieving Competency. Maidenhead: McGraw-Hill.16-30.