Calypso Consulting

(A version of this article appeared in Chinese in CHO Magazine in November 2006)
 
 
            Once you have satisfactorily designed a competency model in your firm, the next challenge is to apply it to one of your business programs.  As I have written before, I believe the first place to apply your model is the company’s performance management program.  But let’s be very clear.  This is not just a technical exercise for HR.  In fact, it is a proven method of improving company performance and should be a tool for every line manager.
            In Chinese businesses, most managers hear the word “performance” and immediately think of results.  They think of “what” must be done.  How much should we produce?  How much money should we make?  How much service should we deliver?  And so on.  But when competencies enter the picture, the discussion of performance moves from “what” to “how.”  How do we expect our employees to behave?  Should they be more flexible?  More team oriented?  More customer focused?  These are the kinds of things that leading edge companies are measuring today to determine their results – not just the hard outcomes that are typically reported to financial shareholders.
            If your company recognizes the value in the “how” as well as the “what,” then you are probably ready to start applying competencies to your performance management system.  Before explaining how to do this however, I want to issue one stern warning – go slowly!  I know that may sound counter-intuitive to the fast-moving businesses we are all so used to.  But I have seen so many competency programs fail because the company tried to apply it too soon before the majority of employees really understood what it was all about.
Adding Competencies to Your Performance Management Program
            Nearly every performance management plan is based on results.  A typical plan for an employee may list what is expected in terms of production, sales, client contacts, programming code written and/or any number of other results-oriented measures.  These measures are relatively objective and can easily be turned into goals.  Many companies use the SMART acronym to develop their goals.  (S = specific, M = measurable, A = attainable, R = relevant, and T = time sensitive.) 
            But competencies do not fit so easily into that pattern.  First of all, competencies are not typically observed objectively.  They require a competency model to bring objectivity to the behavior.  If one of our competencies is “flexibility,” we can generally define the concept to show that the employee is able to adapt to work within a variety of situations and with various individuals and groups.  But how do we measure that?
This is why you first need a model that distinguishes between different levels of each competency for each level in the organization.  So, for “flexibility,” for example, you may expect very junior employees to be at a Level 1, which, in your model may simply say that, at this level, the employee merely accepts the need for flexibility and acknowledges that people may have different opinions that they are entitled to.  In the case of a much more senior person however, we would expect them to be at a higher level.  It may be Level 5 or higher in your model.  In this case, the employee may actually make organizational changes in order to meet a customer’s needs.
Let’s look at another example of a different competency – “customer service.”  In this case we could expect all entry-level employees to at least be at the first level.  This could mean simply that the employee follows up on client enquiries, requests and complaints and keeps the client up to date on results.  The more senior employee however, would be expected to do much more.  The senior employee may be expected to actually act as the client’s advocate and take the client’s side versus that of his own organization, as long as they see the greater long-term benefit to their own organization.  For example, the senior employee may advise a client not to go forward with a particular contract with his own organization if he believes that it would be better for both the client and his own company to wait until a later time.  Even though doing so now could mean a current loss of revenue for the company.  A good competency model makes these kinds of distinctions for all the company’s competencies and lists at least 5 – 7 levels for each competency.  Each level, in turn, has behavioral descriptions that are germane to the company. 
Remember I said earlier to go slowly.  One of the reasons for this is because we want to be sure that both the supervisor and employee, completely understand what is expected in terms of displaying competency behaviors.  In my experience, it takes at least one year of applying the model to performance to understand it well.  That is why I often recommend NOT tying the competency part of performance management to pay until at least the second year of application.   In the first year, you add the competencies to everyone’s performance plans.  But they become a point for discussion, not reward.  Once managers believe that there is competency improvement, then it can be added to the plan in the same way as the results measures and can be tied to the reward system.
Mechanics
            Actually, this part is very simple as long as you have a competency model with levels and behavioral definitions for each level.  During the performance planning process, the supervisor and the employee talk about the model and where they see strengths and where they see a need for improvement.  In the case of competencies that require improvement, you first identify where the employee is today compared to the levels in the model.  You then make a plan to raise that competency by one level during the performance period (usually one year.)  If attaining the next higher level is still below what is expected for that position, you may try to accelerate things a bit and move two levels.  (If you do this, I recommend a quarterly review to formally monitor progress.) You should probably do this for no more than two competencies per year, as this is quite manageable. 
Competency development is a lifelong effort so you cannot expect to change one’s total behavior as rapidly as you might change their results performance in productivity or sales.  But if managers did this with each of their employees each year, think of the enormous impact on the company.  Moving the entire company forward, little by little each year, will have major effects on corporate performance and therefore on shareholder return.