|A Futures Market For Competencies|
First published 1995 / People Management journal, UK / Revised 2003 for www.itapintl.com
HR strategists at Chase Manhattan are trying to link the bank’s future supply of
IN HIS RECENT BOOK, Job Shift: How to Prosper in a Workplace Without Jobs, William Bridges argues that, as a way of organising work, the job is a social artefact that has outlived its usefulness. Jobs, he says, were a 19th-century contingency to “package the work that needed doing in the growing factories and bureaucracies of the industrialised nations”.
While it is clear that we have, over time, repackaged and institutionalised the concept of work into the concept of the job, it is also clear that the vast majority of professional jobs are hybrids, requiring a combination of skills, usually with a minority emphasis on one aspect or another. Much of modern human resource management is aimed at fitting the best people into given jobs. But at Chase Manhattan Bank we are exploring the option of aligning what people can offer – their competencies – against the demands of customers, rather than against the ill-fitting and ill-designed demands of jobs.
Of course, once invented, jobs had to be organised. Increasingly the different layers created by this process are seen as a liability in the race to get closer to the customer. This has prompted the current fashion of delayering - the rationale for which is that hierarchy and bureaucracy are the same thing. But, as Elliott Jacques argues in Requisite Organisation, hierarchical levels that are fixed against appropriate "time horizons" deliver efficient management of work; misaligned levels are not necessarily the same as too many levels.
Beyond the question of layers, the real issue is the jobs they capture. Both collectively and individually, we concentrate on fulfilling the needs of jobs, rather than those of customers or ourselves. The same pressures on layers perhaps more accurately illustrate that the job, as a distribution mechanism for individual talents, has had its day, and that the time for David McLelland's 25-year-old concept of "competency" has finally arrived.
As a major player in global financial markets, Chase Manhattan has operations across the world, covering most geographic markets and product/industry categories. Throughout the 1960s, '70s and early '80s, customers were served according to their location or their business sector and the bank flourished. But, during the mid-1980s, something subtle began to happen; customers around the globe were transformed into global customers. Assumed boundaries such as the home base, local markets and market segment became less relevant as various recessions, crashes and booms forced hard thinking and tough competition for new markets and alliances.
The rapid expansion of international communications suddenly meant that domestic products and markets were no longer safe from the assault of "foreign" products supported by good marketing. The financial needs of customers around the globe metamorphosed into something beyond the grasp of cosy, locally focused relationships.
Chase, like many of its competitors, suffered during this phase and needed to find a way to focus its extensive resources on unfamiliar terrain. Now it receives wide recognition for having attempted something different and apparently doing it well.
So what happened? For one thing, a much stronger emphasis on developing a clear, differentiated and customer-focused strategy emerged, prompted initially by an early internal paper which addressed the issues of "What are we good at?" and "What can we be competitive at?" It asked the question: "What are our corporate core competencies?" This strategic realignment led to a much clearer understanding of the customer base and a clear determination to focus on their needs.
On the global corporate finance side, a great deal of effort was put into determining what customers were demanding, and this ultimately led to a definition of the competencies required in each segment of the market, describing what skills, abilities, traits and behaviours individuals would need to deliver the business strategy.
At the same time, the HR function and senior line managers were taking this opportunity to jointly sponsor a co-ordinated global effort to define the "supply" side of the equation - what the bank had to offer - and to establish who had what, to what degree they possessed it, where they were, what career history they had, and what degree of mobility they saw for themselves. This information on individual competencies could then be matched against the "demand" side of the equation - the data on which customers require what, where, to what degree and so on. Suddenly, we were into the realm of marketing what individuals really had to offer against what customers demanded. The issue of jobs did not feature on either side of that equation; competencies became the new currency, and detailed analysis the new distribution mechanism.
The Chase corporate finance model of competencies features many of the categories you would see elsewhere, but the line and HR people involved in the early phases were careful to develop their own strategic definition of areas such as "teamwork", "coaching" and "selling skills". And, unusually given the wide set of applications envisaged, each competency is defined from a number of perspectives offering distinct definitions, targeted at different applications.
The "Framework" shows how each individual competency was considered from five different perspectives. There is just one actual competency definition - that which appears in the central column and explains it is when you've got it; the observable demonstration and exercise of the competency.
