Designing and using a set of reliable and valid leadership competencies is critical for organizations seeking to go from point A to point B.  Leadership competencies are essentially an ideal profile specifying the types of skills, knowledges, and behavioral traits you want your leaders to possess, and therefore, exhibit.  Leadership competencies can used as part of a broader talent management system and succession planning, for leadership identification and development purposes, and/or as part of a performance management system – e.g., via a 360 degree feedback.

Despite the prohibitive cost associated with its design and use – anywhere from $75,000 to $400,000, depending on the size and scope of the project – many organizations fall short of the reliability and validity requirements set forth by such governing bodies as APA (American Psychological Association) and SIOP (Society for Industrial-Organizational Psychologists).  As a psychometrician and a consultant, I have found the following five steps to be common in leadership competency design.

1. Starting from the top – Many believe (HR/OD professionals and consultants alike) that there are specific leadership competencies that is fixed – meaning that if you find leaders possessing certain qualities (critical thinking skills, strategic orientation, market awareness etc.), you can plop him/her into an organization and he/she will bring out the magic.  Given the large number (in the hundreds) and variations in competencies purported to be important, it is highly unlikely that one set of competencies apply to all organizations. As with Olympic athletes, while one generally needs to be “fit,” this does not guarantee a gold medal in every event. In other words, like athletes, different organization need different sets of competencies in order to optimize their competitive edge.  This means starting from the top.  A solid set of competency, therefore, is modeled after what an organization needs; not something offered “off-the-shelf.”  This step ensures that you identify precisely those skills you feel is “necessary” for your organization to be successful.
2. Validating with existing leaders – Once you have a set of competencies deemed important, it is critical to run them by existing leaders to obtain their thoughts on how important each competency (and related questions) is.  This step is important for two reasons:  First, it legitimizes the competencies in the eyes of those who are being assessed – i.e., the leaders themselves; thus, getting them to buy-in on the idea.  Second, it satisfies the “face validity” requirement set forth in the major governing bodies.  In other words, if I am design a test to select competent mechanics, I need to run the test by real mechanics in order to be sure that the test is measuring what it is intending to measure.
3. Validating against actual performance – Once the first two steps are complete, the next step is to assess existing leaders on these competencies and compare these scores against their performance evaluations.  The most objective was to do this is through a 360 degree assessment – i.e., obtaining judgments from subordinates, peers, and supervisors. In this way, an objective scores on each of the competency is obtained without the inflated scores often seen with self-rated assessments.  After some reliability checks and data cleaning, the aggregated scores are compared against the same leaders’ past performance scores.  If the set of competencies deemed important for an organization are, in fact, what the organization values, then the correlation between those same competencies and performance ratings should be positive.  This is called “concurrent validation.”
4. Validation against future performance – In addition to validating against current performance levels, the same competencies should be compared against performance some point in the future – e.g., 9 to 12 months.  This technique, known as “predictive validation,” further ensures that the set of competencies are, in fact, deemed important and that leaders are being assessed – at least partially – on those competencies.  **Note: Although unlikely, it is possible that performance management system is entirely different, and event, opposed to the set of competencies being assessed.  In such a case, the performance management needs to be refined to be aligned with the competencies.
5. Setting competency cut-off scores or categories – Finally, once data have been obtained on the competencies from each leader, there is a need classify individuals according to their scores on each of the competencies. While it may be tempting to choose an arbitrary category, this may lead to classifying most, if not all, leaders as needing improvement.  Thus, it is better to allow the data to choose the size of the difference that is meaningful to the population being tested.  This approach, known as the “data-driven” method, is done by using the “standard deviation” (or average difference) of the competency scores.  This approach ensures that the different score categories are based on the population at hand (each organization will differ on what this deviation score is) and is a known “legally defensible” strategy.

In sum, there are a number of common mistakes (mostly by omission) that occurs in the development of leadership competencies.  While the above steps may seem overly rigorous, there are ways to incorporate them without making the process overly daunting.  The result is a set of competencies that (a) will be viewed by incumbents as legitimate, (b) has proof that it is measuring what it is supposed to be measuring, and (c) ultimately allow you to place your complete confidence in the intervention stemming from its use.

