What is the value of a competency model and why are they suddenly so en vogue?
To answer these questions, let’s think like a CEO who is starting a new company. The CEO has a long term (3-5 yr) vision of what goals they want to accomplish. They have a COO who identifies how to accomplish these goals, one year at a time. The COO must translate this plan into who must do what in order to achieve each goal.
By way of an example, if this were a company who was going to make a flying car, the CEO’s long term goals might be to establish a flying car as a viable transportation vehicle, achieve sales of 100,000 units in 3 years, and derive the price down from an introductory early adopter price, to an end purchase price of $50,000. The COO would need to hire:
- An R&D department to develop it
- A manufacturing department to build it
- A distribution department to get the cars to market
- A sales and marketing department to sell it
- A service department to service the cars once on the market
Everyone would have an intermediary goal that if accomplished, would lead to the accomplishment of the company goals, and achievement of the long term strategy.
As the goals get driven down lower and lower, they become more specialized, until they get to a specific person performing a specific role, for example, an R&D engineer. To ensure that each R&D engineer can help the company, the company has to define what skills this person must be able to do really well. And this is the competency model for this job. I like to use the description that a competency model defines what separates “good” from “great”. Not everything a person does in a role should be part of the competency model. For example, any engineer must be able to perform engineering design functions, but a great engineer can work with other R&D engineers to troubleshoot design issues before they reach manufacturing.
So the value of a competency model is that it identifies what skills each person in the company must be able to do to be “great”. And if everyone performs at the “great” level, then company strategy is achieved, and a company is likely to have a competitive advantage.
The next question is, “why now?” Companies have always needed to create a competitive advantage. So a competency model has always had value. What’s different is that:
- The pace of change has accelerated – and with it, the skills required to be successful continue to change
- To survive today, companies must continuously innovate, which only increases the changing skills required
- People stay in the same job for less time, and therefore people need to be able to become “great” without as much experience as they had in the past
- New workers entering the workforce want to be able to make an impact more quickly – they want to know how to be “great” right away and are motivated to get there
If you don’t know what skills are required to be “great”, that is, you don’t have a competency model for each job, how can you innovate, keep up with a changing global environment, maximize your human capital, and make employees motivated to stay? And that’s why competency models are so en vogue today.