r-vm The current issue and full text archive of this journal is available at kfey www.emeraldinsight.com/1934-8835.htm IJOA 21,4 504 Received 11 May 2011 Revised 1 December 2011 13 February 2012 24 April 2013 Accepted 26 April 2013 Developing performance-linked competency model: a tool for competitive advantage Atri Sengupta Calcutta Business School, Kolkata, India D.N. Venkatesh HR Professional, Hyderabad, India, and Arun K. Sinha Jaya Shree Textile, Kolkata, India Abstract Purpose - The aims of the article are to not only review existing competency models and offer a comprehensive performance-linked competency model towards sustaining competitive advantage, but also validate the proposed model in an Indian textile organisation. Design/methodology/approach - The article operationalises the term "competency" and intends to develop a comprehensive performance-linked competency model after analysing the existing models with respect to competitive advantage; and the model has been validated empirically in an Indian textile company using data envelopment analysis (DEA), cross-efficiency DEA, and rank order centroid (ROC) methods. Findings - It reveals that the comprehensive performance-linked competency model focuses on competency identification, competency scoring and aligning competency with other strategic HR functions in a three-phase systematic method which will subsequently help the organisation to sustain in the competition. It has further been shown how using DEA, cross-efficiency DEA and ROC, an organisation can align individual performances and their competencies in terms of efficiency. Research limitations/implications - If the number of competencies get increased, DEA cannot be used. Practical implications - This can be applied to industry for more efficient and effective performance measurement tool. Originality/value - The paper enables organizations to systematically manage their employee competences to ensure high-performance level and competitive advantage. Keywords Competences, Competitive advantage, Cross-efficiency DEA, Data envelopment analysis, Performance-linked competency model, Rank order centroid Paper type Research paper International Journal of Organizational Analysis Vol. 21 No. 4, 2013 ' pp. 504-527 © Emerald Group Publishing Limited 1934-8835 DOI 10.1108/IJOA-05-2011-0488 Introduction Business world has become increasingly volatile and to sustain itself in competition, an organization needs to establish its uniqueness in business. To deal with this constantly changing scenario and increasing demand of business, organizations have already identified "knowledge" as a driver towards excellence. Knowledge-centric HR functions The authors acknowledge the valuable guidance and suggestions given by Professor Bani K. Sinha, Academic Advisor of Calcutta Business School and Former Professor of IM, Calcutta regarding data envelopment analysis. enable individuals to explore their potentials to the fullest extent. How to leverage knowledge in the organization or how to match employee competencies with organisational requirements and job demands are the major focus of strategy developers in the organizations. Human resource management has witnessed a paradigm shift in last decade. HR, nowadays, "works alongside senior managers, providing the link between business and organisational strategies, providing support and challenge to the senior team and developing credible initiatives in a setting of ongoing cost reduction" (Holbeche, 1999) -thus emerging as a "business partner". Even with a transformed HR, business excellence is yet to be reached. Market reality forces organizations to come out with innovative ideas in people management in order to sustain themselves in a highly growing competitive environment. Competency mapping has become an important tool of this knowledge-centric economy, thus drawing maximum attention of the industry. Thompson and Strebler (1995) stated that more than 50 percent organisations in UK use competency mapping. A number of studies are available on linking competency mapping with different HR functions. For example, competency approaches are said to be the basis for workplace learning provision (Lei and Hitt, 1996; Spangenberg et al., 1999); increased employee productivity, reduced training costs, and reduced staff turnover (Homer, 2001). Recent research endeavours towards considering employee competency as a core contributor of sustainable competitive advantage (Lawler, 2005; Hendry and Pettigrew, 1986; Barney, 1991; Lado and Wilson, 1994; Kamoche, 1996). A competency paradigm was set in terms of strategic thinking, innovation, creativity, etc. to succeed in business competition and a continuous effort was redirected towards defining new competencies (Ulrich, 1997). Undoubtedly the truth is that the people-force or creative capital can only drive the organization towards advantageous position in competition. Effective management of intellectual assets other than physical and financial assets of the organisation are necessary to competitive advantage (Seubert et al, 2001). Hitt et al. (2001) also pointed out that the intellectual capital of the organisation breeds competitive advantage and that leads to superior performance. Moreover, intellectual capital is a fundamental determinant for organisation's current and future competitiveness (Wang and Changa, 2005). Managing talent and their competencies are indeed the major focus of the organisations in the turbulent market. A lot of studies have been done in this aspect. However, major focus of the earlier researchers were either on identifying competencies for business success, or linking competencies for management development function or performance improvement function in piecemeal. Most of those articles did not focus on how to ensure competitive advantage through competency management. Moreover, there is a huge controversy related to operationalising the term "competency". Thus, a comprehensive approach towards competency management rather than competency mapping has been felt necessary. The intention of this paper is to develop a comprehensive model which will offer the organization a strategic solution to manage its competencies in a more systematic way