Competencies: Alternative frameworks for competitive ...

Competencies: Alternative frameworks forcompetitive advantage

Robert L. Cardy a, T.T. Selvarajan b,*

a Department of Management, W.P. Carey College of Business, Arizona State University,Tempe, AZ 85287-4006, USAb School of Business, University of Houston-Victoria, 14000 University Boulevard,Sugar Land, TX 77479, USA

Abstract Competencies in organizations can be broadly classified as employee-level and organizational-level. Since organizational-level competencies are embed-ded in employee-level competencies, the identification of the latter is important fororganizations interested in using competencies to achieve competitive advantage. Inthis paper, we present a model of employee competencies as a means toorganizational competitiveness and discuss various frameworks for identifyingemployee competencies. In addition to the traditional frameworks, which are moresuitable for organizations functioning in a static environment, we offer twoalternative frameworks that can be useful in identifying competencies in a dynamicorganizational environment. Once appropriate employee-level competencies areidentified, a competency-based human resource system can be implemented toensure that employees actually do possess the identified competencies.D 2005 Kelley School of Business, Indiana University. All rights reserved.

1. The importance of competencies

The importance of competencies to organizationscannot be overstated; in fact, they can be the keyto competitive advantage. In order for an organi-zation to succeed in its mission, organizationalcompetencies must match strategic intent. Withoutthe needed competencies, even well-conceptual-ized and well-stated strategies cannot be success-fully implemented and realized. It is competencies

that allow the concept of strategic intent to beoperationalized.

The concept of competency can be vieweddifferently within an organization. From a strategicmanagement perspective, Hitt, Ireland, and Hoskis-son (2005) define competencies as a combination ofresources and capabilities. The combination ofresources and capabilities in an organization canbe classified as core competencies when they arevaluable, rare, difficult to imitate, and difficult tosubstitute. As such, core competencies can be asource of strategic competitiveness. For example,the design of products appears to be a corecompetency for Apple and a key source of its

0007-6813/$ - see front matter D 2005 Kelley School of Business, Indiana University. All rights reserved.doi:10.1016/j.bushor.2005.09.004

* Corresponding author.E-mail addresses: [email protected] (R.L. Cardy)8

[email protected] (T.T. Selvarajan).

KEYWORDSEmployeecompetencies;Competencyidentification;Developmentframeworks

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strategic competitiveness. From a strategic per-spective, competencies can be functions, processes,and routines in an organization. For instance, theemployee- and family-oriented culture and empha-sis on research and development at SAS Institutewould appear to form core competencies for theorganization (Watson, 2002; Wiscombe, 2002).

Competencies have also developed into a centralconcept in the area of human resource manage-ment (HRM). From the HRM perspective, compe-tencies are viewed as capabilities of people. Forexample, a job may require the performance of aparticular task which, to do well, requires specificemployee knowledge, skills, or abilities. The pro-fession of health administration, for instance, hasbeen examined in terms of competencies neededfor effective practitioner performance. In such astudy, Shewchuk, O’Connor, and Fine (2005) foundthat health administrators require competencies inoperations management, patient focus, politicaland ethical concerns, finance, and physician rela-tionships. Delving more deeply, competencies inthe operations management category include com-munication skills, team building, and listeningskills, and those in the patient focus categoryinclude community knowledge, regulatory knowl-edge, and political savvy.

The concept of competency is central to thedomains of both strategy and HRM, although thetwo frameworks are different lenses throughwhich competencies are understood and devel-oped. The strategic perspective focuses on com-petencies at an organizational level and deals withthem in a more abstract fashion as a uniquecombination of resources and capabilities. HRM,on the other hand, views competencies as person-al characteristics related to effective job perfor-mance. We do not contend that one perspectivehas a better or more correct view of competen-cies; rather, we believe there is advantage inaligning the concept of competencies across thetwo perspectives.

The focus of this paper is on employee-levelcompetencies, and we present a model of em-ployee competencies as a means for organization-al effectiveness. Since organizational-levelcompetencies are embedded in employee-levelcompetencies, identification of appropriate em-ployee-level competencies is an important aspectof a competency-based system. Thus, the majorpurpose of this paper is to present alternativeframeworks for identifying and developing em-ployee competencies. In addition to the tradi-tional frameworks for identifying competencies,we present two alternative frameworks thatshould prove especially useful for organizations

that are facing dynamic, changing, and volatilemarkets. Before discussing the employee compe-tencies model and frameworks for identifyingcompetencies, let us review the concept ofcompetencies.

