Using Competencies to effectively Manage Talent and Drive Business Value

Many would argue that one of the most important factors impacting the value of a business, is its employees and its management team.  A business that relies on its owner for too many critical functions is risky for a new owner and therefore worth a lot less.  Incorporating Human Resource (HR) best practices to manage, train, promote, motivate, compensate, retain, recruit and attract the best people can drive enterprise value and its marketability when it comes time to sell.  Like many “best practices” it can also provide the business a competitive edge.

To meet the needs and expectations of the business, each job throughout the organization should have clearly defined competencies as part of an up-to-date job description. The organization should also have a system to ensure that employees are sufficiently proficient in those competencies. Competencies can be thought of as the observable behaviours, knowledge, ability, and skills of an employee’s performance in a specific function.  In other words, it is more about the “how” employees and management perform the tasks associated with their job than the “what.”  Defined competencies for a specific job can include both general competencies, such as “customer service” and functional or technical competencies that are job-specific, such as “engineering design.”

Defining the specific competencies, along with clear definitions of expected proficiency levels, for each job, can become the backbone of an effective HR management system.  Besides the obvious benefit of using for performance evaluation reviews and determining compensation levels, the incorporation of competencies into job descriptions has many other benefits.  For example, managers and supervisors can use both job-specific and general competencies to evaluate potential candidates against open positions.

With the right systems in place, management can gain a deeper understanding of the organization’s competency gaps which can be incorporated into training or recruitment programs.  This becomes critical as a company grows or when there is a change in strategy.  Management can use them to re-organize functional responsibilities within a business unit or across the entire company. Employees can use competencies to self-assess their suitability for open positions or to help craft their career path within the business.
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The bottom line is that when employees and management understand what they need to be good at, how it is measured, and how it contributes to the company’s overall success, they become more engaged.  And there is nothing more powerful than an engaged management team and workforce with clear goals and a common purpose when it comes time to sell.

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