human resource development review · pdf filehuman resource development ... human resource...

http://hrd.sagepub.comReview

Human Resource Development

DOI: 10.1177/1534484305284602 2006; 5; 72 Human Resource Development Review

Gaye Özçelik and Murat Ferman Cultural Context

Competency Approach to Human Resources Management: Outcomes and Contributions in a Turkish

http://hrd.sagepub.com/cgi/content/abstract/5/1/72 The online version of this article can be found at:

Published by:

http://www.sagepublications.com

On behalf of:

Academy of Human Resource Development

can be found at:Human Resource Development Review Additional services and information for

http://hrd.sagepub.com/cgi/alerts Email Alerts:

http://hrd.sagepub.com/subscriptions Subscriptions:

http://www.sagepub.com/journalsReprints.navReprints:

http://www.sagepub.com/journalsPermissions.navPermissions:

© 2006 SAGE Publications. All rights reserved. Not for commercial use or unauthorized distribution. by Tunggul Butarbutar on February 25, 2007 http://hrd.sagepub.comDownloaded from

http://www.ahrd.org

http://hrd.sagepub.com/cgi/alerts

http://hrd.sagepub.com/subscriptions

http://www.sagepub.com/journalsReprints.nav

http://www.sagepub.com/journalsPermissions.nav

http://hrd.sagepub.com

10.1177/1534484305284602Human Resource Development Review / March 2006Özçelik, Ferman / TURKISH CULTURAL CONTEXT

Competency Approach toHuman Resources Management:Outcomes and Contributions ina Turkish Cultural Context

GAYE ÖZÇELI.K

MURAT FERMANIs71k University

This article examines the competency approach to human resources man-agement (HRM) in organizations through a review of literature and theo-ries on the competency perspective. Building on previous theory and someempirical evidence, a new competency framework is developed. The mainpurpose of the article is to examine the effectiveness of the competencyapproach as a human resources strategy for promoting expected roles,skills, and behaviors in organizations. The article also examines poten-tial challenges to implementing a competency approach to HRM in a spe-cial cultural context. This is provided by a case study in a multinational,fast-moving, consumer goods company in Turkey. One of the findings ofthe study is that there are challenges to implementing the competencyapproach due to the cultural differences between home and host countries.If properly designed, however, the competency approach can enhanceselection, development, promotion, and reward processes to meet bothindividual and organizational needs.

Keywords: competency; human resources management; competencymodel; culture; Turkey

In today’s competitive business world, sustainable competitive advantage isthe fundamental factor for achieving organizational strategies. Lucia andLepsinger (1999) have mentioned that creating distinctive products, provid-ing continuous capital flow, and developing contemporary technologies arethe inevitable conditions to enter to the marketplace. Ulrich and Lake (1990,as cited in Dyer & Reeves, 1995) have stated, “As capital and technologybecame increasingly available to virtually anyone, anywhere, the search ofcorporations for sources of sustainable competitive advantage increasinglypointed inward towards organizational capabilities” (pp. 656-657). Manyorganizations have found that the ability of their workforce is the key to gain

Human Resource Development Review Vol. 5, No. 1 March 2006 72-91DOI: 10.1177/1534484305284602© 2006 Sage Publications



competitive advantage. Houtzagers (1999) has suggested, “any perfor-mance gap that goes on within a company such as poor capital equipment,inefficient distribution channels, lousy products, ineffective marketing orbad resource allocation always comes back to people who have a direct rolein each of these activities” (p. 27). According to McLagan (1997) today’sorganizations are more concerned about their “human competence base”and its development. For organizations to perform effectively, they needsystems to assess and develop employee performance against conceptuallysound and measurable criteria, because it is necessary for an organization toknow whether its people possess the abilities critical for success to adapt tochanging demands (Lucia & Lepsinger, 1999). An important milestone forclarifying the requirements for successful performance is the competencyapproach.

The competency movement has been in use in business through thegroundbreaking work of David McClelland (1973), Richard Boyatzis (1982),Spencer and Spencer (1993), and many others in the field for more thanthree decades. The term competency has been defined in the literature fromseveral different points of view. However, one factor that united the litera-ture was that the purpose of defining competent performance or competen-cies was to improve human performance at work (Hoffman, 1999).

This study examines the competency approach to human resources manage-ment (HRM) in organizations primarily by reviewing the literature and theorieson the competency perspective. Building on previous theory and some empiricalevidence, a new competency framework is developed. The main purposes of thearticle are as follows:

• Identify whether the competency approach to human resources practices could beconsidered an effective tool for reinforcing the expected HRM roles, skills, andbehaviors in enterprises.

• Examine the competency approach and the potential challenges it may bring in aspecial cultural context, because Turkey is an emerging economy with a deep cul-tural heritage, where traditional values are blended with modernized and industrial-ized business values. This perspective is provided by a case study in a multinational,fast-moving, consumer-goods firm in Turkey.

A Literature Review ofthe Competency-Based Perspective

The competency movement in the human resources field has been stud-ied since the beginning of the 1970s. David McClelland, an American pro-fessor, started the study of competencies in the early 1970s. McClelland(1973) demonstrated that behavioral traits and characteristics were muchmore effective than aptitude tests in determining who was successful in jobperformance. As cited in Lucia and Lepsinger (1999), his approach to com-

Özçelik, Ferman / TURKISH CULTURAL CONTEXT 73



petencies was based on employee’s actual behavior and differentiatedbetween superior and average performers.