2. What are competencies?

In their book chapter on the role of competency indeveloping organizational competitiveness, Turnerand Crawford (1994) broadly classify competenciesas belonging to one of two categories: personal orcorporate. Personal competencies are possessed byindividuals and include characteristics such asknowledge, skills, abilities, experience, and per-sonality. Corporate competencies belong to theorganization and are embedded processes andstructures that tend to reside within the organiza-tion, even when individuals leave. These twocategories are not entirely independent. Thecollection of personal competencies can form away of doing things or a culture that becomesembedded in the organization. In addition, corpo-rate characteristics can determine the type ofpersonal competencies that will best work or fitin the organization. Our focus is on personal, oremployee, competencies.

As the topic of competency increases in popular-ity, a great deal of variance across organizationsexists regarding what constitutes a competency. Forexample, some organizations take more of a trait-based approach to identifying employee competen-cies, while others use more behaviorally baseddescriptions. Thus, it is important to consider thedefinition of competency, at least from a prescrip-tive framework. Next, we review the definition andtypes of competencies from an HRM framework.

2.1. Definition of competency

The employee competency construct can be tracedback to an article by McClelland, in which theauthor does not directly define the word compe-tency, but uses the term as a bsymbol for analternative approach to traditional intelligencetestingQ (McClelland, 1973, p. 7). In this approach,McClelland advocates the use of skill sets related toperformance on the criteria based on criterionsampling. The use of the term competency waspopularized in The Competent Manager, whichdefined the word as ban underlying characteristicof a personQ that could be a bmotive, trait, skill,aspect of one’s self-image or social role, or a bodyof knowledge which he or she usesQ (Boyatzis, 1982,p. 21). This broad description would seem topotentially refer to any individual difference char-

R.L. Cardy, T.T. Selvarajan236


acteristic; however, the context in which theseindividual differences are considered is job perfor-mance. Further, Boyatzis distinguished between jobfunctions/tasks and competencies by pointing outthat competencies are what people bring withthem in order to perform jobs. Woodruffe (l992)defines a competency as bthe set of behaviorpatterns that the incumbent needs to bring to aposition in order to perform its tasks and functionswith competenceQ (p. 17).

Woodruffe’s description of the term competen-cy has some simple but important characteristics.First, employee competencies have to do withobservable behavior. While operative variablessuch as personality traits, values, motives, andthe like underlie behavior, these characteristicsare revealed in observable and identifiable pat-terns of behavior. Second, the behavioral patternis related to job performance. Third, and perhapsmost implicit, is that the concept of competencycan include the traditional knowledge, skills, andabilities (KSAs), but also go beyond these char-acteristics. Specifically, effective performanceincludes not only capability, but also the motiva-tion or desire to perform. Kochanski (1996) offersa simple description of competencies as thesuccess factors in an employee’s organization andprofession. For example, competencies may bethought of as the factors that distinguish higherperformers from average or lower performers inan organization. Similarly, Kennedy and Dresser(2005) recently defined competencies as anythingemployees have or acquire that contributes toorganizational success.

In sum, employee competencies are character-istics associated with successful performance.These characteristics should manifest themselvesin observable behavioral patterns that make apositive difference. It is important to recognizethat there are a number of characteristics that maynot have as direct an impact as KSAs on perfor-mance, yet can be important determinants ofsuccess. These underlying characteristics havebeen referred to as below-the-waterline charac-teristics by Hofrichter and Spencer (1996). Forexample, underlying characteristics such as valuesand personality may play as important a role insuccess as technical skills. However, it is importantto carefully define and measure these underlyingcharacteristics. As with any competency, below-the-waterline characteristics should be able to bedefined as patterns of behavior.

The phrase competency model is often usedinterchangeably in the literature with the termcompetency. Mansfield (1996) defines competencymodel as a detailed and behaviorally specific

description of the characteristics employees needto be effective. A competency model might beconsidered the set of competencies associated witha job or role in an organization.

