The Competency Matrix : Introduction and Basics of Design

THE COMPETENCY MATRIX : A BASIC LOOK AT FUNDAMENTALS

This article is an instrospective analysis arising from a study of a multitude of sources relating to Management Theory and Practice, and has been born out of studying the Business Failure of a couple of organisations where I worked; thus, this is an attempt to answer some questions on where organisations fail, and how can we prevent failure. I have looked / am looking at many parameters of functioning – Logistics & Supply Chain, Sales, Marketing, Finance, and more… here, I focus on a part of Organisational Development and Business Strategy. Do leave a comment with your thoughts on the same. This is an article born of introspection and  studies of both theories as well as case studies - but I have abandoned theoretical approaches for a more brusque basic approach to explain the concept, 

A Competency Matrix is a tool that documents the required competencies for each position in the organization; and compare with the current skill sets, thus charting a way forward for the organization as well as an employee. Through this a gap analysis is feasible, and you can further identify and develop key resources. This is a standard definition; to that, I would like to add that a properly designed competency framework also helps you to develop and drive the organization in a desired direction. Before we come to designing a matrix or framework, let us look at the need for one

NEED FOR A COMPETENCY MATRIX

A competency is the ability to perform a task or job; there are a multitude of competencies, that can be roughly divided into Functional, Technical, People and Soft Skills. Among these, the first two are the most vital and immediate; the other two build on the first two. The balance among these changes as one rises up the ladder – but as a general rule, even in higher roles there is a strong need for domain and functional-technical skills, though their roles may demand more of the other two…

Thus, it is a balance that needs to be maintained per the role and the function.  Lack of functional skills leads to medium term to longer term damage - which is why the connection is never made, and companies pay a high price, focusing on the other two. Any number of reasons can be given – but to give one simple reason, functional skill sets, even in senior managers enable a much better degree of supervision as well as helps in trend identification in the market {Sales and Marketing} or in the  technology / operations / production / finance / HR functions.

THE COMPETENCY MATRIX:

IMHO the Competency Matrix actually flows from the external environment, the internal environment, and the Business Plan; most matrices go wrong as they are situated in the now at the entry levels, and only incorporate elements of the business plan at progressively higher levels. This creates a situation where the senior levels are working on one set of parameters, the junior levels on another - with the middle levels with no clarity of either purpose or direction.

Example - the industry is in  change; but there is a felt need for ensuring cash flows. This leads to the first 2 levels being focussed entirely on immediate cash flows, with no focus on either process or ethics; and not even an iota of focus on capturing the change as it is influencing the business. Remember - the survival of the first 2 and the middle levels, their incentives & growth are linked to immediate cash flows. This myopic focus on cash flows leads to a scenario when some fundamental shifts in the environment get inadvertently missed leading to losses or worse in the medium term. One has ensured the organization survives in the short term while simultaneously ensuring it fails in the medium term! This is a vital point that needs to be kept in mind while designing a framework.

There is nothing in it for them {Middle and Lower levels}  to focus only on the future, and this also further incentivizes  rent-seeking behaviour i.e. maximising own benefit while ignoring trends and the future. This is what leads to trouble; the employees dont lose - as they move on, get higher roles basis performance at lower levels despite not showing even one item needed for the higher role. There is no loss for the employee by and large; only people to lose - The Promoters, The Shareholders, The Creditors, and those who cannot move to new roles in new companies.

Competency Mapping is massively, grossly misunderstood to link only to the NOW, it has to have its roots in the Environment & The Business Plan. Another Example - basis their employees recommendation, the Stakeholders decide to invest into a new product line. This fails. The plan ignored the changing environment, due to which the market moved. Result: 00s to 000's of Cr of loss basis faulty assumptions. Had the competencies been linked to the Environment and the Plan, this was avoidable; by contrast, the employees, as their incentives / growth / performance/ skills had no focus on the longer term, missed – either by mistake, or deliberately – the cues that could have prevented disaster.

The point here is, I see and spot a trend in the market. Why should I report or escalate this? Why should my manager show interest in it? It isnt valued where it matters - the PMS; where only numbers count. Thus, someone who ignores trends, uses unsavoury tactics to push in material,is promoted; the guys n  gals who are smarter, spot the changes, dont do as well. They deliver; but even if they deliver, say, 85 - 95% of the targets, they get nothing except threats to quit.