In the left-hand column, we aimed to isolate the factors that predicted the ability to develop that competency, in language which was not necessarily related to direct work experience. We wanted to be clear on what it was that an individual needed to walk in the door with, so that the training, education, and experience investment would be fruitful in a reasonable timeframe.
Finally, we thought about the output side of the equation: what it was that the individual was meant to produce with the competency. This is where "level" became relevant - not attached necessarily to "job" and hierarchical level on existing payscales and title-structures, but with reference to the differing "standards" of output expected of people who had developed the competency to differing degrees.
Part of the reason for following this apparently complicated route was because of a commitment to a broad range of applications. The objective was to reinvent every major area of human resources management, and the processes attached to them, as the basic model illustrates (see diagram on next page). So we saw the potential definitions as being particularly appropriate to recruitment and selection, most obviously at the graduate or MBA level where work experience was limited, but also for internal sourcing. Transfers across businesses were becoming much more of an issue and we needed a way to test the probability that an individual who might be very experienced in one area might quickly learn the skills of another.
The three output standards, which we thought would cover 80 per cent of employees (probably not the highest superstars and the newest entrants), were geared toward performance management, to giving managers and employees a clear statement of what was expected of an individual from a given competency. So instead of a dialogue running: "I need you to be a better team player"; "What do you mean by that?"; "You know what I meant by that, so go away and be one ….", managers and the people reporting directly to them were now able to select an appropriate standard of performance, compare it with what was actually happening, and have a meaningful conversation.
AS THE EXAMPLE illustrates (see foot of article), the central competency definition has a number of distinct uses. At the simplest level it represents the progression from "potential" and defines what people should aim to develop with their inherent characteristics. It is also the currency for "gap analysis" when considering and quantifying individual training and development needs, or assessing organisational HR development needs against customer profiles.
The competency definition and a related behavioural scale are used to assess to what extent the individual has developed the competency, through seven points ranging from "minimal knowledge" to "recognisable ability" (representing a firm professional standard) and up to "advisory level" (related to the best in the external market). This range is positioned as an external, absolute scale, not an internal relative measure. As such, it is used for individuals (always starting with self-analysis) to agree with their manager their individual competency profile, or for managers to specify the competency demands of given roles or specific job vacancies, or for the business to profile the differing requirements of customers.
Each of these different applications, utilising the appropriate elements of the model (and only the appropriate elements - the tools do not need to be as complicated as the "owners' manual") are supported by specifically designed, user-friendly document packs, which look similar and soon become familiar, whether assessing oneself, specifying a job, doing a candidate search, assessing performance, or analysing development needs.
In this way a competencies framework for multiple applications at a number of levels has been built and progressively implemented. It addresses the strategic needs of the organisation at a macro level, but equally - and vitally, as a prerequisite for a successful corporate agenda - it supports a stream of products which get to the individual's agenda of professional development, career opportunity and performance-related reward.
This competencies-based approach boosts both teamworking and individual empowerment, which might otherwise conflict. Conventionally, people see themselves as hired - and hopefully empowered - to do a job, and increasingly they are also expected to combine in cohesive teams.
By using the Chase model, individuals agree their competencies profile (including product, industry and geographic expertise) with their manager, describing what they can offer to client relationships. So rather than seeing themselves and being seen as representing their best-fit job, their unique competencies can be matched against clients and integrated with others into effective teams, empowering them to fulfil the demands of customers rather than jobs.
A current trend is to think of employment in terms of the rather woolly concept of "employability", rather than the conventional employment-contract-in-a-job arrangement. Instead of looking forward to continuing in our present jobs, we are encouraged to think about our ability to get other ones. But the focus is still on jobs - leaving one, getting another - even though it is painfully obvious that the number of jobs in the economy is decreasing, recovery notwithstanding.
We still measure employment only in terms of "holding a job". And you have either got one or you have not. But with the language of competencies, you may have something else - the ability and capability to do useful work, in a variety of ways, maybe even for a variety of employers. As your customers, they may need some of what you can offer, if not all of it, and they don't want you pretending to be able to do things you can't. This idea surely takes us nearer to employability than fighting it out in a shrinking jobs market. And through the analysis and articulation of individual competencies, companies such as Chase are beginning to open a direct path between the competencies of their people and the customers who want them.
IS IT REALLY a new employment contract, then, which focuses on the relationship between the employee and employer, with lost security being the price of a better passport to other jobs with other employers, who are not inclined to offer any more security than the first? Jobs are surely part of the problem, not the solution. Employers want to provide less of them because they are expensive and have obsolescence built in. And once you have got them, they are still difficult to get rid of.