Boyatzis (1982) was another leading researcher who specifically focusedon the importance of managers’ competencies. Boyatzis defined the termcompetency similar to Klemp’s (1980) definition. According to both Klemp(1980) and Boyatzis (1982) competency is an underlying characteristic ofa person, resulting in superior performance in a job. Boyatzis (1982)noted that a model of effective performance existed when the factors—organizational environment, job demands, and individual competencies—were aligned with one another. Boyatzis (as cited in Wood and Payne, 1998)concentrated on identifying the characteristics of superior performers andwas driven by the need to make corporations more effective through select-ing, developing, and rewarding the right people.

Lyle M. Spencer and Signe M. Spencer (1993) defined competencies as“the combination of underlying attributes, skills, traits, knowledge andmotives of a person which have been causally related to superior perfor-mance in a job” (p. 9). Competency was defined by Lucia and Lepsinger (ascited in a synthesized agreement at a conference in Johannesburg, 1995) as“a cluster of related knowledge, skills, and attitudes that affects a major partof one’s job (a role or responsibility), that correlates with performance onthe job, that can be measured against well-accepted standards, and that canbe improved via training and development” (p. 5).

According to Meyer and Semark (1996), the competency-based manage-ment (CBM) perspective has been used by many firms to deliver spectacularorganizational gains. Yet researchers basing their views on a behavioralpsychology perspective have argued that HRM practices could contribute toa competitive advantage as long as they reinforce the skills, attitudes, andbehaviors (competencies) that result in decreasing costs and/or improvingproduct differentiation (Lado & Wilson, 1994). Therefore, the importantrole of human resources practices in contributing to a firm’s competitiveadvantage overlaps with the concept of competency as a human resourcesstrategy for effective performance.

Studies of the competency approach emphasize that this concept usuallyincludes underlying attributes, skills, traits, knowledge and attitudes thatare required for successful performance in a job (Boyatzis, 1982; Spencer &Spencer, 1993). The individual competencies required for one’s job havebeen identified. However, it is equally important to consider the externaland organizational environment in formulating competencies, which wastaken into account in Boyatzis’s (1982) work. Economic, social, political,industry, strategic, and competitive factors, as well as the availability ofhuman resources are all necessary for developing competency standards.Nevertheless, competency models should be installed so as to be alignedwith organizational strategy.

74 Human Resource Development Review / March 2006



Thompson and Strickland (2001) argue that the soul of managing a busi-ness enterprise goes through the tasks of crafting, implementing, and exe-cuting corporate strategies and business approaches that management fol-lows to achieve targeted organizational performance. A corporation canachieve success in business strategies as long as it creates sustainable com-petitive advantage. The competitive advantage can be achieved throughresources—that is, technology, capital, and the workforce of the organiza-tion. Among these factors, the human factor is a crucial source of competi-tive advantage. According to the resource-based view of the firm (Barney &Wright, 2000), the role of a network of people in an organization and theirrelationships with each other are key elements of strategy. The HRM func-tion in an organization has become a partner of a strategic vision that willhelp foster the company’s organizational performance.

One of the important concerns of the HRM function has been to identifythe correct tools to evaluate employee performance. Competency-basedmanagement has been emerging as an important dimension of human devel-opment for employability and corporate competitive advantage (Meyer &Semark, 1996).

The human resource function is very crucial to support a broad rangeof business objectives that require competent employees (Torraco &Swanson, 1995). The success of long-term implementation of competenciesdepends on the alignment of competencies with the organization’s vision.Competencies impact systems that actively support the organization’svision, strategy, and key capabilities so that individuals can understand howtheir behaviors support these strategies. Second, competencies produce themost significant change and development for employees’ performancewhen they are applied across a range of human resources developmentprocesses (Schoonover, 2002). Swanson (1994) (as cited in Torraco &Swanson, 1995) emphasize that enhancing employee expertise throughhuman-resource practices would increase the likelihood of achieving busi-ness objectives.

Carrol and McCrackin (1998) argue that competencies are generallyorganized into three main categories. The first is the core competency cate-gory, which was first proposed by Prahalad and Hamel (1990). A core com-petency forms the basis for strategic direction; it is something a companydoes well relative to other competitors. Because the workforce of the orga-nization is crucial in terms of creating strategic value and organizationalperformance in the organization, the concept has influenced the HRM prac-tices. Core competencies refer to the elements of behavior that are importantfor all employees to possess as, for example, a core competency in “results/quality orientation.” It is much better to institutionalize these competencieswithin the organization because employees are transient. The second cate-gory is leadership / managerial competencies. This category involves com-




petencies that relate to leading an organization and people to achieve anorganization’s objectives that relate to managing, supervising, and develop-ing people. Some examples include “visionary leadership,” “strategic think-ing,” and “developing people.” The third category is functional (job-specific) competencies, those that are required to be performed in a particu-lar job role or profession.

Integrating Competencies into HRM Practices

A competency framework structure. Competencies are usually designed insome structured framework as depicted in Figure 1. Behavioral indicators areexamples of effective behaviors that can be observed when a person displays acompetency. These indicators are important as a useful human resources toolto illustrate when a particular competency is demonstrated in a job. A collectionof related behavioral indicators constitutes a competency (C). Then, the com-petency is described and provided with a title. A collection of closely relatedcompetencies make up a competency cluster (CC). Finally, a total collection ofclusters, competencies, and behavioral indicators is called a competencyframework (Whiddett & Hollyforde, 1999).