to ensure high-level performance in the organization and to sustain competitive advantage. Present article aims at: • operationalising competency and competency management; • offering a comprehensive performance-linked competency model which will ensure competitive advantage; and • validating the model in an Indian textile company using data envelopment analysis (DEA) and rank order centroid (ROC) methods. A tool for competitive advantage 505 Literature review Competence based management or linking competence with performance has been the major focus of the industry in recent past. The concept of competency was first introduced in the early Roman practices to profile the attributes of "good Roman soldiers". However, it started its journey in corporate world since 1970s when McClelland (1973) initiated this approach as a selection tool. Gradually, efforts have been made to link competency with several organisational functions, such as training and development, performance management and reward management (Lucia and Lepsinger, 1999; Beck, 2003). Even the competence approach has been found to be effective for competitive advantage, innovation and effectiveness (Houtzagers, 1999), knowledge management (Hellstrom etal, 2000; Ley and Albert, 2003), implementing change (Martone, 2003) and so on. The major challenge faced by the competence literature was to operationalise the term (Shippmann et al., 2000). Early initiatives were taken to differentiate the terms "competence" and "competency". The widely accepted view is that the term "competence" is associated with "performance of work" and "competency" refers to the behavioural abilities of the manager required to perform the work effectively (Pierce, 1994). Existing models reveal that organisational "core competencies" are linked with the competitive advantage (Hamel and Prahalad, 1994; Murray, 2003); whereas knowledge, skills, attitudes, traits, motives represent the individual competencies (Boyatzis, 1982; Klemp, 2001; Higgs, 2003; Guo and Anderson, 2005). A number of attempts have been made to define competence. For example, Boyatzis (1982) defined job competency as an underlying characteristics of an employee in terms of motive, trait, skill, self-image, social role or knowledge required for effective performance. Sparrow (1997) conceptualized this in terms of behavioural attributes which can distinguish a superior performer from average. Athey and Orth (1999), on the other hand, stated job-related competency in terms of a set of observable performance dimensions, such as individual knowledge, skills, attitudes, and behaviours, collective team, process and organisational capabilities which are linked to high performance and competitive advantage. According to Jackson and Schuler (2003), competencies are "the skills, knowledge, abilities and other characteristics that someone needs to perform a job effectively". It is noticeable that all the definitions are linked with superior performance and competitive advantage. However, no definition includes future aspects of organisation and job which are essential for competitive advantage. Although, in an empirical study (Wickramasinghe, 2009), researchers, while trying to identify competencies of different managerial functions, focussed on future competencies for the job across functions. The study revealed clear differences between current and future competency requirements of the job. Moreover, effective performance or superior performance needs to be operationalised. Competency based performance management and reward system is not a very new concept in organisations. However, comparing performances of the individuals who are producing different outputs using different inputs and designing reward policy based on the method is questionable. A relative efficiency measurement is required for the perspective. Competency management is nowadays being considered as a tool for business strategy. Keeping all of these in mind, present study attempts to operationalise job-related competencies as a set of measurable individual attributes related to knowledge, skills, abilities, attitudes and behaviour which are required to perform a specific job, maintaining balance between different roles an individual needs to play in the organization, and fulfilling the current and future requirements of the organization in order to earn competitive advantage. Strategy-focused competency management facilitates competitive advantage to the A tool for organization. Because "distinctive human resource practices help to create unique comnetitive competences that differentiate product and services, and in turn, drive •, , competitiveness" (Cappelli and Crocker-Hefter, 1996). Prahalad and Hamel (1990) advantage stated that core competencies (social and learned competencies) are the most important intangible assets that can lead to sustainable competitive advantage. Several competency models have been proposed so far, but a few are found effective 507 where performance is concerned. Present study attempts to develop a comprehensive - competency model which aims at integrating organisation's business objectives (current and future) individual competencies, individual performance and other HR functions of the organisation. It is observed from the literature that two competency models are prevalent, namely, skill-focused (Boak, 1990) and outcome-focused (MSC, 2009). In traditional organizations, major focus was given on performance based requirements of the job position as compared to people-orientation (Stuart and Lindsay, 1997). Mulder and Collins (2007) argued that US competence based approach was mostly dominated by behavioural aspect, whereas EU conceptualized competence as a more integrated approach combining knowledge, skills, and attitudes together. Undoubtedly, competency based management yields competitive gain for the organizations. As the major objective of competence based management is to improve performance, this essentially requires modelling competencies properly. In a comparative analysis of managerial competency needs across areas of functional specialization, Wickramasinghe (2009) specified the model in terms of knowledge, skills and value. They tried to measure competencies