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Talent Management Perspectives

Published January 2007

Correlating Competencies: To Each Industry Its Own

 

  Tegan Jones

When managers do employee evaluations, they measure worker performance based on a specific set of skills related to a given job role. For each company, these standards are different, meaning that individuals doing the same job across organizations are often assessed using different, company-specific standards.

To address this variation, the talent research firm Bersin & Associates recently released "The Role of Competencies in Driving Financial Performance," a study on the relationship among performance reviews, competencies and business success.

Using amalgamated data provided by SuccessFactors, a global provider of talent management solutions, Bersin & Associates found a clear correlation between the competencies used in performance reviews and business outcomes such as growth and profitability in four different industries.

Erik Berggren, SuccessFactors director of customer results, said identifying key competencies by industry is necessary to truly develop best practices.

"I've been working with strategic and management consulting for a decade, and we have often talked about best practice but, seriously, we haven't really known what best practice is," he said. "We haven't had a real aggregated data subset we have been able to correlate to financial performance."

By using anonymous data from 40 companies that use SuccessFactors' on-demand software, researchers analyzed and compared the financial performance of businesses by industry.

Once the green companies with high growth and profitability were distinguished from the red companies with low growth and profitability, researchers could distinguish the competencies related to high performance in each industry.

Looking at the green companies, it's clear that there are a few key competencies that are crucial to success, Berggren said, and these skills seem to align with the challenges these industries most often face.

In the financial services industry, initiative and communication are critical to creating and managing the many mergers and acquisitions that take place in the industry, while in industrial manufacturing, tactical competencies such as quality and job knowledge are needed to ensure the production of superior products.

For retail professionals, dependability, personal organization and quality help mitigate the industry's high turnover rate and in the high-tech field, customer focus and innovation help get successful new products onto the market.

While the study consistently found the competencies that drive growth and profitability are different in each industry, some larger trends also were identified. For example, the research showed high-performing organizations focus more on organizational capabilities, while their lower-performing counterparts value competencies that build individual skills.

"Generally speaking, companies that perform better focus more on strategic competencies versus more job- and role-specific competencies," Berggren said.

Rob Bernshteyn, SuccessFactors vice president of product marketing, said these findings are important for managers who want to increase the effectiveness of their employee assessments.

While managers always intend to focus on the competencies that will do the most to improve performance, they don't choose the best ones, he said.

"What's exceptionally exciting about that is that we can go out to leaders, to managers, to employees, to executives across any vertical and tell them, 'You can be prescriptive to your managers in terms of what they should be evaluating their subordinates on,'" he said.