The PMS, as it does not account for broader business aspects, misses these changes. Thus, the so-called underperformers were actually far sharper in spotting the changes, yet focussed on their number targets, doing reasonable well, 80-90% plus; They either get sacked, or passed over, as someone has used wrong methods to achieve 120%. End game begins here for that product line... as the errors accumulate and create a cascading impact on the business over time. The organizational direction deviates from the ground reality by ever larger degrees, leading to eventual business failure.

DESIGNING A COMPTENCY MATRIX

A functioning CM has to cater to all verticals and functions and capabilities; A good CM must create conditions that enable the identification and nurturing of such talent as is shown by the qualities of Initiative, Risk Taking, Trend Spotting, Decision Making, Balance, Team Handling etc, thus ensuring these people not only rise up – but more importantly, they feel secure, the first level of need; and subsequently see value in staying the long road in our organization.

A functioning CM does this, as a secondary achievement; with its primary goal being ensuring Organisational Development and continued performance in desired direction. This is the central paradox in  the CM design; catering leader identification or focus on enabling business performance? Both are important, though conceptually CM is about enabling overall performance. Realistically, achieving the primary objective should automatically lead to the secondary objective.

First, systemic balance between Leader-identification and business performance; Leader identification is a subset of overall CM. You cannot and should not cater to Leader Identification & development  as people do not stay long enough; this is a business reality. Secondly, this approach creates a top-heavy structure, with some key people being out of sync with the rest. Therefore, the way ahead Overall BP, and  first winning the trust of employees. This way, if you focus on 10, and even 6 stay – then it will have been worth it. Thus, reach a balance between these two

Overall Business Performance

Here, we have two areas – the NOW and the FUTURE : and some basic elements, namely, Norms, Behaviours, Organisational Culture, and Organisational Silos. All of these have a clear definable impact on the resultant direction of the organization over a longer period of time.

The NOW : The now  has to be the primary focus as your cash flows marketshares etc depend on this. Therefore, there is a need to identify what is needed to ensure performance in the now. While designing this, take into account the norms of the organization; business challenges are routine – and not taking into consideration the operating norms of the company will create a situation where your matrix is not in sync with how the company is actually operating on the ground - and neither do you have a plan to cater to this, leading to trouble! The Skill & Competency Matrix has to link into the operating norms as they are in reality, and specifically take them into consideration.

Behaviors : in the now, you have to understand what behaviors are you entrenching through the new matrix. Are you strengthening unwanted behaviours, tactics, strategies – like unethical conduct, rent-seeking, wrong direction steps, tactics / strategies not in sync with where you want to go – or are you strengthening the right behaviours etc? If your matrix does not dismantle the existing structures that incentivize the old operational methods, {for ex – excess discounts to win sales – you have to tackle this, and ensure employee who fails on this gets no credit for performance}

The FUTURE :

Central paradox – how much attention to give to the future, and how to build it into the DNA of the Orgn, as well as throughout all layers and functions? This links to what behaviors you are enabling. Need to enable initiative, trust, risk-taking, security,

Second and more important aspect is culture. The CM has to specifically cater to the organizational culture. So, first you need to understand the culture of the organization. If the culture does not support your direction you want to go – then you get into trouble. This is where the operational norms and the behaviours identified above will link into longer term strategy, enabling innovation / initiative / risk-taking etc, enhancing information flow across departments, levels as per need – which enables the orgn to break existing organizational silos and prepare it for a VUCA environment. Therefore, one last thing a good CM must have – break internal silos and create a nimble fast—moving orgn.

Let me close with one  example, based on true stories – moving the Orgn towards a mass channel strategy from an exclusive or wholesale strategy, or moving from an exception-based special approvals system to a process-based system. Unless you cater to culture, behavior & norms {which are strengthening old patterns, as the incentives promotions etc are linked to them}, it leads to a scenario wherein entrenched culture, norms and behaviours are operating on older parameters. Due to this, managerial focus shifts towards monitoring adherence to new systems far more, leaving less time other functions and creating a situation of rift and rising tensions as the older system clashes with the new, thus leading to a suboptimal results.