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Competencies in organizations can be broadly classified as employee-level and organizational-level. Since organizational-level competencies are embedded in employee-level competencies, the identification of the latter is important for organizations interested in using competencies to achieve competitive advantage. In this paper, we present a model of employee competencies as a means to organizational competitiveness and discuss various frameworks for identifying employee competencies. In addition to the traditional frameworks, which are more suitable for organizations functioning in a static environment, we offer two alternative frameworks that can be useful in identifying competencies in a dynamic organizational environment. Once appropriate employee-level competencies are identified, a competency-based human resource system can be implemented to ensure that employees actually do possess the identified competencies.

The importance of competencies to organizations cannot be overstated; in fact, they can be the key to competitive advantage. In order for an organization to succeed in its mission, organizational competencies must match strategic intent. Without the needed competencies, even well-conceptualized and well-stated strategies cannot be successfully implemented and realized. It is competencies that allow the concept of strategic intent to be operationalized. The concept of competency can be viewed differently within an organization. From a strategic management perspective, Hitt, Ireland, and Hoskisson (2005) define competencies as a combination of resources and capabilities. The combination of resources and capabilities in an organization can be classified as core competencies when they are valuable, rare, difficult to imitate, and difficult to substitute. As such, core competencies can be a source of strategic competitiveness. For example, the design of products appears to be a core competency for Apple and a key source of its strategic competitiveness. From a strategic perspective, competencies can be functions, processes, and routines in an organization. For instance, the employee- and family-oriented culture and emphasis on research and development at SAS Institute would appear to form core competencies for the organization ( Watson, 2002 and Wiscombe, 2002). Competencies have also developed into a central concept in the area of human resource management (HRM). From the HRM perspective, competencies are viewed as capabilities of people. For example, a job may require the performance of a particular task which, to do well, requires specific employee knowledge, skills, or abilities. The profession of health administration, for instance, has been examined in terms of competencies needed for effective practitioner performance. In such a study, Shewchuk, O'Connor, and Fine (2005) found that health administrators require competencies in operations management, patient focus, political and ethical concerns, finance, and physician relationships. Delving more deeply, competencies in the operations management category include communication skills, team building, and listening skills, and those in the patient focus category include community knowledge, regulatory knowledge, and political savvy. The concept of competency is central to the domains of both strategy and HRM, although the two frameworks are different lenses through which competencies are understood and developed. The strategic perspective focuses on competencies at an organizational level and deals with them in a more abstract fashion as a unique combination of resources and capabilities. HRM, on the other hand, views competencies as personal characteristics related to effective job performance. We do not contend that one perspective has a better or more correct view of competencies; rather, we believe there is advantage in aligning the concept of competencies across the two perspectives. The focus of this paper is on employee-level competencies, and we present a model of employee competencies as a means for organizational effectiveness. Since organizational-level competencies are embedded in employee-level competencies, identification of appropriate employee-level competencies is an important aspect of a competency-based system. Thus, the major purpose of this paper is to present alternative frameworks for identifying and developing employee competencies. In addition to the traditional frameworks for identifying competencies, we present two alternative frameworks that should prove especially useful for organizations that are facing dynamic, changing, and volatile markets. Before discussing the employee competencies model and frameworks for identifying competencies, let us review the concept of competencies.

The previous discussion provides a broad description and contrast of the primary approaches to the development of competencies. While these conceptual descriptions and distinctions should be clear, application of these frameworks needs to be considered. A basic but critical question addresses which framework will result in the best employee competencies. Other issues pertain to the use of competencies as the basis for criteria. For example, when operationalized as criteria, what might be the utility of each competency framework at the level of individual workers and at the team level? Many organizations currently employ team-based structures, and it is important to consider how proposed criteria could be utilized at both the person and team levels. We next turn to a consideration of these issues. As depicted in our overall model, the impact of an employee competency framework is contingent upon the organizational context. The job-based approach to developing competencies requires a stable and relatively unchanging context. Rapid change in technology or job requirements can result in employee competencies that become obsolete and worthless to the organization, yet the competencies and their associated criteria can remain past the point of usefulness. The future-oriented framework offers utility when specific direction and goals can be specified. When a future strategic direction can be stated at an operational level, the employee competencies needed to make the plan possible can be specified. The person-based framework is most suitable in an organizational context of dynamic change. Due to market forces, technology changes, and other variables, an organization may find that the context of its work does not offer a stable basis for identifying employee competencies. The process of its work, however, may remain quite stable. Thus, the person competencies needed to work effectively in that environment may be a stable competency framework. Finally, the value-based approach offers utility when an organization wants to establish or emphasize core values. Translating these values into employee competencies and criteria operationalizes the values and makes them real throughout the organization. It might be noted that a value-based approach, in particular, may not lead to competitive advantage. Organizations emphasizing core values may not, in the short-run, be primarily concerned with profit and competitive advantage (Collins & Porras, 1994). Driving values throughout the organization, however, may be seen as the means to achieving an effective organization. Thus, the overall model includes organizational effectiveness as a possible outcome associated with the employee competency frameworks. Another issue to consider has to do with the use of employee competencies as criteria. Table 2 identifies some of the major uses of each of the four types of competency criteria at the level of individual workers and at the level of work teams. At the individual level, job-based competencies would be useful for the assessment of the levels of relevant skills. The criteria could be used in the assessment and selection of job candidates, and could be used for assessing current workforce members for purposes such as training, development, placement, and so on. At a team level, the job-based competencies could be used to determine the skills needed for a balanced and fully functioning team.Future-based competencies could be used at the individual level as signals of the direction of the organization. Workers could clearly see what would be expected of them in the future. Further, they could assess the extent to which their skills and interests fit with the overall direction and specific competencies. At the team level, the future-based competencies would be useful for identifying team projects necessary for achieving the future strategic vision. For example, teams may need to focus on competency areas and derive plans for how the needed skills should be developed in the organization. The strategic competencies may also make clear to established teams areas in which their skills need to be developed. Person-based competencies would offer very broad requirements that could drive recruitment and selection efforts. These generic requirements might specify broad cognitive abilities and/or general personality characteristics. At the team level, person-based competencies, depending on their breadth, might be useful for developing roles within the team structure. For example, one worker may best fit the role of technical expert, another the role of team facilitator, and another the role of concept person. Competencies at the role level may prove most useful for the establishment or development of effective teams. Value-based competencies would be useful at the person level for identifying how work should be carried out. In addition to establishing process requirements, the value-based competencies would provide a means for workers and prospective workers to assess their fit with the organization. This is consistent with the increasingly popular person–organization fit model of selection. Person–organization fit assesses the congruence between individual and organizational values. At a team level, the value-based competencies would provide useful guidelines for how the team should carry out its work. The competencies could be used as explicit criteria for assessing the effectiveness of the team work process. The alternative approaches to the development of competency models offer new avenues and direction for practice. For managers, the person- and value-based approaches offer important tools for the development of criteria. Further, these alternative competency approaches may capture critically important facets that the other approaches may miss. As a practical matter, the alternative development approaches should not be viewed as mutually exclusive tools. For example, an organization may combine various approaches and use all of them across different parts of its operation, or the job-based approach might be supplemented with the value-based approach. Further, to the extent that jobs in an organization include both fixed and variable tasks, both job-based and person-based approaches may prove useful. There are many possibilities, and an organization that takes the time and effort to find the right framework for identifying and developing employee competencies will find the process worth the while.