Developing individual competencies profile and application to FPT corporation

By identifying the linkage betw een individual com petencies and the organizational corc com petencies, and the role o f the core com petencies in an organization the author gives the an

TRUONG VU THANH THU Y

DEVELOPING INDIVIDUAL COMPETENCIES PROFILE

AND APPLICATION TO FPT CORPORATION

Major: Business A dm in istratio n

Code:

MASTER OF BUSINESS ADMINISTRATION THESIS

S U P E R V IS O R : NGUYEN NGOC ANH

H A N O I, 2 0 0 4

2.1.3 Linkages between organizational core com petencies

and individual com petencies2.2 Identify core competencies

2.3 Build individual based com petencies profile

2.4 Application o f individual com petencies profile

2.5 C om petencies’ roles

3 APPI ICATION TO FPT CORPORATION

3.1 M ethodology o f building individual based com petencies profile3.2 Application o flB C P into human resource m anagem ent

3.2 ! Competencies based-W ork design

3.2.2 Competencies based-Recruitm ent and selection

3.2.3 Competencies based-Perform ance managem ent

3.2.4 Competencies bascd-Training

3.2.5 Competencies bascd-Otlicr application

C CO M PETEN CIES BASED CA REER PATH M ATRIX FOR FPT 84

x

2 Top-down and bottom-lip approach

3 Relation between com petencies, HR practice and business strategy

4 C om petencies base work design method

5 C om petencies based perform ance m anagem ent m ethod

6 C om petencies based training process

" T hink o f a diversified com pany as a tree: the trunk and

m ajor lim bs as core products, sm aller branches as business

units, leaves and fr u it as end products N ourishing and

stabilizing everything is the root system: core competencies.

Focusing on core com petencies creates unique, integrated

system s that reinforce fit am ong yo u r fir m 's diverse

production and technology skills-a system ic advantage yo u r

com petitors c a n 't copy

H ow ever, who m akes up the corporate core com petencies? And who creates the unique? It is the human The advantage that the corporate can achieve is depended

on the efforts o f individual, or the individual com petencies A lthough the concept about individual com petence was developed long tim e ago in the w orld, it is about

to appear w idely in Vietnam M any consulting firms have used com petencies based

m ethodology as a tool to upgrade corporate initiative especially in human resource

m anagem ent Base on this scenario, in this thesis, the author want to systemize the idea about the organization core com petencies and individual com petencies for further understanding and applying the com petence concept By identifying the linkage betw een individual com petencies and the organizational corc com petencies, and the role o f the core com petencies in an organization the author gives the answ er about w hy organizations should focus on developing the individual com petencies profile and use that profile as a strategic hum an resource

m anagem ent to upgrade the hum an capital, one o f the m ost im portant factor that helps to bring the success to the organization For illustration, the author analyzed the need to develop individual com petencies profile for FPT C orporation and the application o f com petencies based m ethodology in its strategy o f developing human resource

! C K P rah alad and G ary H am el, "T h e corc com petence o f the c o rp o ra tio n ” Harvard ¡Justness Review. April

1 2001

o f these officers had sim ilar work experiences and academ ic backgrounds, there was an interest to find out if there were some differentiators that influence their ability to perform At that tim e, the help o f Harvard behavioral scientist David C

M cClelland and a social scientist David Berlew was sought and so the two proceeded with devising an approach based on M cC lelland’s theory o f m otivation and which focused on an individual’s relative level o f need for affiliation, power and achievem ent A trained researcher used a technique called “behavioral event interview ” and in the process, asked subjects to tell stories about how they perform ed their jobs, decisions they found to be most difficult, and how they' handled situations that did not go well

Unknown to the researcher was the fact that certain subm arine com m anders were consistently high perform ers while others were consistently considered as average

T his mix o f perform ers had been sclcctcd to determ ine w hether or not a common set o f differentiating behaviors emerged from the interview s with the high perform ers It was concluded that there w as a statistically significant correlation

am ong the behaviors described during the interview by the com m anders who had

2 E rn esto G E spinosa, FPM , Competence, (h ttp ://w w w p m ap o rg p h /n e w sle tte r/a p ril/fro m d e sk h tm )

records o f high perform ance This research approach becam e the accepted method for com petency m odeling in the years to come.

N ow adays, the word “com petencies” is used in m any contexts, w ith very different meaning O ver the years, com petencies have been used to denote organizational or business com petencies as well as individual or em ployee com petencies

B ellow ing is the review o f com petencies concept that is classified into organizational core com petencies and individual com petencies

2 1 1 O r g a n iz a t io n a l C o r e C o m p e t e n c ie s

O rganizational core com petencies are those capabilities that are critical to a business achieving com petitive advantage The starting p oint for analyzing core com petencies is recognizing that com petition betw een businesses is as much a race for com petence m astery as it is for m arket position and m arket power Senior

m anagem ent cannot focus on all activities o f a business and the com petencies required to undertake them So the goal is for m anagem ent to focus attention on com petencies that really affect com petitive advantage

The main ideas about core com petencies o f the corporation w ere developed by C

K Prahalad and G ary H am el through a series o f articles in the H arvard Business Review followed by a best-selling book - C om peting for the Future Their central idea is that over tim e com panies m ay develop key areas o f expertise w hich are distinctive to that com pany and critical to the com pany's long term g ro w th 1

3 Strategy-Core competencies ( h ttp ://w w w tu to r2 u n c t/b u sin e ss/stra te g y /c o re _ c o m p e te n c ie s h tm )

"In the 1990s m anagers w ill be ju d g e d on their ability to identify, cultivate, a nd exploit the core com petencies that

m ake grow th p ossible - indeed, they'll have to rethink the concept o f the corporation it self ” C K P ra ha la d and G

H am el 1990.

