2 What are Competencies?
3 What is Competence Management?
4 Goals of Competence Management
5 Tasks of Competence Management
6 Approaches and Levels of Competence Management
7 Competence Management Model
8 The Benefits of Competence Management
9 The Disadvantages of a Competence Management System
Competence management, competency management system, what is that exactly? Is it just a bunch of cumbersome formalities and bureaucracy again? Is that just a process in agile projects? Everything in complex systems is supposed to run itself, right? There are many open questions here that must be answered in a plausible content. The aim of the present study is to explain the competence management processes in modern organizations from a business perspective and to discuss the internal problems and possible solutions as well as advantages and disadvantages of these processes. This analysis also aims to provide an up-to-date contribution to science and research.
The more complex and dynamic the market, economy, and politics become, the more uncertain all forecasts and therefore society become. People are increasingly having to make decisions with uncertainty. More and more they must organize their actions and the actions of groups, teams, or organizations. To do this, they need more and more special skills, namely the self-organization skills. This brings with it complex competencies that are often hidden in potential. They encapsulate the complex experiences, knowledge, skills, values, and ideals of a person or groups. Anyone who can recognize, expand, and unite them with others can hold the future on their side, because competencies hit the future.
Competencies and thus competence management play an increasing role in all organizations of the global economic system. In today's ever-changing business world, successful companies must continuously align their processes with the requirements of customers and products. Therefore, more and more companies are establishing competency management. The more competence management is anchored in organizations, the more successfully and smoothly run well-organized processes, policies, and procedures in an organization. Ultimately, competence management not only ensures lasting competitive advantages, but also the flexibility and innovative ability of employees and thus the survival of the company in a competitive business world.
Against this background, the following central questions of competence management will be discussed and explained:
- What are competencies, and what is competence management?
- Why is competence management important, and how does it help?
- What are the goals and tasks of competence management?
- Which approaches, levels and models does competence management have, and how do they help with complex processes and procedures?
- What are the advantages and disadvantages of a competence management system?
2 What are Competencies?
What are competencies exactly? Why do we need competence-oriented systems in the operational business context at all? First, it can be seen that the term “competence” is now ubiquitous. There is a lot of argument about this, and there are an incredible number of competencies and definitions. The word “competence” is generally fuzzy and imprecise at first glance, but in fact, upon closer inspection, it is not so in a business sense.
There are different directions within the understanding of competence, a large part of which is compatible with one another.1 Here social, communicative, and emotional as well as personal, methodical, and technical competence are among the core competencies.2 Today, executives, or manager can no longer do without coaching skills in an ever-changing environment. Intercultural competence is required in complex systems of the global economy. In complex systems of the global economy, the importance of intercultural competence is increasing. Which competences belong to the key competences can differ from industry to industry and from job profile to job profile, from the tasks of an employee, but also from hierarchical level to hierarchical level.3
On the other hand, competence is a restricted concept that generally only emphasizes the ability to act.4 Here, the competency qualification framework is a meaningful focus on the ability to act in open and uncertain situations. In fact, in literature and especially in the English-speaking world, competencies are often equated with “skills”, abilities or qualifications, such as those shown in a diploma. However, those words don't mean the same thing. A competence is essentially the sum of knowledge, skills, and personality traits or attitudes. The Term “competence” has a broader meaning than “skill”. Competencies cannot be acquired through formal learning alone.5 In addition, there is informal and non-formal learning in the process of work and from others. In this context, examples of a competence include adaptability, engagement, collegiality, learning ability, self-knowledge, and self-awareness.6
The use of the term in everyday language, when someone is given competence in a certain area, is meant implicitly. He or she not only has theoretical knowledge but can also apply this knowledge practically in complex situations. This ability makes it possible to make independent decisions in a specific context, to deal with the corresponding requirements, to be assigned rights and to take on obligations.7
Competencies are abilities to act creatively and self-organized in unexpected, open, sometimes chaotic situations.8 Specialist skills are, therefore, the ability to act creatively and self-organized in open problem situations of a theoretical and practical nature.9 The key point of the whole competence is that the ability of competence to act in open situations does not even necessarily depend on education and previous training. Even low-skilled people need these skills to act in such situations. As a result, competencies in business and management concepts are becoming increasingly necessary.
3 What is Competence Management?
Competence management play an increasing role in all organizations. The excellent specialist idiot is less and less in demand. Competencies open the future and ensure the survival of an organization.10 Making the best use of existing skills and realizing the potential of the staff is crucial for the innovation and even the survival of many companies in the global business system. Competency management system is a great way to get the most out of the employees' competences. But what is competence management exactly?
