How (Some) Big Businesses Leave Competitors in the Dust

Want to know what could make your company outperform its sector average by a factor of 2 or 3 or even more than 4? Then you might want to read a report that came out today.

A consortium (in which my company Havenshire is a member) has just released its ‘2015 Report on Trends in Competency Management’. The title and writing style may be dry, but for executives of big organizations the content is exciting.

Many large companies spend huge amounts of money and effort in pursuit of performance increases. When we began our research, we intuitively expected to find good practices correlate with a good bottom line, but we thought the numbers would be modest. The magnitude of what we found bowled us over.

A lot of people aren’t familiar with the term ‘competency management’ (CM). The concept is simple. CM assesses the skills and qualifications of workers, determines what’s needed to successfully fulfill roles in the organisation, and matches up workers with the roles they are best suited to perform.

The term ‘competency and capability management’ (CCM) discussed at length in the report goes a step farther. It includes capabilities (the ability to succeed). To do that, it folds in ‘soft skills’ and behavioural characteristics such as trustworthiness, leadership, influence and commercial awareness.

As you can imagine, much of this has historically been hard to quantify, so it has typically been evaluated by gut feel.

In our research, the consortium came up with a proprietary CCM Index. This allowed us to objectively rate and rank companies against each other even when their CCM methods differ considerably. To our surprise, the performance differential in any sector was not modest at all. Top performers outrun the average of their sectors by more than a factor of two, and in one sector by a factor of more than four.

We also found that the ‘sweet spots’ for making performance gains by improving CCM are not where investment is most prevalent–many companies do not focus at the levels where it can give the best return on investment.

Obviously, a blog post can’t do justice to the entire topic. If you are an executive in a large organization and want a copy of the paper, please let me know.