These areas o f expertise m ay be in any area but are m ost likely to develop in the critical, central areas o f the com pany w here the most value is added to its products For exam ple, for a m anufacturer o f electronic equipm ent, key areas o f expertise could be in the design o f the electronic com ponents and circuits For a ceram ics

m anufacturer, they could be the routines and processes at the heart o f the production process For a softw are com pany the key skills may be in the overall sim plicity and utility o f the program for users or alternatively in the high quality o f softw are code w riting they have achieved

A com petence w hich is central to the business's operations but w hich is not exceptional in som e way should not be considered as a core com petence, as it will not differentiate the business from any other sim ilar businesses For exam ple, a proccss which uses com m on com puter com ponents and is staffed by people with' only basic training cannot be regarded as a core com petence Such a process is highly unlikely to generate a differentiated advantage over rival businesses

H ow ever it is possible to develop such a process into a core com petence with suitable investm ent in equipm ent and training It follow s from the concept o f core com petencies that resources that are standardized or easily available will not enable n business to achieve a com petitive advantage over rivals

In 1994, Fogg C D defines organization core com petency as "those few internal com petencies at w hich you are very, very good, better than your com petition, and

that you will build on and use to beat the com petition and to achieve your strategicobjectives."

In general, organization core com petencies are strategic business capabilities that provide a com pany with a m arketplace advantage and it refers to the unique factors that m ake an organization com petitive Core com petence is a strategic concept that captures organizational capabilities Core com petencies can relate to any strategically relevant factor: greater proficiency in product developm ent, better

m anufacturing know -how , the capability to provide custom ers better after-sale services, faster response to changing custom er requirem ent, superiors perform ance

in m inim izing costs, the capacity to reengineer and redesign products faster and rivals, superiors inventory managem ent systems, strong m arketing and

m erchandizing skills, specialized depth in unique technologies, or greater effectiveness in prom oting union-m anagem ent corporation H onda’s core com petence is its in-depth o f expertise in gasoline engine technology and small engine design Intel’s is in the design o f com plex chips for personal computers Procter and G am ble’s core com petencies reside in its superb m arketing distribution skills and R & D capabilities in the five core technologies- fats, oil, skin chemistry, surfactants, and em ulsifiers Sony’s core com petencies are its expertise iri electronic technology and its ability to translate that expertise into innovative products (m iniaturized radios and video cameras, TV s, and V CRs with unique features)

2 1 2 I n d i v i d u a l C o m p e t e n c e

The concept about individual com petence is various Study in this area, one is

im m ediately struck by the lack o f uniform definitions, very fine lines o f definition distinction w ith term s such • as com petence, com petency, com petence as the

"power, ability, capacity to do, for a, task", whereas M erriam W ebster4 defines that com petence and com petency are synonymous as are com petences and com petencies.

A ccording to G uy Le B oterf,5 a Frcnch expert on com petence, “Com petence is the com bination o f relevant resources that the individual m obilizes to reach a particular result” He says that com petencies are not them selves resources in the sense o f know ing how to act, know ing how to do, or attitudes, but they mobilize, integrate and orchestrate such resources This m obilization is only pertinent in one situation, and each situation is unique, although it could be approached as an analogy to other situations that are already known

From his theory, paradigm any analysis o f com petence has to be contextualized to the typology o f product, service and organization For exam ple, a violin m aker's result, her or his perform ance (a wonderful violin with a perfect and harmonious sound) is the result o f the ability, the com petence to perform a series o f key activities by com bining and m obilizing in the best possible way the wealth o f individual (personal) and netw ork (external) resources Sim ilar exam ples o f the relation betw een resources, com petence and results may be imagined for a skilled

In 2000, looking at another approach Le B oterf define com pctcncy as a construct, which is the result o f a pertinent com bination o f a num ber o f resources (know ledge, inform ation netw orks, relation networks, know ing how to do)

1 M e rria m -W e b ste r is A m e ric a ’s forem ost p u b lish er « N n n g u ag c-rcln lcd rcfcrcn ec w orks, t he com gany

p u b lish es a d iv e rse array o f print and clcc tro n ic p roducts, in clu d in g Meniam-Webster's Collegiate

Dictionary, Eleventh Edition— A m e ric a ’s b est-sellin g desk d ictio n ary — and Webster's Third New

Intei naiional Dictionary» Unabridged.

5 The concept of competence (h ttp ://p ro m o k o m p c te n s.n e t/in d c x 12 — I htm l)

Richard B oyatzis6 (1982) defines w ork com petency as an underlying characteristic

o f a person w hich can be a m otive, a trait, a skill, an aspect o f his personal image

or o f his social role, or a body o f know ledge w hich he or she uses To Boyatzis,

that enable consistent delivery o f desirable results, which are defined as below.

