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IJM
28,3/4 Competency management in
support of organisational change
Maria Vakola, Klas Eric Soderquist and Gregory P. Prastacos
260 Athens University of Economics and Business, Athens, Greece

Abstract
Purpose – Competitive advantage depends largely on the ability to activate and use organisational
resources. As a result, the focus in the strategic management, organisational behaviour and human
resource management literature has turned to the internal capabilities of organisations including a
particular focus on employees’ competencies. This paper seeks to analyse and discuss a
forward-looking, dynamic and proactive approach to competency modelling explicitly aligned with
strategic business needs and oriented to long-term future success.
Design/methodology/approach – This paper is based on a longitudinal research project
sponsored by a leading Greek bank, currently undergoing fundamental corporate restructuring.
This paper describes how the competency model was developed and how it facilitated strategy
implementation and change by supporting communication, employee understanding of business
goals, and the incorporation of new behaviours, roles and competencies in operations.
Findings – A forward-looking and proactive approach to competency modelling is presented and
discussed in the context of a large-scale organisational change. The organisational core competencies
required for a business to compete successfully in the banking sector are defined and discussed. The
right mix of skills and behaviours that the individuals would need to possess in order to produce and
support those core competencies is also analysed and discussed.
Originality/value – Traditional approach to competency management, which is analogous to job
analysis, focuses on competencies of successful individuals, rather than on competencies that are
needed to support an organisation to meet its short- or long-term objectives. It is important to realise
that there is a need to shift toward a forward-looking and proactive approach to competency modelling
and present a competency methodology that supports this need.
Keywords Competences, Change management, Banking
Paper type Research paper

International Journal of Manpower
Vol. 28 No. 3/4, 2007
pp. 260-275
q Emerald Group Publishing Limited
0143-7720
DOI 10.1108/01437720710755245
Introduction
The competency approach to human resource management is based on identifying,
defining and measuring individual differences in terms of specific work-related
constructs, especially the abilities that are critical to successful job performance. The
concept of competency lies at the heart of human resource management, providing a
basis for integrating key HR activities such as selection and assessment, performance
management, training, development and reward management, thus developing a
coherent approach to the management of people in organisations (Lucia and Lepsinger,
1999).
The use of competencies in human resource management is not something new,
although the approach is still characterised by a certain confusion related to what
competencies are and how they should be measured (Shippmann et al., 2000).
Difficulties with the operation and implementation of competency management
systems are mostly related to the complex and lengthy process required for identifying
the appropriate competencies for an organisation and for building the appropriate
competency model Athey and Orth (1999). Another issue of concern is that the
competencies defined most often end up as being backward-looking rather than Competency
future-oriented with respect to strategy and organisational change (Torrington et al., management
2002). Competency models tend to focus on what managers currently do rather than
what is needed to perform effectively in the future (Antonacopoulou and Fitzgerald,
1996), something that jeopardises the potential of competencies to act as levers for
implementing change (Martone, 2003).
The need for a forward-looking and proactive approach to competency modelling, 261
i.e. to the process of identifying and describing job competencies in narrative form for
an identifiable group of jobs (Rothwell and Lindholm, 1999), is driven by the increasing
pace in strategy development and implementation (Athey and Orth, 1999). In this
context, competencies can be used for translating strategy into job-related and
individual skills and behaviours that people can understand and therefore implement
in support for change. The challenge here is not only to be able to define the
organisational core competencies required for a business to compete successfully, but
also define the right mix of skills and behaviours that the individuals would need to
possess in order to produce and support those core competencies.
We present and analyse a novel approach to competency modelling that allows us to
explicitly align competencies to goals and strategy, thus actively supporting those
changes necessary for implementing change and achieving competitive advantage.
Based on a case study from the banking sector, we illustrate the rollout of such future
oriented competency framework and discuss how it was used in order to facilitate
strategy implementation and support required change.

