Competence and

Competency
What are they and how do they affect performance?

The terms competence and competency are diffuse terms used liberally in
organizations and in academic literature. Although the concept is well-
developed, it seems that there is little agreement on what is meant by the
terms and even less agreement on how they affect performce.

Dr. John Kenworthy

6/3/2008
COMPETENCE AND COMPETENCY

The concept of competence remains one of the most diffuse terms in the organisational and occupational literature (Nordhaug
and Gronhaug, 1994). Exactly what does an author mean when using any of the terms of competence?

The concept of individual competence is widely used in human resource management (Boyatzis, 1982, Schroder, 1989,
Burgoyne, 1993). This refers to a set of skills that an individual must possess in order to be capable of satisfactorily performing a
specified job. Although the concept is well developed, there is continuing debate about its precise meaning.

Others take a job-based competence view that according to Robotham and Jubb (1996) can be applied to any type of business
where the competence-based system is based on identifying a list of key activities (McAuley, 1994) and behaviours identified
through observing managers in the course of doing their job.

A useful view is to look at competence to mean a skill and the standard of performance, whilst competency refers to behaviour
by which it is achieved (Rowe, 1995). That is, competence describes what people do and competency describes how people do
it.

Rowe (1995, p16) further distinguishes the attributes an individual exhibits as “morally based” behaviours – these are important
drivers of behaviours but especially difficult to measure – and “intellectually based” behaviours as capabilities or competencies.
Capabilities are distinguished as these refer to development behaviours – i.e. are graded to note development areas to improve
behaviours in how people undertake particular tasks.

Young (2002) develops on a similar theme and builds on Sarawano’s (1993) model, linking competency and competence to
performance and identifies competency as a personal characteristic (motives, traits, image/role and knowledge) and how the
individual behaves (skill). Competence is what a manager is required to do – the job activities (functions, tasks). These in turn
lead to performance of the individual [manager].

Jacobs (1989) considers a distinction between hard and soft competences. Soft competences refer to such items as creativity
and sensitivity, and comprise more of the personal qualities that lie behind behaviour. These items are viewed as being
conceptually different from hard competences, such as the ability to be well organised. Jacob’s distinction fits neatly into
Young’s model with hard competences referring to identifiable behaviours, and soft competences as the personal characteristics
of the individual.

Further distinctions relate to the usefulness of measuring competenc[i]es. Cockerill et al. (1995) define threshold and high-
performance competences. Threshold competences are units of behaviour which are used by job holders, but which are not
considered to be associated with superior performance. They can be thought of as defining the minimum requirements of a job.
High performance competences, in contrast, are behaviours that are associated with individuals who perform their jobs at a
superior level.

In the UK, the Constable and McCormick Report (1987) suggested that the skill base within UK organisations could no longer
keep pace with the then developing business climate. In response, the Management Charter Initiative sought to create a
standard model where competence is recognised in the form of job-specific outcomes. Thus, competence is judged on
performance of an individual in a specific job role. The competences required in each job role are defined through means of a
functional analysis – a top-down process resulting in four levels of description:

Key purpose

Key role

Units of competence

Elements of competence

Elements are broken down into performance criteria, which describe the characteristics of competent performance, and range
statements, which specify the range of situations or contexts in which the competence should be displayed.

The MCI model now includes personal competence, missing in the original, addressing some of the criticisms levelled at the MCI
standards. Though the model tends to ignore personal behaviours which may underpin some performance characteristics,
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particularly in the area of management, where recent work has indicated the importance of behavioural characteristics such as
self-confidence, sensitivity, proactivity and stamina.

The US approach to management competence, on the other hand, has focused heavily on behaviours. Boyatzis (1982) identifies
a number of behaviours useful for specifying behavioural competence. Schroder (1989) also offers insights into the personal
competencies which contribute to effective professional performance.

Personal competencies and their identifying behaviours form the backbone of many company-specific competency frameworks
and are used extensively in assessment centres for selection purposes. This is because behavioural (or personal) competence
may be a better predictor of capability – i.e. the potential to perform in future posts – than functional competence – which
attests to competence in current post. The main weakness of the personal competence approach, according to Cheetham and
Chivers (1996), is that it doesn’t define or assure effective performance within the job role in terms of the outcomes achieved.

In his seminal work “The Reflective Practitioner”, Schon (1983) attempts to define the nature of professional practice. He
challenges the orthodoxy of technical rationality – the belief that professionals solve problems by simply applying specialist or
scientific knowledge. Instead, Schon offers a new epistemology of professional practice of ‘knowing-in-action’ – a form of
acquired tacit knowledge – and ‘reflection’ – the ability to learn through and within practice. Schon argues that reflection (both
reflection in action and reflection about action) is vital to the process professionals go through in reframing and resolving day-to-
day problems that are not answered by the simple application of scientific or technical principles.

Schon (1983) does not offer a comprehensive model of professional competence, rather he argues that the primary competence
of any professional is the ability to reflect – this being key to acquiring all other competencies in the cycle of continuous
improvement.

There are criticisms of competency-based approaches to management and these tend to argue that managerial tasks are very
special in nature, making it impossible to capture and define the required competences or competencies (Wille, 1989). Other
writers argue that management skills and competences are too complex and varied to define (Hirsh, 1989, Canning, 1990) and it
is an exercise in futility to try and capture them in a mechanistic, reductionist way (Collin, 1989). Burgoyne (1988) suggests that
the competence-based approach places too much emphasis on the individual and neglects the importance of organisational
development in making management development effective. It has also been argued that generic lists of managerial
competences cannot be applied across the diversity of organisations (Burgoyne, 1989b, Canning, 1990).