It can be stated that competencies provide the basis for measuring the skills of the employees, while a competency management system helps companies keep track of the three components of being competent – ability (skills), interest and knowledge.11 Every role of a management requires specific skills and competencies.12 Sometimes, an employee already has these competencies in an organization, but other times he or she needs to acquire or develop them first. This is where competence management comes into play.
Competence in management is a key component to an organization's success, from resource utilization to customer service. There are different definitions of competency management systems. A good definition of competence management is “a methodology aimed primarily at capitalizing on employees’ skills, knowledge, and professionalism to the fullest extent possible in line with organizational objectives.”13
According to Matthias Koprek, “competence management refers to the active and systematic handling of an organization's competencies, which is oriented towards strategic corporate goals. This includes identifying, understanding, diagnosing, visualizing, developing, deploying, and securing long-term employee potential according to operational needs.”14
In this context, it can be said that competence management describes the dealing with the competencies of a company or its units. This approach is always systematic and is always based on the strategic goals of the company. Competence management is actually about viewing, describing, evaluating and using the existing skills in the company as well as recognize and develop potential.15 Without exception, this is done with a strict focus on the corporate goals to ensure the sustainable competitiveness of the own company. So, competence management is fundamentally a core discipline of human resources development but is of overriding importance for strategic corporate management. That is why HR must think long-term when designing competence management because success does not come ad hoc.
At this point, it is important to point out that the terms competence management and skills management are often used synonymously. However, they differ in their strategic orientation and establish themselves in different systems.16 The distinguishing feature is that while competence management is seen as a central task of strategic corporate management, skill management focuses on the knowledge and skills of the employees.17
Competence management is clearly at the level of strategic corporate management.18 It is obvious that successful competence management is difficult to achieve without some form of skills management, so that despite undeniable strategic aspects, skills management can essentially be understood as operational implementation. In short, skill management supports operative business processes, competence management supports strategic ones.19
Finally, it can be said that a good competence manager identifies the task- and activity-specific competence requirements of the organization and diagnoses the competencies of individual employees and teams. Efficient measures for personnel and organizational development can be derived from the comparison of target and actual profiles, to which this management discipline is assigned.
4 Goals of Competence Management
It should be noted that competence management is a mandatory discipline in strategically thinking, success-oriented companies and organizations. The primary goal of competence management is to effectively use the potential that every company has due to the existing skills and abilities of its employees. The aim of strategic competence management is to precisely provide those competencies within the framework of resource planning that increase both the performance of the employees and the organization. Companies that know the potential of their employees achieve their corporate goals quickly and directly.20 That means exactly:
-The primary goal of any business is to serve its customers efficiently and effectively. However, it must be able to distinguish itself from its competitors.21
- The strategic competence management facilitates the organization and personnel planning.
- Strategic competency management means that competency needs are recognized earlier, and the necessary measures are taken accordingly in good time.
- It gives more security to personnel planning, such as personnel deployment planning and succession planning.
- Expectations and requirements can be better communicated to employees. There is more transparency.22
- At the same time, competence management can increase employee motivation. The only important thing is that skills are recognized. Awards for certain skills and levels of skill achieved can also have a motivating effect.23
In conclusion, it should be emphasized that to achieve these goals, leadership as decision-making and leadership style play an important role and communication is a magic word in the process of the competence management system.24
5 Tasks of Competence Management
First, it should be stated that the core of competency management is measuring competences and developing competences. The tasks of competency management include all measures and actions that ensure the company's competence needs in the medium term.25 As a core task of knowledge-oriented corporate management, competence management goes beyond the traditional understanding of training and further education by integrating learning, self-organization, using, and marketing of competencies.26
Competence management also includes the tasks of describing and documenting competencies (e.g., as part of human capital accounting) and ensuring the transfer, use, and development of competencies, based on the personal goals of the employee and the goals of the company.27 In particular, there are four main tasks:
- Representation: The structured and condensed overview of skills at employee and company level, with the targeted result of a structured qualitative and quantitative analysis of the skills. However, the measurement and presentation methods developed or proposed in this context are often incomplete, since above all the individuals can make statements about his or her professional skills. But this is sometimes disputed among experts. Therefore, it is rarely asked for it.
-Reflection: Critical questioning of the skills and derivation of operational interventions for improvement, with the targeted result of a targeted inventory and evaluation of skills. For example, this includes the gap analysis.
- Distribution: Distribution and dissemination of competencies to the various levels of the organization such as project, process, control levels, with the desired result of a high availability of competencies. Here, the transition to knowledge management is fluid.