2.2. Types of competencies

Competencies have been identified and competen-cy models developed from differing sources orperspectives. Perhaps the dominant model to dateis the development and reliance on generic com-petencies. The fundamental assumption behindgeneric competencies is that a set of character-istics necessary for success across organizationalsettings can be identified. For example, Thorntonand Byham (l982) identified a list of competenciesfor top management that includes leadership skills,general management skills, interpersonal skills,communication skills, creativity, and personalitytraits such as dependability and adaptability.Dulewicz (l989) identified a set of four clusters ofcompetencies as important for middle managers.The four middle manager competency clustersinclude those categorized as:

(1) Intellectual (e.g., strategic perspective, anal-ysis, and judgments);

(2) Interpersonal (e.g., persuasiveness, decisive-ness);

(3) Adaptability (e.g., resilience); and(4) Results orientation (e.g., initiative, business

sense).

As described earlier, clusters of competenciesfor the health care administration profession havealso been identified.

While the generic model is appealing, there areimportant disadvantages to a one-size-fits-all mod-el for competencies. Simply stated, characteristicsthat lead to effectiveness in one organizationalsetting may not translate into effectiveness inanother. There may be some competencies thatare generic and transfer across organizations.However, many competencies may be unique toorganizations, particularly those that have treatedtheir human resource as an asset in creating adifferentiated presence in the market. Further,application of a generic set of competencies maybe resisted by employees. Participating in develop-ing organizationally specific competencies canincrease understanding of the competency frame-work and commitment to it.

The custom, or organic, model for identifyingcompetencies can be time consuming and expen-sive. The effort may involve interviews andsurveys as a means for identifying competencies.As involving as the process may be, several

Competencies: Alternative frameworks for competitive advantage 237


organizations have taken steps to develop theirown custom set of competencies.

As is evidenced by the preceding examples ofgeneric competencies, a trait-based model foridentifying competencies is common. Parry (1996)notes that a trait model is also common for manycustom competency models developed in organiza-tions. In contrast, the prescriptive definition webegan with emphasizes observable behaviors ratherthan traits. In addition, some models emphasizeresults as competencies; for example, the ability tomake sales might be considered a competency insome organizations.

The content choice confronted when consider-ing competencies parallels the general contentchoice faced when considering performance ap-praisal criteria. As observed by Cardy and Dob-bins (1994), in the field of performanceappraisal, the three major types of appraisalsystems include traits, behaviors, and outcomes.Of the three, behaviors have probably been themost widely recommended, since they are ob-servable and changeable characteristics. Thus,behaviorally based systems may leave less roomfor error and bias, and can be useful for trainingand development purposes. Traits, on the otherhand, are quite ambiguous and are considered tobe relatively fixed characteristics of workers. Assuch, traits leave room for potential error andbias, and do not offer much hope for training anddevelopment purposes. Outcomes can be clearlymeasured, but pose problems in terms of infer-ring causality. For example, the outcome levelsof a worker may be largely due to factors beyondhis/her control. Outcomes can be more influ-enced by external or system factors than wouldtraits or behaviors, as the latter are moredirectly under the control of the person. Thus,results can pose difficult problems for measure-ment and development purposes, since thecauses of the outcome levels can be difficult todetermine.

3. Model of employee competencies

As with other types of resources and capabilities,employee competencies have the potential to besources of competitive advantage. However, tocontribute to competitiveness, the competenciesmust, first and foremost, be aligned with thestrategic direction of the organization. As pre-sented in Fig. 1, employee competencies intervenebetween the organization’s strategic vision and thelevel of competitiveness it realizes. As identified inthe model, the identification of employee compe-tencies is an important aspect of the process.Specifically, the strategic intent of the organizationmust be carefully considered and translated intoappropriate competencies. Employee competen-cies must be aligned with and enable the strategicintent of the organization. While the translationissue can be simply stated, it can prove to bedifficult in practice. What competencies are reallyneeded to realize the strategic goals? What kinds ofskills, knowledge, and other characteristics doemployees need that will provide the organizationa competitive advantage? These types of questionscan be challenging for organizations trying to aligntheir strategic intent with employee competencies.An organization may determine that it will competein its industry through customer service. What doesthis strategic intent mean for employee competen-cies? Is quick delivery important, or will quality beemphasized? Even if the competency implicationsof a strategic vision are clear, other employeecompetencies can take center stage. For example,a salesperson who hits sales numbers may have theright customer service approach, but the short-term benefit of maximizing sales can overshadowthe long-term goal of competing on the basis ofquality of customer service.