Figure 2.1: Competence components

are developed through the learning, application and practice o f specific Scientifit, Technical and Job related K nowledge

Scientific K now led g e: Scientific K now ledge refers to the general m ethods, rules

and principles o f the physical natural, econom ical and behavioral sciences Scientific know ledge is generic and applicable in all situations relating to Ihc particular scientific discipline being practiced Science usually involves som e soil

o f hypothesis testing m echanism or asking the question "w hat if '

u B o y a t/is, R F: ( 1982) The Competent Manager; A Mode! for Effective Performance N ew York: John

W iley and Sons

Technical K now ledge: Technical K now ledge refers to specific techniques, rules

and principles relating to a particular technological application o f the general sciences, e.g food technology, hanking technology, electronic technology, etc technical know ledge is m ore specific and only applicable to specific fields and practices o f a particular technology

.Job K now ledge: Job K now ledge relates to Scientific and Technical K now ledge It,

how ever, refers to the very specific way it is applied w ithin the com pany and to the very specific safety know ledge, know ledge o f specific tools, procedures, m ethods and policies that apply to the perform ance o f a particular Job in a very specific job situation This m eans that the job know ledge required to perform this specific task will differ from another jo b environm ent or organization (I.e the way financial transactions are handled in various com panies is quite different from one company

to the other

A S k ill refers to a n u m b e r o f m icro ta sks that have to be perform ed in a fixed way

to enable the perform ance o f a m ajor Task These M icro tasks could be quite complex They are usually perform ed subconsciously and are typically com pleted

in several seconds or m inutes They are tasks that typically call for:

• O perations involving com plex, subtle hand, finger, and eye co-ordination

• Unusual m ovem ents, postures or rhythm s not found in everyday life, e.g

m ovem ents concerned with the hand-operated safety guards on pow er presses

• A bnorm al use o f the senses, e.g inspection o f hand-sew ing needles requires highly developed discrim ination in the sense o f touch

• C om plex inform ation-processing activities relating to problem solving and decision-m aking

Skills are usually tested by means o f observation, practical application tests, role- play, etc It usually consists o f the application o f knowledge Skills could be cognitive, psychomotor or affective, depending on the dominance o f their enabling behaviors.

C ognitive Behaviors ("thinking" behaviors): Cognitive behaviors involve the

recall and classification o f specific information, the application o f information and the analysis, evaluation and use o f information in the process o f problem-solving and decision making.

Psychom otor behaviors ("acting" behaviors): Psychomotor Behaviors are those

requiring precise muscular movements in a particular way to achieve a particular result.

A ffective Behaviors ("feeling" behaviors): See attributes following.

The following are examples o f skills:

• Problem solving skills

• Communication skills

• Budgeting and Controlling Costs skills

• Programming skills

• Typing skills

are usually tested by psychological tests and are usually noticeable in the overall behav ior o f an individual.

They are usually referred as Affective Behaviors ("Feeling Behaviors") Affective Behaviors, frequently hidden from observation, are the values that a person places upon what they think or do They are usually observed as a person's attitude or

feelings tow ards perform ance All Cognitive or Psychom otor behaviors are accom panied by A ffective behaviors These Affective behaviors usually develop

as the direct result o f learning processes related to the learning and mastering o f cognitive and psychom otor Skills When a trainee perceivcs the learning oT a cognitive or psychom otor skill as being successful, the affective feelings and behaviors will autom atically be positive The opposite is also applicable Honesty, respcct, accuracy, and tidiness are the example o f attribute

M cC lelland' pointed out that Com petence is understood as the relation between human and w ork tasks, i.e the concern is not about know ledge and skills in itself, but which know ledge and skills are required to perform a specific task in an efficient way

Zemke (1982) interviewed several experts in the field to determ ine "precisely wlint makes a com petency" and he captured his findings tliusly: "Competency, com petencies, com petency models, and com petency-based training are all

H um pty-Dum pty words meaning only what the definer wants them to mean The problem com es not from malice, stupidity or m arketing avarice, but instead from some basic procedural and philosophical differences am ong those racing to define' the concept and to set the model for the way the rest o f us will use com petencies.”

Fum hani (1990) states that " the term com petence is new and fashionable, but the concept is old Psychologists interested in personality and individual differences, organizational behavior arid psychom etrics have long debated these questions o f personality traits, intelligence and other abilities "

D avid M cC lellan d , w hose research in the 60s ami 70s sheds a lot of* light on the influence o f com petencies

on p e o p le ’s

International Labor O rganization8: Com petence is the social construction o f significant, useful lessons for the productive perform ance in an actual working situation, which is attained not only through instruction, but also - and to a great extent - through learning by experience in specific jo b situations'1.

In the book C om petencies in Action, Jane W eightm an defined “Essentially,

com petencies underlie the behaviors thought necessary to achieve a desired outcome A com petency is something you can dem onstrate.” “C om petency is about perform ance - how w e define it, assess it, develop it, acquire it, and so on Some desired perform ances, or com petencies, are easy to define m easure and develop [ .] However, m any desired perform ances or com petencies are much more complex and are difficult to observe or measure [ .] But even in these difficult-to-judge areas, we can usually agree that some individuals’ perform ance is more effective than that o f others [ ] What the com petency m ovem ent tries to do is to analyze what it is that m akes som e people’s perform ance better than others, and to list the com ponent factors which go to m ake up these com petent perform ances.”