in terms of current expertise, i.e. a respondent assesses self on each competence item; current importance, i.e. a respondent assesses the importance of each competence to perform current jobs; and future importance, i.e. a respondent assesses the future importance of any particular competence to perform jobs. This study restricted its scope to competency mapping only and moreover, the effectiveness of asking the job holder to rate the future importance of any particular competence for a job is questionable as it is beyond their knowledge about the future aspect of the job. Another competency based labour management model for construction industry, suggested by Serpell and Ferrada (2007), involved designing an education and training plan based on labour competencies originated from organisational strategies. Thus, the major focus of this study was competence based development only, a mere part of comprehensive competence-based management. Holmes and Joyce (1993), on the other hand, measured managerial performance in terms of job-focused, person-focused, and role-focused competencies. Job-focused approach refers to identifying the key tasks of the job concerned; person-focused approach considers individuals' personal background, personality, values, motivation and other attributes; and role-focused approach focuses on social context in which a job is done. The major focus of most competency models was to align employee's performance with the company's goals. But effectiveness of any competency model depends on to what extent it can justify the "best fitted" concept, i.e. the balance between organisational requirements, job requirements and person requirements. Most of the existing competency models are based on back-ward looking than future oriented (Torrington et al, 2002). These fail to incorporate organisational requirements from future aspects. Competency model must be aligned to organisational strategies or changes in future course of time. Beside, a competency model should also recommend its measurement techniques and ensure a link with other strategy-driven HR functions of the organization. Aligning performance with competency: a proposed model Combining all the above-mentioned issues, a comprehensive competency model has been developed (Figure 1). The model includes three-phases - competency identification, competency assessment, and aligning competencies with other strategy-driven HR functions to gain performance excellence. Phase-I: competency identification The first step in the performance-linked competency model is to identify competencies which are required to perform a particular job in an organisation. It is needless to Phase-I: Competency Identification Person-focused r \ Job-focused Role-focused Phase-ll: Competency Assessment • Organisational Current Requirements S Essential ■f Desired • Organisational Future Requirements ■f Essential S Desired • Benchmark Competency Index Competency Score Card Competency Current Com pet ency Require ments Current Com pet ency Gap Future Com pet ency Require ments Future Com pet ency Gap Benchmark Com pet ency Index Bench mark Com pet ency Gap Potential Com pet encies Person-focused Competencies Job-focused Competencies Role-focused Competencies Assigning weights (to measure essential and desired) Assessment period {continued) Phase-Ill: Aligning Competencies with Other Strategy-driven HR Functions mention that in the context of several managerial functions and roles, thinking of one-size-fits-all competency is impractical (Wickramasinghe, 2009; Barber and Tietje, 2004; Hayes et al, 2000; McKenna, 2002). A number of attempts were made to identify competencies in the organisations. For example, Boyatzis (1982) identified competencies as an underlying characteristic, namely, personal characteristics, experiences, motives and other attributes, which can distinguish a superior performer from an average performer. Hay Group (2001) also linked the competency with effective performance in a specific job, organisation and culture. In both the studies, competencies were identified keeping superior performers in mind. Boyatzis (1982) focused on competencies based on behavioural characteristics only, which, however, are not sufficient for determining superior performance. Hay Group (2001), also with the same tune, focussed on behavioural characteristics only. Although considering specific job, organisation and culture while defining competencies and perhaps the approach is more realistic. But, they also neither considered other aspects of job competencies, nor included the future perspectives while identifying competencies. Competencies, in the present study, are operationalised as a set of measurable individual attributes related to knowledge, skills, abilities, attitudes and behaviour which are required to perform a specific job, maintaining balance between different roles an individual needs to play in the organization and fulfilling the current and future requirements of the organization in order to earn competitive advantage and that essentially requires input from organisational strategy. The competency identification phase of the present model consists of three major competency clusters, namely, person-focused competency, job-focused competency and role-focused competency which are drawn from and aligned with the organisational current and future strategies. The term "future" although refers to short, intermediate and long-terms, but for the sake of simplicity it can be restricted up to next three years of time period. "Person-focused competency" refers to personal attributes and values required performing a specified job; "job-focused competency" is knowledge and skills required performing a list of activities; and "Role-focused competency" focuses on attributes required meeting contextual (societal) demand of the specified job. In case of role-focussed competency, direct relationships of the said job with other jobs in the organisation are considered. "Organisational requirements", on the other hand, refer to strategy based current and future requirements of the organization. Two kinds of competencies are identified - one is standard competencies which fulfill the requirements (current and