LINKING COMPETENCY MODELS TO ORGANISATION OUTCOMES

Some writers have identified competencies that are considered to be generic and overarching across all occupations. Reynolds
and Snell (1988) identify ‘meta-qualities’ – creativity, mental agility and balanced learning skill – that they believe reinforces
other qualities. Hall (1986) uses the term ‘meta-skills’ – as skills in acquiring other skills. Linstead (1991) and Nordhaug and
Gronhaug (1994) use the term ‘meta-competencies’ to describe similar characteristics. The concept of meta-competence falls
short of providing a holistic, workable model, but it does suggest that there are certain key competencies that overarch a whole
range of others.

There is however, some doubt about the practicability of breaking down the entity of management into its constituent
behaviours (Burgoyne, 1989a). This suggests that the practice of management is almost an activity that should be considered
only from a holistic viewpoint.

Baker et al. (1997) link the various types of competence by first establishing a hierarchy of congruence as a backbone to the
model. In broad terms, they describe the congruence of an entity to be the degree of match or fit between some external driver
to the entity and the response of that entity to the driver. This method enables them to take into consideration the idea that
management, as an entity, and the individuals who perform the function do so within a particular environment. Measurement
of congruence or goodness of fit, has been attempted in studies of operations (Cleveland et al., 1989, Vickery, 1991). Baker et
al.’s hierarchy is shown in Figure below, with four levels of congruence: 1) Organisation level, 2) Core business process level, 3)
Sub-process within core process level, and 4) Individuals level.

At the organisation level, there is congruence when a firm adopts a strategy that is consistent with the competitive priorities
derived from the firm’s business environment. The strategy, in turn, determines the operational priorities of the firm, following
Platts and Gregory (1990), Baker et al. (1997) using their own terminology, consider these operational priorities to drive the core
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processes of the firm. These, in turn, can be broken down into a number of sub-processes – and congruence is needed between
the sub-processes and the core processes. At the individual level, the skills and knowledge should also match the priorities
driven by the sub-processes.

This hierarchical model follows a traditional approach that structure follows strategy (Vickery, 1991, Cleveland et al., 1989, Kim
and Arnold, 1992). Others view that competences are a part of the structure of the firm and should influence strategy making,
Bhattacharaya and Gibbons (1996) point out that Prahalad and Hamal (1990) and Stalk et al. (1992) take this approach.

The hierarchical model has been tested analysing case studies of seventeen manufacturing plants that won Best Factory Awards
during the period 1993-95 in the UK (Cranfield) and established benchmarks. Baker et al. (1997) found some direct cause-effect
links between enabling competences at the sub-process level and competitive performance (at the core process level). However,
they also found many ‘best practices’ such as employee empowerment and team working which were harder to link to specific
competitive competences.

This model provides an insightful way to break down the complex issue of how individual performance influences the
competitive competences of the firm. Baker et al.’s research is limited within the manufacturing sector where core processes are
often easier to identify and define with a clear delineation of individual effort, technology and product. It is also established on
the basis that structure follows strategy – whereas, most firms will already have structure and will be adapting their strategies
continuously as the external environment changes.

Figure 1. Hierarchical model of competence (Baker et al., 1997)

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Cheetham and Chivers (1996) describe a model of competence that draws together the apparently disparate views of
competence - the ‘outcomes’ approach and the ‘reflective practitioner’ (Schon, 1983, Schon, 1987) approach.

Their focus was to determine how professionals maintain and develop their professionalism. In drawing together their model,
they consider the key influences of different approaches and writers. The core components of the model are:
Knowledge/cognitive competence, Functional competence, Personal or behavioural competence and Values/ethical
competence with overarching meta-competencies include communication, self-development, creativity, analysis and problem-
solving. Reflection in and about action (Schon, 1983) surround the model, thereby bringing the outcomes and reflective
practitioner approaches together in one model shown in Figure below.

Cheetham and Chivers model of professional competence is useful in bringing the concept of individual competence to bear on
the competence of the organisation in a non-manufacturing context, but it still falls short of providing a useful model to link an
individuals behaviour with the business results of an organisation across industries – a generic model if you will.

Figure 2. Model of professional competence (Cheetham and Chivers, 1996)

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Young (2002) creates a generic model neatly, by developing his individual model further to the organisational perspective
adopting the concept of core competence, as articulated by Prahalad and Hamal (1990) and further developed by Stalk et al.
(1992) and Tampoe (1994), suggesting that the collection of individual competences within the organisation create the
organisational core competence.

This model provides a way to understand how developing competency (personal characteristics and behaviours) at the
individual level enables an individual to demonstrate competence (the functions and tasks of the job) which in turn cascades
through a hierarchy of the organisation (core competence and other activities supporting the organisation) to deliver business
results.

INDIVIDUAL JOB

Personal Job
Characteristics Behaviour Activities
•Motive •Skill •Functions
•Trait
•Tasks
•Image/role
•Knowledge

COMPETENCY COMPETENCE PERFORMANCE

Organisation
Activities
Organisation Level •Functions
•Tasks

CORE PERFORMANCE
COMPETENCE

Figure3. Individual variables of competency, competence and performance and organisation core competence (adapted from Young, 2002)

Please contact the author for full bibliography

John Kenworthy 2008