The American C om pensation A ssociation defined com petencies as " individual perform ance behaviors that are observable, m easurable and critical to successful' individual or corporate perform ance" (Canadian HR R eporter-Press Release,1996)

M arshall, Patricia (1 9 9 6 ),0“ A com petency is an underlying characteristic o f a person, which enables them to deliver superior perform ance in a given job, role or situation.”

* T he International L ab o r O rg an izatio n is the UN sp ecialized ag en cy w hich seeks the prom otion o f social

ju sticc and in te rn a tio n a lly reco g n ized hum an and labor rights It w as founded in 1919 and is the only

surviving m ajor creatio n o f th e T reaty o f V ersailles w h ich brought th e L eague o f N atio n s into b eing and it

b ecam e the first sp e c ia liz e d ag en cy o f the UN in 1946

9 ILO Formación profesional Glosario de término.'; escogidos. G eneva 1993 (h ttp ://w tv w ilo o rt’)

10 M arshall, P atricia (1 9 9 6 ), “ W hy are som e people m ore successful than o th e rs? ” , in P eople and

co m petencies, ed ited by N ick B oulter, M urray D alziel and Jack ie Mill, K ogan I’agc, seco n d edition.

Ducci (1997) defined competency as an identifiable and evaluable set of interrelated attitudes, values, knowledge and skills that allow for satisfactory performances in actual working situations, according to standards used in that occupational area.'1

In a dynamic conception, competencies arc continually acquired (education, experience, daily life), mobilized and developed, and they cannot be explained or demonstrated independently o f a context This conception locates competency in the individual's head, it is part o f his patrimony and his intellectual and human capital.

ability to successfully carry out some work activity which, which includes:

• Things an individual must demonstrate to be effective in a job, role, function, task, or duty, an organizational level, or in the entire organization.

• Aspects o f an individual that imply a level o f skill, achievement, or output

In d iv id u a l C o m p e te n c ie s Level

/

Normally, competencies are defined at different level The fundamentals to clarify each level are various The level o f competencies is in function o f the complexity and diversity o f the tasks The specialization o f competencies is related with the amplitude o f knowledge demanded by the equipment and machinery used, the material they work upon or with which they work, as well as the nature o f the goods and services produced.

11 Ducci, Mar ía A ngélica El enfoque de competencia laboral en la perspectiva internacional (n: Formación basado en competencia laboral. Cintcrfor/ILO Montevideo 1997.

12In the applied system o f the United Kingdom, the levels have been structured beginning with the analysis o f the productive functions Their intention was to create a frame o f reference sufficiently ample so as to conserve a sense o f flexibility and maintain the possibilities individuals have to transfer their competencies to new labor contexts.

The definition o f levels makes up part o f the structures o f standardized systems o f competency- certification; its use allows a person to visualize the possibilities o f promotion and transferal among different qualifications.

I

The five competence levels defined in the United Kingdom are:

Level 1 : Competence which involves the application o f knowledge in the performance o f a range o f varied work activities, most o f which may be routine and predictable.

Level 2: Competence which involves the application o f knowledge in a significant range o f work activities, performed in a variety o f contexts Some o f these activities are complex or not routine and there is som e individual responsibility or autonomy Collaboration with others perhaps through membership o f a work group'

or team may often be a requirement.

Level 3: Competence which involves the application o f knowledge in a broad range o f varied work activities performed in a wide variety o f contexts most de which, most o f which are complex and non-routine There is considerable responsibility and autonomy and control or guidance o f others is often required.

Level 4: Competence which involves the application o f knowledge in a broad range o f complex technical or professional work activities performed in a wide

L What is the competence level (w w w ilo o n ;)

variety o f contexts and with a substantial degree o f personal responsibility and autonomy Responsibility for the work o f others and the allocation o f resources is often present.

Level 5: Competence which involves the application o f a range o f fundamental principles across a wide an often unpredictable variety o f context Very substantial personal autonomy and often significant responsibility for the word o f others and for the allocation o f substantial resources features strongly, as do personal accountabilities for analysis, diagnosis, design, planning, execution and evaluation.

In other approach, the level o f the competencies is identified by the proficiency and/or by the degree/certificate for the knowledge Base on this approach, competencies can be defined at three levels: knowledgeable, proficiency, and advance or even more detail by describe at four levels Each level is defined as below:

Level 1: The awareness level At this level the person has some knowledge o f the subject or has some skill in applying the knowledge To be effective the person needs further training or practical application o f his/her skill to be able to apply it' effectively in the job During the application therefore the person needs close supervision or assistance to ensure that the output to be delivered adheres to the standards as specified (Customer focus skill - Investigates and takes action to meet customers’ current and future needs - Level one: Demonstrates concern for how customers will use his/her products or services Works effectively with customers 1:1 or in small groups in clarifying and responding to their needs Demonstrates a strong customer service orientation, and takes responsibility to follow up with customers to ensure their needs and expectations are satisfied)

Level 2; The functional application level At this level the person has a good knowledge o f the subject and can apply his knowledge effectively Outputs delivered conform to the standards and minimum supervision or assistance is required to deliver the outputs New knowledge gained can be applied in the workplace but needs guidance and assistance in the application thereof Still needs training on the subject and must be lent on training courses to leam new skills (Customer focus level two: Understand customers, proactively gathering information to learn about their needs and expectations Builds ongoing relationships with customers Sets customer expectations appropriately Collaborates with other teams to ensure the customer gets a flawless product or service).