The need for a new perspective on competency modelling

Boyatzis (1982) suggested that a job competency is an underlying characteristic of an
employee (i.e. motive, trait, skill, aspects of one’s self-image, social role, or a body of
knowledge), which results in effective and/or superior performance in a job. More
recently, Sparrow (1997), in his review of the use of organisational competencies in
personnel selection and assessment, defined competencies as people’s behavioural
repertoires, i.e. their sets of behavioural patterns, which are related to work
performance and distinguish excellent from average performers. Further, according to
Athey and Orth (1999) a job-related competency is a set of observable performance
dimensions, including individual knowledge, skills, attitudes, and behaviours, as well
as collective team, process, and organisational capabilities that are linked to high
performance, and that provide the organisation with sustainable competitive
advantage.
Thus, we retain from the above that an individual job-related competency is the
underlying set of behavioural patterns of an employee related to effective and/or
superior work performance, acting both at an individual and collective level
(effective/superior performance both in solitary and inter-personal work), and that
provide the organisation in which they are implemented and applied with sustainable
competitive advantage.
Employees’ competencies and the integration of HR policies and practices with
business strategies play a central role for sustained competitive advantage (Hendry
and Pettigrew, 1986; Barney, 1991; Lado and Wilson, 1994; Kamoche, 1996). The
culture of the lifetime employment no longer exists. Rather, we are witnessing a shift
from “people as workforce to people as competitive force” (Prastacos et al., 2002, p. 67)
IJM that identify strategic thinking, innovation, creativity, and business sense as critical
28,3/4 requirements for succeeding in almost any kind of job, thus driving the need for
defining and developing new competencies (Ulrich, 1997). In this context, it is
particularly important to grasp the dynamic nature of individual job-related
competencies and recognising the need for connecting competencies with changing
business needs (Athey and Orth, 1999).
262 In spite of the abundant concepts, frameworks and management publishing dealing
with strategy, recent research shows that one of the most difficult managerial and
leadership issues remains the translation of business strategy into the individual
competencies needed for implementing and supporting that strategy at the operational
level in organisations (Kaplan and Norton, 2005). Most often, employees must be
provided with quite prescriptive job descriptions in order to be able to behave in a
manner aligned with strategic objectives (Sparrow, 1997). As a result of this
prescriptive approach the competencies identified in many competency management
projects are oriented toward the skills needed to continue doing what the organisation
already does. In that sense, few competency models differ from the traditional
approach of selecting and retaining employees who can perform a set of well-defined
tasks, usually focusing on technical knowledge and skills (Sappey and Sappey, 1999).
In times of frequent change, or in project-oriented environments, however, such a view
of competencies seriously limits the organisation’s potential for dynamically adapting
to an evolving strategy.
From a methodology point-of-view, the most common approach to competency
modelling involves images of what job holders do based on static job descriptions and
identification of behaviours that distinguish outstanding from adequate performers
(Cockerill et al., 1995). Then, the attributes, e.g. high performance competencies, which
distinguish outstanding from average job performance, are identified and measured.
Finally, statistical analysis of the frequency of these competencies leads to a “model” of
competencies demonstrated by outstanding performers. This approach to competency
management, which is analogous to job analysis, focuses on competencies of successful
individuals rather than on competencies that are needed to support an organisation to
meet its short- or long-term objectives (Ledford, 1995). Moreover, the laborious
procedures required in order to dig out, analyse, validate and then elaborate on job
descriptions and other descriptive data related to the tasks and activities that compose
jobs are time consuming and costly, especially in larger organisations (Athey and Orth,
1999).
In view of the above, there are a number of issues that need to be addressed in order
to advance the approach to competency management if the objective is to find support
in competencies for implementing strategy-driven change initiatives. First, there is a
need to shift toward a forward-looking and proactive approach to competency
modelling. If competency modelling focuses on the analysis of gaps between current
high and average performance, it ignores the skills required for long-term future
success. As a result, the organisation compensates and rewards behaviours that
already from the outset may be obsolete and constitute obstacles to strategy
implementation (Antonacopoulou and Fitzgerald, 1996). As business needs are
changing, business leaders are recognising the value of employees who are not only
highly skilled but, more importantly, can adapt to changes, learn quickly, commit
themselves to continuous professional and personal development and communicate
effectively (Rodriguez et al., 2002). Second, the laborious and time-consuming Competency
procedures of traditional approaches to competency modelling will be of little use for management
organisations with rapidly changing structures, processes and performance
requirements.
Finally, for companies that operate in continuously changing business
environments there is a critical need to implement new business strategies quickly
and effectively (Hitt et al., 1998; Hamel, 1994). Competencies, if generated from 263
strategy, can be used as powerful communication tools in order to translate business
strategy and changes in structure and processes into behavioural terms that people can
understand and therefore, implement. Competency management and integration of
competencies into HR functions provide HR management with a toolkit for capturing
and communicating strategic vision and objectives in clear behavioural terms that can
be easily understood and applied (Athey and Orth, 1999).