There are fundamentally different frameworksfor identifying employee competencies, and theyare reviewed later in this paper. The link betweenthe identified competencies and organizational

Strategic Vision

Organizational Context

Employee competencies

Identification

Implementation

Organizational competitiveness/effectiveness

Figure 1 Employee competencies as means to competitiveness and effectiveness.



effectiveness is, as depicted by the model, moder-ated by the context. To be successful, an organi-zational context that is characterized by constantchange requires a different framework for identi-fying competencies than a context that is stableand very slow to change.

Another important step in regard to employeecompetencies is their implementation. It is notenough to simply identify the needed competen-cies, they have to be put into action. Implementingemployee competencies requires that they be usedas standards which drive employee evaluation anddevelopment. If the competencies are really tomake a difference in the day-to-day routine of howthe work of the organization is performed, theyneed to be translated into criteria for assessing anddeveloping employees.

Criteria serve to focus attention on what isimportant in an organization and drive recruitmentand selection efforts. Further, they are used as thebasis for performance appraisal, often determinecompensation levels, and are used as a basis forpersonnel decisions such as promotion and termi-nation. Thus, the criteria focused on can have awide-ranging impact on the composition and beha-viors of the human resource in organizations.Additionally, criteria can operationalize the strate-gic direction and value orientation of an organiza-tion. Criteria can make very real and concrete howan organization will transform itself into its futurevision.

The criteria focused on in organizations haveimportant and direct influences on organizationalcompetitiveness and effectiveness. Focusing on thewrong or on deficient criteria may severely affectthe performance of an organization and lead to itsfailure in the marketplace. Moreover, the criteriacan be critical determinants of organizationalculture and how the organization is viewed bypeople outside of the organization. For example,the extent to which an organization emphasizesfactors associated with product quality or servicecan be quickly surmised by customers and become acharacteristic that the marketplace associates withthe organization.

Translating employee competencies into criteriaoperationalizes the strategic efforts of the organi-zation. Without implementing competencies ascriteria, the strategic vision or identified compe-tencies might as well be rhetoric or documents putinto storage. Making competencies real requiresthat they be translated into criteria. The processthat depicts translation of strategic vision intocriteria is graphically shown in Fig. 2. FollowingCardy and Dobbins’ (1994) work in this area, thefigure presents a common HRM hierarchy of criteria

that begins with the ultimate level. The ultimatecriterion could be the strategic vision for theorganization; for instance, perhaps becoming afirst-class service organization. These ultimate-level criteria need to be translated into conceptu-al-level criteria. For example, the ultimate goal ofcompeting through excellent customer servicemight be achieved through speed, value, luxury,service, or a combination of these or other means.Each of these approaches would imply differenttypes of employee competencies that would beneeded to achieve the strategic vision. If thestrategic vision of customer service is conceptual-ized as being achieved through speed, then em-ployee competencies such as task-orientation,persuasiveness, and manual dexterity might beidentified. Based on these employee competencies,operational-level criteria such as number of trans-actions per hour or number of customer servicecalls per day might be put in place. These criteriawould operationalize and drive speed as the meansby which customer service will be achieved in theorganization. On the other hand, if the strategicvision of customer service is conceptualized asbeing achieved through quality, employee compe-tencies such as social skill, adaptability, and beingcustomer-oriented might be identified. Based onthese competencies, operational-level criteria suchas customer satisfaction and customer retentionmeasures might be used.

Regardless of the standard, the criteria put inplace make clear to everyone just what is impor-tant and what they should be focused on. It does

Ultimate

Conceptual Employee Competencies

Strategic Direction

Competency- based Criteria Operational

Figure 2 Levels of criteria and employee competencies.



little good to identify a strategy and associatedemployee competencies needed to achieve acompetitive advantage if these competencies arenot translated into performance criteria. Unfortu-nately, task performance and productivity can beshort-term concerns for which operational mea-sures are handy and routinely used. Staying withthese criteria can mean that a new strategicdirection never takes hold and becomes reality.An important management issue is whether em-ployee competencies have been driven down intothe level of operational criteria.