Level 3 : The expert level At this level the person has an extremely good knowledge o f the subject and can work completely on his/her own he/she learns any new items regarding the subject out o f own will and can easily find new ways

o f applying the knowledge and skills The person's knowledge and skills is o f such standard thflt he/she can train, guide or assist others in gaining the knowledge and skills that he/she has (This does not reflect that the person must have training skills or knowledge to operate at this level.) (Customer focus - at this level: thể person will adapt products and services to customer feedback; Design and monitors interfaces between his/her group and customer satisfaction; Be alert and appropriately responsive to any data indicating a customer opportunity or change

in customer needs; talk and acts with customer service in mind; Serve as a role model in providing exceptional customer service) Only the end-result or the output

is clicckcd when delivered to others and it usually conforms to standards specified.

Level 4 : The specialist At this level the person has gained all the knowledge available regarding a subject and keeps him/herself up to date with any changes regarding the subject on a continuous basis It is a person that can apply his/her

knowledge effectively without any supervision or assistance At this level the person can train, guide and assist others in the application o f the knowledge in creating the outputs according to standards specified At this level the person creates new things regarding the subject that is not included in the knowledge lie/she has gained so far or training courses presented on the subject (Customer focus - nt this level the person will design his/her organization for optimal customer focus and service; is outstanding in developing strategic, ongoing customer relationships, gaining trust and respect for the company; develops long­ term product or service plans and strategies that anticipate and channel customer needs and expectations; Strategically and effectively positions products and services in the mind o f the customer.)

No matter what approach to identify level o f competencies, defining level o f competencies helps the individual to upgrade his or her competencies by setting up study path Human resource managers can also using competencies level to design job profile Both five-level system and four-level system can also be the benchmarking tool to design standard criteria in recruitment, performance management, training and compensation Competencies levels may or may not link with the hierarchy level in the organization Regularly, in the competencies based' methodology, competencies levels are described integrating to hierarchy level so that it is easier for human resource managers in human resource planning and practice.

C o m p e ten c ie s Profile

A competency profile is generally composed o f five to ten competencies but can include as many or as few as are required to accurately reflect performance variations in the position T here arc may possible types o f competencies: excellent skills in manufacturing a high quality product, know-how' in creating and operation

D A I HOC Q U Q C G t A H A N p l

TRUNG T A M THONG TIN THU V|£ n

a system for filling customer orders accurately and swiftly, the capability to provide better after-sale service, a unique formula for selecting good retail locations, unusual innovativeness in developing new products, better skills in merchandizing and product display, superior mastery o f an important technology, a carefully craft process for researching customer needs and tastes and spotting new market trends, an unusually effective sale force, outstanding skills in working with customers on new applications and uses o f product, and expertise in integrating multiple technologies to create whole families o f new products The company can

do profiling and matching by comparing the incumbents’ knowledge, skills and behavior, the current and potential future jobs, and the performance o f employees

in the value chains and the employee in the role in order to ensure that performance can be measured and delivered against a set o f agreed standards or requirements

defined by the company or its clients Each occupation or job has certain pre­ determined deliverables or outputs that must be delivered by the employee in that particular role These outputs must be delivered at a specific lime according to specific company standards, specific requirements o f the client and adhering to any internal company procedures In order to deliver upon these outputs the employee will require certain enabling factors or competencies that he/she would apply in the process o f creating and delivering the required outputs These competencies consist o f a combination o f specific knowledge, skills, attributes or qualities that he/she must apply in certain ways in order that the end result or outputs ate delivered according to the standards and requirements outlined by the company and client.

Resourcc-bascd analysis (Lado and Wilson, 1994) suggests n tight link between individual and organization core competencies is a good way to achieve sustained competitive advantage One definition o f employee core competency, for example, suggests "(it is) a principal or critically essential competency for successful job performance for a given job at a given level in an organization hierarchy" (Dubois, 1993).

Differences in definitions notwithstanding, Hendry and Maggio (1996) suggest that when competencies are linked to the broader goals o f an organization, the following common elements emerge as outcomes o f a comprehensive competency model:

• Identification o f characteristics and behaviors that differentiate top performers from others in relation to their contribution to strategic objectives;

characteristics that focus individuals on core organization goals;

• Practical observation help prescribe and validate behavioral descriptions that achieve the desired results;

• Description o f skills, attitudes, traits, and behaviors that can be attached to pay, performance measurement, hiring criteria, training, organizational staffing, career development, and succession planning.

To conclude, high performance organizations have shown improved efficiency and effectiveness in translating corporate values into meaningful performance objectives and actions through the increasing use o f com petencies in their performance management programs Individual com petencies, on the other hand, utilized in hiring new employees or developing existing em ployees, make dramatic differences in organizational capabilities.

2.2 Identify Organizational Core Competencies

Prahalad and Hamel suggest three factors to help identify core competencies in anybusiness:

The first factor: Provides potential access to a w ide variety o f m arket

The key core competencies here are those that enable the creation o f new products and services.

I

Example: Why has Saga'3 established such a strong leadership in supplying financial services (e.g insurance) and holidays to the older generation?

