Our work at Egon Zehnder, a global leadership consulting firm, is focused on discovering and developing leaders. A problem our clients often face is that they lack a “common language” to talk about their people, which can undermine their efforts to recruit, develop and promote the right people. Despite the pervasiveness of this problem, whenever we mention competencies to clients, there is often a tinge of exasperation associated with them. There are several “off the shelf” models that have become ubiquitous, and may have contributed to the idea that competency models are just another HR initiative adding unnecessary diversion to the already complex job of being a people leader. However, research shows that competencies positively correlate with organizational effectiveness and accelerate development (Harper, 2021). Google measured the impact of its own competency framework, and they found that it led to a 20% rise in overall job satisfaction among teams utilizing it, highlighting the link between clear expectations on behavior and employee engagement (Vorecol, 2024). The point is that in spite of the competency fatigue, there is still value in them. This article discusses why they remain important and how to make them work for your organization.
The competency movement began in the 1970s with David McLelland’s hallmark hypothesis that capability was a better predictor of job success than conventional IQ or psychometric testing. Standardized “capabilities” are what help differentiate one employee’s performance from another. The competency movement began in response to increasing job complexity. Intelligence and experience/credentials were no longer sufficient predictors for job success; organizations had to break down jobs into their required competencies and assess candidates against them. In today’s nomenclature, this is known as “the how”, or the consistent patterns of behavior someone demonstrates in their job(s). In recent years, the “skills” movement has gained prominence, emphasizing hard or technical skills. Organizations have begun experimenting with skill-based hiring and development to enhance productivity. Still, fewer than 1 in 5 have adopted this practice across the organization (Deloitte Consulting LLP, 2023; Schreiber-Shearer, 2024). Other organizations are moving away from competencies all together, choosing to focus just on objective measures of performance, such as productivity rates, sales figures, quality and time metrics. With so much in flux and only “the what” part of the performance equation to rely on, it begs the question: are we at risk of incentivizing a “results at all cost” approach?
The reality is that past behavior is still the best predictor of future performance (NeuroLaunch editorial team, 2024). While it is now critical to also assess potential to understand in what areas and to what degree someone is most likely to develop, understanding how emerging and current leaders in your organization do what they do remains the key to differentiating your average leaders from your great ones. Unfortunately, 50 to 70% of all organizational initiatives fail, including the implementation of leadership competency models (Clemmer, 2021). In response and based on our work developing and implementing competency frameworks for many of our clients, we’ve codified our learnings to help avoid the spiral and make competencies work for your organization.
Less is More
Too often, organizations rely on “off-the-shelf” competency models like Lominger, which are a pre-produced collection of competencies. These models are essentially comprehensive lists of various skills and behaviors that leaders might need. Using this kind of framework as a “plug and play” means many organizations end up with too many competencies, and often different ones depending on employee level and function in the organization. In an effort to be comprehensive, organizations miss the opportunity to align their core (or aspirational) competencies for their business with the behaviors they expect from their people. This lack of curation not only makes it difficult for employees and line managers to remember what is important, it also makes it more difficult for them to identify, develop and promote the people who are demonstrating the behaviors that leadership believes will lead to business success.
Tip: Try to keep the framework focused on ~five competencies (max 6) to make them easier to remember and recognize.
Made Specific to the Business
Not only is volume a problem with “off the shelf” models, so is specificity. While you might be applying a robust model, a big part of the success of adoption will be if employees and leaders feel it reflects the uniqueness of their organization – that it “feels like them.” As always, the competencies should start with the business, connecting the strategic priorities to the organization’s core competencies/differentiators (e.g., customer-centricity, operational excellence, innovation capabilities, etc.). Competency models typically focus on three dimensions of behavior – business leadership, thought leadership, and people leadership. But what’s most important is that the terminology used is made to be as specific to the organization’s goals and culture as possible. Otherwise, it can become unrelatable and easy to dismiss. Involving key leaders in defining and pressure testing the competencies is a helpful way to combat this.
Tip: Do some data gathering. Identify questions that you can probe with leadership to develop something specific to your organization, including: What do we do better than anyone else? What differentiates ourproduct/service/model in the market? What are our biggest opportunities and challenges? In the next 3-5 years, what will be the biggest strategic and operational priorities? What will winning look like? What will help us get there? When speaking with a broader set of leaders, you could also ask: What makes a leader at your level stand out (positively or negatively) at the company? What do you think your manager does well (and differently) than you? What will we need to distinguish leaders here in the future (to achieve the things we discussed earlier)?