4. Frameworks for identifying anddeveloping employee competencies

As mentioned earlier, the process of identifying anddeveloping employee competencies is important intranslating the strategic intent of an organizationinto organizational competitiveness. In this sec-tion, we discuss various frameworks for identifyingand developing employee competencies, includingtwo traditional approaches and two alternativeapproaches. Table 1 summarizes the four compe-tency identification approaches based on thenature of competencies and organizational con-text. The two traditional approaches are labeledjob-based and future-based. We label the job-based framework as such because the competen-cies are derived from an analysis of the jobrequirements. The future-based approach focuseson competencies needed to achieve a futurestrategic direction. This approach is still oftenbased on an analysis of the job, but as the job willexist in the future. An alternative competencyframework is labeled value-based because compe-tencies in the framework are based on the values ofthe organization. A second alternative framework isreferred to as person-based, as the competenciesare based on characteristics of people rather thanon task.

4.1. Job-based approach

The job-based framework for developing competen-cies is likely themost common. Under this approach,the development of competency criteria begins with

an analysis of present job requirements. The famil-iar tool of job analysis is the starting point for thisprocess, and resulting job analysis findings drive thecompetency criteria. For example, competencieswould reflect the most important and/or most time-intensive tasks and duty areas. Competencies mightbe identified through surveying or interviewingtarget employees regarding competencies neededon the job. A less rigorous, but common, approach isto identify required competencies by culling througha generic competency list.

Mansfield (1996) notes that the job-basedapproach has typically focused on developingcompetencies for a single job at a time. Amultiple-job approach, however, offers advan-tages to the organization in that competenciescan be used for a variety of jobs. Mansfielddescribes a multiple-job approach that consists ofdeveloping a broad set of competencies that spanacross various jobs in the organization. Thesecompetencies are defined and behaviorally de-scribed using generic language so that the com-petency descriptions can apply across a variety ofjobs. Mansfield provides the example of interper-sonal awareness as a generic competency thatcan be applied across all jobs and described inbroad terms. Under the multiple-job approach,the organization develops an overall set ofcompetencies that should capture the targetpopulation of jobs. Each job then can be de-scribed as a profile of various levels from theoverall set. Some competencies may not apply toa job, while others may be present at highdegrees.

Competencies developed with a job-based ap-proach identify skills that reflect what is needed toperform the jobs in the organization. Therefore,the competencies speak to performance on thecurrent job and are based on the assumption thatthe current job will not dramatically change. Thecompetencies have a static nature. Further, theyfocus on the content of the job since they are basedon a job analysis. Thus, the competencies center onwhat is done on the job. Job-based competencieswould best fit in and promote organizationalcultures that would be characterized as hierarchi-cal and fixed. In this scenario, job expectations and

Table 1 Nature of competencies and organizational context as a function of the type of competency developmentapproach

Job-based Future-based Person-based Value-based

Nature of competencies Static-focus onwhat gets done

Directional change-focus onwhat needs to be done

Broad and emergent Process-focus on howthings are done

Organizational context Fixed-static;hierarchical

Fixed-future oriented Innovation-organic anddynamic; empowered

Strong process focused



the environment would be highly defined, and theenvironment would be static.

4.2. Future-based approach

Rather than being based on present job duties,competencies may be based on the mission andfuture strategic direction of the organization. In aconceptual consideration, Lado and Wilson (1994)have linked the future strategic orientation of theorganization and competencies. In this approach,the future strategy of the organization drives thecompetencies that will be considered core andcentral to the interests of the organization. Thefuture strategy drives the competencies, which inturn drive hiring, appraisal, training, and develop-ment activities. Thus, competencies provide ameans for organizations to prepare for their futuredirections. Further, the competencies link thefuture strategy of the organization with the humanresources, and provide a rational and common basisto the human resource management (HRM) func-tions. Thus, competencies can, theoretically, inte-grate HRM with business strategy and align thefunctions of HRM toward a common purpose. Twocompanies that use competency-driven strategydevelopment models are Hughes Aircraft andSiemens (Walker Group, 1997). Hughes Aircraftdefines strategic competencies required withinthe next 3 to 5 years consistent with its businessstrategy, and Siemens Business Communicationsreplaced job-based systems with competency-based systems tied to business strategy.