The case study company and its corporate restructuring program

The bank has a network of more than 370 branches, located mainly in South Europe as
well as in Central and Western Europe, and it employs 6,800 people. Apart from retail
and corporate banking the bank has developed, right from its founding more than 100
years ago, a range of other activities such as asset management, leasing, insurance,
factoring etc. The bank operates in a market characterised by major changes, such as
an impressive increase in mergers, acquisitions and strategic alliances, a significant
privatisation of public banks, with corresponding growth of private ones, and the entry
of new financial services organisations, characterised by flexibility, and targeting
specific market segments with customised products and services.
However, despite a brand name that is associated with high competence, reliability
and tradition, the bank’s processes and culture have been suffering from inefficiencies,
lack of customer focus, “job for life” attitude, resistance to change, inertia and
bureaucracy. Needing to better exploit its strengths and break new ground in product
innovation and customer service, the bank has launched a corporate-wide
restructuring program called “Pegasus”, aiming at major improvements at the
strategic and operational levels. The strategic objective of the restructuring program
consisted of meeting its customers’ and employees’ expectations through a new
corporate identity, improved operations, service orientation, and better HRM systems.
The program aimed primarily to change the bank’s culture and corporate identity by
adopting a more customer centric organisation. To achieve this, the bank reengineered
its customer relationship management programmes, developed a clearer profiling
towards well defined market segments, streamlined its organisational structure, and
invested in technology in order to improve processes efficiency and productivity.

How the competency model was developed

Within the context described above, the top management of the bank decided to
redefine their HR methods and systems starting from a focus on individual job-related
competencies for the bank’s retail network. The competency model should focus not
only on behaviours, knowledge and skills necessary, but should also facilitate
communication about strategy and articulate how people could expect to be selected,
trained, evaluated, and rewarded after implementation of the new strategy. Moreover,
IJM competencies related to the ability to change, learn and take initiatives should
28,3/4 explicitly be integrated.
At this point the research team was called in to accompany the competency project
using multiple sources of evidence such as annual reports, internal documentation,
interviews, archival records and personal observation. Following extensive
discussions with the bank representatives, an in-depth literature review of
264 competency management in general and of competency models in particular, and a
careful scoping of the project, a number of methodological principles for the
development of the competency model were defined.
First, the competency framework should take into consideration not only job
descriptions, but also best practices and recent trends in the industry (banking), as well
as the organisation’s own strategy (Martone, 2003), so as to guarantee a direct and
dynamic link between strategy and competencies and the relevance and “survival” of
the framework throughout and beyond the implementation of the change program.
Second, the competency framework should consist of a set of “generic” competency
areas, with each competency area to be composed of a limited number of competencies
that would be relevant, to different degrees, for every concerned job position (Lucia and
Lepsinger, 1999). The competency areas would guarantee some continuity and account
for the path-dependency in the relation between strategy, organisation and
competencies, while the detailed competencies would allow for more rapid
adaptation and flexibility in the model.
Third, for every position in the branch network, the set of required competencies
would then develop into a competency profile (Boyatzis, 1982), indicating the detailed
job-related competency characteristics, specific for that position in the network.
Fourth, in formulating the individual, job-related competency profile, functional as
well as behavioural characteristics of the job should be taken into account, referring to
both knowledge- and skill-based competencies, as well as behavioural ones that should
characterise the job-holder (Woodall and Winstanley, 1998).
As a result, the above actions led to the development of the competency framework
which unfolded through three distinctive but parallel processes of identifying and
elaborating competencies based on:
(1) Banking core capabilities.
(2) Banking industry trends.
(3) The bank’s own competitive strategy.