Stephen B. Jeong, is currently the Managing Director of Waypoint People Solutions - www.waypointps.com, a human capital consulting firm that focuses on high precision employee diagnostic surveys using cutting-edge measurement technology and methodologies. He holds Ph.D. in Industrial-Organizational psychology from the Ohio State University and has been advising private, public, and government organizations since 2000.  He can be reached at stephen.jeong@waypointps.com.

Frame materials used to be pretty much steel. Until Cannondale came around (actually it was Vitus, but most of you don’t know that brand) and made aluminum bikes commonplace, steel was the frame material of choice. Aluminum made bikes lighter and thus marginally faster. Then came titanium and carbon fiber, each with their own ride characteristics and weight considerations. Think about how an SUV is tuned to drive as opposed to a sedan versus a sports car. Frame design and material does the same thing for a bike. As bikes get lighter and more comfortable, and as they are designed to allow more power output to be transmitted efficiently from the rider to the road, the bike actually allows you to go faster than they did 20 years ago.

So here comes part 2 of this post where I try to relate some strange and vague cycling concept to Human Resources. (it is an HR blog after all…) I’ll go back to the concept of employee portals and direct access. Basically it’s about providing the end user with an agility that allows them to do what they need to do faster and more efficiently. You can take your portal, and depending on the shape you give it, it can be a simple transactional site that provides relatively little value to the employee and to offloading work from your HR staff, or you can have an engine that allows not only your employees and your HR staff to perform their function faster.

(Just in case anyone cares, I have a custom Carl Strong titanium frame, double butted. Fully loaded with all off the shelf components, it comes in at just over 15 lbs.)

As a child, whenever I would screw up, my mother always said, “Why can’t you be more like Billy?”  Billy was a straight-A student who excelled in every sport with which he was involved – an all-around “wunderkind” who could do no wrong.  Needless to say, I didn’t like being compared to Billy all that much.

Those of you who have had experience with employee surveys – satisfaction or engagement – may be familiar with the concept of “benchmarking.”  Benchmarking involves comparing a company’s survey scores – on a range of topics such as communication, supervision, engagement, and efficiency – with scores from a group of companies on comparable survey questions.  Most commonly utilized benchmarks are scores from companies that fall into the same or similar industry sector, or scores from companies deemed “high performers.”  This idea of gauging our company’s performance in reference to other companies can be tremendously appealing – it’s simple, intuitive, and sexy.

Notwithstanding the above, I find it hard to justify – from a scientific point of view – the current level of enthusiasm for the use of these benchmarks.  There is no doubt, when carefully selected, normative benchmarks can provide useful insights into an organization’s standing.  Before pulling out your pen and checkbook, however, I’d like to point out a few things for your consideration.

1. Differences in company strategy – While most companies have in common the goal of increasing revenue, there are key strategic differences among companies that work to diminish the actual (as opposed to perceived) value that benchmarks bring to interpretation of survey data.  Depending on their strategic goal, one company might emphasize “innovation,” while another, “efficiency.”  One might focus on “training,” while another, on “R&D.”  In other words, companies vary on the extent to which they place more or less value on one or more aspects of their operations or culture.  This is true even those within the same industry. Take the “microchip” industry; some are now focused on producing cheaper solar panels while others are continuing to pour money into improving wafer machines.  These varying strategies can and do have an impact on survey scores.   So, what am I saying?  The point here is that an overall survey score of 89% (satisfied employees) on “innovation” may be fabulous for one company, but unacceptable for another.  So, drawing conclusions from the difference observed between one company’s score on “innovation” or “customer service” against a group of other companies (even those in the same industry) downplays the meaningful differences that exist among these companies.
2. Timing of data collection (historical effects) – Employee survey is a collection of attitudes.  Attitudes, in turn, are susceptible to constant fluctuations in one’s emotional state.  Imagine that your company just announced the second round of layoffs and reported that revenues were less than expected for the past quarter.  We all know that the conditions – both internal and external – can impact our responses to survey questions.  This is what statisticians call “error.”  This means that, any temporary condition – like layoffs – that can either inflate or deflate survey scores can contribute to increasing the size of this error.  Imagine now, the timing of the surveys from different companies that make up a given benchmark.  It is highly unlikely that the data were collected within the same month or even the same year.  We’ve gone through a fairly significant roller-coaster ride in the past 12 months.  Can you really draw firm conclusions from your Q2 of 2009 surveys scores when compared to data collected between Q2 of 2007 through Q2 of 2009?
3. Importance of past performance (historical trending) – Benjamin Franklin emphasized the importance of gauging current performance using past data.  For example, in order to stop cursing, he carried around a notepad to keep track of the number of times he cursed each day.  After several weeks, he would draw a simple chart to check his progress.  Similarly, one of the most important diagnostic tool available to organizations is historical survey data. Historical trend data provide information that, I would argue, is substantially more important than comparison to external benchmarks.  This is primarily because one company’s culture – like one’s personality – tends to remain fairly stable over time.  This means that, any significant shift in upward or downward direction (as measured by standard or average deviation) tells a lot about what is happening to different aspects of that company’s culture.  Moreover, because you are likely to be aware of the changes that your company has undergone in the past 12 months, you are able to more reliably factor this into your interpretation of the results.  From this perspective, historical shifts deserve much more attention than any discrepancy found between your survey results and some external benchmark data.