The future-based approach yields competenciesthat are future-oriented and are based on what willneed to be done in the organization in the future.The approach requires a clear vision of the organi-zation’s projected path and what job duties andtasks will exist. The culture associated with thisapproach could generally be characterized as fu-ture-oriented; however, there would still be a fixednature to the culture since the competencies wouldbe focused on specific areas of job performance.

4.3. Alternative frameworks for identifyingcompetencies

The job-based approach would seem to fit well inorganizational environments that are stable, em-phasize a consistent set of tasks, and have clearfunctional responsibilities. The future-based ap-proach to developing competencies is appropriatein situations where change is a planned andcoordinated effort. Many of today’s organizations,however, operate in dynamic environments thatcall for flexibility and ever-present short-termchange. Moreover, even comprehensive long-term

plans can be significantly altered by unforeseenchanges in the market. As Collins and Porras (1994)reported in their book on the habits of visionarycompanies, this has led some organizations toembrace the stability that can be found in value-based management. The remainder of this paperwill explore the two previously mentioned alterna-tive frameworks for identifying and developingemployee competencies (the person-based andvalue-based approaches), both of which are basedon the above aspects of change.

The person-based approach focuses on broadperson skills and other individual attributes, andestablishing an environment in which these skillscan result in marketable products or services. Thevalue-based approach emphasizes values as astable framework for identifying competencies.While these values determine how things shouldget done, they do not identify which tasks shouldbe performed.

4.3.1. Person-based approachThe person-based approach to developing compe-tencies consists of identifying the individual attri-butes that will offer the organization the greatestpotential in its human resources. Microsoft, forexample, emphasizes overall intelligence as a keyhuman resource competency. Stross (1996) reportsthat Microsoft managers look for intelligence aboveall else, including experience in programming,when hiring employees. This can be explained bythe fact that the company believes its realcompetitive advantage is its bsuper-smart,Q highlyintelligent workforce.

Competency development based on a person-focus may also be suitable for knowledge-basedorganizations that depend upon creativity andinnovativeness of employees for organizationaleffectiveness. A job-based or future-based ap-proach may be too mechanistic to engendercompetencies that foster creativity because thesetraditional approaches ignore individual interestsand attitudes. In a case study of competencydevelopment for knowledge workers in Volvo,Sweden, Lindgren and colleagues (Lindgren, Sten-mark, & Ljungberg, 2003) found that the company’scompetency development approach was focused onemployees’ interests; that is, things that excitethem and they are passionate about. The focus onpersonal interests of knowledge workers in thecompany engaged employees in more information-seeking activities, which resulted in additionalinnovation and knowledge creation.

The person-based approach is consistent withthe rationale underlying skill-based pay: thatpotential and bdepth on the benchQ are important



organizational assets. Having a deep pool of skillstranslates to innovation, flexibility, and possibility.On the downside, though, it may lead to chaoticconditions and require great faith in the potentialof the human resource that marketable productsand services will result. As indicated in Table 1, thecompetencies associated with a person-based ap-proach are broad and emergent. Broad character-istics (such as overall intelligence in the Microsoftexample) would likely be the initial focus in orderto develop broad potential. Through the develop-ment of products and services, other particularcompetencies that might be needed would eventu-ally surface.

The culture associated with the person-basedapproach would be innovative and based on abottom-up organizational process. The environmentwould be dynamic, and workers would be providedwide scope to pursue their ideas. This person-basedapproach can be illustrated by a recent case study ofa competency-based human resource system imple-mented at a law firm (Vaaler, 2005). The approachfor competency modeling in this law firm can beviewed as a bottom-up process since, as the authorreports, the process involved soliciting commentsand inputs on the nature of competencies. The firmalso defined competencies in broad terms (i.e.,general behaviors and attitudes) rather than spe-cific outcomes. Consequently, the firm developed aset of generic competencies that can be applied toall the lawyers. Interestingly, although the firmdefined the competencies in broad, abstract terms,they followed the definitions with concrete exam-ples of observable behaviors for each competency.This is consistent with our assertion that it isnecessary to translate competencies into opera-tional-level criteria for effective human resourcemanagement. The behaviors cited by the law firmwere used to develop manuals for guiding recruit-ment and performance appraisal processes. Inanother example of this approach, Dainty, Cheng,and Moore (2003) reported development of acompetency-based performance model for con-struction managers. In this study, a broad range ofbehavioral competencies was developed based onextensive interviewing of construction managers.During these interviews, the managers were askedto recount examples of behaviors and actions thatled to superior performance. As a result, the studyidentified 12 core behavioral competencies (e.g.,composure, team performance) that were predic-tive of stellar performance.