In terms of banking core capabilities Leichfuss and Mattern (1996) present a

comprehensive study identifying five capabilities that differentiate the best banks
from average or low performers in the sector: a strong corporate leadership; a highly
professional marketing approach; a differentiated and efficient distribution system;
lean, efficient, automated processes; and, finally, a credit policy that covers risk and
ensures adequate decision criteria and rating capability. As a starting point for the
process of defining competency areas for the model, the research team held two focus
groups consisting of human resources experts and banking experts in order to generate
individual job-related competencies from these five core competencies of leading
banks.
In terms of banking industry trends, we reviewed relevant annual reports, research
papers, industry and consulting reports[1], as well as selected press and journal articles
in order to identify important current and future trends in the international and local Competency
banking sector. Supplementary to this documentary analysis, interviews were management
conducted with sector experts and bank executives, and new focus groups were held
with the same participants as in the first phase.
Finally, in order to develop more specific competencies for the particular case study
bank, we conducted an in-depth analysis of the bank’s strategy, particularly in view of
the corporate restructuring program. This analysis relied on extensive interviews with 265
the president and CEO, the vice presidents of the bank, the directors of retail and
corporate operations, and other top managers, as well as an analysis of the bank’s
internal documents.
Having generated an important number of competencies from these three
independent but parallel phases of analysis, the research team synthesised and
grouped these competencies as illustrated in Figure 1. There was a certain overlap that
had to be eliminated, and before formulating the final propositional competency
framework a final workshop was held with the bank’s HRM team.
Using the methodology of Tett et al. (2000), this prepositional framework was
further examined and refined by a panel of experts on human resource management
and banking. We asked the panel to review, specify if necessary further synthesise the
initially selected competencies, and finally validate the formulated competencies from
an implementation perspective. Leaning heavily on the input from the panel we
elaborated a competency model with five major distinctive competency areas (Table I).
The explicit requirement that the competency framework should be used transversally
for all jobholders in the bank’s branches was also integrated in the final elaboration of
the framework.
Each competency area contained between three and four competencies adding up to
a total of 17 competencies in the five areas that, in turn, were specified in a total of 65

Figure 1.
The process of grouping
synthesising the
competencies generated
IJM
Competency area Definition
28,3/4
Interpersonal excellence General definition: develops/maintains networks
both within the organisation and with clients;
focuses on providing excellent customer service;
demonstrates communication co-operation abilities
266 Some examples: identifies/makes use of events for
developing external networks; maintains regular
two-way communication; maintains a problem
solving attitude
Project operations management General definition: demonstrates competencies of
planning, organising, co-ordinating monitoring of
bank resources, processes operations
Some examples: pays attention to details; accurately
estimates resources to achieve plans; avoids negative
impact of own actions on others; accurately
prioritises key tasks; regularly reviews progress of
tasks
Business sense decision making General definition: ability/willingness to make
decisions, based on profound knowledge of business
environment, strategic needs, bank’s processes,
products services
Some examples: stays up to date on products service
information; has extensive knowledge of product or
service features internally and externally; identifies
new opportunities for business
Sales management General definition: demonstrates competencies in
organising promoting sales based on market
awareness, customer relationship management
Some examples: relates benefits product features to
the customer; sales objections, is skilled in closing
sales; exceeds customer’s expectations; has a history
of repeat business
People management General definition: demonstrates competencies of
planning, guiding developing human resources
Some examples: uses knowledge of individual’s
strengths, interests, development needs to delegate
Table I. tasks; provides accurate regular feedback; identifies
Final competency areas where support is needed, provides it

profiles, defining what is understood by each competency, both from a responsibility

and a behavioural perspective.
After the elaboration of the full competency model it was of utmost importance to
validate it with data coming from jobholders. Thus, the research team conducted 60
interviews with branch employees representing all jobs covered by the competency
model. The analysis of these interviews confirmed the above full model (five areas, 17
competencies and 65 profiles), and, most importantly, provided important data in order
to fine-tune the behavioural repertoires for each competency. This data allowed the
match of each task with functional and behavioural competencies that ensure effective
performance in each job at all levels. Two examples are illustrated in Table II.
 Competency
Competency area: interpersonal excellence Competency area: sales management
Competency 1: Interpersonal Competency 3: sales negotiating management
communication competencies
Competency profile for branch manager Competency profile for account officer