Briscoe and Hall (1999) identify three main approaches that organiza-tions use to create competency models. The first is the research-basedapproach in which top-performing executives are asked to give examples ofcritical behavioral incidents that are crucial for success. The idea is thatsuperior performers are different from good performers and are thought todemonstrate these superior behaviors consistently. Second, a strategy-based approach is based on the idea that a company experiencing changes inits strategic goals will also drive a need for change in the competency


CC1 CC3

C1 C2 C3 etc etc etc etc etc etc

Behavioral indicators Organized into related groups

Closely related competencies

Competency Clusters COMPETENCY FRAMEWORK

CC2

FIGURE 1: A Typical Competency Framework StructureNOTE: From “The Competencies Handbook,” by S. Whiddett, and S. Hollyforde, 1999, Institute ofPersonnel and Development, London, p. 5. Copyright 1999 Steve Whiddett and Sarah Hollyforde.Reprinted with permission of the author.



requirements for its employees. Finally, a value-based approach is based onthe view that competency frameworks are derived from the normative cul-tural values of the organization.

The application of competency models to HRM. In this section, we applycompetency models to five areas of HRM practice—selection, training anddevelopment, performance management, career planning, and compensationmanagement.

Selection. Competency-based selection is the oldest application among allhuman resources systems and can be traced back to McClelland’s (1973) earlywork with competencies for hiring purposes. Competency-based models havebeen used by many organizations to identify suitable candidates at the recruit-ment stage. The purpose is to establish the “behaviors” needed in a particularjob and the extent to which these are possessed by different candidates (Rowe,1995). A competency model provides a complete picture of what it takes to per-form the work so that interviewers can identify characteristics required to dothe job well. Records of selection decisions and ratings of competency, if regu-larly acted upon, can help organizations improve the process by preventingthem from making unfair decisions and improve the effectiveness of selectiondecisions.

Spencer and Spencer (1993) pointed out that assessment of candidatesmay involve a variety of methods. For instance, assessment centers andbehavioral (competency-based) interviews have the highest level of crite-rion validity correlation with job performance.

Training and development. An effective training and development systemmust take a long-term view of organizational needs and it must focus on devel-oping the talent currently available in the workforce in order to meet thoseneeds. A well-constructed competency model includes not only behaviors thatare indicators of effectiveness on the job but also those required to support theorganization’s strategic direction, as well as develop and maintain the cultureneeded to achieve business results (Lucia & Lepsinger, 1999).

Performance management. Today, performance is not only seen as “what”(objectives) an employee achieves but also viewed as “how” (competenciesdemonstrated) the job is carried out. Many organizations use competency-based models as a part of their employee development centers. The objectivehere is to assess individuals’ strengths and weaknesses so that future develop-ment is identified (Rowe, 1995). The competency, as a measurement tool, iden-tifies behavioral factors relevant to performance in the job (Whiddett &Hollyforde, 1999). The performance management process becomes strongerwhen employees are appraised on both objectives (what) and behavioral perfor-mance (how), referred to as the “mixed model.” The “mixed model” provides ashared understanding of what will be monitored and measured, and ensures anunderstanding of how the work gets done in addition to what gets done.




Career planning. According to McLagan (1996), the competency approachis an effective tool to be used as a criterion for career development. Competency-based career-planning systems link competencies with the developmental act-ivities, which help employees learn what they need for further development.Competency-based career planning provides a method to assess candidate readi-ness and helps an HR professional assure a measurable and systematic methodfor filling the vacant positions due to promotions, terminations, and other person-nel transitions (Lucia & Lepsinger, 1999).

Compensation management. Competency-based pay provides a linkbetween competency ratings and compensation (Whiddett & Hollyforde,1999). As in the performance-management process, a mixed-model approachto compensation is desirable. The important aspects of how a job is performedare ignored when organizations concentrate on pay for results only. On theother hand, organizations may not adequately evaluate results if they only focuson pay just for the use of competencies. Establishing compensation for demon-strated competencies, that is, both what is accomplished and how it is accom-plished, provides fairness and equity and distinguishes between superior andaverage performers. However, as identified by the American CompensationAssociation (1996), competency-based compensation is the least commonapplication of competency models among all HRM practices.

Characteristics of the TurkishCultural Context and HRM

The human resources management field has undergone rapid change inTurkey in the past decade and a half. Additional challenges and forces thataffect the implementation of sound HRM systems lie ahead. Based onthe popular study of Hofstede’s (1980) four dimensions of culture—“power distance,” “uncertainity avoidance,” “individualism/collectivism,”and “femininity/masculinity”—and in terms of its cultural environment as aMuslim society and a secular state, Turkey was found to be more collec-tivistic and more hierarchical than the Western cultures. As Aycan (2001)mentions, with a young, educated workforce, Turkey today is more alignedwith Western industrialized societies and has oriented toward moderate col-lectivism and hierarchy and strong uncertainty avoidance. Another signifi-cant cultural characteristic of Turkey is paternalism, which refers to “a sub-ordinate superior relationship whereby people in authority provide supportto those under care and whereby subordinates show loyalty, and complianceto the person” (Aycan, 2001, p. 253).

Authority relations in Turkey are based on obedience and respect forauthority. In private and public organizations, there is a high power dis-tance, strong centralized decision making and strong uncertainty avoid-ance. Turkish employees are afraid of expressing disagreements with their




superiors, and they do not have autonomy in the work environment (Wasti,1998).

