Management Skills-Based Management

The state of Pakistan's economy One year of tax survey KSE: An update Skills - based management

A new tool for productivity

By Prof. Wali Khan Durrani
June 11 - 17, 2001

CORRECTION: The article "skill-based management", appearing in our issue (May 21—June 3), was not in proper chronological order due to some technical error. It is highly regretted and complete article is being reprinted for the convenience of our readers.

Consider buying a pen. You do not buy a pen because you want a pen; you buy a pen because you want to write. The same goes for the people. You do not hire people because you just want them. You hire them for what they can do, for their skills and for their competencies.

But is not it odd that hiring or placement decisions are still made largely on gut feelings, recommendations or on humanitarian grounds even though Human Resource costs usually undersize all other costs. You become Humanitarian and treat Inhumans as Humans and vice versa. In the hiring process, mostly you ignore organizational requirements. You ignore competency, hire and place square pegs in round holes.

Human Resources are strategic assets

Each organization in public or private sector requires that individuals possess very specific competencies, but we do little to formally map those competencies to our work advantage. Nor do we view Human Resource competencies as strategic assets, to be molded and developed to meet the future needs of the organizational plan. Of course people are important, but their competencies are the real substance of success.

Let us view, how do we typically manage in our environments? Out of 100 per cent employees, we just pile more and more work onto the 30 per cent employees that we consider as the top performers while shuffling the other 70 per cent employees among various projects. In most cases, particularly in our politically infected environments, these 70 per cent employees do not perform. Rather they retain and become a cancerous liability.

These other 70 per cent may or may not contribute, but we seldom give them anything that is really mission-critical. Is this because they can not do it? In some cases: yes, may be they are incompetents. Or else we do not really know what they can do. Let us have four suppositions here:

a. Most people are capable of far more than we ask of them.
b. When motivated, most will willingly provide far more.
c. Most people are time passers, having dung tapaoo approach.
d. Most people are gamers having totally individual selfish approach and that is the hallmark of any negatively politicized society and environments. Most people in our society suffer from psychological hedonism and are champions of gaming, talking and sycophancy.

If we believe these suppositions to be largely true, the question next becomes, "How can we ensure that our people willingly give us more? Skills-based management may offer that mechanism through a designed, disciplined and tailor-made program where skills are measured tracked and combined into job descriptions. It should be a program where project requirements can be run against the organizational or business unit's skill set and the best teams chosen. It should be a program where employees' skill gaps can be identified as areas of possible growth.

A new sense of accountability

Skills-based Management (SBM) is a concept about instilling change and real change into the organizational mind-set and value-set. SBM should be a conscious strategy, designed and endorsed from the highest management levels. It should be about skills, Human Resource competence in those skills and how skills relate to the organizational plan. The SBM organizational objectives could be to:

a. Instill greater responsibility into the individual for the development of valued skills by providing the informational resources to define, measure and achieve that development.
b. Implant greater accountability in managers and supervisors for their subordinates' aggregate skill-set.
c. Provide top management with consistent, strategic decision-support criteria for Human Resource development, deployment, outsourcing and hiring tactics.
d. In short, it should be creating an environment where individuals' competence in vital skills can be measured, feed back, valued, acted upon, nurtured and molded.

A Line Initiative

The benefit of SBM concept discussed above falls to the particular Line Information System (IS) Organization that could realize or knows, uses and implements Information Systems through Information Technology with the best-developed tailor-made software.

But the Human Resources and Training departments, often the vanquisher of such new ideas, benefit by being viewed as taking a "bottom line" approach. In its barest essence, SBM methods would and should identify each employee's competencies and his/her skill gaps and points each employee to pertinent development solutions to overcome those skill gaps.

When competencies are openly cataloged, people set out to upgrade their abilities, resulting in a more talented, more productive staff. What if you could raise organization-wide productivity by 5 per cent? Consider an organization of 200. At an average fully burdened cost of Rs. 600,000.00 per employee, annual payroll cost is Rs. 120 million. Extracting 5 per cent more from that expense yields a Rs. 6000,000 per year payback. That is the equivalent of 10 "free" people year in and year out!.

