By Janet Hayes
One imperative for organizations in successfully executing their strategies is to ensure that they have the necessary competencies to carry them out. Concepts like the core competence of the corporation and hedgehogs imply that identifying and strengthening competencies are necessary in order for companies to distinguish themselves from competition. Once an organization determines which competencies are critical, though, how does the leadership team build or strengthen them?
Individual Skills vs. Organizational Competency
Many organizations treat organizational competencies as though they were simply a sum of the skills of the people in their organizations. While individual skills are critical, however, relying strictly on them to embody critical competencies is not enough because:
1. The organization may not have enough of the right skills to distinguish itself.
2. Individuals come and go, but to continue to thrive over time, the organization needs to maintain its competency without regard to changes in personnel. In fact, if your company’s competency relies strictly on individual skills, then competitors can take over your competency simply by hiring away your company’s best people.
3. Individual skills alone do not encapsulate everything the company needs to do well in order to compete. For example, even the most highly skilled individuals working in an uncoordinated way will not fare well in the eyes of the customer or gain efficiencies for the company.
Definition of Organizational Competency
Harmonic Systems Consulting defines “organizational competency” as the harmonious blending of four basic components of organizational identity. This competency identity includes individual skills, but only as one of the four necessary components. Harmonic Systems Consulting’s view of the four components required for organizational competency is depicted in the picture below:
These components must be orchestrated to work together in daily harmony for the long term benefit of the company’s customers and associates.
The Four Keys of Organizational Competency
Following are descriptions of the four keys that comprise organizational competency. To illustrate the concept, we will use an example of a Project Management competency.
As mentioned above, individual skills are critical to an organization. However, to be part of an organizational competency, the company needs multiple individuals with the necessary skills. Most competencies require a subset of individuals with a very high level of skills and many more individuals with a lower level of skill.
Skills and training programs must be directed toward developing the appropriate level of skills necessary for the desired competency, but that does not imply that a high level of skill is always required. A custom furniture shop may require their craftsmen to have high skill levels because each piece is unique and processes are dynamic. McDonald’s, however, cannot expect a high level of skill from every employee in their restaurants, so they rely more on highly defined processes.
For an organizational competency in Project Management, a company would need one or more highly trained and experienced project managers and a broader, company-wide, group of individuals to be trained on project management techniques.
A second critical component to organizational competency is having resources that support the competency. These resources might include tools, software, methodologies, checklists, templates, etc.
For Project Management, resources might include templates for charters and meeting agendas and minutes, project management and project portfolio management software, a new product development methodology, a method for decision-making, forms for tracking issues, risks and changes and project budget tracking tools.
In order for the company’s customers to benefit from the competency, the skills and resources must work together in a coordinated way. That coordination comes via the third key, processes. Processes might include manufacturing steps, research and development scientific methods, application development, order entry, customer service, etc.
For Project Management, a process might start with creation of a charter and a budget, then assignment of personnel to the project, followed by development of a plan, etc. There should also be a process for prioritizing projects and deciding which ones need to be started or stopped.
The final key to organizational competency, shared knowledge, is the one that is most often neglected. Knowledge held by individuals must be shared in order for the competency to be institutionalized within the organization. Sharing knowledge is crucial to maintaining the competency as individuals get promoted, transferred or leave the organization and to continuously improve. Knowledge may be shared through formal or informal means, but must be accessible to everyone who needs it. It might be shared via an intellectual capital database, a wiki or in a file drawer that everyone knows about. It could also be shared by mentoring or birds-of-a-feather meetings to share learnings.
For Project Management, shared knowledge might include a repository of previous project plans, a collection of post-project completion reports that capture learnings and a project office where less-experienced project managers can go for mentoring by highly skilled experts.
Culture’s Role in Organizational Competency
One important factor in developing or strengthening an organizational competency is the company’s culture. If the company culture doesn’t support the development of a competency that is critical for the strategy, it must be addressed or it will put the organization out of alignment (for more about alignment, see our blogs on the Orchestra Model© and Alignovation©) and the competency will not be realized.
For example, a company strategy may determine that better attention to efficiency and quality is necessary, so they may embark upon developing a competency in Lean Six Sigma. If, however, people in the organization are not accustomed to data-based decision-making or disciplined execution, that culture will need to be addressed via change management and clear definition and communication of desired behaviors in order to build the new competency. Demonstrating that the desired competency is built upon existing capabilities and emphasizing the career opportunities that result from the new competency will help to support the change.
Individuals may also see a downside to sharing knowledge if they believe that their skills are what makes them uniquely important. In that case, rewards and compensation focused on sharing knowledge a crucial. Techniques for creating a learning organization should also be considered.
The word “competency” comes from the Latin word competere, which means “strive together”. Our Harmonic Systems Consulting definition of organizational competency includes the four interlocking components of skills, resources, processes and shared knowledge. This multi-faceted definition guides companies in defining all of the elements they need to develop for their organizational competencies in order to “strive together” harmoniously for distinction in their highly competitive markets. Understanding organizational competency in this comprehensive manner is especially appropriate because competere is also the root word for “competition”.