According to Aycan (2001), there is a divergence among organizations inadopting effective HR practices. Some organizations really perceive “em-ployees” as their strategic partners and try to implement human resourcestrategies. The competency approach is one of the significant tools thatsome of these salient organizations pursue. However, the most importantchallenge is setting up culture- and company-specific systems that followcurrent global trends. Wasti (1998) argues that it is highly questionable toapply North American HRM practices to the Turkish culture. It is clear thatwhatever the new system is, it should go through a process of cultural adap-tation and should prepare the workforce for a new system in which em-ployee competencies are integrated with organizational strategy.

The HRM applications in Turkey are not implemented in a generalizedand standard fashion. However, large-scale domestic and multinationalorganizations are now trying to implement competency-based HRM prac-tices with the objective to recruit, appraise, and develop their employees inline with their corporate strategies and culture (Akalp, 2003; Onay, 2002).Other small- and medium-sized enterprises (SME) have not simply gonebeyond traditional personnel administration processes. They need moretime and effort to primarily establish and implement effective HRM prac-tices before embracing the competency approach.

The Application of Competency-Based HRMin Turkey: Case Study Evidence

Competencies and competency-based (HRM) practices have been wide-ly used by many enterprises around the world for more than three decades.The case study is important in the sense that it links theory and practice inan important way by representing one of the best companies practicingcompetency-based management of human resources as a multinationalenterprise in Turkey. Founded in the 19th century, the company originates inthe United States. From the mid-20th century on, the company grew into aworldwide organization and established many affiliates around the world.Today the company sells its products in more than 100 markets. The affiliatein Turkey was established in 1992 and has been in operation since then.

Research methodology. The study adopts a qualitative case methodologybased on in-depth interviews with individuals responsible for HRM (called“HRM executives”) from three units: HR strategy articulation, recruitment andselection, and employee development and compensation. The interviews werebased on a semistructured questionnaire used to conduct face-to-face inter-views. Further questions arising from the interviews were identified by tele-phone calls and e-mails. In addition, the same questionnaire was administered




to 10 employees and 10 managers in the company in order to get their viewsabout the implementation of the competency approach. Employees were ran-domly selected from a nonmanagerial employee group who hold universitydegrees. Managerial positions were also selected from a group of supervisorsand managers who hold a university degree or higher level of education. Equiv-alent replies to each structured and unstructured question are grouped together.All interview data was then codified for each question in a frequency table andcompiled to reach the majority of the overlapping replies. The secondary dataabout the company and HRM practices were received from various publicsources.

There are limitations to the use of a case study. It is recognized that con-ducting this study based on qualitative case methodology hinders the gener-alization of results over populations. However, this approach can be usefulfor contributing to theory building (for example, see Yin, 1994).

The management of the company in Turkey was not responsible fordeveloping the competency model. Rather, the competency method wasdeveloped by the headquarters of the company. It then had to be imple-mented by all affiliates that demonstrated a standardization approach bycompany headquarters. This meant that the information about the compe-tency method was not easily accessible considering the difficulties in reach-ing those executives at company headquarters. However, the crucial evi-dence from the interviews showed that the competency approach of Lyle M.Spencer and Signe M. Spencer (1993) was the philosophy that inspired thecompetency model used by company headquarters.

It is also necessary to clarify that the company executives requested thatthe name of the company would not be identified in the article. The informa-tion used in the case study came from confidential sources within thecompany.

The competency framework structure. The competency framework con-sisted of competencies, not competency clusters, each involving a definitionand related behavioral indicators. Adoption of this competency perspectivemeant that any employee working for the company should possess or havethe potential to demonstrate most of these competencies. The competenciesrequired for the job and organization were selected from the competencyframework depending on the position, role, or level of responsibility. The com-petency framework of the company is shown in Figure 2.

As stated, the company used Spencer and Spencer’s (1993) model indeveloping the competency model. Identifying superior performers wasconsidered as the key to the company’s success. In addition, strategic mar-ket and business needs were also integrated into the competency model sothat the inferred competencies would contribute to strategic performance.

Another factor that also influenced the development of the compe-tency framework was the corporate cultural values of the organization. For




instance, integrity, having a collaborative spirit, and creativeness were someof the organization’s values and were reflected within the competencyframework as “Integrity,” “Teamwork and Cooperation,” and “CreativeThinking.”

Competency-based selection. The main requirement for conducting acompetency-based selection system in the company was to hire people whohave the potential to make effective and valuable contributions to the jobs and/orroles they occupy and, hence, contribute to the overall success of the company.Competency-based selection was useful for assessing the output and behaviordimensions in the company. It clarified how the employee did his or her job pre-viously, the role the employee took, how he or she behaved, and what he or sheachieved. Assessment centers and behavioral event interviews were the maincompetency-based selection methods used by the company.

The evidence from the interviews with HRM executives, managers, andemployees suggests that the competency-based selection system definitelyensured objectivity and a high probability of hiring the right people for theright jobs. In addition, it ensured hiring people who matched the company’sstrategies, culture, and values. As mentioned by the employees, there weredifferent understandings of the competency constructs measured. The com-petencies sampled in the instruments are developed by company headquar-ters to be used in multicultural settings. However, we should emphasize thatit is unclear whether the constructs that were measured have the same con-ceptual meaning in the culture in which they were assessed.

Competency-based training and development. According to the evidencefrom the HRM executives, the company in Turkey pursued a multiculturaltraining system so that it could meet the needs of the employees in Turkey. Asmentioned, this approach enabled executive management to make the mosteffective use of training and development by being sure about where to focus onscarce resources (i.e., time and training costs). The evidence from the inter-views indicates that the competency-based training development system help-


C1 C2 C3

Behavioral indicators Organised into related groups

Closely related competencies

COMPETENCY FRAMEWORK

FIGURE 2: Competency Framework of the Company



ed employees focus on their goals, skills, and behaviors, so the greatest impacton performance would be achieved.

