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Competency Analysis

Competencies may have value for personal development and communicating organization direction. However, the subjectivity make competencies a risky foundation for a pay system since they bear little connection to the work employees do. A number of processes for classifying competencies have been proposed. One of them uses three groups: Personal characteristics: Employees are expected to come in the door with characteristics like integrity, flexibility, respect, and then develop and demonstrate them in increasingly complex and ambiguous job situations. Visionary: These are the highest-level competencies. They might be expressed as taking the initiative in moving the organization in new directions, and understanding trends in the marketplace, in world events, in the local community. Organization specific: Between the above two groups are the competencies that are tied specifically to the particular organization and the function where they are being applied. They generally include leadership, customer orientation, functional expertise. Like compensable factors, competencies are derived from the executive leadership’s beliefs about the organization and its strategic intent. However, not all employees understand that connection. The heart of the person-based plan is that employees get paid for the relevant skills or competencies they possess, whether or not those skills are used. Competency-based plans assume that if people are to be paid based on their competencies, then there must be some way to demonstrate or certify to all concerned that a person possesses that level of competency. While the notion of competencies may have value in identifying what distinguishes typical from truly outstanding performance, there is debate on whether competencies can be translated into a measurable, objective basis for pay. The basic question remains: Is it appropriate to pay you for what I believe you are capable of doing versus what you are doing? It is likely more effective, for pay purposes, to focus on what is easily measurable and directly related to organizational success.