Core Competencies that enable Saga to enter apparently different markets:

• Clear distinctive brand proposition that focuses solely on a closely-defined customer group

• Leading direct marketing skills - database management; direct-mailing campaigns; call centre sales conversion

M Saga g roup is b ased at Folkes tone, UK Saga group focuses ex clu s iv ely on the p rovisio n o f high quality, value for m o n e y scrvice for pe o p le 50 and over T h e s e includc holidays to w o r ld w id e d estin atio n s including cruise in our o w n ship, and a w a r d - w in in g m ag az in e, in s u ran ce and finance p roducts, and radio stations

• Skills in customer relationship management

T h e second fa c to r: M a k e s a significant c o n tr ib u tio n to th e p e rc eiv e d c u sto m e r benefits of th e en d p r o d u c t

Core competencies are the skills that enable a business to deliver a fundamental customer benefit - in other words: what is it that causes customers to choose one product over another? To identify core competencies in a particular market, ask questions such as "why is the customer willing to pay more or less for one product

or service than another?" "What is a customer actually paying for?

Example: Why have T esco14 been so successful in capturing leadership o f the market for online grocery shopping?

Core competencies that mean customers value the Tesco.com experience so highly:

• Designing and implementing supply systems that effectively link existing shops with the Tesco.com web site

• Ability to design and deliver a "customer interface" that personalizes online shopping and makes it more efficient

• Reliable and efficient delivery infrastructure (product picking, distribution, customer satisfaction handling)

The th ird fa c to r: Difficult for c o m petito rs to Im itate

A core competence should be "co m p etitiv ely u n i q u e " : In many industries, most skills can be considered a prerequisite for participation and do not provide any significant competitor differentiation To qualify as "core", a competence should be something that other competitors wish they had within their own business.

Example: Why does Dell have such a strong position in the personal computer market?

14 u \\ v\ I I'sco I'oiTi pro vides on line sh opping services

Core competencies which are difficult for the competition to imitate:

• Online customer "bespoken" o f each computer built

• Minimizations o f working capital in the production process

• High manufacturing and distribution quality - reliable products at competitive prices

Core Competencies are not seen as being fixed Core Competencies should change

in response to changes in the company's environment They are flexible and evolve over time As a business evolves and adapts to new circumstances and opportunities, so its Core Competencies will have to adapt and change.

2.3 Build Individual Based Competencies Profile

After the corporation core competencies is identified, to one approach, the individual competencies are built base on a set o f skills, experience, expertise, or a company’ scope and depth o f technological know-how, and focused efforts in performing one or more related value chain components or core activities For example, a competency profile for a public assistant might include initiative, cooperation, analytical thinking, and a desire to help the client.

To arrive at an individual based competencies profile managers need to do four

things:15

1 Construct n value chain o f company activities

2 Identify the best chains that make the significant success to the company

3 Identify the activities and the competencies critical to that success

4 Make the appropriate internal and external benchmarking comparison to determine how well the company performs activities (which activities

15 T h o m p s o n Trick land, Strategie Management: Concepts and cases (Irw in Book T e a m , 1996) p 107

represent core competencies and which ones are better performed by outsiders?) and how its cost structure compares with competitors.

To other approach, competency profile development can be handled through the top down and bottom-up approaches The top-down approach generally involves picking, based on a strategic analysis o f the organization's performance objectives,

an array of competencies from a dictionary o f competencies and assessing those for

a particular position or class o f positions The shortcoming associated with this approach is that the competencies survey is carried out as an additional step separate from the creation o f the profile The top-down process has the potential to reduce the applied face validity o f the profile and, subsequently, reduce employee participation.

Figure 2.2: Top-down and bottom-up approach

Top down approach

Strategic analysis and

The bottom-up approach, on the other hand, involves exploratory checklist surveys and subsequent confirmatory interviews to derive the competencies from employees, thereby increasing the face validity and simultaneously developing the assessment questions to tap into them McClelland's (1973) pointed out two factors that help to identify competencies: "Use o f Criterion Samples" or systematically comparing superior performing persons with less successful persons to identify successful characteristics and "Identification o f Operative Thoughts and Behaviors that are Causally Related to Successful Outcomes" or the best predictor o f what persons can and will do in present and future situations is what they have actually done in similar past situations In addition to these potential benefits, bottom-up approaches may result in employees being directly involved in the development of competency profiles that will describe behaviors that are relevant to their tasks This is useful for gaining employee understanding of, input to, participate, and loyalty to the process This approach is similar to the value chain approached method.

In the bottom-up approach, several techniques can be usçd to analyze job family such as, focus groups, inventories and questionnaires, interviews, diaries and work logs and people based techniques such as observation, repertory grids and testing.10,

Focus g ro u p s

These consist o f a group o f people at varying levels within the authority who meel

on a regular basis over a period o f time The group will look at a cross­representation o f roles across the authority It is usual practice for one person to present the main purpose o f each job/role, its key accountabilities, principal activities and perform ance indicators Following this presentation the group will brainstorm the range o f qualities needed to perform the role Once all the roles have been brainstormed, the group will collate the qualities into clusters Once the

'* Identifying competencies fo<- recruitment purposes (h ttp://w ww.lg-

cm ployers.gov uk/r ccruit/guidc/com pctcncy/idcntify.h tm l)

d u s te rs have been identified, the group will develop a working title for each competcncy, together with the behavioral indicators o f the competency in action in every day work.