Competency-based performance management. The need for involving com-petencies in the company’s performance-management system stems from thefact that the system reflected and reinforced the organization’s vision, objec-tives, values, and culture by focusing employee behavior on strategic priorities.The performance-management system was applied in two different waysdepending on the hierarchical levels in the company. First, Results/Goal-Oriented Performance Management was used for the positions below thesupervisory level. The emphasis in this case was evaluating on an annual basisto show whether the goals set for the employee at the beginning of the year wereachieved at the expected level or not. The competency criteria were notconsidered in this performance appraisal process.

Second, the “Mixed Model”/Total Performance Management approachreferred to the assessment of both performance results and competencybehaviors that predicted performance in the job. This model was used forpositions above supervisory and higher levels in the company. Assessmentof competencies involved the evaluation of behaviors, knowledge, ability,and personal characteristics because these factors were also considered tobe within the definition of the competency. The mixed model evaluatedmanagerial positions by showing not only what results they achieved butalso how they achieved those results.

The evidence from the case suggests that the performance-review pro-cess provided more accurate and objective information for training anddevelopment and career-management systems. Still, employees mentionedthat they somehow felt that the performance evaluations were unjust forsome employees. This could be attributed to the one-way feedback frommanagers and the managers’caution about giving negative feedback. There-fore, this provided little room to rate low or undesirable performance andsometimes caused inequality in the eyes of the high-performing employees.

Competency-based career management. The main objectives of the companyfor developing a competency-based career planning system were to define a listof expected behaviors required by the job that helped assess candidate readi-ness and to provide a measurable and systematic method for filling the vacantpositions due to promotions, terminations, and other personnel transitions.

As mentioned, the performance-review process differed depending onthe hierarchical level of the positions. In nonmanagerial positions, objec-tives of employees were reviewed. For supervisors or higher, both objectivesand competency behaviors were reviewed. Therefore, to a certain extent thecompetency issue played a role in the current career planning system.

The most commonly used tool to assess an employee’s developmentaland promotional potential was the assessment center (AC). An assessmentcenter is composed of a variety of testing techniques, which allow candi-




dates to demonstrate job-related dimensions of performance (worker char-acteristics) in job simulation exercises that simulate the important condi-tions and contexts that occur on the target job(s) (Joiner, 2002). In an AC,the expected competencies for the target positions were examined in thecandidate employees who were seen as having the potential for future roles.The evidence from the case analysis suggests that if extended to all employ-ees, competency-based career management could enable a fairer methodol-ogy to determine development plans and assesses employee readiness forpromotions, transfers, or terminations.

Competency-based compensation management. The competency criterionin the company’s compensation policy was a factor in their compensation prac-tices. The pay system in the company is composed of base pay, based on the jobor role, and variable pay, for competencies and performance results (individ-ual, team, or organization). Base (fixed) pay was determined by the job evalua-tion studies and external market benchmark results. The company used the Hayjob evaluation method. The criteria for job evaluation included know-how,problem solving, and accountabilities. Based on the criteria, the total score foreach job was determined and located against pay grades, each of which corre-sponded to a pay range.

Variable pay included additional compensation for competencies dem-onstrated on the job and actual performance results of the employee basedon the objectives. For positions below the supervisory level, the variable paywas composed of only one criterion: performance results (objectives). Thevariable pay, including both competencies and objectives, was applied forpositions at the supervisory level and higher. As the grade level increased,the accountabilities of the job also increased. Therefore, the relative percent-age of total compensation the organization wanted to pay for performancealso increased. The individuals who demonstrated superior performanceand met or exceeded performance expectations received performance pay(variable pay). Therefore, the assessment of competencies had a modestinfluence on compensation.

Challenges to Adopting theCompetency Approach to HRM

The evidence from the case study suggests that the competency frame-work should be adopted systemwide to account for the environmental, orga-nizational, and market factors. However, it is not clear whether the frame-work will be modified by the affiliate because of changes taking place locally.We believe that company headquarters should be flexible in applying thecompetency framework, especially when considering local differences.

Employees and managers recommended that an organization-widereview of the competency framework should be conducted every 1 or 2




years. This review should include making the necessary changes in theframework and ensuring that employees possess the behaviors and skillsrequired for superior performance in the regional and worldwide competi-tive environment.

Competencies are more meaningful when a significant ratio of employ-ees in the organization are involved in the process and present their opinion.In addition, both employees and managers mentioned that it would be muchbetter if they were given the chance to develop competency indicators; how-ever, this was not possible because the company was required to conform tocorporate HR practices.

Employees also argued that they would like to be evaluated based on themixed model so that they could be treated equally with other positions. Theybelieved that this would reinforce their trust and confidence in the process.Although they knew that the competency model was adapted to companypurposes, employees sometimes felt a lack of trust. On the other hand, theycould not express their ideas to their managers or to the HR Department. Interms of Turkey’s cultural setting and human composition, the case pro-vided evidence that employees still felt power distance between themselvesand management when expressing their expectations. In addition, the Tur-key company is an affiliate of the parent corporation and mostly host nation-als were employed. The fact that these people were reluctant to give negativefeedback in Turkey should also be taken into consideration.