But the use of interim professionals, contractors, consultants, temporary executives, etc, shows that companies still need professional competencies, but in freer, more flexible packages than "job lots", because their customers do. Ironically, the misnomer "self-employment" is still used to describe people who don't have a job but are employed by customers. Only hermits are self-employed.
The change we may have to make is to get used to the idea of being "freely employed" - serving a number of employers at once. We will be much more able to do that if we are first conscious of our competencies rather than identified only by our job and consumed by the threat of losing it.
Until organisations and individuals can move on from the jobs mentality and recognise the new currency of competency, we will all be stuck with the old employment contract, but in a weaker form. The new employment contract is one between an individual and the customers they can serve. There is nothing new in one that goes from individual to job through organisation to customer.
ORGANISATIONS involved in fast-moving markets that continue to use jobs as the aligning mechanism against the customer are bound by the laws of physics to have a problem. When the customer moves on, they are faced with the unattractive alternatives of either having to change people's jobs - which usually represents troublesome, unwelcome and painful change for people - or, worse, the hassle is considered too big or too soon after the last reorganisation and the customer moves on but the business does not.
Within this scenario, many organisations focus significant effort into succession planning mechanisms in an effort to cover key vulnerabilities. But as with so much else in this arena, these mechanisms are seen in relation to individuals succeeding to jobs, not to serving customers. We all talk about customer-focused strategy, so is it not possible to have a succession mechanism that is also customer-focused?
One of the first problems with conventional succession planning in this new market environment is that it reinforces the "upward obsession" of planners and individuals (as Beverly Kaye identified some years ago in her book, Up is Not the Only Way), which to say the least now seems inadequate as a route for career development. The other main issue is that the candidates identified for "Job X" two years ago, for which they and everybody else has been primed, now face a different job altogether. The market has moved on; the customers use more sophisticated products; new products have emerged; new alliances have evolved; and the team servicing those clients has itself developed a different skills profile, into which the new "successor" must now fit.
What drives this kind of outcome is not the customer, development or strategic need, but the need to fill a job. It may be a very different one by the time it has to be filled - but as long as it is there, it must be filled.
At Chase, using the currency of competencies, we are developing instead a process of "real-time succession". Using customer analysis and strategic research, it is possible to compare anticipated competency demand against competency supply, provided you have gathered information on existing individual competencies. That is the succession planning task - to fill the current and predicted competency gaps in the places they are likely to emerge, in a timely manner. The "pipeline" problem is about the flow of competencies "to the point of the arrow", as it was referred to in our exercise at Chase - ie, the point at which the bank reaches the customer. This is not about filling jobs, it is about meeting the needs of customers.
The organisational agenda then becomes one that is based on real data: strategic data, customer data, resource data. Action becomes focused around the tactical issues involved in delivery against the strategic needs of the business. Assuming, over time, some success at the macro tactics, the micro issue of resourcing a given specific need at a given time is one that can safely be assumed to be deliverable. At that point - the real time when the role needs to be resourced - that is when to look for candidates, against the current competencies specification for that role, constructed in its strategic context.
THE PROCESS of capturing, manipulating and searching across the database is one which, of course, must be systematised. At Chase we have jointly developed such a system with an outside vendor, who is already a leader in succession-planning systems. The system is globally operational, if yet only exploited to a modest degree relative to its potential. But already, delivering such a real-time search capability, as well as many other applications, has opened a few eyes to the power of the competency route and the systems tool built to utilise it.
So much energy, anxiety and resources are dedicated to reorganising jobs, when what people really offer - their competencies -may still have just as much market value, even if their clustering must change. And as an alternative, if you isolate the factors that predict the ability to learn new competencies that customers need, you can offer people the opportunity to develop them.
Instead of a job structure that ensures the process of meeting customers' needs over time is a problem, "competencies consciousness" can turn that problem into a genuine opportunity. Organisations can focus on the customer and develop information on the real resources required to service them. That is the real stuff of human resource management, and it is clearly and emphatically not the exclusive preserve of those in HR.
Returning to one of the themes in the Bridges' article (and of his book Job Shift) "… the good job, once the definition of responsibility, is now a very risky business …" The competencies route is the best hedge there is against that risk.
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