This method can provide greater acceptance o f the competencies within the authority, as they tend to be in language that the authority understands In-house people will also have a greater understanding o f the roles, although it is important to ensure that the group reflects the range o f roles across the authority The main disadvantage with this approach is that it can require a significant time commitment from those involved

Inventories anti questionnaires

This technique involves using an inventory (or questionnaire or checklist) to break down the job requirements into key tasks, which are then subdivided into day-to- day activities The inventory information is obtained by talking to the jobholder and manager, as well as through observing the jobholder in action Following the initial identification o f activities, the jobholder is asked to give a score for elements such

as the time taken to undertake the work, its complexity and the consequences of error The greater the score, the more criticality o f the tasks are Following thifc, each competency is rated to provide an indication o f the importance o f each competency

This tool is helpful where jobs are well defined and predictable and it can be a cost- effective way o f gauging the views o f a large number o f jobholders and managers However, it is essential that adequate time and resources are provided to enable effective analysis o f the inventory/questionnaire results In most circumstances, use

o f a software package for the purpose is recommended

In terview s

This involves interviewing jobholders and/or managers in order to identify the specific events that form a critical part o f the job Interviewees are usually asked to describe particular experiences in their work and the interviewer will then probe to determine the actions taken and the outcome From this, the interviewer can infer the competencies required, particularly when dealing with critical incidents.

This approach tends to be most helpful to identify competencies, which are critical when dealing with demanding situations, rather than the standard competencies, so determining the difference between average and superior performance It is helpful

as it focuses directly on the competencies required rather than analyzing the work that then needs to be developed into appropriate competencies It is essential when implementing this approach, which the interviewer is experienced in a competency approach and has the nccessary interview skills

Diaries and work logs

This involves the jobholder maintaining a record over a period o f time, from which the competencies can be deduced This approach can take two forms A diary approach requires that the jobholder log the activities they undertake at various times throughout the day A log lists key criteria, perhaps in the form c/i competencies, and jobholders are asked to record each time during the day they employ that competency

This method ensures that the jobholders' views are directly taken into account and can be a cost-effective way o f gaining information from a large number of jobholders However, the process o f analyzing the results and collating them into some sort o f order can be time consuming

Repertory grid

This approach attempts to identify the competencies, which differentiate between poor, average and superior performance The manager is interviewed and asked to place people in various categories o f performance The interviewer then prompts the manager to describe some o f the examples o f performance and then attempts to break these examples down to certain elements that can isolate and identify the behaviors that accompany performance at different levels.

T his way only takes into account the views o f the manager and not the jobholder It

is also necessary to ensure confidentiality during the process The process requires a suitably experienced and skilled interviewer and can be time consuming

Observation

This method involves the observation o f jobholders undertaking their normal day- to-day activities The observer will normally develop a record form that lists possible behavior indicators and then records when these behaviors are displayed during the observation process, which might focus on a particular time period

Observation enables the observer to see the work at first hand and prevents disruption to the manager or jobholder However, the jobholder may have concern*: about being observed for long periods o f time and may need reassurance o f the purpose o f the exercise Where a number o f observers are used, it is imperative that all observers use the same approach

Testing

Ability and psychometric tests are undertaken by a cross-section o f jobholders The results are correlated against levels o f job performance in order to identify differentiating characteristics and key compctcncies

Testirg can provide differentiators between performance levels and also some benchmark data on the current workforce, which can then be used as a measure foi

future employees However, it is essential that there is clear data about the differing performance levels in order to compare the test results against This approach can also be very sensitive for jobholders and it is therefore important that the purpose o f testing is clarified with those involved.

2.4 A pplication o f Individual C om petencies Profile

Individual competencies profile is used in H um an Resource M anagem ent as a strategic tool, which is called Competencies based m ethodology or competency- base human resource management model C ompetencies based m ethodology takes the broad term o f competencies that make up an individual's overall competcncc and matches them with required which competencies are available to an organization can help inform and direct human resource management culture and practice human resource functions

The advantages o f competencies based methodology are significant By linking human resource activities through a com m on language and framework, by reflecting the values and mission o f the organization and by establishing clear expectations o f perform ance for employees, competencies based methodology integrates human resource practices into the business strategy o f the organization and maximizes the delivery o f its services to clients H owever, the users should consider the pros and cons when using competencies based methodology

Valid and reliable competency-based human resource management models can produce a number o f positive outcomes For example:

• directly link individual competencies to organizational strategies and goals

• develop competencies profiles for specific positions or roles, matching the correct individuals to task sets and responsibilities

• enable continual monitoring and refinement o f com petency profiles

• facilitate employee selection, evaluation, training, and developm ent

• assist employers in hiring individuals with rare or unique competencies that are difficult and costly to develop

• assist organizations in ranking competencies for compensation and performance management

On the contrary, less valid and reliable competency-based human resource management models can result in negative out-comes For example:

• develop less meaningful compctcncics in organizations without clear visions

o f their goals or strategies

• be quite expensive and time-consuming to administer

• reduce core organizational competencies understanding as a result o f poor employee participation

• unsuccessful performance and when the competencies are too "generic"

Figure 2.3: Relation between competencies, HR practice and business strategy

Compensation Job profile

There are five factors that the human resource (HR) managers should have as tools

to use competencies based methodology Those factors have a tight linkage No single factor is omitted when apply competencies based methodology to perform

