What Is The Competency Framework And Why It Matters In Business

A competency framework broadly describes performance excellence within an organization. These frameworks usually include specific competencies that are applied to a variety of occupational roles.

Understanding the competency framework

Although many no doubt classify competency frameworks as corporate jargon, they are nonetheless a crucial aspect of any successful business. Indeed, an organization that neglects to create a competency framework is neglecting to define performance standards. With no standards to judge against, performance metrics are highly subjective.

Competency frameworks are developed for each distinct role within an organization. They must use clear and identifiable language that define excellence and how it might be achieved. Indeed, excellence becomes the performance standard that each employee is measured against.

How to develop a competency framework

Developing a competency framework consist of four steps:

1. Determine the purpose of the framework

When determining purpose, it’s important to realize that context is everything. A framework which determines which employees are eligible for a raise will be vastly different from a framework whose primary goal is to reduce product shrinkage. 

2. Research

Once the purpose has been determined, relevant information must be collated. This can be done by:

  • Observing the relevant role within the organization and making competency-based notes. That is, analyzing the behaviors for each role that constitutes competency.
  • Liaising with employees who are the most familiar with the competency being measured. For example, a key part of reducing product shrinkage may be checking best before dates three times a day. In any case, lines of communication must be opened to glean important details. This can be done in the form of surveys or questionnaires, if not through face-to-face interviews.

3. Construct the framework

With the list of behaviors and actions, the framework should be constructed by grouping similar behaviors and actions together. An employee involved in reducing shrinkage may have grouped behaviors such as:

  • Thrice-daily checks of perishable goods according to best before date.
  • Logging products that will come out of date in the coming days on to a hand-held device.
  • Ensuring that the device is charged and a report printed for tomorrow’s best before check routine.

4. Implement the framework

Once implemented, employees should be informed of the reasons for creating the competency framework and what the business hopes to get out of it. Such frameworks need total buy-in to be effective, and full disclosure is one way to get it. Employees should also be trained in certain areas if they do not already possess the relevant skills.

The benefits of competency frameworks to businesses

Recruitment guidance

When a business is hiring, competency frameworks guide the suitability of interviewees for a specific role. Once employed, employees are naturally more motivated, satisfied, and remain with the company longer.

Succession planning

Many businesses are facing awkward transition phases as their predominantly baby-boomer workforce retires from management and is replaced with a younger generation. Competency frameworks can help smooth this transition by ensuring that the next generation has the requisite abilities and behaviors to be leaders of the future.

Improves productivity

Competency frameworks reduce cost overruns that result from poor employee performance and high employee turnover. It may also reduce the costs of inefficient leadership where a lack of communication on expectations creates confusion and low morale.

Competency framework example

Let’s conclude this article by having a reasonably detailed look at the United Nations Educational, Scientific and Cultural Organization (UNESCO) competency framework.

This framework – like those developed by most other companies – ensures staff competencies are aligned with organizational goals and clearly articulates acceptable standards of behavior.

UNESCO defines three components that lead to successful performance.

1 – Core values

Core values are principles that define and unite the way in which employees work and behave. These values include:

  • Commitment to the organization – employees are proud to serve UNESCO’s mission and the broader United Nations system. They are also required to act in the best interests of the organization and create awareness of UNESCO’s work across different audiences.
  • Integrity – decisions and actions must be guided by fairness, transparency, and honesty. This means following the Standards of Conduct set forth by the International Civil Service. Integrity is also defined as not letting personal, social, economic, or political views impact decision-making.
  • Respect for diversity – all individuals should be treated with respect regardless of their differences. Employees should be open-minded, challenge prejudices, promote diversity, and show empathy toward others.
  • Professionalism – primarily, professionalism involves an active and sustained investment in UNESCO’s mission. Professional staff demonstrate mastery of subject matter, anticipate key issues, adapt quickly, and work collaboratively.

2 – Core competencies

Core competencies are skills, abilities, and knowledge that result in essential behaviors:

  • Accountability – all UNESCO employees must be dependable across all facets of their role and comply with company rules and regulations. They must also be able to take personal responsibility for their words and actions and honor commitments. 
  • Communication – effective communication means sharing ideas with others, active listening, asking questions when unsure, and considering the unique perspectives of others. Employees must also be able to hold a conversation and use a variety of different channels to disseminate their message.
  • Teamwork – this entails working with colleagues in a positive, collaborative environment via consensus building, respect for others, and the solicitation of input from all members of the team.
  • Innovation – employees demonstrate initiative and can think creatively to improve processes, procedures, activities, and methods. This requires thinking “outside the box” and the courage to take calculated risks.
  • Results focus – results focus means that an individual assumes accountability for the delivery of results and can understand how they contribute to organizational success. Effective time and resource management are critical, with soft skills such as adaptability and perseverance also desirable.
  • Planning and organizing – this is a core competency that deals with establishing a course of action to achieve a stated goal. Employees must allocate time and resources effectively and develop contingencies for unexpected obstacles. Monitoring progress using appropriate tools and considering the big picture is also key.
  • Knowledge sharing and continuous improvement – where possible, employees should keep abreast of new developments in their field and promote a culture where learning, improvement, and knowledge are celebrated.

