Companies have been using competency models for decades to define the skills, knowledge and abilities that are necessary to be successful in a certain job or organisation. Basically, these models are then used by managers to rate their employees on a set of competencies and to use these scores as a basis for compensation & benefits. But, how can you possibly rate employees on only a couple of skills?
The main problems with competency models are threefold:
- They are a simplification of the truth
- They do not reflect how good someone is
- Humans are unreliable rater
They are a simplification of the truth
Competency models try to resume in only a couple of competencies whether or not someone is successful. We find this absurd. How can someone decide on an employee’s success based on a generic, incomplete list of competencies? That would be like claiming that Shakespeare is successful just because he speaks English fluently and is able to grow a moustache?
Let us demonstrate how absurd these models are. Try it in your own company and see for yourself.
- Ask ten people to rate ten employees based on their competencies. Now calculate the average score of each employee. You will see that everyone gave different scores and based on the average scores, there are several employees who can be considered as “the best”.
- Now ask the same ten people who they perceive as the best employee. We can guarantee you that they will all name the same person, but that individual will not have received the highest average score on the basis of his/her competencies.
I believe you understand what I am trying to point out here: competency models simplify the truth and give a wrong image of who is or is not “successful” in a company.
They do not reflect how good someone is
Another issue with competency models comes to the surface when you realise that they are unable to reflect through their ratings how an employee excels in a certain competency. They only represent whether or not someone is “good” at a particular competency. This isn’t in line with reality, where certain individual strengths can make up for other weaknesses.
For example, Harry works as a sales representative and is good at active listening, time management and communication, but what really makes him an expert in his field is his one-of-a-kind closing technique. This unique competency of his, closing deals, can only receive a maximum score of 5/5, which doesn’t give enough attention to how remarkable this competency is in comparison to his other ones. His manager might find that he’s also good at active listening, time management and communication and also deserves a 5/5 for these competencies. So, these models don’t allow his greatest strength to be represented and to outweigh his possible weaknesses. It’s a shame, don’t you think?
Humans are unreliable raters
It is possible that you believe in the goodwill of your manager and his/her objectivity when it comes to the scores that he/she gives on the employees’ competenties, but the truth is that you shouldn’t. In fact, you shouldn’t believe in any ratings at all. You heard us right. We are saying that all humans are unreliable raters. If you don’t believe us, believe science. Because this matter is called “the idiosyncratic rater effect”. Study after study has proven that humans are not objective enough to rate other people. In fact, when managers rate their employees, nearly 60% of that rating is about the managers themselves and not about the employees who they are rating. This is because managers will rate a competency based on how they define that specific competency, how they rank themselves in that competency and how tough of a rater they are. Crazy right?
What’s even more crazy, is relying your employees’ compensation and selecting your company’s high performers or high potentials on scientifically proven incorrect ratings.
Should all competency models be thrown in the trash straight away?
It depends. Are the roles in your company quite predictable and are employees easily replaced? Then you can still use competency models. However, nowadays the majority of companies are very volatile and in these companies different skills and competencies are required from the employees. Here, competency models are not reliable as a basis for promotions, compensation…
Even in the most volatile companies, competency models can come in handy for inspirational coaching, hiring or job matching. However, they should only be used as a guidance, not more than that.
For example, during a coaching session competency models can bring structure into the conversation and turn managers into more effective coaches. The different competencies can be talked about and objectives can be set on the basis of these models.
What should HR focus on?
We believe that the time HR is currently spending on competency models can better be spent on training managers, selecting a good tool, personality testing, OKRs, creating scalable models… We strongly believe that these activities will bring more added value than competency models currently do.