future) of the organisation; and second is the benchmark competencies for superior performance. Standard competencies are identified at two levels - essential and desired. Reason behind, all competencies are not equally important to perform a specific job. Essential competencies are highly important and crucial for the job performance. Desired competencies, on the other hand, are important but not crucial for the job performance. A Benchmark Competency Index (BCI) is formed based on superior performers in the similar jobs, either, within the company or within the specific industry. Thus, every competency cluster consists of two sub-clusters - standard (essential and desired) and benchmark. Summarizing, competencies will be identified in two steps, namely: (1) using job analysis where immediate boss along with job-holder and departmental head will be interviewed about the standard competencies required to perform the particular job efficiently; and (2) identifying the benchmark competencies from the superior performers. Phase-II: competency assessment In the competency assessment phase, every individual will be measured based on a competency score card which aims at not only measuring the individual competencies in comparison to standard and benchmark competencies, but also assessing the unutilized potential competencies of an individual. Components of competency scorecard are described as: • "Current competencies" - person-focused, job-focused and role-focused competencies an individual currently possesses. • "Current competency requirements" - person-focused, job-focused and role-focused competencies required to fulfill the current requirements of the job. These are current competency standards in terms of essential and desired competencies. • "Current competency gap" - difference between the current competency requirements and current competencies of an individual. • "Future competency requirements" - person-focused, job-focused and role-focused competencies required to fulfill the future requirements of the job. These are future competency standards in terms of essential and desired competencies. • "Future competency gap" - difference between the future competency requirements and potential competencies of an individual. "BCI" - person-focused, job-focused and role-focused competencies possessed by A tool for the superior performers of the organisation for the similar jobs or of the specific rornnptitivp industry, if data is available. • "Benchmark competency gap" - difference between benchmark competencies and current competencies of an individual. • "Potential competencies" - competencies those an individual possesses but have not been utilized so far in the organization. Weights are assigned based on DEA and ROC to distinguish between essential and desired competencies. "DEA is a method for assessing comparative efficiencies in terms of resource conservation without detriment to its outputs or alternatively the scope for output augmentation without additional resources" (Cooper et al, 2000). Essential and desired competencies are measured considering "time spent" as output, that is, more time is spent on essential competencies as compared to desirable. Similarly, BCI is developed using cross-efficiency DEA method. In this case, some other quantifiable key performance indicators of comparable jobs are considered as output. Assessment period can either be annual or bi-annual. Scores for current competency gap, future competency gap and benchmark competency gap are also identified with the objective of aligning other HR functions with these scores in order to ensure competitive advantage. advantage 511 Phase-Ill: aligning competencies with other strategy-driven HR functions The basic objective of any competency model is to align this with other strategy-driven HR functions so that organisation can earn competitive advantage. Needless to mention that efficient and effective human capital is the key to become high-performing organization. Thus, hiring effective and competent people is always in the centre of focus to the organisatons. Competencies identified in Phase-I play the role of selection benchmarks. Training needs of an individual are determined by current competency gap, future competency gap and benchmark competency gap of competency scorecard in Phase-II and thus learning and development function is designed accordingly. Organisation's performance management system is designed based on competency scorecard. This will give a vivid picture about the performance of the employee. Employees' performances are mapped with respect to BCI and reward their performances accordingly. Three levels of performances are identified - average, above average and superior. Performance bonus is given based on which category of performance level an employee reaches. Competency scorecard also allows organization to measure the potential competencies of the employee. Identification of potential competencies and using those competencies for organisational benefit will surely add value to employees' motivation. Potential competencies can be identified by putting employees in different non-work activities throughout the year. Recognising extraordinary performance and value-adding potential competencies should be the major focus of reward policy. This entire process also helps the organisation to design their succession policy effectively. Reason behind considering competency management as a tool for competitive advantage is that it gets aligned with organisation's current and future strategy to sustain in the competition. Based on future requirements of the organization and fitting employees current and potential competencies with those requirements are the basic inputs to succession planning of the organization. Thus, using these inputs to manage careers of the talents is playing a crucial role in talent-retention strategy. Validation of the proposed model: a case study of an Indian textile company The company (name cannot be disclosed for maintaining confidentiality) is in linen and wool business, based in easter part of India. It is now one of the top linen brand manufacturing companies in India. In both the businesses it has leading market share as compared