The One Big Thing You Need to Do Before You Rewire Your Competency Model

In nearly every client call these days, we hear one familiar request: “We need to update our competency model.”

And almost inevitably, we hear the follow-up: “But we’re not sure how.”

For example, we were recently on a call with the CHRO of a global pharmaceutical company. We were discussing how to shift their leadership requirements to better meet current employee needs. While they had skilled leaders, they knew everything was about to shift.

“It’s a perfect storm,” she said. “People are scared. They’re concerned about their safety, their families, and trying to work from home. They’re worried about their jobs and the future of the company. And through it all, they’re isolated from each other. Our leaders have stepped up to the challenge. They’ve tried to be more available, more accessible, more human, and it’s helping.

But that’s just dealing with the short-term, she said. Longer term, a lot more is about to change.

“I do think leadership at our company will look similar in some ways, and very different in others. We know that it’s necessary to re-think our leadership model, but as ambiguous as the situation is right now, we’re not sure what the answer is.”

This CHRO’s story is nearly identical to the many other conversations we’ve had recently. The bottom line? They know things are changing. They know their business is going to need to transform. They want to update their competency model. But they have no idea where to start.

This Is a Mass Extinction Event

It’s no big surprise that there’s a lot of uncertainty right now. After all, the economy is facing an “extinction level event.”

What do we mean by that? Well, if you remember back to your old science classes, extinction events are disastrous things that quickly wipe out a lot of species, like the asteroid that wiped out the dinosaurs (or any other theory you may subscribe to…). In the business world, extinction events are radical changes in the market that permanently alter the business landscape. A few examples are things like world wars, market crashes such as in 2009, or even the dot-com bubble of the late ‘90s.

The scale and severity of the global pandemic has swiftly and irreversibly transformed large parts of the economy. It’s taken hard hits at once-strong industries, such as oil and gas. And it’s accelerated the bankruptcy of many major businesses that were already struggling.

But there’s a flip side to extinction: Opportunity. In the case of the dinosaurs, the elimination of the reptile giants opened opportunity for mammals (and eventually humans) to take over the planet. And the same will happen for businesses that seize the right opportunities as we enter a new era.

Why does this matter in a discussion about your competency model? Because it’s critically important to understand the magnitude of the business changes that are happening. You will need to tie your talent management strategy and competency model closely to those new business opportunities. You need to know exactly what a Success Profile will look like for leaders in your organization. Otherwise, you may face extinction.

Identify business drivers first

We know it’s not a surprise that you need to align your talent strategy with your business strategy. But surprisingly, we often find it to be a missing piece of competency models.

At DDI, we start by partnering with senior executives to identify business drivers, which are the 3-4 biggest challenges that executives and senior leaders see as most critical for the future success of their organization. We then leverage our extensive research database to align competencies for each level of leadership to the business drivers.

For example, a company that’s gunning for market dominance might focus on business drivers such as driving product innovation, driving profitable growth, and entering new global markets. Meanwhile, a business facing budget shortages will have different priorities. They may be focused on building strategic partnerships, controlling and reducing operating costs, and driving process innovation.

These business drivers define the most important things your leaders need to do to drive success against the organization’s future business strategy. And each one has a set of leadership competencies associated with it. If your leaders don’t have those skills, you need to make it a top priority to rapidly develop them. Or in some cases, you may need to hire new talent who is more closely aligned with the leadership competencies needed for your future direction.

For instance, a business driver like “entering new markets” requires three key leadership skills: business savvy, entrepreneurship, and driving execution. If your leaders don’t have these skills, or rapidly develop them, it’s unlikely that you will succeed in a core part of your business strategy.

As you reset your business strategy in this new economic environment, the first step you need to take is to identify your business drivers. (And if you’re still in the process of resetting your business strategy, check out the blog from our colleague Matt Paese on the 5 Phases of Business Transformation post-COVID.) Once you have your business drivers in place, you can identify the most critical competencies your leaders will need to thrive in this new paradigm. And everything else will start to fall into place.

Five Key Elements of Your New Competency Model

While every company will have unique business drivers, there are some broad trends that we are seeing across industries that companies need to be focused on right now.

As Josh Bersin and Stephanie Neal noted in a recent DDI webinar, the one certainty is that we need to learn to live with deep uncertainty. The dramatic events and subsequent crisis response are no longer a “once in a lifetime,” but will happen with more frequency and urgency than ever before.  Leaders will need to be ready to react and pivot at a moment’s notice. Constantly.

So as you build your new competency model, every company should be considering the following key leadership elements:

1. Demonstrate Emotional Intelligence & Empathy: Dramatic changes stir a lot of emotions in employees. Leaders need to be ready to address those feelings to retain and engage talent.
2. Create a Culture of Trust & Purpose: Employees increasingly demand to work for companies that they believe are contributing to building a better world. Your leaders need to know how to cultivate trust with their teams and communicate purpose regularly.
3. Lead Change & Drive Innovation: The constant changes in the market will force businesses to rapidly change and innovate. You can’t afford to have leaders that drag their feet toward change. You will need leaders who are open-minded, and ready to seize opportunities for change.
4. Build Resiliency in the Workforce: As employees grapple with the pace and magnitude of change, they will need to become increasingly resilient. Leaders can help their teams to become more resilient, and support them in feeling confident in the changes ahead.
5. Foster a Coaching Culture: Without question, employees will need to constantly learn new skills as the business shifts. A strong leadership culture of empowerment and coaching will help employees quickly get up to speed.

What’s next?

A competency model is just the start. The success of the model depends on how your leaders live those competencies.

Once you have you your leadership competency model in place, you need to begin thinking about assessment, selection, and development strategy. How do you know your leaders have the competencies you need? Do you need different leaders in certain roles? How are you going to support your leaders’ development in these key areas?

Unquestionably, there’s a lot of work ahead as we forge a new era of business. Having the right leaders with the right skills will make the difference between extinction and opportunity.

Learn about how DDI does competencies differently.

Shirley M. Mayton, PhD, SPHR, SHRM-SCP is a DDI Senior Consultant with a passion for unleashing potential in others. She has worked with executives across industries and business sectors to create organizational initiatives that enhance leadership capability and drive business success. When not helping organizations become more successful, Shirley enjoys spending time outdoors hiking, biking, camping and birdwatching.

Alex Smith is a Consulting Manager within DDI’s US Operations. In his current role, he leads a team of consultants and is also the Engagement Manager for several of DDI’s largest scale client partnerships across the globe. Alex lives an hour outside of NYC with his wife, and two young children, aged 5 and 3.