To summarize, there’s quite a bit of “hype” tied to the use of benchmarking data; more so than can be justified.  While they can provide useful information when selected and used appropriately, differences in company strategy, cultures, and historical effects all work to make external benchmark data, in general, less useful than they appear on the surface.  In worst cases, benchmarks can lead to grossly misleading conclusions and what I would call here the “Why can’t you be more like Billy” syndrome.  Well-functioning companies are like Olympic athletes, you don’t need to be good at everything to win the gold, just your event.  By the way, Billy is now a history teacher and although I watch the History Channel from now and then, I would never think for a moment about trading professions.

Stephen B. Jeong, is currently the Managing Director of Waypoint People Solutions - www.waypointps.com, a human capital consulting firm that focuses on high precision employee diagnostic surveys using cutting-edge measurement technology and methodologies. He holds Ph.D. in Industrial-Organizational psychology from the Ohio State University and has been advising private, public, and government organizations since 2000.  He can be reached at stephen.jeong@waypointps.com.

This shift is causing the modern organization to un-bundle and then re-bundle their activities and infrastructure into more agile, nimble structures that can change and scale up or down as business needs dictate. So what does all this means for the modern HR organization and for HR technology? HR has long been an organization that has worked across boundaries, and functions such as benefits and payroll have long been outsourced to third-parties. Yet, the un-bundling of HCM will have a much farther reaching impact. Beyond benefits, payroll, and call centers, we are seeing the un-bundling of HR services from RPO (recruitment process outsourcing) to off-boarding and the un-bundling of HR technology from licensed enterprise resource planning (ERP) software to subscription-based software-as-a-service (SaaS). ¹

I have nothing against either the point solution or the ERP system.  Either way there are tradeoffs to be had.  What an organization decides to implement is really quite up to it’s own needs.  However, there are a few problems I constantly see as organizations go towards a path of more point solutions:

• Forgetting that there is a lot more integration in an ERP system than meets the eye.  Simple data interfaces are often not enough, and while every vendor touts tight integration, rarely is it true.  You can get enough integration, but at some point, you just need to realize the tradeoffs.  Let’s take job and competencies for example.  Job definition and benchmarking is a core part of the core HCM system, and it honestly should live in the HCM and not somewhere else.  To do good job design and benchmarking, you should have job attributes associated with it, some of these come in the form of competencies.  However, if you put competency libraries in the core HCM, you now have a (perhaps) very large set of data that needs to get integrated with every talent application that you own.
• Forgetting the foundation is also a very common problem.  Not only do some organizations deal with having talent systems that are independent of their HCM, but some have multiple talent systems.  Trying to cross the lines on those same foundational competency data models across recruiting, performance, development, learning and succession platforms is a major headache if you decided to source each component independently.
• Forgetting the process is my last major headache.  One must really ask the question if you can have a single end to end process that managers will love if you have so many systems.  After all, usability is probably more important than functionality, so forcing managers to have different user experiences for performance, compensation, etc is a major risk from the change and adoption standpoint.