to its capacity and turnover. The business strategy of the company is to surpass the benchmark in quality, productivity and become customer's preferred choice globally and accordingly to build the organisational capability with talent acquisition and development with contemporary cutting edge competencies. A continuous and systematic effort of performance-linked competency management in the company has made their turnaround story from a commodity product to a lifestyle icon, from mass production to customised designs and from high cost producer to high value provider. Aligning employee competency with business strategy has always been given highest priority in the company which has repositioned them with top market leaders of India. The proposed model has been initially implemented in the HR department of the company as a pilot test, however, they are always in search of betterment and research continues on the aspect. Total employee strength of the company is near about 5,000. The case study was developed based on the implementation of the proposed model in HR department of the company only. The department majorly dealt with hiring, training and development, performance management systems, compensation and reward, succession, organisational health survey, talent retention, etc. The HR department consisted of 44 employees. A step-by-step implementation of the model is discussed below: • Phase I. Based on the current and future business strategies of the company along with managerial judgements, employee competencies for better performance were identified. • Current business strategy. The business strategy of the company was to surpass the benchmark in quality, productivity and became customer's preferred choice globally and accordingly to build the organisational capability with talent acquisition and development with contemporary cutting edge competencies. • Current job-focused competency. Conceptualising jobs (how far the employee was aware of the purpose and alignment of his/her job towards company strategies), domain expertise (how far the employee had technical knowledge and skills which ensure better performance), system-orientation (how far the employee was acquainted with the system prevails in the company). • Current person-focused competency. Communicating (how far the employee managed required information, exchanged viewpoints using verbal and non-verbal mode, and managed transparency and time in communicating), team-player (how far employee coped himself/herself with team goals and requirements, helped team members to grow within the team culture), result-oriented (how far employee was focused and motivated in producing desired results on time through overcoming situational obstacles, if any there), negotiating (how far employee had the ability to negotiate to reach the desired results), interpersonal relationship (how far employee maintained effective relationships within and outside organisation, building network for the betterment of the organisation), innovative (how far employee had the desire for innovative idea and its implementation to solve problems which benefits the organisation). • Current role-focused competency. Planning (how far employee planned the work A tool for on the alignment of business plan), organising (how far employee optimised comnetitive resources for work), leading (how far employee influenced others to get the work done on time and became the role model for others), coordinating (how far acivantage employee had the ability to coordinate with others for effective performance), monitoring (how far employee supervised other work and took corrective actions, if deviated from original plan). 513 • Future business strategy. Future strategy of the organisation is to retain and develop the leadership talent and critical resources in line with the required competencies as per defined long-term, medium term, and short-term strategies. A balance should be made between inducting new talent and retaining star performers. • Future job-focused competency. Understanding business (how far employee is aware of business environment of the organisation; technical expertise (how far employee is aware of computer application in his/her respective domain). • Future person-focused competency. Team-player (how far employee fits with the team); change-facilitator (how far employee facilitates change in the organisation); innovative (how far employee initiates and implements innovative idea for the betterments of the organisation); learning attitude (how far employee has desire for continuous learning). • Future role-focused competency. Leading (how far the employee has the ability to influence others towards achieving goal); mentoring (how far the employee has the ability to guide and train others). DEA was used to identify organisational current competency requirements in terms of essential and desired; and to create the BCI. ROC, on the other hand, was used to identify essential and desired future competencies. DEA is a multi-factor productivity analysis tool for measuring the relative efficiencies of a homogeneous set of decision-making units (DMUs). The efficiency score in the presence of multiple input and output factors is defined as efficiency = weighted sum of outputs/weighted sum of inputs. ROC is a simple way of giving weight to a number of items ranked according to their importance. Present case considered job-focused, person-focused and role-focused competencies as multi-factor inputs and the quantified departmental jobs as multi-factor outputs for DEA. Two sets of DEA were conducted, namely: (1) DEA1 (a relative efficiency measurement method) for identifying efficient and inefficient employees along with organisational current essential and desired competency considering frequency of use (time frame) as the measurement unit for multi-factor inputs. (2) DEA2 (a cross-efficiency ranking method) for identifying BCI. The multifactor outputs for each DEA is mentioned in Table I. (3) ROC for identifying organisational future essential and desired competencies. Findings of DEA 1 For DEA1, employees (job-holders of the department) were asked to rate identified current competencies (job-focused, person-focused and role-focused) based