HR functions The following is the five factors

1 Company strategy, goals, and objectives: to set the direction for HRM activities

2 Competencies based job profile includes:

a Position name

b An introduction and a summary o f main responsibilities and duties

c A listing o f key responsibilities and performance measurers

(Measurer is the base point for compensation policy)

d Competencies requirement: knowledge, skills and characteristics that predict effective and superior performance in the job (competencies required should be defined level)

e Other requirement such as qualification, certificate, experience, language, physical demand, etc

The competencies based job profile not only provides core information in relation to what the job entails, but also is a tool for vacancy advertising All human resources functions are based on this profile The profile will contain afl the generic information for each o f the functions The profile will contain all the generic information for each o f the functions Changes in any o f the functions will have an impact on the job profile and on the other functions via the job profile The human resources functions reside within the organization: therefore it can be seen as an open system that resides within an open system Any changes outside as well as inside the organization has an effect on the way human resources functions are performed Any changes in the environment, client needs, employment laws, changes in products, policies and procedures, management decisions, etc, has a direct impact on the way human resources functions are performed The human resources function itself has an

impact on each other if any changes in one o f the functions take place (I.e change in the way o f recruitment is clone and competence o f people recruited, has a direct impact on the way that training will he done as well as the wax selection and placement is done Changes in the perform ance management tools and methods used could have a direct impact on the remuneration o f employees, etc.)

Sample of a Competencies based job profile

Position: Director

Report to: CEO

Summary of main responsibilities:

Directs and coordinates activities o f the com pany in accordance with identified company goals under the guidance o f the Board o f Director to obtain optimum efficiency, economy o f operations, and maximize profits by performing the following duties personally or through subordinate supervisors

Duties

/Measurer

Plan, develops and implements com pany C om pany operates at peak '

policies and goals pro d u ctivity and profitability.

Directs and coordinates promotion o f P roduct or service

products or services performed to prom otions are effective,

develop new markets, increase share o f com plete, and tim ely

market, and obtain competitive position

in industry

Analyzes division or department budget O perating budgets are cost

request to identify areas in which effective a n d accurate

reductions can be made, and allocates

operating budget

Confers with administrative personnel S u g g ested changes are

and reviews activity, operating, and sales beneficial, accurate, and

reports to determine changes in programs timely.

or operations required

Facilitates monthly meeting with M eetings are productive,

Controller to evaluate job costing and thorough, a n d tim ely

project management billable hours

Directs preparation o f directives to D irectives are complete,

division or department administrator clear, a n d beneficial

outlining policy, program, or operations

changes to be implemented

Promotes organization in industry, P rom otio na l efforts are

manufacturing, or trade organizations p ro fessio n a l a n d prod uctive Maintains a commitment to the com pany C om pany com m itm ent is

vision and the “spirit” o f the consistent a n d p o sitiv e

organization

Presides over all company wide M eetings a re conducted in an employee meetings and formal meeting efficient, productive, and

o f directors and managers tim ely manner.

Reviews activity reports and financial Analysis a n d pla n s are statements to determine progress and thorough, accurate, clear, status in attaining objectives, and revises a n d beneficial.

objectives and plans in accordance with

current conditions

Interfaces with C E O to revise objectives P lans are thorough,

and plans in accordance with current accurate, clear, and

Serves as chairman o f committees such C om m ittee activities are

as management, compensation, and sales p roductive a n d profitable.

Maintains full and final signature Signature authority is utilized

authority for the company and its bank in an accurate and ethical

Plans and develops industrial, labor and Policies y ie ld productive and

public relations policies designed to p ro fita b le results.

improve company image and relations

with customers, employees, and public

Communicates clearly and directly with C om m unication is ongoing.

employees concerning performance clear, concise, and com plete

expectation, productivity, and

accountability

Develops employees for future E m ployee developm ent is

advancement when possible accessible to departm ent

Education and Experience

A, five years related experience

Language

Ability to read, analyze, and interpret general business periodicals,

professional journals, technical procedures, or governmental regulations Ability to write reports, business correspondence, and procedure manuals Ability to effectively present information and respond to questions from groups o f managers, clients, customers, and the general public

Foreign language require (state if any)

C e rtific a te (if any base on the requirement o f the corporation)

Work environment and environmental conditions (state clearly)

3 Individual Competencies Profile (ICP): This is the set o f individual competencies that contribute in success o f company This list o f competencies

is the based for the human resource mangers to design job/role and conduct recruitment, performance and training

4 Training Manual provides the guideline for the users about the list ol knowledge requirement, study methods, mode o f training, and training courses list to upgrade level in each competency

5 Training Policy equips human resource managers tools to promote, coach, andguide tlic employees in training path and career development The trainingpolicy can also refer to the compensation policy and other benefit foremployees.

The application o f competencies based methodology will be discussed in relationwith FPT Corporation in the next chapter

2.5 C om p eten cies’ roles

Many companies have looked at their competencies in two ways:

1 Based on values, what are leadership and managerial behaviors that apply

on a company-wide basis?

2 What are the specific areas o f knowledge and skills that are critical for each function o f the business?

In most successful companies, competencies:

• Reinforce corporate strategy, culture, and vision

• Establish expectations for performance excellence, resulting in a systematic approach to professional development, improved job satisfaction, and better employee retention

• Increase the effectiveness o f training and professional developmentprograms by linking them to the success criteria (i.e., behavioral standards