A new UK industry Index reveals that large businesses with best-in-class processes for investing in people outperform their sector peers by more than double on key performance indicators for growth in market share, profitability and sustainability. With the Office of National Statistics showing the UK languishing second from the bottom of G7 nations for worker productivity, the findings suggest substantial economic rewards if widespread implementation of best practice in staff development becomes a reality.
The findings come in a new report by a consortium of experts in Competency and Capability Management (CCM). The authors, now working with the Cabinet Office and local government to improve delivery of large projects, have developed the CCM Index which measures individual organisations against their sector peers and sector versus sector. The index is based on interviews with senior executives and analysis of correlations between corporate KPIs, sophistication of competency management and investment in competency management.
Andy Todd, Managing Director of Commercial Catalyst Ltd, one of the report authors, commented:
“The research shows it is possible to quantify the impact of investing in staff development on a firm’s competitive advantage. It’s definitive proof that managing the competency and capability of staff is a critical issue that deserves attention in the boardroom as well as the HR department. Those who do it best massively outperform those who don’t. Looking at the impact on growth in market share, profitability and financial sustainability, the gap between those with the best CCM and the sector average is much bigger than we expected.
“CCM is about mapping skills against corporate goals – something many executives admit their organisations are not good at. This is especially pertinent at a time when Britain faces an impending skills crisis and lags behind other G7 nations in terms of productivity. The new government has a mandate to boost economic growth and along with commissioning bodies like the Highways Agency and Network Rail, they are beginning to demand proof of competencies from businesses they work with. There is a £466bn infrastructure plan for the UK, but British firms could be overlooked in favour of overseas competitors if their CCM doesn’t improve.”
Competency and Capability Management is defined as the ability to capture and quantify the competency and capability of people in an organisation, map it to roles and optimise acquisition, development, retention and motivation of staff to maximise organisational performance.
A report summarising the research, Trends in Competency Management, also finds that CCM can add most value to business performance when it is applied to senior operational and programme managers, rather than lower-middle management, rank and file labour and skilled trades. However, these are often viewed as the most difficult staff to address because the so-called ‘soft skills’ they typically require are difficult to measure.
Andy Todd added:
“Workers lower down the food chain are low hanging fruit and shouldn’t be ignored, but the real rewards are found higher up the management structure – particularly those with operational or programme responsibility. Businesses typically find these the hardest levels to address, but top companies use cutting edge techniques, data and systems to make a genuine difference.
“A blend of economic, political and business factors means it has never been so important for firms to get the most out of the people they employ and to ensure their competencies and capabilities are aligned with corporate goals. The message for businesses is clear. It’s time to review your CCM processes and learn how the best in your sector and in other sectors drive performance from their people.”
The CCM Index finds that sectors with substantial competition between firms and high risk mitigation measures, such as Aerospace and Defence, or Engineering and Heavy Construction, tend to have the best CCM performance and less variation between firms than other sectors. Conversely, Healthcare, Oil and Gas and Information Technology have high variation between firms which is starkly reflected in the relative performance of companies.
The authors of the report are Online Profiling Ltd, experts in competency management, and The Project Academy, experts in project management. Having worked together on many competency and project management projects for large corporations and Government departments such as and the Cabinet Office over more than two decades, they shared information for analysis with Commercial Catalyst Ltd and Havenshire Ltd – firms with experience of business performance improvement from multiple perspectives.