Functional Development of public relations; Use of knowledge experience in order

Responsibility of bank’s promotion in the to attract new customers, maintain 267
local market existing ones
Develops collaboration with colleagues, Use all the available customer
subordinates, ensures timely accurate information, fully understands
information knowledge sharing customers’ profile needs
Uses appropriate communication channels Answers all the questions to the best of
his/her knowledge, facilitates an
informed decision making
Takes care of all the issues involved in
the selling process
Behavioural Creates a climate of trust; can cope with the Creates a climate of trust; shows Table II.
unexpected; deals with conflicts; appreciates patience, effectively deals with difficult Examples of competency
diversity customers; continuously updates areas, competencies
his/her knowledge in order to negotiate competency profiles for
effectively two jobs

At this stage, the final validated model was successively introduced in order to define,
communicate and implement new jobs in the pilot branches where the change
programme was successively rolled out. This allowed us to focus our study on how the
competency system could support strategy implementation and change.

The use of competencies for translating strategy into action and for
supporting organisational change
The competency management project was time-paced with the rollout of the
corporate-wide restructuring project. This gave us a unique opportunity to observe and
analyse, through participant observation and interviews with executives and branch
employees, how the competency framework actively could translate the strategy
behind the transformation into actions at the level of individual job holders, and how it
supported change. We identified six particular areas where this happened, as detailed
below.

Communication of strategic changes

The reality of the transformation program was that strategic initiatives were deployed
in a top-down manner. In this process of implementing the new strategy, the central HR
department used competencies in order to communicate strategic changes and their
implications for operations. More specifically, in their effort of translating the emphasis
on customer service, the development of new distribution channels, and the new
values, behaviours and roles attached to these changes, the HR managers expressed
these desired objectives in the language of both functional and behavioural
competency profiles. This process was facilitated through workshops including all
levels of employees where specific methods such as role-play and team-building
IJM exercises were employed in order to explain how competencies will help the
28,3/4 organisation meet its goals.

Improvement of employees’ understanding of how to reach goals

One of the major causes of failure of large-scale organisational change efforts is poor
communication (Kotter, 1996). As a result, employees often have difficulties in making
268 sense of the necessity for change, in comprehending how their own operational reality
will be affected, and, above all, in understanding their own critical role as contributors
to the desired change. Competencies proved to be a powerful tool that enabled HR
managers and change agents to communicate change objectives and the management
expectations regarding new ways of working, leading to a significantly improved
employee understanding of the desirable actions and behaviours for reaching the goals
set, compared to previous experiences with other major changes in the bank. A large
majority of the interviewed branch employees pointed out that competencies clarify
where the bank wants to go and how it should operate in order to successfully reach
these strategic destinations.
An account officer with long experience from the branch network said:
Competencies will help people understand the bank’s vision. Many times in the past we
heard about changes in what the bank will do in the future but until now, it was never
very clear how such changes would affect us or what we would need to do in order to
follow these plans.
Through the competencies framework, with well defined and expressed competencies
anchored in strategy, jobholders felt they gained a better understanding of what was
expected, what was rewarded, what was desirable and what behaviours and abilities
would be needed in the short-, mid- and more long-run.

