11 Steps to Building Business-Focused Competency Models

To have the greatest impact, your competency modeling efforts must be aligned with relevant business outcomes. Here are the steps you can take to make the competency modeling process business-focused from start to finish.

1. Collect data from multiple perspectives. Too often HR leaders and consultants rely solely on interviews with current employees/incumbents (i.e., those currently holding the job or role of interest) as the cornerstone of their competency modeling process. This strategy is shortsighted and does not provide the depth of information needed to identify the critical competencies for particular jobs or roles. Collecting data from incumbents, leaders, and internal or external customers, using multiple formats (interviews, surveys, sorting exercises), will help maximize the depth of information obtained and enhance the relevance of the resulting competency model.

2. Integrate the data from multiple perspectives. Just having data from multiple perspectives is not enough. The data must be analyzed separately and then brought together to tell a cohesive story around the critical knowledge, skills, abilities, and other characteristics (KSAOs) along with “how” the job needs to get done—to create a strong competency model.

3. Focus on a specific goal or a set of goals. Doing so reinforces the alignment between the competency modeling process and other organizational needs and helps create a sense of urgency. The case study that follows starts with selection and development as the key goals.

4. Use a sorting exercise with key stakeholders. Once you have collected your KSAOs from the multiple data points, gathering key subject matter experts and other knowledgeable stakeholders for a “sorting” exercise is advisable. During this facilitated exercise, they will be asked to sort the detailed KSAOs into the broader competency buckets and come to consensus on their decisions as a group. This exercise will increase buy-in for the process and enhance the relevance of the resulting competency model.

5. Make the process practical. Technical jargon and fancy acronyms do not impress senior or front-line leaders. When describing the competencies needed for particular roles, use readily understandable terms such as “must-have,” “needed to win,” and “differentiator.” This is not “dumbing it down”; this is making a somewhat tedious process interesting and bringing it to a level where action can be taken.

6. Establish a buy or build strategy. When using a competency model for selection needs, key stakeholders should decide whether to hire external candidates who possess the desired competencies (i.e., buy) or to provide internal staff with training on the competencies (i.e., build). Careful assessments of time, effort, and budget will play a big role in this decision.

7. Set minimum requirements. Once the competencies have been selected, minimum acceptable levels of performance on each of the competencies must be defined. Specifically, HR leaders and managers across the organization must understand the minimum level at which individuals can perform and still be successful in their roles.

8. Link to business outcomes. This step is straightforward if you follow the Business Partner Roadmap™—discover the key business outcomes; assess the competencies (for example, during selection or performance appraisal processes); line up the competency data and business outcome data; and analyze using structural equation modeling. This process will “validate” the competency model and also show its direct business impact. Additionally, this procedure will solidify buy-in from senior leaders and front-line managers and will help drive your training, hiring, and performance appraisal strategies because you will know what competencies to focus on based on their importance to the bottom line.

9. Continue to refine the model and the strategy around it. The roles for which you built the competency model may change over time, so revisiting the model every 18 months to ensure its comprehensiveness and relevance is recommended. At the same time, reexamining the buy/build strategy that was created for the particular role is beneficial. For example, the training for a competency may have been brought in-house, or the budget may allow for a vendor—these options can create an opportunity to build the necessary skills versus buying.

10. Include standards of performance. Many organizations place a strong focus on their mission, vision, and values, but far fewer make the values, or standards of performance, a central part of their competency model. Standards represent a key piece of how the job gets done. When appropriate, incorporate your standards into the mix.

11. Generic models are not enough. Broad, all-encompassing competency models are faster to put down on paper—but that is it. They do not provide any real value in terms of driving accountability or building training, selection, or performance appraisal strategies. To make your competency model more specific, consider including foundational competencies that are applicable to all roles, strategic competencies that are pertinent to specific roles (e.g., leaders), and functional competencies that are specific to particular functions or departments.

Excerpted from Scott P. Mondore, Shane S. Douthitt, and Marisa A. Carson, Business-Focused HR: 11 Processes to Drive Results (SHRM, 2011).