Competency based HRM Meaning

The Competency Based Human Resources Management is an approach that standardizes and integrates all HR activities based on competencies that support organizational goals.

Competency-based HRM is about using the concept of competency and the results of competency analysis to inform and improve the processes of performance management, recruitment and selection, employee development and employee reward. The language has dominated much of HR thinking and practice in recent years.

Competencies are any observable abilities, skills, knowledge, motivations or traits defined in terms of the behaviors needed for successful job performance.

From the competency framework, the main types of competencies are created, and they consist of core, functional and leadership competencies.

Core Competencies, are fundamental to the organizational success and are applied across the whole organization from the board of directors, and middle management, down to fresh graduates and juniors. These competencies decide how organizations want to shape their employees, the company’s image and its professional characteristics. They are one of the company’s strengths, competitive advantage and could affect its profitability and growth.

Competency-based HR is primarily based on the concepts of behavioural and technical competencies as defined in the first section of this chapter. But it is also associated with the use of National and Scottish Vocational qualifications (NVQs/SNVQs) as also examined in the first section. The next five sections of the chapter concentrate on the application and use of behavioural and technical competencies under the following headings:

• Competency frameworks;
• Reasons for using competencies;
• Use of competencies;
• Guidelines on the development of competency frameworks;
• Keys to success in using competencies.

Behavioural competencies

Behavioural competencies define behavioural expectations, ie the type of behaviour required to deliver results under such headings as teamworking, communication, leadership and decision-making. They are sometimes known as ‘soft skills’. Behavioural competencies are usually set out in a competency framework.

The behavioural competency approach was first advocated by McClelland (1973). He recommended the use of criterion-referenced assessment. Criterion referencing or validation is the process of analysing the key aspects of behaviour that differentiate between effective and less effective performance.

Technical competencies

Technical competencies define what people have to know and be able to do (knowledge and skills) to carry out their roles effectively. They are related to either generic roles (groups of similar jobs), or individual roles (as ‘role-specific competencies’). The term ‘technical competency’ has been adopted fairly recently to avoid the confusion that existed between the terms ‘competency’ and ‘competence’. Competency, as mentioned above, is about behaviours, while competence as defined by Woodruffe (1990) is: ‘A work-related concept which refers to areas of work at which the person is competent. Competent people at work are those who meet their performance expectations.’ Competences are sometimes known as ‘hard skills’. The terms technical competencies and competences are closely related although the latter has a particular and more limited meaning when applied to NVQs/SNVQs, as discussed below.

NVQ/SNVQ competences

The concept of competence was conceived in the UK as a fundamental part of the process of developing standards for NVQs/SNVQs. These specify minimum standards for the achievement of set tasks and activities expressed in ways that can be observed and assessed with a view to certification. An element of competence in NVQ language is a description of something that people in given work areas should be able to do. They are assessed on being competent or not yet competent. No attempt is made to assess the degree of competence.

Functional Competencies are the Business’ Front Wheel Competencies, no vehicle can function or move forward without its front wheels; the same goes for business, no organization can perform without its Functional or its Job Specific Competencies. These competencies drive high performance and quality results for each function in the organization. It can be technical or non-technical knowledge, skills, and abilities required to fulfill job tasks, duties or responsibilities.

Leadership competencies are basically leadership skills and behaviors that contribute to superior performance, used to assess an individual’s ability and skills to be a leader. By using a competency-based approach to leadership, organizations can better identify and develop their next generation of leaders.

Finally, applying the Competency Based HRM in any organization is the most effective approach nowadays; as competencies act as an effective benchmark for measuring employees’ qualifications and suitability of filling a specific position.

Applying the approach across the organization, should lead to more fairness in evaluation, proper career development, improve hiring decision, increase operating effectiveness and most important to supporting the achievement of strategic and business goals.