3 – Managerial competencies

As the name suggests, managerial competencies are skills and abilities that are required of senior staff. For UNESCO, this denotes staff at P-4 level and above.

Competencies include:

  • Driving and managing change – leaders display an open and positive attitude toward change and can mobilize subordinates to implement it.
  • Strategic thinking – this competency involves ensuring that strategy is aligned with UNESCO’s vision and values.
  • Making quality decisions – in other words, decisions must be made based on the best available evidence with all risks considered. Senior employees must also be accountable for their decisions.
  • Building partnerships – managers should also be well-versed in establishing long-term relationships that help UNESCO achieve its goals. They should actively promote inter-sectoral alliances and understand that the best relationships are mutually beneficial.
  • Leading and empowering others – like any superior, UNESCO leaders need to inspire and motivate others toward a common vision. They must know the unique strengths and weaknesses of each subordinate and be visible and available for those who have queries or concerns.
  • Managing performance – crucial to leading and empowering others is a positive work environment where employees are given the best chance to succeed. Poor performance should be dealt with quickly, fairly, and constructively, while those who perform well should be championed, celebrated, and encouraged to advance their careers.

Key takeaways

  • A competency framework broadly defines how an organization might strive for excellence – either within the organization itself or in the sector as a whole.
  • Developing a competency framework is a four-step process that is iterative and specific to individual employee roles.
  • Competency frameworks have several benefits including increased staff retention, morale, and productivity. They may also assist in succession planning and hiring.

Organizational Structure Case Studies

Airbnb Organizational Structure

Airbnb follows a holacracy model, or a sort of flat organizational structure, where teams are organized for projects, to move quickly and iterate fast, thus keeping a lean and flexible approach. Airbnb also moved to a hybrid model where employees can work from anywhere and meet on a quarterly basis to plan ahead, and connect to each other.

eBay Organizational Structure

eBay was until recently a multi-divisional (M-form) organization with semi-autonomous units grouped according to the services they provided. Today, eBay has a single division called Marketplace, which includes eBay and its international iterations.

IBM Organizational Structure

IBM has an organizational structure characterized by product-based divisions, enabling its strategy to develop innovative and competitive products in multiple markets. IBM is also characterized by function-based segments that support product development and innovation for each product-based division, which include Global Markets, Integrated Supply Chain, Research, Development, and Intellectual Property.

Sony Organizational Structure

Sony has a matrix organizational structure primarily based on function-based groups and product/business divisions. The structure also incorporates geographical divisions. In 2021, Sony announced the overhauling of its organizational structure, changing its name from Sony Corporation to Sony Group Corporation to better identify itself as the headquarters of the Sony group of companies skewing the company toward product divisions.

Facebook Organizational Structure

Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organization structure is organized around the leadership of Mark Zuckerberg, and the key executives around him. On the other hand, the function-based teams based on the main corporate functions (like HR, product management, investor relations, and so on).

Google Organizational Structure

Google (Alphabet) has a cross-functional (team-based) organizational structure known as a matrix structure with some degree of flatness. Over the years, as the company scaled and it became a tech giant, its organizational structure is morphing more into a centralized organization.

Tesla Organizational Structure

Tesla is characterized by a functional organizational structure with aspects of a hierarchical structure. Tesla does employ functional centers that cover all business activities, including finance, sales, marketing, technology, engineering, design, and the offices of the CEO and chairperson. Tesla’s headquarters in Austin, Texas, decide the strategic direction of the company, with international operations given little autonomy.

McDonald’s Organizational Structure

McDonald’s has a divisional organizational structure where each division – based on geographical location – is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, internationally operated markets, and international developmental licensed markets. And on the other hand, the hierarchical leadership structure is organized around regional and functional divisions.

Walmart Organizational Structure

Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.

Microsoft Organizational Structure

Microsoft has a product-type divisional organizational structure based on functions and engineering groups. As the company scaled over time it also became more hierarchical, however still keeping its hybrid approach between functions, engineering groups, and management.

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