These culturally embedded behaviors were actually in contradiction tohow competency-based HRM should be implemented because the compe-tency approach allows employees to be more independent and to have open,two-way communication with managers and to negotiate with them duringappraisal discussions. However, being in a moderate power distance culture(Aycan, 2001), both parties are not comfortable with the processes. Due tothe managers’ unwillingness to provide negative feedback, the system maynot be implemented completely and effectively.

A New Competency Framework

All organizations function in a broader social community. According toThompson and Strickland (2001) an industry’s competitive conditions andoverall attractiveness are significant strategy-determining factors. A well-conceived strategy aims at capturing a company’s best growth opportunitiesand defending it against external threats to its well-being and future perfor-mance. In addition, Thompson (2001) stated that economic developmentsinfluence the degree of success or profitability any organization can have.Economic conditions are also influenced by the political and social develop-ments. Rodrik (1997) argued that political instability, constitutional break-downs, frequent cabinet changes, or even military coups can negatively




affect economic developments in a country. When the sociocultural envi-ronment is considered, continuous change in the tastes and values of cus-tomers and changes in the demographic characteristics of the populationdirectly influence the particular business strategies of any company.

The internal forces that influence competencies include organizationalculture, the availability of resources, and product competitiveness. More-over, the organization’s policies, norms, practices, traditions, history, val-ues, beliefs, core ideology, and ways of doing things combine to create itsculture (Thompson & Strickland, 2001). Culture is one of the important fac-tors that influence the development of corporate strategy (Lynch, 2003).The stronger the organization’s culture, the more that culture is likely toshape the organization’s strategy. An internal audit should be done to formu-late corporate goals and strategies, to assess the culture of the organization,and to assure that these elements are all in alignment (Torraco & Swanson,1995).

One of the realities that shape strategy is the amount and quality of theresources (capital, technology, human resource, intellectual property, etc.),competencies and capabilities needed to execute a strategy proficiently.Specifically, technology adds an extra element to differentiate the organiza-tion and enable it to develop a sustainable competitive advantage (Lynch,2000). A company’s ability to create and implement strategies in a support-ive culture is also dependent on its success in attracting, developing, andretaining skilled employees.

Another aspect that contributes to a company’s objectives and strategies,and that is the key to gain competitive advantage, is the performance of theproduct (Baker, Hart, Black, & Abdel-Mohsen, 1996). The products and themarketing of those products should achieve world-class standard in everyrespect (reliability, design, functionality, service, etc.) in order for the orga-nization to gain significant market share in global markets. Therefore ashared vision and strategy should support the essential elements to whichthe organization is committed, such as being a world-class manufacturer, aquality organization, and so on (Thompson, 2001).

A successful strategy implementation and execution depends heavily oncompetent personnel (Thompson & Strickland, 2001). Recruiting, develop-ing, and retaining the right employees are crucial for successful strategyexecution. The human resources function plays an important role in devel-oping a sustainable competitive advantage through using people efficientlyand effectively as a resource. The human resources function in an organiza-tion today partners with top management in designing and implement-ing their corporate strategies (Dessler, 2005). An HR department moni-tors whether the organization’s culture supports the long-term businessstrategy, whether the organization’s strategy is consistent with the business




strategy, whether performance standards are right, and how well humanresources systems support business strategy.

As building capable and competent personnel is a top priority in com-pany success, it is important to find out whether the employees have therequired abilities and skills for successful performance. Because it is diffi-cult for an organization to measure whether its people possess the abilitiescritical for its success, the company should find systems or tools to assessand develop employee performance against sound, measurable, observablecriteria (Lucia & Lepsinger, 1999). Therefore, a competency approachshould support employee development and increase productivity. Compe-tencies are the foundation for an entire HR management function and theycan be integrated with all HR systems—recruitment, selection, training,career development, performance management, and workers’ compensa-tion (Dubois, Rothwell, Stern, & Kemp, 2004). This integration is importantin the sense that the data received from each function within the HR system(i.e., performance management, training and development, compensation,and so on) will be an input for another part of the HR system. For instance,the competency-based performance results of an employee will enable HRmanagers to identify what kind of training and development needs arerequired.

According to Dubois et al. (2004), competencies are valuable when theyare aligned with a shared vision, organizational objectives, business strate-gies, and the external environment. Similarly, Pritchard (1997) stated thatcompetencies are a way to integrate HR strategy with corporate strategy andadd performance value to the organization. By focusing on competencyapplications, organizations are using competencies to integrate selection,training, performance appraisal, career development and compensation.1 Inrecruitment and selection, competencies are used to hire employees; intraining and development, competencies are used to identify suitable train-ing needs and close gaps in employee’s performance. In performanceappraisal, competencies are used to identify factors relevant to performancein the job and compare how a job is done to the results achieved. In careerdevelopment, competencies are used to promote employees or help identifywho is ready to fill a vacant position. In compensation, pay can be based onthe certified skills and competencies used on the job.

It is worth emphasizing that the applicability of the competency approachmay differ depending on the national culture as well as corporate culture.Dubois et al. (2004) emphasized that the demonstration of a competency islinked to the corporate culture that, at the same time, is influenced by thenational culture. This applies to the Turkish cultural context where privatebusiness has been based on family ownership since the 1940s. Today there isan emergence of the professional management perspective in which busi-nesses are more oriented toward adopting international management theo-




ries and practices (Nichols, Sugur, & Demir, 2002). The important concernhere is in what respect these professional managers know and implementthese management practices. It is worth noting that Turkey has slowly beengoing through a cultural transformation from being more collectivistic andhierarchical to a moderately collectivistic and hierarchical society (Aycan,2001). Such cultural transformation has been enabled by the introduction ofnew Western managerial techniques into Turkish organizations, includingpublic organizations (Ates 7, 2004).