I’m not suggesting that ERP is the way to go.  Indeed there are major benefits to going the point solution road, but we often forget that it’s not as easy as an interface.  There are some pretty serious integration, process, service delivery and change issues to be tackled here.  Forget them, and risk failure.  Even the best laid out plans for system implementations can’t help you if you ignore them.

1. Beaman, Karen.  May 27, 2009.  “Unbundling HCM.”  Retrieved from www.jeitosa.com on September 15, 2009. [back]

So, what is a portal?

First and foremost, most portals already have transactional capabilities that we called self service.  These are the basics that we’ve now had for a decade, where employees and managers alike can make changes that range from the simple address transaction to the more complex employee transfer.

Second, the Analytics should be made available to managers (and sometimes even employees).  The portal should be able to present core analytics and KPI’s to a manager based on her level within the organization, business unit, and any other attribute that makes the selection of which KPI’s are viewed meaningful.  But then again, many of us have had analytics in our portals for a few years anyway.

Third, we need to have an integrated knowledgebase.  Here we start to get into more sophisticated service delivery concepts as opposed to just delivering a chunk of data.  By making a searchable knowledgebase available, we’ve now integrated how HR interacts with our customers from an informational perspective and moved away from the simple transaction processing.  The more integrated your search is, the more successful you will be in driving transactions out of the HR staff.  Usability is also king here, as the old 2 clicks to anywhere rule (the one that never ever worked to my knowledge) also applies here – 2 clicks to any information an employee might need.

Lastly, social software has been emerging for a few years now, and while it might be part of people’s portals, HR and organizations in general are still trying to figure out how to apply it.  Once you’ve integrated knowledgebase, you then need to integrate all types of additional data such as wiki’s and blogs to that same search framework.  Tacking on how people connect is a complex leap from allowing people access to data in a knowledgebase or blog, but it’s the same concept – you’re helping people develop ways to get to data and information that is important to them.

At the end of the day, I think we all realize that the corporate HR portal is developing rapidly from the simple data transactions that we’ve lived with for years, and evolving into knowledge transactions.  The first step of HR knowledgebase can quickly become professional knowledgebase and knowledge sharing, and then to connecting.  This is what I think is next for portal anyway, what do you guys think?

Translating not only data elements but any definition you are going to use is simply a starting point in translating data across global geographies, countries and business units. Before embarking on the implementation of systems, it’s truly useful to get some things straight. To do this, I’ll just give a couple of the more obvious examples.

– EEO (race) Codes: We love to report on EEO codes in the U.S. So much of our reporting is defined by these EEO categorizations, but we also know that EEO is exclusively a U.S. concept. As you travel globally, you quickly realize that race and ethnicity is not at all meaningful. If you go to Japan, they really could care less, since 99% of the population is actually Japanese, but they might care about ethnic variations in Japan. You might go to the Middle East where race and ethnicity does matter, but they also may want to know for discrimination purposes if you are Sunni or Shiite. In the end, most implementations I’ve done decide that trying to define and categorize race across the globe doesn’t actually make sense. Instead, they go after the thinks that they can collect like age and gender.

– Exempt versus non-exempt: Again, this is a U.S. centric concept that is defined by FLSA. If you went around the globe and talked about exempt employees, your audience would be bewildered. While it’s not a direct and perfect translation, most other organizations in the world can indeed relate to overtime eligible or not overtime eligible. Simply changing the data labels allows you to move forward with a global terminology that makes sense to everyone.

One of the key failure points of global implementations (there are many however) is the lack of common definitions across the globe. As soon as your global population feels that this is just another corporate initiative that U.S. stakeholders will benefit from, your international population will disengage. There are all sorts of prepatory activities you need to tackle prior to implementing, and data definitions is probably one of the first you should tackle.

We talk about competencies, but when we really get down to the interesting topics in talent management like how our talent interacts with each other to collaborate and innovate, we no longer care about those competencies. We start talking about the experiences they have and the knowledge they can bring to the table. When we staff cross-functional projects, we don’t look at the competencies, we look at valuable experiences.