4.3.2. Value-based approachThe value-based approach to developing compe-tencies consists of identifying the core values the

organization wants to be known for and promote.As Collins and Porras (1994) observed, a focus onvalues can offer a stable anchor for organizationsoperating in turbulent environments, as an organi-zation’s values may be more steadfast than itsstrategy, which is subject to changes in themarketplace. Competencies developed from avalue-based approach would focus on the processof work in the organization. They would specifyhow things should be done rather than what shouldbe done, and would help to clearly establish astrong organizational culture of how work should becarried out.

The value-based approach can be effective indeveloping ethical competencies. Harry JansenKraemer, CEO of the global health company BaxterInternational Inc., believes that ethical conductcan only be assured when employees share thevalues that guide that conduct. Ethical values havebecome an important issue in the wake of recentscandals due to unethical conduct of businessexecutives in companies such as Enron, WorldCom,and Tyco International. Developing ethical compe-tencies is critical in order for organizations to beable to deal ethically with customers, share-holders, employees, and other stakeholders. Spur-gin (2004) suggests that employees’ ethicalcompetencies may include knowledge of ethicalphilosophy, awareness of business ethics issues, andthe ability to critically evaluate arguments onbusiness ethics issues. Organizations that valueethics are in a better position to develop andsustain ethical competencies than organizationsthat adopt ethical orientation for short-term stra-tegic considerations. A job-based approach mayinvolve identifying specific codes of conduct foreach position. But, in the absence of a supportingorganizational culture that promotes, evaluates,and rewards ethical conduct, such a job-basedapproach may fail to elicit the desired ethicalbehaviors. Further, codes and rules cannot bedeveloped for every possible situation. However,with the right values as guiding competencies,employees can be counted on to make ethicalchoices, even in situations that are ambiguous orwere not anticipated with regulations. In otherwords, a value-based approach offers a betteradvantage for developing ethical competenciesthan traditional approaches.

Using a value-based approach can also be moreeffective than traditional approaches for develop-ing multicultural or cross-cultural competencies.John Pepper, former CEO of Procter and Gamble,remarked that globalization has become an ex-tremely important factor for organizations, almostto the point of being a cliche. Developing the



employee competencies necessary to be able tofunction effectively in the globalized businessenvironment is one of the key challenges facingorganizations in this century. As globalization isextremely dynamic, traditional approaches (whichare more suitable for static environments) todeveloping cross-cultural competencies may beless effective. In a case study of competenciesfor global leaders at 3M, Alldredge and Nilan(2000) report that the company identified aglobal perspective as one of the key competen-cies. Included under the umbrella of this globalperspective were such issues as working respect-fully in a multicultural environment and aware-ness of global markets, suppliers, and resources.The 3M approach to developing global competen-cies was grounded in their values and culture.Multinational companies that have strong culturalcompetencies to work in host countries havedefinite competitive advantage. In a study ofAsian multinational corporations and Westernmultinational corporations in China, Luo (1999)found that the Asian multinationals outperformedtheir Western counterparts. This was mainly dueto the Asian companies’ superior knowledge ofChinese markets and appreciation for Chineseculture. An organization that values and appreci-ates global diversity and the multicultural natureof the business environment is better placed todevelop multicultural competencies.

5. Applied value of competencyframeworks

The previous discussion provides a broad descrip-tion and contrast of the primary approaches to thedevelopment of competencies. While these con-ceptual descriptions and distinctions should beclear, application of these frameworks needs tobe considered. A basic but critical questionaddresses which framework will result in the bestemployee competencies. Other issues pertain tothe use of competencies as the basis for criteria.For example, when operationalized as criteria,what might be the utility of each competencyframework at the level of individual workers and atthe team level? Many organizations currently em-ploy team-based structures, and it is important toconsider how proposed criteria could be utilized atboth the person and team levels. We next turn to aconsideration of these issues.

