COMPETENCY-BASED STRATEGIC HR MANAGEMENT

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LECTURE 10
COMPETENCY-BASED STRATEGIC HR
MANAGEMENT Mike Nxele Cairo, 25th 28th June 2007
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OUTLINE

• CORE-COMPETENCY- BASED CORPORATE STRATEGY
  FORMULATION
• TYPES OF COMPETENCIES
• COMPETENCIES AND THEIR APPLICATION
• FROM COMPETENCIES TO HR STRATEGIES AND PROGRAMS

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INTERNAL ANALYSIS AND CORE-COMPETENCIES

• The Core Competencies Model of Hamel and
  Prahalad(1990)
• This is an inside-out Corporate Strategy model
  that starts the strategy process by thinking
  about the core strengths of an organisation
• Whereas the outside-in approach (eg. Porters
  Five Forces) places the market, the competition
  and the customer at the starting point of the
  strategy, the core competence model does the
  opposite

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Core Competence

• DOING WHAT YOU ARE BLOODY GOOD AT
• Prof John De Figiuredo (MIT)

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CORE COMPETENCE

• The set of organisational skills that potentially
  makes the organisation effective in certain
  activities

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FOUR TESTS OF CORE COMPETENCE

• A bundle of skills and Technologies which are
  critical for organisational success.
• A managerial asset which sets the organisation
  apart from competitors.
• Makes a disproportionate contribution to what
  customers perceive as added value.
• Provides competitive advantage

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• The essential thing is that it must be something
  that is peculiar to your organisation and which
  others cannot copy.

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Organizational Capabilities

• The set of competencies needed to effectively
  compete in Knowledge Economy
• (Dave Ulrich)
• These sets of competencies (capabilities)need to
  be identified and sourced.
• But more importantly, success lies with
  developing and applying them and matching them to
  opportunities.
• Our HR Competencies are developed from they are
  Source of your Business Strategy.

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Source of Organisational Capabilities

• Human Capital-skills,experience,know-how and
  capabilities of individuals in the organisation.
• Structural Capital-Organisational
  architecture,business processes,culture,decision
  making,patents, trademarks.(Intellectual
  Capital).
• Relationship Capital-internal and external
  interconnectedness, Value Chain Management,Image
  promotion and development

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• HRM can increase its contribution to the
  organisations effectiveness by playing key role
  in creating value in each of the components of
  strategic capability.
• Through sound HR Policies, Programs and Practices
• HR should be involved in the identification of
  Key Competencies that are needed to exploit
  existing Organization Capabilities Developing
  Competencies to achieve organization's strategy.

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What is the Link with HR?

• There is a relationship among the different types
  of Intangible Capital
• Human Capital drives Structural, and Relationship
  and Capital
• Without Talented and Skillful people, the
  patents, processes, professional relationships
  and channels, would not exist.

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• HR Input into Strategy Formulation is more
  critical with the CORE-Competency Approach).
• Organisational Skills that constitute its core
  competencies are usually embedded in its
  people.(Human Capital)

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COMPETENCIES AND THEIR APPLICATIONS
ENABLING EXAMPLES APPLICATION
Skills Behaviour Interpersonal skills Customer orientedness Entrepreneurship Analytical Skills Establishing and reinforcing desired culture Contributing to good performance by providing the pre-conditions for enabling effective use of functional and technical competencies
DOMAIN EXAMPLES APPLICATION
Functional Technical/Expert Multilingualism Programming skills Knowledge of electronics Building and reinforcing technical and functional skills Specifying a minimum level of technical and functional performance
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COMPETENCIES AS LINK BETWEEN STRATEGY AND HUMAN
RESOURCE PROGRAMMES
Business Strategy
Organisational Capabilities
Competencies
Human Resource Consequences
Capability Components

• Strategy
• Mission
• Values
• Objectives

• Characteristics
• of the organi-
• zation which
• are crucial
• for success-
• fully imple-
• menting the
• organizations
• strategy

• The
• competencies
• (skills and
• behaviour)
• needed to
• bring about
• the required
• capability
• components

• Human
• Resource
• activities for
• developing
• and reinforcing
• the required
• competencies

• Measures
• and actions
• needed to
• build each
• Capability

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FROM STRATEGY TO INDIVIDUAL COMPETENCIES
Business Strategy
Organisational Capabilities
Capability Components
Employee Competencies

• Strategic Intent
• To become the
• Leading telecom
• provider
• in Egypt

• Obtain and
• maintain No. 1
• position in telecom
• l services provision
• Accelerate
• network
• expansion

• Strong focus on
• Added value of
• Customers
• Sophisticated
• information
• system.

• Knowledge of the
• Market and
• Competitors
• Understanding of
• The customer.
• Customer focused
• attitude.

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• The HR Manager needs to have an audit of the
  skills and capabilities of the Organisations
  Human Resources match these against the
  organisations Mission and Objectives and develop
  a plan to fill any identified gaps.

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• Based on this, HR can develop
• Recruitment policies
• Training Policies
• Skills and Competency Profiles
• Reward Systems

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• HR needs skills and tools for competency tracking
  and management for the individuals and teams
  within an organisation.
• Such tracking helps in Skills Gap analysis.
• These processes can now be assisted by
  standardised data formats, which can be automated.

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• Competencies begin to play a central role in the
  formulation of an HR strategy
• This is an HR strategy that is directly aligned
  to the business strategy

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• The End