We talk about competencies, but when we talk about executive development and succession planning, we talk about critical experiences. We look at our possible successor and see if they were deployed in more than two countries as an expat. We look and see if they made the round through finance. Again, we look at the experiences they had, and not the competencies.

We talk about the vision of competencies and how we’ll eventually staff to a specific desired amount of certain competencies in future models of workforce planning, but honestly, we’re already ignoring them before we even get close to that future state.

I know there are a lot of really good talent people out there and perhaps I’m not one of them. Someone tell me if this competency thing is over yet, because you know what, if it’s not over, maybe it should be.

I still don’t get it.

Three and five years ago, we all saw the demos of the snazzy new talent management tools that showed us these great manager and executive dashboards with these great KPI’s and red lights and green lights. They had things that looked like odometers and sliders and any type of gauge you can imagine to display the health of an organization through a specific set of metrics. Best of all, the vendors were all going to deliver these dashboards out of the box. They would have the data, and would deliver their industry best practices right to your doorstep.

The problem is that we still all seem to think that manager self service, cool portals and cool dashboards are the answers. We think that the KPI’s that everyone else uses is going to be meaningful in our environments. The problem is that those same industry KPI’s don’t actively take into account the nature of our business or the goals that each business unit and manager has. In order to be really impactful, a manager needs to know how a KPI is correlated with their individual goals.

Not all of the standard KPI’s out there are actually meaningful to your organization. If a manager simply does not see the correlation of employee turnover rate to their business goals, they won’t really care. Perhaps it’s putting turnover next to the cost of vacancy, and putting a productivity cost to turnover. Perhaps it’s going even further and correlating their turnover/productivity numbers against the rest of the division or organization to see how they stack up and to put right in front of them what the positive or negative impacts of changing the turnover number would be.

As usual, I don’t claim to have the answers, but I do know that going with the standard “stuff” is not helpful without the manager’s business context. The answer really might be that if you can’t devote an appropriate amount of time figuring this out, perhaps you should not do it at all. I know everyone wants a cool dashboard that their execs can look at. Hey, I even realize that most of you sold your execs on talent management software based on the idea that they would have cool stuff to look at. But in 12 months when they realize that it was only cool for the first month, and they don’t even remember their password to log in, then where are you?

I recently talked to an organization who is moving their organization from one end of the city to the opposite far end of the same area. The commuting time between the cities is about 40 minutes, and some employees would benefit and have reduced commute, others would certainly pick up longer train or car rides. I asked about turnover rates and received an answer I was not quite expecting. People who normally would have left the organization were deciding to stay and make the long commutes. For a wholesale organizational relocation, their turnover was in the low single digits. Well, I suppose this is to be expected in this economy, if you leave a job now, there is no telling when you’re going to find the next one.

This got me to thinking, not about corporate relocations, but about the state of turnover and talent in the next couple of years. Sure enough, nobody is leaving their jobs willingly. But whatever the situation is, whether it’s a long commute, someone angry over a missed promotion, or a bad manager situation, there is a large amount of talent that is unhappy and not moving. Let’s say that the average turnover rate in the U.S. is 15% per year and that it sits at 5% today (totally made up numbers – I don’t feel like doing the research). That means a full 10% of the workforce is fairly disgruntled and is in your employee population right this minute. That is a pretty big number, and it’s a lot of unhappiness.

The number is probably a lot bigger than 10%. While this is a global economic problem and most companies are proportionally impacted, negative economies tend to decrease employee engagement. The real problem is that this year you have 10% of the population that is not leaving. That does not exempt you from the additional 10% that is going to get pissed off next year and want to leave. While you might be basking in a disengaged workforce with low turnover this year, next year’s situation might change drastically.

Employees may not be leaving now, but the top talent is already scouting strong companies, identifying which are weak, and determining possible landing spots. You might be the recipient of many applicants when the economy clears, but you might be on the negative end as well. What’s going to happen next year when the economy does turn and the floodgates of people ready to leave open up? Are you ready for the mass exodus or influx? Do you even know where your company is positioned against your competition?

Don’t fool yourself – next year is going to be different for talent and talent acquisition and I don’t know if any of us have really talked about how to prepare for it.