- Taking on the Competition with Core
Competencies
- by David A. Bratton
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- The North American credit union movement is on the frontier of sweeping
changes in the delivery of financial services. Large financial institutions are growing by
leaps and bounds. This growth is happening through both mergers and acquisitions as recent
events have shown.
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- Larger financial institutions means more competition for the consumer's
dollar. It also means more products, more technology and more aggressive pursuit of
customers. Savings and Loans companies have had their share of problems; the insurance
sector has been subjected to significant change and the boundaries between what used to be
called the four pillars (Banking, Savings & Loans, Stockbroking and Insurance) have
blurred beyond recognition.
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- Consumers are interested in dealing with a financial institution
providing the widest possible range of financial options. Credit Unions are positioned to
take advantage of the changing marketplace. With nearly twelve thousand credit unions and
seventy-seven million members in the U.S. and Canada, the credit union movement has the
resources of a diverse, decentralized system to give the other financial institutions a
run for their money.
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- Therefore, it is important for every credit union to understand the
special expertise that they have to master the marketplace. Things like providing the
proper training to staff, emphasizing customer service and community focus and putting
members first are some of the USP's (Unique Selling Propositions) that they enjoy and that
differentiates a credit union from other financial institutions.
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- Core Competencies for Key Positions
- Therefore, developing a core competencies framework for key positions
within the credit union can deliver value far exceeding the cost of doing so. For example,
knowing what constitutes superior performance in delivering outstanding customer service
can lead to actually being able to provide that kind of service. The key is having a team
of employees that are capable of doing the job; are willing to do the job and have
the right 'fit' with the value system of the credit union. To build such a team you first
must understand the core competencies that will create the conditions for superior
performance.
Core Competencies – An Integrated Approach
The following diagram demonstrates how identifying and understanding
the core competencies of key positions links to everything an
organization does. A core competency is defined as any knowledge,
skill, trait, motive, attitude, value or other personal
characteristic that is essential to perform the job and that
differentiates good from superior performance.
Competencies and Recruitment and Selection
Selection researchers, trying to identify what makes an excellent
employee have supported the idea that competencies-based interviews
are particularly good at identifying persistently high performers.
This is hardly an earth-shattering discovery in itself. But by
acting upon it, a credit union can save thousands of dollars in the
cost of poor recruitment and selection and the resulting poor
performance.
This is only one example of how well-designed competencies
frameworks can deliver real value to any business. Credit unions
competing in a fiercely competitive arena can benefit in particular
from designing better selection systems based on the core
competencies needed for superior performance.
Competencies are a way to identify what really makes a difference in
job performance. They are the characteristics that drive
performance. When people can identify more clearly what is expected
in terms of behavior on the job, then they can do their job much
better. Similarly, credit union managers, directors and CEO's can be
more objective and provide the appropriate coaching to help
employees to develop their skills and abilities and, most
importantly, their attitudes toward customers!
This is very important to all of us. We all want to do well in our
jobs and to be appreciated by our customers. This is the way that we
can continue to be focused on service in an effective and efficient
manner.
As an example, a good approach to selection is to attach to every
individual and every job particular attributes or competencies drawn
from a list that is relevant to the credit union business and its
activities. The two can be compared and contrasted so that
individuals can be matched to jobs and missing competencies worked
on.
Introduction of new competencies or new emphasis on old competencies
also provides a steering mechanism for a sound education and
development strategy.
Credit Unions As Knowledge-Based Organizations
Credit unions are knowledge-based organizations like no other, and
rely heavily on the expertise of their people. Without excellent
customer service representatives, financial planners and so on,
performing in a superior manner, clients will leave and cross the
street to a competitor who will offer superior service.
As another example, without a superb Information Technology staff,
business comes to a halt. So understanding IT competencies and
selecting staff accordingly, becomes an effective business strategy!
Competencies are what are paid for in salary and bonuses. So it
makes sense to know what competencies are needed and which presently
reside within the company. Too often employers do not "get what
they pay for." The costs, in lost business, mistakes and poor
service can be directly attributable to poor selection practices.
A well-developed competency framework also provides tangible,
up-to-date information to help credit unions assess their true
capability to deliver strategic plans. By matching the staff
competencies to what is required behavior will identify the gaps in
competencies. Then a strategy can be implemented to focus on the
competencies essential to delivering on the strategic plan.
As the diagram shows, a competency framework also provides a vehicle
for linking that strategy to all HR processes.
As the same data is used for all HR processes, consistency can be
achieved across the entire range of processes, from recruitment
through to performance management, coaching and, if need be,
outplacement.
A competency framework also improves a credit union manager's
ability to manage by bringing together activities and people. If
performance is falling, managers can easily identify whether one of
the reasons is the capability of people, and do something about it.
Competency frameworks also create value for organizations by
reinforcing corporate change. For example, a credit union that wants
to increase its capability to manage change can write this ability
into every employee's profile, assessing (and paying) them on their
achievements.
What is a Competency Framework?
A competency framework is a set of individual competencies or
characteristics that is developed for a specific job or job family.
Each position has a competency model developed for it that includes
the behavioral competencies that differentiate ordinary from
superior performance for that position.
Many organizations use a three-dimensional model for competencies
that does not fall into the trap of focusing too narrowly on job
competencies while overlooking important organization-related
competencies.
The three separate aspects looked at are core, general and technical
or functional competencies; organizational needs; and an integrated
model of competencies
Core competencies are made up of those things that drive the
business strategy, reinforce credit union values and differentiate
the credit union from its competitors. They are competencies that
everyone in the organization should have, at least to a minimum
level.
General competencies are those things that the organization wants
done consistently whenever and wherever required. When they are
relevant, they can be added to a job profile.
Technical or functional competencies are the attributes that
differentiate one job from another - the things that make a customer
servicerepresentative different from a systems analyst or human
resources manager. If core and general competencies have been
described first, it is a relatively simple task to identify the most
significant functional competencies.
The focus of performance in many credit unions is moving to the
team, and for some, organizational capability is a real issue.
Credit unions must understand where the organization is going and
then identify the most critical organizational and other
competencies needed to get there.
If the future is in teams, the focus of a competency framework
should be the collective capability of a team. If the business
believes it needs to transform its culture, then a new
organizational competency needs to be identified.
A good competency model or framework will encompass a mixture of
"can do," "will do," and "fit," characteristics. I believe that to
catch the essence of the whole job it is necessary to use a mixture
of attitude, skills, and knowledge, behavior and output competencies
to produce an integrated competency framework.
For example, the `selling' competencies required of a financial
advisor might include:
Demonstrates understanding of clients and their needs
Provides clients with relevant and timely information
Develops and implements financial plans for clients.
Summary and Conclusion
Developing a competency framework that adds real value by describing
every person's and every job's competency profile, as well as itself
acting as a driver of strategy, need not be that time consuming or
expensive. It can typically be done within six months to a year. The
pay off is a set of competencies, integrated closely (see diagram)
with all HR processes.
The real payoff lies in the ability to take on the competition with
a committed, competent work force, dedicated to providing superior
customer service while demonstrating the core values of the credit
union. Now that's a real value-added thought!
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