Improvement of feedback from branches to headquarters

Competencies contributed to improving the feedback from the branches to the
headquarters of the bank. A series of assessment centres building on the competency
framework were run with the objective of preparing employees for new duties related
to the corporate transformation program. Through these assessment centres and
through the interviews conducted by the research team in parallel, senior management
became aware of gaps in competencies that could transform into serious obstacles in
the process of changing the organisation to implement the new strategy. Hence, the
matching of the competency framework to the reality of existing competency profiles
directly assessed triggered a need for immediate action in order to ensure training and
development aligned with the change objectives and the new strategic orientation.
Results from assessment centres showed that in general branch employees needed
significant development of behavioural competencies related to interpersonal
collaboration and adaptability, in other words defined competencies such as
communication, flexibility, dealing with the unexpected, driving initiatives, and
handling of conflicts. A senior branch officer expressed the following opinion:
This bank employs people with profound knowledge of the banking system and very capable
of using the bank’s processes in an effective way. The problem is that some of us don’t know
how to communicate with the customer and are not very good at finding out their real needs.
The competencies related to interpersonal excellence are essential for the Competency
customer-focused orientation that the bank aims at developing. Through the management
implementation of the competency model, management got feedback early enough in
the change process, allowing for corrective action towards the reinforcement and
development of these competencies.

Integration of new behaviours in operations 269

At the level of day-to-day activities, the success of any transformation program
depends on the extent to which new behaviours and practices are incorporated into
employees’ daily routines, i.e. integrated in operational routines. One means for
achieving this is training of employees combined with employee assessment focused
on the achievement of those new behaviours and practices.
After the identification of gaps in competencies discussed above, the HR department
launched training sessions focusing not only on technical skills, as they used to do in
the past, but also on competencies such as communication, teamwork and sales
management and procedures. The identified competencies gap guided the development
of new training seminars devoted to change management, team building and
communication. These training sessions supported the change process not only in
terms of acquisition of new knowledge and skills directly applicable in daily activities,
but also in terms of allowing for the exchange of opinions and ideas to take place. “This
has opened up a new dimension in my job”, said a branch sales officer. “I have been
able to share both new ideas and some worries with colleagues doing the same job in
other branches” she continued. The competency framework was used in a number of
training-related activities including training needs analysis, training content update,
selection and preparation of trainers, definition of pedagogical approaches, training
evaluation and link of training results with other HR processes, in particular
performance appraisal and evaluations.
Also, it was decided to incorporate competencies into all HRM processes, starting
from training processes and then linking assessment, hiring and ultimately career
development to the competency system. The initial experiences from
competency-based training and assessment turned out positively. A branch
employee in the pilot group expressed her experience in the following way:
To me, the competency framework provides a fixed point that is essential in order to develop
new routines and practices required in our new roles.
The notion of fixed points was perceived as key to successful incorporation of
competencies into daily routines. Many interviewees said that they found in the
competency model a reference framework that could serve as a focal point and
rulebook for initiatives and decision making in the frontline of customer interaction
and day-to-day decision making.
Although this re-engineering phase where all the tools and processes were
re-designed was considered as a success, it will take time to root out the inefficiencies
that were identified in the HR processes before training processes stop suffering from
inefficiencies. As the personnel director noted:
There is a long way to go before fully integrating competencies into all the HRM processes.
We have just started to realise how powerful competencies can be, especially in times of
change.
IJM Enhancement of employee participation in change implementation
28,3/4 The revamping of the training schemes, driven by the competency management
system being adopted, led to an enhancement of the participation and involvement of
branch officers in the change implementation. The central HR department identified
and formed a pool of high performing and high potential branch managers to receive
particular briefings and then take on the role of coaches in the training of their
270 colleagues. One bank manager commented:
Having participated in training sessions about competency-based performance management
systems, I feel more confident to explain what is expected from now on to my people. I feel
also more confident to convince people to follow this change.
The outcome of this “outsourcing” of training was that branch employees achieved a
better and quicker understanding of why and how their roles needed to change
compared to earlier change programs. In this way, the competency management
project helped HR management to come to terms with dissatisfaction and complaints
among newly recruited personnel, personnel that had higher formal qualifications
compared to the already existing staff (e.g. in terms of postgraduate studies in business
or economics and more specific competencies in sales management and customer care).
However, inefficiencies in the existing HRM systems, such as unclear roles and
responsibilities, unclear goal setting, poor performance management and lack of career
planning had led to a turnover rate as high as 30 per cent among these employees. By
involving them in the change planning process from day one, a completely different
climate conductive to commitment could be created: the bank believed in their potential
of acting as change agents raising not only productivity and employee qualifications,
but also their active participation in the reshaping of the bank’s branch office profile.
Potentially and in the longer term, competency-based performance management and
career planning can further contribute to retain the most qualified employees.