on the scale of mostly used = 4 (almost every day); frequently used = 3 (at least thrice a week); IJOA 21,4 514 Major job functions Quantified outcomes New employee joining Training and development Compensation and reward Succession Table I. DEA multi-factor outputs Organisational health survey (OHS) based on a financial year April, 2011-March, 2012 Talent retention Performance management systems 1. How many selections of new employees have been done? How many joining formalities for new employees have been completed? How many employee training needs have been identified? How much man-days training have been conducted? How much training was evaluated by following company training evaluation system? How many employees have been assessed in terms of their performance? How many performance counselling have been done? How many compensation plans for employees including incentive schemes have been designed? How many (total in number) promotions/transfers have been done? How many OHS have been conducted? How many new health policies have been implemented? How many exit interviews have been conducted? occasionally used = 2 (at least twice a month); rarely used = 1 (once in a blue moon); not at all used = 0. These ratings were considered as multi-factor inputs for DEAL DEA was computed based on the principle: "By comparing n units with s outputs denoted by yrk, r= l,...,s, and m inputs denoted by xik, i = 1,... ,m, the efficiency measure for DMU k is: hk = Max^=lUryrk, where the weights, ur and vi, are non-negative. A second set of constraints requires that the same weights, when applied to all DMUs, do not provide any unit with efficiency greater than one. This condition appears in the following set of constraints: for j = l,...,n. The efficiency ratio ranges from zero to one, with DMU k being considered relatively efficient if it receives a score of one. Thus, each unit will choose weights so as to maximize self-efficiency, given the constraints" (Adler et al, 2002). Findings revealed that amongst 44 employees of the department, employees 3 and 5 were found inefficient. Efficiency scores for these inefficient employees were found 0.833; whereas the efficiency scores for all efficient employees was 1.00. Tables II and III depicted weighted output scores and weighted input scores for each employee based on their efficiency levels. The position of an employee, for example El, can be explained from Tables II and III. Employee 1 was found to be an efficient performer who generated maximum output in recruitment and selection, training need identification, and conducting exit interview by using his/her three competencies mostly - interpersonal relationship orientation, organising and leading. Similarly, employee 3, who used his/her competencies, namely, Emp. E-score yl y2 y3 y4 y5 y6 y7 y8 y9 ylO yll y!2 El 1 0.100 0.069 0.003 E2 1 0.029 0.016 0.005 E3 0.833 0.063 0.024 0.085 E4 1 0.017 0.020 0.006 0.048 0.005 0.023 0.072 E5 0.833 0.011 0.021 0.015 E6 1 0.013 0.001 0.006 0.002 E7 1 0.096 0.052 E8 1 0.013 0.012 0.001 0.009 0.019 E9 1 0.031 0.050 0.005 0.049 E10 1 0.041 0.034 Ell 1 0.0005 0.002 0.016 0.002 E12 1 0.020 0.008 0.018 E13 1 0.0002 0.021 0.0005 0.011 E14 1 0.010 0.004 0.002 0.020 0.020 0.002 E15 1 0.016 0.009 0.219 E16 1 0.006 0.016 0.019 E17 1 0.026 0.010 0.001 0.009 0.046 E18 1 0.022 0.018 0.011 E19 1 0.004 0.022 0.004 E20 1 0.035 0.008 0.007 0.003 0.054 E21 1 0.027 0.020 0.013 0.013 E22 1 0.012 0.020 0.0002 E23 1 0.016 0.013 0.038 E24 1 0.012 0.022 0.002 0.003 0.011 0.024 E25 1 0.00003 0.009 0.003 0.011 0.003 0.022 E26 1 0.014 0.006 0.006 0.007 0.011 E27 1 0.017 0.022 {continued) &■ 8, $ Er g a> C ■a rf a a> ft w « o | ^ o &3 ^- h-K CD CD >-i 05 Emp. E-score yi y2 y3 y4 y5 y6 y7 y8 y9 ylO yii yl2 E28 1 0.012 0.013 0.195 E29 1 0.024 0.005 0.011 0.019 E30 1 0.001 0.006 0.017 0.002 0.006 0.010 0.012 E31 1 0.004 0.011 0.015 0.004 0.037 E32 1 0.013 0.015 0.002 0.009 0.018 E33 1 0.028 0.008 0.029 E34 1 0.029 0.001 0.004 0.025 0.025 E35 1 0.015 0.031 0.001 0.006 0.006 E36 1 0.014 0.028 0.015 0.002 E37 1 0.016 0.005 0.006 0.003 0.008 E38 1 0.0004 0.009 0.002 0.012 0.015 0.002 0.005 0.031 E39 1 0.005 0.010 0.015 0.005 0.004 0.008 0.004 E40 1 0.015 0.002 0.002 0.035 E41 1 0.006 0.017 0.009 E42 1 0.022 0.012 0.008 0.001 0.004 0.0005 E43 1 0.009 0.0007 0.010 0.008 0.006 E44 1 0.007 0.011 0.0003 0.007 Notes: E-score - efficiency score; yl - recruitment and selection; y2 - employee joining • formalities; y3 - trainin g need identification; y4 - conducting training; y5 - training evaluation; y6 - assessing performance; y7 - performance counselling; y8 - designing compensation; y9 - identifying people for promotion/transfer; ylO - organisational health survey (OHS) conducted; yll - OHS policy implemented; yl2 - exit interview conducted xl x2 x3 x4 x5 x6 x7 x8 x9 xlO xll xl2 xl3 xl4 El 0.277 0.168 0.476 E2 0.250 0.006 E3 0.294 0.087 0.206 E4 0.210 0.012 0.089 E5 0.241 0.276 E6 0.010 0.063 0.031 0.166 E7 0.005 0.036 0.190 0.066 E8 0.007 0.005 0.239 0.126 E9 0.333 0.735 ElO 0.096 0.315 0.013 0.032 Ell 0.108 0.284 E12 1.000 E13 0.319 0.137 0.034 0.141 E14 0.040 0.065 0.166 0.113 E15 0.232 0.106 0.071 0.165 E16 0.004 0.004 0.016 0.0008 0.411 0.081 E17 0.017 0.236 0.135 0.018 E18 0.657 0.329 E19 0.149 0.013 0.349 E20 0.024 0.197 0.195 E21 0.080 0.047 0.174 E22 0.197 0.023 0.168 E23 0.074 0.067 0.580 E24 0.067 0.082 0.023 0.154 0.080 E25 0.286 0.141 E26 0.190 0.074 0.023 {continued) 3 co ps S3» o C CO h^h • O 1 - 8 & ^ h-K CD CD >-i h-» GO to tí xl x2 x3 x4 x5 x6 x7 x8 x9 xlO xll xl2 xl3 xl4 E27 0.044 0.191 0.033 0.002 0.036 E28 0.113 0.021 0.041 0.101 0.095 E29 0.062 0.221 0.152 E30 0.072 0.011 0.033 0.026 0.021 0.067 0.109 0.002 E31 0.033 0.128 0.152 0.018 0.049 0.017 E32 0.042 0.053 0.088 0.003 0.171 0.046 E33 0.063 0.176 0.190 E34 0.038 0.036 0.210 0.223 E35 0.232 0.068 0.239 0.015 E36 0.428 0.143 E37 0.500 0.0002 E38 0.063 0.115 0.217 0.049 E39 0.046 0.115 0.173 E40 0.174 0.305 E41 0.054 0.165 0.014 0.136 E42 0.279 0.032 0.012 E43 0.097 0.153 E44 0.026 0.220 0.040 Notes: xl - Conceptualising jobs; x2 - domain expertise; x3 - system orientation; x4 - communicating; x5 - team player; x6 - result-oriented; x7 - negotiating; x8 - innovative; x9 - interpersonal