Research has shown that the requirements for a talented workforce andthe strategic management of human resources have been felt due to devel-opments in globalization, competition, and technology in Turkey (Baran,Karabulut, Semerciöz, & Pekdemir, 2002). Research results stated by Aycan(2001) indicate an increasing number of organizations have started apply-ing the competency approach to selected human resources practices; it islikely that they will extend the approach to all human resources practices.


Corporate Strategy

Human Resource Strategy

Shared Vision

Career Management

Recruitment &

Selection

Compensation Management

Performance Management

Training & Development

Individual Excellence

(Competencies)

Core

Leadership/ Management

External Factors Industry

competitiveness Economic Developments

Social and Political Developments

Internal Factors Product

competitiveness Organizational

Culture Resources

(technology, capital, human, etc.)

FIGURE 3: Competency Development Model



Future Trends in the Competency Approach to HRM

In line with Spencer and Spencer’s (1993) view, today’s organizationsface an ever-increasing pace of technological and societal change, a furthershift to an information economy requiring highly skilled knowledge workersand intensifying global competition. These trends have created a tight labormarket for the most needed knowledge workers who, in turn, change the waycompetency-based HRM is executed. In this environment, competency-based HRM is most effective when it is based on reliable monitoring ofemployee performance and follow-up.

Enabling competency and human resources applications through tech-nology is receiving increasing attention. The use of technology can evolveinto integrated human resources information systems (HRIS), which haverecently been implemented in some of the organizations using competencymodels. Schippmann et al. (2000) also mentions that improved softwareapplications will ease the implementing of technology-mediated compe-tency modeling.

HRIS bring many advantages such as ease of use, sophistication, securityof data, flexibility of reporting, low cost, and most important, the integra-tion of human resource information into all aspects of the organization. Onthe other hand, HRIS may create resistance from employees due to emo-tional resistance to change, resistance to technology due to learning diffi-culties, and fear of measures taken to ensure the security of information.Still, as the world moves toward accelerated technologies, it is necessary fororganizations to adjust and educate personnel for the benefit of the entiresystem.

Conclusions

The competency approach is an effective measurement tool that helpsemployees agree on a common language and comprehend what is under-stood by superior performance. Moreover, competency management is acore human resources strategy to help align internal behaviors and skillswith the strategic direction of the organization as a whole. As shown in theTurkish case, cultural settings of the organization should be taken intoaccount in developing the model as well as the way the system is alignedwith local norms, attitudes, and behaviors.

The primary outcome of competency models is aligning individualbehavior with organizational strategies, goals, and values through translat-ing those values and strategies into specific behaviors. Today, organizationsrealize that if properly designed and skillfully handled, the competencyapproach leads to individual and organizational performance enhance-ments. Competency models therefore help the integration of all HRMpractices.




One of the fundamental challenges of the competency approach is therisk of restricting the diversity in the organization, because all the membersare obliged to apply the same corporate-wide competency standards. Thismay limit innovation and the diversity of ideas in the organization.

An implication for further research is to conduct an industry-wide analy-sis in competency-based HR practices in Turkey (or another country) todetermine differences in competency model design and/or implementation.The benefits and challenges of the competency applications in specificindustries could be examined accordingly. Future research could also iden-tify differences in competency model design and/or implementation byorganization characteristics (for example, differences in mission, culture,organization size, and structure). The competency approach should also befurther analyzed and studied by human resources advocates and academi-cians for its performance contributions, calculated return on investment,and potential challenges so that future competency-based HRM practiceswill be conducted purposefully and effectively.

Note

1. United States Office of Personnel Management (1999).

References

Aycan, Z. (2001). Human resource management in Turkey—current issues and future challenges,International Journal of Manpower, 22 (3), 252-260.

Akalp, G. (2003). I³nsan Kaynaklar? Yönetiminde Ücret Sistemine Genel Bir Baks 7 [A General Over-view to Compensation System in Human Resource Management], Endüstri I³liskileri ve I³nsanKaynaklar Dergisi [Industrial Relations and Human Resource Journal], 5, 1. Retrieved Septem-ber 12, 2004, from http://www.isguc.org/arc_view.php.

Ates 7, H. (2004). Management as an agent of cultural change in the Turkish public sector. Journal ofPublic Administration Research & Theory, 14 (1), 33-58.

American Compensation Association (ACA), Hay Group, Hewitt Associates LLC, Towers Perrin,William M. Mercer Inc. (1996). Raising the bar: Using competencies to enhance employee per-formance. Scottsdale, AZ: American Compensation Association.

Baker, M. J., Hart, S., Black, C., & Abdel-Mohsen, T. M. (1996). The contribution of marketing tocompetitive success: A literature review. Journal of Marketing Management, 2 (1), 39-61.

Baran, M., Karabulut, E., Semerciöz, F., & Pekdemir, I. (2002). The new HR practices in changingorganizations: An empirical study in Turkey. Journal of European Industrial Training, 26 (2-4),81-87.

Barney, J. B., & Wright, P. M. (2000). On becoming a strategic partner: The role of human resourcesin gaining competitive advantage. Human Resource Management, 37 (1), 31-46.

Boyatzis, R. (1982). The competent manager: A model for effective performance. New York: Wiley& Sons.

Briscoe, J. P., & Hall, D. T. (1999). An alternative approach and new guidelines for practice [Elec-tronic Version]. Organizational Dynamics, 28 (2), 37-52.