Institutionalising changes
The competencies that were identified and specified in the competency model defined
new standards for performance of all employees in the branches. Therefore, the model
urgently needed to be integrated in the performance management system so as to
ensure that the competencies would not remain just an ideal but be truly assessed in
practice. Through an explicit goal setting procedure, a clarification of expectations, and
a transparent evaluation procedure of employee competencies, a strong and
comparatively rapid institutionalisation of the desired changes was achieved in the
bank. The new performance management system was perceived as a significant
improvement compared to the appraisal frameworks and procedures previously in
place. One interviewee commented:
The previous system was considered as a typical procedure without any real impact on us.
Therefore, we didn’t pay much attention to “numbers” coming in every year. In any case, the
average performance score was 8.5 out of 10 which means that we didn’t really have to try
harder since we were all considered outstanding.
By explicitly identifying competency gaps, the new system provides direct input for
defining individualised training initiatives and the system also enables HR and line
managers to provide feedback to the employees on how successful they are in meeting
the new requirements. A branch office director stated:
 Initial results from performance appraisals showed poor customer orientation and poor Competency
people management skills. It was about time to realise that being a good banker is not
enough. We need to change also in those softer issues in order to stay in business. management
The adoption of a competency-based performance management system, although it
was still in its early stages of development and implementation at the time of our
study, has built the foundation of a more positive climate and expectations for the
future, and, as an HR officer commented, has provided a “strong motor” in order to 271
keep up the momentum in the transition phase.

A road-map for implementation and support in strategy implementation

and change
Competency management has been around for a number of years. Experiences from
extensive use of it in a variety of business environments show that it can provide
substantial benefits in terms of aligning HR policies with strategy and rejuvenating
HRM processes such as selection, training, assessment and development. However,
competency management needs to be used widely: a tendency of focusing on what the
organisation already does might lead companies to get stuck with outdated processes
and visions of what is strategically important. An inclination towards looking at
successful individuals when defining competencies, without an in-depth analysis of
which competencies are really valuable for implementing strategy, might lead to poor
focus and an over-emphasis on generic behaviours compared to job-related skills.
Finally, a tendency of developing too detailed competency frameworks with a long
lead-time between competency definition and actual implementation might result in
inflexible competency frameworks that end-up in closets instead of being used actively
to integrate strategy, change and operations.
The competency framework developed within this study was designed to cope with
those shortcomings and it proved particularly successful in our case study through the
following: First, it anchored the competencies in the new strategy of the bank as well as
in core competencies and industry trends, thus integrating a dynamic and
forward-looking approach in the competency modelling. Second, it helped validate
the emerging model with management and job-holders, as well as with HR and
Banking experts, thus ensuring focus on job-related skills integrating strategy and
operations. Third, it enabled areas and competencies to remain generic while at the
same time allowing for significant variation to take place at the level of the competency
profiles. This substantially improved the flexibility of the model.
Besides providing a roadmap and design imperatives for developing a competency
framework, our study also identified a number of impacts on strategy implementation
and change given the competency approach. As we were able to study how the
stepwise implementation of the competency model in the bank’s branch network
unfolded, we could observe how it played a central role for supporting strategy
implementation and reinforcing the roll-out of the change program of which the
competency project itself was part. These potentially positive impacts require a set of
managerial levers in order to be optimally exploited. In Table III we indicate a number
of such levers observed in our study, providing a roadmap for tapping into this
potential.
The key to use the levers indicated successfully is the development of a
management agenda that focuses on the integration between strategic management,
IJM
Potential positive impacts for
28,3/4 supporting strategic change Levers/actions for tapping into this potential