relationship oriented, xlO - planning; xll - organising; xl2 - leading; xl3 - coordinating; xl4 - monitoring conceptualising jobs, organising and monitoring to get maximum output in recruitment and selection, training need identification, and conducting exit interview, was found inefficient. It was also observed that input "innovative" was appeared maximum time amongst 44 employees in Table III and then it was "monitoring". Then based upon the judgements of senior managers, essential and desired competencies were identified (Table IV). Also, from the mean value of weighted inputs of efficient employees can be considered as required current competency scores to become efficient employees (Table IV). Findings of DEA1 also revealed that for employees 3 and 5 who were found inefficient can improve themselves by benchmarking their immediate efficient employees in the efficiency frontier. For example, employee 3 can benchmark with employees 17, 31, 44, and 5 with employee 2,11, 29 and 44 (Table V). Findings ofDEA2 To identify the BCI, DEA2, a cross-efficiency ranking method was used. The method calculates efficiency score of each employee n times, using optimal weights evaluated by the n Linear Programms, based on the following equation: hi k=l,...,n, ; = 1, where, hkj Em • i=\Vik%ij employee j is evaluated by the weights of employee k. A tool for competitive advantage 519 Weighted inputs appeared Level of Required current Inputs no. of times competency competency scores Conceptualising jobs 8 Desired 0.076 Domain expertise 12 Essential 0.156 System orientation 14 Essential 0.108 Communicating 10 Essential 0.095 Team player3 4 Essential 0.136 Result-oriented 10 Essential 0.031 Negotiating 6 Desired 0.128 Innovative 21 Essential 0.165 Interpersonal Essential relationship oriented 10 0.149 Planning 2 Desired 0.055 Organising 17 Essential 0.264 Leading 10 Essential 0.126 Coordinating 10 Essential 0.098 Monitoring 18 Essential 0.121 Notes: aSurprisingly "team-player" competency was chosen as desired by employees; but according to managerial judgement, it should be considered as essential Table IV. Essential and desired inputs Employee 3 Employee 17: Employee 31: Employee 44: -0.300 - 0.260 - 0.050 Table V. Employee 5 Employee 2: Employee 11: Employee 29: Employee 44: Benchmark combinations -0.026 -0.133 -0.139 -0.457 for inefficient employees IJOA Subject to: 21,4 0 < hkj < 1 The cross-efficiency ranking method in the context of DEA utilizes the results of the cross-efficiency matrix hkj in order to rank the units. h~k = YlJ-i^kj/n better represent the 520 unit evaluations. "Maverick index" (Doyle and Green, 1994) measures the deviation between the self appraised score and the unit's peer scores, mentioned in the following equation: Mk = ———, where ek = 1 Y]hk] Employees who scored low on Mk, are generally all round performers and are frequently found both self- and peer-efficient (Adler et al, 2002). Table VI projected the rank of the efficient employees. It should be noted that cross-efficiency DEA is used for ranking efficient employees and not for the inefficient employees. Thus, employees 3 and 5 were dropped in order to calculate cross-efficiency DEA. As per the managerial judgement, top ten employees, i.e. employees 32,2,18,29,13, 33,31,17,44,42 were considered as "star performers". BCI was developed based on the mean value of weighted competencies of star performers (Table VII). Findings of ROC Three personnel from top management (general manager and vice president levels) were chosen to rate the future required competencies subjectively in terms of their importance in future. They were asked to rate based on the rank order scale as essential (E), highly important (HI), important (I), desirable (D), and not at all important (NT) (Table VIII). The weights were found based on the following ROC principle: 1 1 m ^—< n n=i where m denoted the number of items and wi was the weight for the zth item (Bagla et al, 2011). To rank the subjective rating of each personnel, fuzzy measurement scale was developed using ROC method which found essential (E) = 0.457, highly important (HI) = 0.256, important (I) = 0.157, desirable (D) = 0.090, and not at all important (NI) = 0.040. Thus, for each personnel, different ranking was observed for each future required competency. Ultimate weight for each competency was found by converting the total weights of each personnel for particular competency to normalcy weights and then based on managerial judgements future required competencies were termed as essential or desirable (Table IX). Then departmental head and immediate boss were asked to rate each employee subjectively based on the scale excellent (E), very good (VG), good (G), average (A), and poor (P). Based on above mentioned ROC method, weights of future required competencies for each employee were found. Table X referred to such assessments of the star performer employee 32. Employee Efficiency score Rank E32 -0.796005 1 E2 -0.412731 2 E18 -0.288515 3 E29 -0.178223 4 E13 -0.151804 5 E33 -0.025966 6 E31 0.0448607 7 E17 0.0599659 8 E44 0.0603698 9 E42 0.0771321 10 E16 0.2138637 11 E22 0.2213806 12 E20 0.2316444 13 E43 0.2358078 14 E25 0.2913966 15 E23 0.3236436 16 E38 0.3338063 17 E40 0.335 18 E24 0.3507892 19 E19 0.3873755 20 E6 0.400156 21 E27 0.421 22 E8 0.4694018 23 E39 0.4819576 24 Ell 0.4951788 25 E41 0.600196 26 E26 0.6182824 27 E30 0.6255621 28 E14 0.7460746 29 E37 0.7882905 30 E35 0.9267202 31 E21 0.9498414 32 E36 1.1720744 33 E34 1.322951 34 E4 1.5636453 35 E12 1.7312366 36 E7 1.893 37 E9 2.5674242 38 El 2.7337249 39 E10 3.2552066 40 E28 4.1786031 41 E15 6.573 42 A tool for competitive advantage 521 Table VI. Rank of efficient employees Phase II: competency score card The competency score card for employee 32 only was produced in the present article as an example because publishing performance assessment of all the employees were not permitted by the organisation (Tables XI-XIII). It can be observed from the above mentioned Tables XI-XIII that employee 32 reached his efficiency level mainly by using six amongst 14 competencies identified for current business. Those six competencies were domain expertise, system orientation, IJOA 21,4 522 Table VII. Benchmark