Carroll, A., & McCrackin, J. (1998). The competent use of competency-based strategies for selectionand development. Performance Improvement Quarterly, 11 (3), 3. Retrieved January 20, 2004,from http://www.ispi.org/publications/piq.htm




Dessler, G. (2005). Human resource management (International edition, 10th ed.). EnglewoodCliffs, NJ: Prentice Hall.

Dubois, D. D., Rothwell, W. J., Stern, D. J., & Kemp, L. K. (2004). Competency-based humanresource management. Palo Alto, CA: Davies-Black.

Dyer, L., & Reeves, T. (1995). Human resource strategies and firm performance [Electronic version].The International Journal of Human Resource Management, 6 (3), 656-657.

Hoffman, T. (1999). The meanings of competency. Journal of European Industrial Training, 23 (6),274-275.

Hofstede, G. (1980). Culture’s consequences. Beverly Hills, CA: Sage.Houtzagers, G. (1999). Empowerment, using skills and competence management [Electronic ver-

sion]. Participation and Empowerment: An International Journal, 7 (2), 26-27.Joiner, D. A. (2002). Assessment centers: What’s new? [Electronic version]. Public Personnel Man-

agement, 31 (2), 179-185.Klemp, G. O., Jr. (Ed.). (1980). The assessment of occupational competence. Report to the National

Institute of Education, Washington, DC.Lado, A. A., & Wilson, M. C. (1994). Human resource systems and sustained competitive advantage:

A competency-based perspective [Electronic version]. The Academy of Management Review, 19(4), 698-670.

Lucia, A. D., & Lepsinger, R. (1999). The art and science of competency models: Pinpointing criti-cal success factors in organizations. San Francisco: Jossey-Bass/Pfeiffer.

Lynch, R. (2003). Corporate strategy (3rd ed.). Englewood Cliffs, NJ: Prentice Hall.Mc Clelland, D. C. (1973, January). Testing for competence rather than for intelligence. American

Psychologist, 1-14.McLagan, P. A. (1996). Competency models: Great ideas revisited. Training and Development, 50

(1), 60-65.McLagan, P. A. (1997). Competencies: The next generation, Training and Development, 51 (5), 40-

48.Meyer, T., & Semark, P. (1996). A framework for the use of competencies for achieving competitive

advantage. South African Journal of Business Management, 27 (4), 96. Retrieved May 24, 2004,from http://www.journals.co.za/ej/ejour_busman.html

Nichols, T., Sugur, N., & Demir, E. (2002). Globalized management and local labor: The case of thewhite-goods industry in Turkey. Industrial Relations Journal, 33 (1), 68-85.

Onay, R. (2002, December). Coca-Cola performance management system [Coca-Cola PerformansYönetimi Sistemi]. Paper presented at the 2002 IV. Conference on Performance Management [IV.Performans Yönetimi Zirvesi], Istanbul.

Prahalad, C. K., & Hamel, G. (1990). The core competence of the corporation. Harvard BusinessReview, 68 (3), 79-91.

Pritchard, K. H. (1997). Introduction to competencies (SHRM white paper). Retrieved April 1999from http://www.shrm.org

Rodrik, D. (1997, March). Globalization, social conflict and economic growth. The World Economy,1-18.

Rowe, C. (1995). Clarifying the use of competence and competency models in recruitment, assess-ment and staff development. Industrial and Commercial Training, 27 (11), 12-17.

Schippmann, J. S., Ash, R. A., Battista, M., Carr, L., Eyde, L. D., Hesketh, B., et al. (2000). The prac-tice of competency modeling. Personnel Psychology, 53 (3), 703-740.

Schoonover, S. C. (2002). Implementing competencies: A best practices approach. Retrieved June14, 2003, from http://www.schoonover.com/ResourceCenter/article9.htm

Spencer, L. M., & Spencer, S. M. (1993). Competence at work: Models for superior performance.New York: Wiley & Sons.

Thompson, J. L. (2001). Strategic management (4th ed.). London: Thomson.Thompson, A. A., & Strickland, A. J. III. (2001). Crafting and executing strategy: Text and reading

(12th ed.). Singapore: McGraw-Hill.




Torraco, R. J., & Swanson, R. A. (1995). The strategic roles of human resource development. HumanResource Planning, 18 (4), 10-22.

Ulrich, D., & Lake, D. (1990). Organizational capability: Competing from the inside out. New York:Wiley.

United States Office of Personnel Management. (1999). Looking to the future: Human resourcescompetencies, a comprehensive study of the Federal Human Resources Community. RetrievedOctober 1, 2005, from https://fehb.opm.gov/studies/Trans2.pdf

Wasti, S. A. (1998). Cultural barriers in the transferability of Japanese and American humanresources practices to developing countries: The Turkish case. The International Journal ofHuman Resource Management, 9, 609-631.

Whiddett, S., & Hollyforde, S. (1999). The competencies handbook (pp. 4-120). London: Institute ofPersonnel and Development.

Wood, R., & Payne, T. (1998). Competency-based recruitment and selection, West Sussex, UK:Wiley & Sons.

Yin, R. K. (1994). Case study research: Design and methods (2nd ed.). Thousand Oaks, CA; Sage.

Gaye Özçelik is an academic researcher and PhD student in contemporary busi-ness at the Social Sciences Institute in Is771k University.

Murat Ferman is a professor of the Faculty of Economics and Administrative Sci-ences, Management Department in Is771k University.




human resource development review · pdf filehuman resource development ... human resource...

Documents