Communication of strategic Translate specific defined objectives into competencies,

changes
272
Improvement of employees’
understanding of how to reach
goals
Improvement of feedback from
branches to headquarters
Incorporation of new behaviours
Enhancement of employee
participation in change
implementation
Table III.
Potential positive impacts Institutionalising changes
from competency
management on the
implementation of
strategic change
functional behavioural competency profiles
Use specific efforts, such as role-play, in order to
illustrate how competencies will make the organisation
operate in order to meet its goals
Accompany the competency framework with clear
guidelines methodologies for linking competencies to
goals, for clarifying what is desirable, for conducting
competency-based evaluation
Follow up frequently on employees’ understanding of
what is expected
Clarify what behaviours/abilities will be needed in the
short-, mid-more long-term future
Use the competency framework as a basis for
conducting assessment centres interviews already at
the definition stage of change efforts
Search for gaps in competencies that could transform
into serious obstacles to change processes
Take actions to initiate a bridging of these gaps before
rolling out the change effort
Develop training programs to follow up on the
reinforcement of competencies identified as missing in
the gap analysis. As change unfolds, training needs
will change
Facilitate the exchange of opinions ideas through
training. This will support the change process not only
in terms of acquisition of new knowledge skills directly
applicable in operations, but also in terms of changing
behaviours roles
Give to a pool of high performing high potential
managers the role of coaches in the development of the
competencies of their colleagues
Tap into this resource of change agents in order to
reinforce the communication about the need for change
about the true meaning of competencies required in
new roles
The shift to a competency-based performance
management system allows HR management to start
institutionalising change through better goal setting,
clarification of expectations, reward of behaviours that
support new strategic objectives

change management and human resource management. Optimised competency-based

management consists of moving in a continuous loop of strategy formulation –
competency model adaptation – change implementation – application of competencies
for optimised business results – strategy reformulation, and so on. A competency
model should never be seen as developed once and forever. If HR managers fail to
adapt continuously and reengineer periodically their organisation’s competency
framework, it will at best become outdated and fall into oblivion, and at worst drag the Competency
organisation into stagnation and loss of competitive momentum. management
Despite its contributions discussed above, this study has several limitations related
to the timing of the data collection and the project itself. Although, the change project
has just finished, some key performance results have not yet been possible to measure.
We were involved in the change project from its planning phase and as a result,
observations and interviews took place during all project phases. However, the overall 273
evaluation of the project is still going on and more findings are expected to come out
from this process. Further study of the tangible effects of the new strategy and
organisation is carried out on a continuous basis and will allow us to close the loop
between strategy formulation, competency modelling, application of competencies and
business results.
A natural suite to our research would be to try to model and then quantify, through
survey-based research, the exploratory links between job-related competencies,
strategy implementation and change that have been developed here. A striking gap
exists in the literature on organisational capabilities concerning the contribution of
human resource management and job performance to core capabilities that would be
important to bridge in order to pursue the quest for optimised competency
management in practice.

Note
1. EIU and Andersen Consulting, Deloitte Research, Ernst & Young, Group of Ten, Meridien
Research.

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Further reading
Deloitte Research (2001), Re-inventing Financial Services Business Models, Deloitte Research,
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Ernst & Young (2000), Small Business Banking, Ernst & Young, London.
Group of Ten (2001), “Report on consolidation in the financial sector”, available at: www.imf.org.

About the authors

Maria Vakola is an organisational psychologist and she is currently working as an assistant
professor at the Athens University of Economics and Business. She received her PhD in
organisational behaviour/change management from the University of Salford, UK. Her research
interests concentrates on change management, individual and organisational readiness to Competency
change. Maria Vakola is the corresponding author and can be contacted at: mvakola@aueb.gr
Klas Eric Söderquist is an Assistant Professor and head of the Management Science management
Laboratory’s Innovation and Knowledge Management Unit at the Department of Management
Science and Technology at Athens University of Economics and Business (AUEB). He holds a
DBA from Brunel University, UK. His research concentrates on R&D, innovation management,
and knowledge management.
Gregory P. Prastacos has more than 20 years of research and consulting experience in 275
strategy and operations, decision-making, and business transformation. Prior to joining the
Athens University of Economics and Business he was on the faculty of the Wharton School. He
has been a senior partner and Chairman of Deloitte & Touche Conslulting (Greece), and has
received the INFORMS first prize on the practice of Management Science (Edelman Award). He
has published seven books and numerous articles in journals.

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