- Development: Adaptation of the competence portfolio, considering the existing potential and future requirements, such as expansion or reduction. This also includes a risk analysis in which the company, department, or subject-specific risks of the migration of important skills or their obsolescence are determined, and countermeasures are proposed.
In principle, competence management can be reduced to two basic tasks: First, recruiting people with key skills. Secondly, developing employee and team skills that are necessary for the company. The prerequisite for finding and hiring employees with the desired skills, i.e., for closing the skill gaps of existing employees, is the ability to measure skills. So, it is important to get an idea of the current level of competence.
6 Approaches and Levels of Competence Management
As already mentioned, the aim of competence management system in business organizations is to effectively use the potential that every company has due to existing employee skills and abilities and based on this, to develop the competencies necessary for sustainable competitiveness. The goal is therefore to actively control and direct one's own competence base.
Competence management combines two basic approaches of organizational science, which also play a role in achieving these goals here. These are the resource-based approach and the learning-oriented competence approach. Both approaches are significant for the application of competence management.
- Resource-oriented approach: The resource-oriented approach – also known as the core competence approach – is fundamentally concerned with the use of an organization's potential.28 The aim is to ensure the competitiveness and survivability of a company in the long term through the right accumulation of resources and thereby stand out from the market environment.29
- Learning-oriented approach: In contrast, the learning-oriented competence approach focuses on the individual as a competence bearer. This approach regards competencies as prerequisites for self-disposition.30
In addition, a successful competence management takes place on three levels: Normative level, strategic level, and operational level.
- Normative level: The normative level includes the strategic company goals, which set the course for personnel development and thus also for competence management.
- Strategic level: Competences are identified and modeled at the strategic level. Competence requirements for functions, positions, and activities are formulated (target profiles).
- Operational level: At the operational level, competencies are diagnosed (actual profiles), competence corridors identified (comparison of target and actual profiles), development measures are taken, and the success of competence development is checked.31
1 Arnold/Erpenbeck (2014), Wissen ist keine Kompetenz. Dialoge zur Kompetenzreifung. Baltmannsweiler.
2 https://www.igi-global.com/dictionary/conceptual-framework-assessment-higher-education/4804 [23.04.2022].
4 Erpenbeck (2014), p. 20.
5 North/Reinhardt/Sieber-Suter (2018), p. 35 f.
6 https://www.ag5.com/everything-you-need-to-know-about-competence-management/ [23.04.2022].
7 Dietrich/Gilbert/Pigeyre/Aubret (2010), p. 7 ff.
8 Erpenbeck/Heyse (2019), p. 11.
9 Heyse/Erpenbeck/Ortmann (2015), p. 13.
10 Heyse/Erpenbeck/Coester/Ortmann/Sauter (2019), p. 13.
11 Winterton/Delamare - Le Deist/Stringfellow (2006), p. 21 ff.
12 Blokdyk (2021), p. 13 f.
13 ibid, https://www.ag5.com/everything-you-need-to-know-about-competence-management/ [23.04.2022].
14 https://www.kodekonzept.com/wissensressourcen/kompetenzmanagement/ [25.04.2022].
15 https://www.personio.de/hr-lexikon/kompetenzmanagement/ [25.04.2022].
16 http://www.wissensstrukturplan.de/wissensstrukturplan/glossar/s_skill.php [25.04.2022].
17 https://kompetenzen-gestalten.de/wissen/kompetenzmanagement-skillsmanagement [25.04.2022].
18 Dietrich (2018), p. 65 f.
19 https://skilltree.at/skill-management-vs-kompetenzmanagement/ [25.04.2022].
20 Was ist Kompetenzmanagement?, in: Kode, ibid. [25.04.2022].
21 https://www.managementstudyguide.com/competency-management.htm [25.04.2022].
22 https://www.haufe.de/personal/hr-management/kompetenzmanagement-in-unternehmen_80_556452.html ibid., [23.04.2022].
23 Rosenstiel/Nerdinger (2014), p. 83, 151.
24 Richter (2021), p.12, 27, 103.
25 Rosenstiel/Nerdinger (2014), p. 133 ff.
26 North/Reinhardt/Sieber-Suter (2018), p. 8 ff.
27 https://www.fmt-cornerstone.com/en/competence-management/#:~:text=The%20aim%20of%20competence% 20management,competences%20necessary%20for%20sustainable%20competitiveness. [26.04.2022].
28 https://www.managementstudyguide.com/core-competency-theory-of-strategy.htm [26.04.2022].
29 https://www.techtarget.com/searchcio/definition/core-competency [26.04.2022].
30 Hall/Paradice/Courtney (2003, p. 63 ff.
31 https://www.kodekonzept.com/wissensressourcen/kompetenzmanagement/ ibid., [25.04.2022].