As depicted in our overall model, the impact ofan employee competency framework is contingentupon the organizational context. The job-basedapproach to developing competencies requires a

stable and relatively unchanging context. Rapidchange in technology or job requirements canresult in employee competencies that becomeobsolete and worthless to the organization, yetthe competencies and their associated criteria canremain past the point of usefulness. The future-oriented framework offers utility when specificdirection and goals can be specified. When a futurestrategic direction can be stated at an operationallevel, the employee competencies needed to makethe plan possible can be specified. The person-based framework is most suitable in an organiza-tional context of dynamic change. Due to marketforces, technology changes, and other variables, anorganization may find that the context of its workdoes not offer a stable basis for identifyingemployee competencies. The process of its work,however, may remain quite stable. Thus, theperson competencies needed to work effectivelyin that environment may be a stable competencyframework. Finally, the value-based approachoffers utility when an organization wants to estab-lish or emphasize core values. Translating thesevalues into employee competencies and criteriaoperationalizes the values and makes them realthroughout the organization.

It might be noted that a value-based approach,in particular, may not lead to competitive advan-tage. Organizations emphasizing core values maynot, in the short-run, be primarily concerned withprofit and competitive advantage (Collins & Porras,1994). Driving values throughout the organization,however, may be seen as the means to achieving aneffective organization. Thus, the overall modelincludes organizational effectiveness as a possibleoutcome associated with the employee competen-cy frameworks.

Another issue to consider has to do with the useof employee competencies as criteria. Table 2identifies some of the major uses of each of thefour types of competency criteria at the level ofindividual workers and at the level of work teams.At the individual level, job-based competencieswould be useful for the assessment of the levels ofrelevant skills. The criteria could be used in theassessment and selection of job candidates, andcould be used for assessing current workforcemembers for purposes such as training, develop-ment, placement, and so on. At a team level, thejob-based competencies could be used to deter-mine the skills needed for a balanced and fullyfunctioning team.

Future-based competencies could be used atthe individual level as signals of the direction ofthe organization. Workers could clearly see whatwould be expected of them in the future. Further,



they could assess the extent to which their skillsand interests fit with the overall direction andspecific competencies. At the team level, thefuture-based competencies would be useful foridentifying team projects necessary for achievingthe future strategic vision. For example, teamsmay need to focus on competency areas andderive plans for how the needed skills should bedeveloped in the organization. The strategiccompetencies may also make clear to establishedteams areas in which their skills need to bedeveloped.

Person-based competencies would offer verybroad requirements that could drive recruitmentand selection efforts. These generic requirementsmight specify broad cognitive abilities and/orgeneral personality characteristics. At the teamlevel, person-based competencies, depending ontheir breadth, might be useful for developingroles within the team structure. For example,one worker may best fit the role of technicalexpert, another the role of team facilitator, andanother the role of concept person. Competen-cies at the role level may prove most useful forthe establishment or development of effectiveteams.

Value-based competencies would be useful atthe person level for identifying how work should becarried out. In addition to establishing processrequirements, the value-based competencieswould provide a means for workers and prospectiveworkers to assess their fit with the organization.This is consistent with the increasingly popularperson—organization fit model of selection. Per-son—organization fit assesses the congruence be-tween individual and organizational values. At ateam level, the value-based competencies wouldprovide useful guidelines for how the team shouldcarry out its work. The competencies could be usedas explicit criteria for assessing the effectiveness ofthe team work process.

The alternative approaches to the developmentof competency models offer new avenues anddirection for practice. For managers, the person-and value-based approaches offer important toolsfor the development of criteria. Further, thesealternative competency approaches may capturecritically important facets that the otherapproaches may miss. As a practical matter, the

alternative development approaches should not beviewed as mutually exclusive tools. For example,an organization may combine various approachesand use all of them across different parts of itsoperation, or the job-based approach might besupplemented with the value-based approach.Further, to the extent that jobs in an organizationinclude both fixed and variable tasks, both job-based and person-based approaches may proveuseful. There are many possibilities, and an orga-nization that takes the time and effort to find theright framework for identifying and developingemployee competencies will find the process worththe while.

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Level Job-based Future-based Person-based Value-based

Individual Person skills assessment Direction and fit Generic requirements Process requirements and fitTeam Team requirements Team projects and required

skill developmentDevelopment of roles Team process effectiveness



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