Although the Information Systems Department (Globally this term is also known as Information Technology) is often the first to undertake a SBM initiative, any organizational unit can benefit. Information System (IS) Skills, often technical in nature, are perceived as a little easier to quantify, and for this reason IS is often the test case. Furthermore, IS is often under pressure to prove a consistent return-on-investment, and there only a skilled-based approach can help.

The software component

A successful skills-based management initiative requires an enabling skill inventory and decision-support software application. A common mistake is to over-emphasize the importance of software selection and skimp on the organizational strategic planning aspects of the initiative.

A successful skills-based management initiative is far more about effecting cultural and value changes to yield big productivity gains than it is about putting in a skill software package. Software is the easy part. In fact, skills-based management's software requirements call for little more than an up-to-date, easy-to-use skill inventory application.

The basic components of the application are skills, competency ratings, position profiles, employee profiles and learning events. All these are combined in a repository (an underlying database-like structure) that, when fully populated, yields decision support of the highest order.

Skills

Skills should represent those skill-or-knowledge items deemed vital to organizational success. There are four general types of skills:

a. Technical: Relating to specific concepts, methods and tools specific to that business unit, business function or organization.
b. Supervisory: Enabling a person to supervise others effectively.
c. Interpersonal: Enabling employees to communicate and interact effectively.
d. Administrative: General business, line-of-business and support infrastructure.

Many organizations prefer to implement only technical skills in their skills-based management initiatives. Technical skills are observable, demonstrable and testable. The other skill types are softer, more subjective, and less easy in which to confidently quantify competence.

Once the repository is populated, each employee skill profile can be compared to his or her position skill profile and skill gaps can be identified. These skill gaps are management's business risks, but at the same time are also the opportunity presented by the skills-based management.

We can model the competencies we require for success with new technologies and then determine how current talents of Human Resource match up with those modelled needs. Individual Development Plans will quickly put us ahead of competitors still counting on gut feelings.

True Decision Support

With a skills-based management repository populated, vital decision-support and strategic planning information becomes available using consistent, quantified data such as:

a. Employee skill gap reports and employee development plans.
b. Inform each employee where he or she needs development, and what to do about it.
c. Compile skill gap analyses, competency distributions.
d. Where are we under-skilled? What is our bench strength? Where are our risks?

Training requirements

e. Who needs what training? Why? What non-training solutions are available?
f. Team-building queries and competency searches

Who meets a certain profile? Who does not?

g. Succession planning and career planning, Job applicant and analyses; applicant searches.
h. Every manager has access to the skill-based information needed to achieve goals.
i. Managers can see their skill-based risks and can plan to develop talent where it is most needed.

The benefits

Today's organizations, business units or work places (public or private) are under a number of challenges. A department run under SBM tenets has the following advantages:

a. Quicker adaptation to technology change: The usefulness of the latest technologies can be assessed immediately by analyzing position definitions. If these new skills are found to be crucial to the organizational objectives, the skills can be added to the repository, competencies measured, skill gaps identified and immediate training ordered.
b. Attraction and retention of top producers: Good people want to work where there is an institutionalized system of competency rating. They want to work on project teams chosen through objective skill analysis, and not racial, ethnic, linguistic, sect based factional and political favouritism. They want to work where they are given the tools to improve in the right areas.
c. More for the rupee: The training rupee is spent on focused areas of greatest need, the recruiting rupee is spent just on skills that are most needed and the labour rupee is maximized over time because employees develop only those skills that fit the corporate business objectives.
d. The business unit or the business function: This serves the business objective and can quantify exactly where new budget is needed to fulfil that objective, or where current budget has been correctly expended to achieve that objective.

Conclusion

Skills-Based Management goes to the very core of the organization, instilling competence and contribution as the culture's value-set: Top line management views the organization in terms of its total skill-set, allowing them to truly "engineer" the Human Resource to meet the Organizational mission. Employees feel accountability and responsibility for their own personal growth and development. They know exactly where they stand, and exactly what to do to enhance their worth.

Supervisors become more accountable for their people's abilities and foster their subordinates' development accordingly. For those willing to invest modest time and money to achieve fundamental culture shifts and big payback productivity benefits, skills-based management warrants closer consideration.