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Creating Layers of Competency

Closeup of businessman assembling blank wooden cubes into a structured whole on antique wooden desks. Conceptual of business start up, vision and strategy.
In this era of lean staffs and resources and “do more with less,” it might seem unnecessary to reaffirm the importance of identifying learning priorities. Yet, it wasn’t that long ago that learning functions operated with very different paradigms.
Recall the “tidal wave” training where the same learning washed over the entire staff, or the learning and development “grocery store” where employees or their supervisors selected any learning that looked appealing, such as location or convenient timing.
In 2016, thousands of organizations have incorporated competencies into their learning and development efforts. Competencies focus development efforts, and more broadly they fuel every element of talent management, including staffing: onboarding, career development, succession, promotion and transition/termination. Competencies are the foundation of integrated talent management.
Granted, competency modeling presents quite a few challenges. Many progressive organizations are getting rid of performance reviews and competency frameworks because leaders say they don’t add value. It’s a hotly debated topic. Those who defend competency models do so because their organizations have clearly benefited, there are currently no better alternatives, and because getting rid of them would leave a vacuum that would put us back 20 years into far more subjective, undefined territory.
Many organizations like Deloitte or Cigna Corp. that are said to be getting rid of performance reviews aren’t. Instead, they’re addressing shortcomings because employees continue to need feedback. Competency modeling is equally critical to modern talent management, and like performance reviews, practitioners are crying out for improvement.
Some of the challenges include:
  • The time required to create competency models.
  • Lack of internal bandwidth and/or knowledge.
  • Rapid change/job evolution means competency models may quickly become out-of-date.
  • Quick-pick methods, especially without professional facilitation, may not accurately identify critical competencies.
  • Selection of easily visible skills while subtle but important qualities are missed.
  • Learning and other processes that are not designed to use competencies.
  • Increasingly popular strengths-based programs suggest that employees should use their own strength set to be successful.

There is a variety of competency modeling best practices in the learning industry. One of the most promising approaches, multilayer competency modeling, hasn’t received much visibility. In this approach:

  • Competency models are assembled with components — different sets of core competencies that apply to multiple job roles/individuals.
  • Much of each role-based competency model is preselected, which leads to saving time, greater quality and tighter career ladders.
  • Competency models are more dynamic and easily updated because changing the cores updates multiple competency models.
  • Managerial and technical paths are accommodated.
  • Cross-functional and technical competencies are included.
  • Common cores result in a smaller, cross-functional competency library, which increases focus on the remaining few, eases communication, and simplifies integration with learning and other talent management processes.

The Journey to a Competent Model

CME Group Inc., a global financial services company with roughly 2,500 employees, provides a marketplace for buyers and sellers of diverse asset classes such as interest rates, foreign exchange, real estate and weather through its electronic trading platforms. Nate Aramovich, senior director of organizational effectiveness, and Fernando Arena, manager of organizational effectiveness, have managed and implemented CME’s competency modeling.
The company initiated its work with competencies to achieve several key talent management objectives:
  • Empower individuals to plan and advance their careers.
  • Improve capabilities to develop internal talent.
  • Identify best talent to fill critical positions or assignments.
  • Attract and retain talented employees.
  • Foster engagement and a more positive organizational culture.
  • Catalyze higher performance.

CME’s competency modeling developed and evolved in three phases. Phase One began in 2012 with a plan to quickly create impact and value by focusing on leadership-level core competencies. Taking into account business drivers and associated leadership tasks, CME identified four to seven critical competencies for each of five leadership levels within the organization — consistent expectations for leaders across all functions and development targets for leaders at each level.

By focusing initially on this limited objective, the company quickly had results it could apply to multiple talent management processes for critical layers in the organization. At the same time, it began socializing the notion of competencies among stakeholders who would need to be onboard and supportive.
In Phase Two, CME identified functional competencies for each function, IT, HR, etc., and competencies for job families within the functions using a five-step process (Figure 1). In CME’s building block approach, the company built sets of core competencies that could be incorporated into numerous jobs. For example, a CME recruiter can be assembled from three sets of core competencies:
Creating Layers of Competency
Creating Layers of Competency
Source: CME Group Inc., 2015
  1. Organizationwide competencies: For the recruiter, the individual contributor core competencies apply.
  2. Functional core competencies: For the recruiter, HR functional competencies apply.
  3. Family competencies: The recruiting family competencies from junior recruiter to recruiting manager apply.

CME also identifies proficiency — the level of competency expertise required for success in a position — using a five-point scale ranging from awareness to expert. Job incumbents and their supervisors establish the proficiencies with guidance from a knowledgeable facilitator.

Setting proficiencies is valuable for several reasons. First, they create a realistic picture of hiring and training needs, and avoid the recruiting, training and turnover costs associated with overqualification. Second, they help develop clearer career ladders. Finally, they are a good way to fine-tune competency models built with level, functional and family core competencies. That is, the required competencies of a senior recruiter and a junior recruiter may be nearly identical, but needed levels of expertise may vary.
To promote greater understanding and acceptance, CME brings together its jobs profile and competency information into a user-friendly, graphically pleasing format (Figure 2). The one- to two-page printouts provide users with the most critical information about a position. A more detailed report is available to talent management professionals.
Based on lessons learned in Phase Two, CME re-engineered its process, extending use of predeveloped cores even further (Figure 3). Highlights of Phase Three include:
  • Four sets of core competencies are selectively applied to all jobs. This replaces a much larger number of cores used in Phase Two.
  • The cores result in eight to 12 predetermined competencies per job role.
  • Only four additional competencies are selected for each job. Subject-matter experts select these functional or technical competencies guided by previously selected functional competencies.
  • Competency model is reduced to 12 to 16 competencies from 18 to 20.
  • Managerial and technical career paths are accommodated.
  • Talent management processes will be simplified. For example, learning and development, resources can be reduced, and the best can be aligned to fewer competencies.
In the End, We Learned …
According to CME’s Aramovich and Arena, these are some of the most important lessons from the company’s foray into multilayered competency modeling:
  1. Focus sufficiently on end processes. Detailing competency-based talent management processes from the start provides valuable insight into what competency model data will be most useful. Further, competency models should be tailored to the capabilities of the talent management technology being used. Finally, tangible benefits help engage supervisors and individual contributors.
  2. Use facilitators as competency experts. Trained facilitators yield superior results compared with having supervisors and job incumbents pick competencies unassisted. Over time, CME doubled down on facilitators, transitioning from meeting leader and data collector to competency expert. Experienced facilitators learn the competency library and gain valuable cross-functional knowledge. This enables them to preselect lists of competencies. Subject-matter experts validate the list and suggest what is missing.
  3. Shorten the competency library. Having a good competency library with cross-functional and technical competencies, behavioral indicators and behavioral interview questions was a boon. CME was able to simplify by removing competencies that no longer fit and reduce the number of variations for a single competency. For example, while there may be different critical behaviors for “making presentations” and “verbal communications,” one competency can cover both.
  4. Craft a story. Rather than having subject-matter experts pick competencies, have them describe upcoming goals they need to accomplish, such as operational efficiency or opening new markets. Include questions about how their work affects the organization and industry, followed by what skills managers and teams need to deliver the desired impact. Then validate the preselected competencies against that story.
CME realized several benefits:
  • The competency modeling meetings are helpful when setting expectations.
  • Managers are happy they now have a means to articulate career paths.
  • Hiring managers no longer have to create interview guides. It’s also easier to compare candidates.
  • Everyone sees the new role profiles, and managers and individuals can agree on up to three critical competencies to focus on for the year as part of CME’s performance management process. This helps to make feedback richer.

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