Given the importance of the connection between the model and business, it is best to review and refresh the model every 2-3 years, or as needed if there is a significant strategic change in the business.
Scaled
Too often we see organizations using competency models that are limited to the name of the competency and a short behavioral description for each. While this is an acceptable start, ultimately this restricts organizations to binary assessments of people as either demonstrating the behavior or not. This significantly reduces an organization’s ability to finely differentiate between people and to clearly articulate an individual’s progression on the competency. “Scaling” competencies, meaning defining levels of proficiency within the competency, not only helps organizations convey what is expected for particular levels or roles, it makes it easier to make better decisions about promotions and role changes and to tailor development plans.
Tip: While scaling competencies is important, it can also become another “complexity trap.” You don’t need a level in the model for every level in the organization. We find defining three to five levels typically works well with an individual contributor/people leader/executive as a starting point and depending on the size of the organization and framework for progression. We often see that definitions across the scale are too aspirational, and this becomes a challenge for our clients to be more thoughtful about which competencies they actually need their people to stretch to or not.
Engagement Starting at the Top
The GEs, P&Gs and J&Js of the world didn’t become talent management machines because they have the best competency models, but because their top leaders place as much attention and discipline on their talent needs as they do to the company’s financial health. Engagement from the top using a “common language” is crucial to own and adopt it as part of the organization’s people processes. What can be even more impactful is taking your leadership team through an assessment and development exercise using that common language because receiving feedback about their strengths and development areas in this language helps them internalize it and then use it more effectively with their teams.
Tip: Find a way to get feedback to the leadership team using the common language as quickly as possible following its development and launch. This could be a rigorous, third-party assessment or 360-degree feedback. It is influential when an organization can communicate that the leadership team has been through this exercise.
Implemented as a Development Tool
Not only is a scaled model the best way to set consistent, objective expectations for behavior and differentiate people, it’s also a way for people to really grasp what it looks like to develop as a leader at your organization. It’s a roadmap. And it’s useful at the individual level and for cohort-based development. HR partners can equip leaders to use it when they are working with team members on their reviews, goals and development plans, and to use it in a talent review context when discussing team members’ strengths and development opportunities (see more about this in the next section). This reiteration will help it become familiar as the “common language” used by the organization. For example, when Johnson & Johnson implemented a competency-based leadership development approach, managers trained under the model showed a 20% improvement in team performance metrics compared to those who had not be exposed to it (Vorecol, 2024).
Tip: Encourage leader storytelling using the specific competency language and celebrate competency-based decisions, like promotions or hires. Create a measurement strategy and feedback loop. You can track adoption through feedback surveys, auditing development plans, or manager check-ins.
Integrated at Scale into People Processes
When developing and deploying a competency model, perfect can often become the enemy of good enough. Assuming you develop 5-6 competencies that are scaled, that will be a robust tool and especially useful for deeper assessment and development (e.g., in the context of succession and promotion). However, this is still a lot of information, and it can be complex for the business to use it at scale. Deploying a simplified version of it can be useful to aid its adoption in processes with “higher volume,” such as talent acquisition, performance management and talent reviews. Think “good enough” over perfect when necessary.
Tip: The purpose of talent reviews is to create a shared understanding of people’s strengths and development areas, agree on appropriate moves/other development actions, and to track progress against them. This does not require “scoring” people on a scale, however, the model can be helpful to compare and contrast people. Instead of asking people leaders to “score” people, ask them to consider people’s relative strengths and development areas with others on their team. Giving them some homework to reflect on their team in terms of the competency model helps them come prepared, which you can reinforce by providing a conversation guide in the talent review. Start with a pilot group (business unit or large team with a friendly business sponsor) to gather feedback and refine before rollout.
A competency model can serve as an invaluable tool for organizations seeking to enhance leadership effectiveness and foster a culture of development. By establishing this “common language,” organizations can bridge the gap between expectations and performance, thereby driving engagement and productivity. It is essential, however, to emphasize the balance between simplicity and rigor in their development and implementation. Organizations should aim to curate a tailored set of competencies that reflect their unique culture and strategic goals and are applied starting at the top. When thoughtfully designed and integrated into people processes, they can transform the way organizations identify, nurture, and promote talent, leading to sustained success.