competency index Inputs Level of competency Benchmark compf Conceptualising jobs Desired 0.250 Domain expertise Essential 0.339 System orientation Essential 0.035 Communicating Essential 0.080 Team player Essential 0.329 Result-oriented Essential 0.019 Negotiating3 Desired - Innovative Essential 0.128 Interpersonal relationship oriented Essential 0.144 Planning3 Desired - Organising Essential 0.138 Leading Essential 0.092 Coordinating Essential 0.082 Monitoring Essential 0.033 Note: Tt was observed that two desired competencies (negotiating and planning) did not play very important roles in determining efficiency level Competency Personnel 1 Personnel 2 Personnel 3 Understanding business E NI I Technical expertise I E HI Team-player E E HI Change-facilitator I I D Table VIII. Innovative HI E I Subjective rating Learning attitude E HI E of future required Leading DIE competencies Mentoring DDE Competency Normalcy weights Level Understanding business 0.101 Essential Technical expertise 0.134 Essential Team-player 0.181 Essential Change-facilitator 0.062 Desired Table IX. Innovative 0.134 Essential Essential and desired Learning attitude 0.181 Essential future required Leading 0.109 Essential competency Mentoring 0.098 Desired communicating, innovative, result-oriented, and monitoring. He/she was found superior in "innovative". He/she was also found superior as compared to benchmark competencies, except in "domain expertise". Considering his/her fit with future required competencies and potential competencies, top management considered him/her as resourceful talent for the organisation. Phase III: aligning competencies with other HR functions Training needs for employee 32 were identified from competency score card by the top managers - team-player, interpersonal relationships, domain expertise, technical expertise, and organising ability. He/she was referred for retraining to acquire excellence in those competencies. Performance bonus, star performers of the year, promotions were announced for the deserving candidates so that they can be motivated. While making the hiring more effective and strategy oriented, organisation will now focus on essential current and future required competencies in potential interviewees. A tool for competitive advantage 523 Conclusion and implication Undoubtedly, the organization which knows how to optimize its competencies as per situational demand, will only sustain in the competition. Competency management is now-a-days being considered as a strategic alliance tool for competitive advantage. Keeping this in mind, present article has offered a comprehensive performance-linked competency model which encompasses not only competency identification, but also measuring competencies and aligning competencies with other strategic HR functions, such as, effective hiring, learning and development, performance management and rewards, succession planning and career management. The major objective of this Employee Competency HOD Immediate boss Normalcy weights E32 Understanding business VG Technical expertise G Team-player G Change-facilitator VG Innovative VG Learning attitude E Leading E Mentoring A VG VG A G E E E G 0.117 0.094 0.056 0.094 0.163 0.209 0.209 0.056 Table X. Employee assessment on future required competencies Competency Current competency requirements Employee competency Current compi gap Conceptualising jobs 0.076 — Domain expertise 0.156 0.042 0.114 System orientation 0.108 0.053 0.055 Communicating 0.095 0.088 0.007 Team player 0.136 - Result-oriented 0.031 0.003 0.028 Negotiating 0.128 - Innovative 0.165 0.171 -0.006 Interpersonal relationship oriented 0.149 - Planning 0.055 - Organising 0.264 - Leading 0.126 - Coordinating 0.098 - Monitoring 0.121 0.046 0.075 Table XI. Current competency score card of employee 32 IJOA 21,4 524 Table XII. Benchmark competency score card of employee 32 Competency Benchmark competency index Benchmark Employee competency competency gap Conceptualising jobs 0.250 - Domain expertise 0.339 0.042 0.297 System orientation 0.035 0.053 -0.018 Communicating 0.080 0.088 -0.008 Team player 0.329 - Result-oriented 0.019 0.003 0.016 Negotiating - - Innovative 0.128 0.171 -0.043 Interpersonal relationship oriented 0.144 - Planning - - Organising 0.138 - Leading 0.092 - Coordinating 0.082 - Monitoring 0.033 0.046 -0.013 Table XIII. Future competency score card of employee 32 Competency Future competency requirements Employee assessment Future competency gap Understanding business 0.101 Technical expertise 0.134 Team-player 0.181 Change-facilitator 0.062 Innovative 0.134 Learning attitude 0.181 Leading 0.109 Mentoring 0.098 0.117 0.094 0.056 0.094 0.163 0.209 0.209 0.056 -0.016 0.040 0.125 -0.032 -0.029 -0.028 -0.100 0.042 Potential competencies Forecasting capability model is to integrate current competencies and future competencies required by the organization for its strategic moves. Often organization finds difficulty to track the employee potentials and mobilize those towards effective performance. Present model enable organisations not only to measure current and future competencies of the employees, but also draw a roadmap towards deploying employee potentials through competency scorecard. 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(2009), "A comparative analysis of managerial competency needs across areas of functional specialization", Journal of Management Development, Vol. 28 No. 4, pp. 344-360. A tool for competitive advantage 527 Further reading Prien, E. and Sanchez, J.I. (2000), "The practice of competency modelling", Personnel Psychology, Vol. 53, pp. 703-740. Woodall, J. and Winstanley, D. (1998), Management Development: Strategy Practice, Blackwell, Oxford. About the authors Atri Sengupta, PhD from Indian Institute of Technology, Kharagpur, India, is an academician, a corporate trainer and consultant. Atri Sengupta is the corresponding author and can be contacted at: atrisengupta@hotmail.com D.N. Venkatesh, PhD from Hyderabad Central University, Karnatake, India, is a corporate trainer and consultant. Arun K. Sinha, PhD from Rajasthan University, India, is the Sr Vice President - HR & IR, Jaya Shree Textile, India. 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