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To cite this document:
Anna Sutton Sara Watson , (2013),"Can competencies at selection predict performance and
development needs?", Journal of Management Development, Vol. 32 Iss 9 pp. 1023 - 1035
Can competencies at selection predict
performance and development needs?
Purpose This study explores the utility of an organisation-wide competency framework,
linking competency ratings at selection to later development needs and job performance.
Design Candidates’ scores at a management selection event were compared to their
performance appraisal scores on the same competencies six to 12 months later (N=58).
Scores on numeracy and profit-and-loss tests were also collected at the selection event and
related to subsequent performance (N= 207) and development needs.
Findings Competency ratings at performance appraisal were significantly lower than at
selection interview. Correlations between ratings at interview and at performance appraisal
were generally weak, though one (Understanding the Business) showed significant
relationships with 5 of the 7 performance appraisal competencies. In addition, competency
ratings were related to employee turnover and managerial development needs.
Research limitations / implications Although competencies were clearly defined, inter-rater
variations may have occurred which obscure the relationships. However, it is of interest that
a single competency at selection (Understanding the Business) seems to have the greatest
effect on performance, employment outcome and development needs.
Practical implications A competency framework that is embedded in both selection and
performance ratings can provide the organisation with a clearer understanding of what
determines managerial success, as well as informing better selection decisions. This study
also raises the issue that performance ratings may be influenced more by a manager’s ability
to understand the business than by any other competencies.
Originality / value The use of a longitudinal design provides unique evidence of the
relationship between competency ratings at selection and later performance, employment
outcome and development needs.
Keywords: competencies, selection, development, manager
Introduction
Competency frameworks are suggested to provide a practical way for an
organisation to integrate its HR practices across the employee life-cycle, from selection
through training and development, to performance appraisal and promotion. Using an
integrated framework is purported to enable the organisation to strategically deploy its
human capital to meet business objectives. This study explores the utility of a
competency framework embedded throughout both selection and performance
appraisal processes, identifying the organisational advantages accrued as well as
highlighting some of the difficulties in practical application.
The growing emphasis on strategic HR management during the 1990s resulted in
pressure on HR to reduce costs, improve its services, increase its impact and provide a
more satisfying work experience for its own employees (Kochanski and Ruse, 1996).
Process and competence emerged as key factors in how the HR function was organised.
While definitions of what a “competency” actually is may differ somewhat, there is good
consensus that competencies are characteristics of an individual that underlie effective
or superior performance (Boyatzis, 1982). Their usefulness and popularity lie primarily
in the way they capture a range of individual characteristics in a performance-focused
manner, incorporating not only what a person can do, but what they want to do (Ryan et
al., 2009). Competencies are a common feature of many people management policies
and practices and a whole industry has developed around their application in
organisations. Matching employee competencies and job requirements is claimed to
improve employee and organisational performance, as well as lead to increased
satisfaction (Spencer et al., 1992).
While competency criteria were initially designed for specific applications,
competency frameworks that can be applied across the full range of human resource
processes are now emerging. The competency framework has, therefore, been
recognised for its practical applications in the assessment of candidate suitability to a
particular role, along with assessment of effectiveness post-appointment (McBeath,
1990). Indeed, Soderquist et al (2010, p326) refer to competency as lying at “the heart of
HRM” allowing horizontal and vertical integration of HR activities with each other and
with organisational strategy. A competency framework within an organisation may be
used to structure selection processes, training and development programmes and
performance appraisal templates, providing an integrated and coherent approach to the
management of an organisation’s human capital.
The advantages of implementing integrated competency frameworks within and
even across organisations have been demonstrated in several different industries and
countries. A framework developed for diabetes nurses, for example, outlines how it can
provide a career structure, assist in business planning and allocation of resources, allow
benchmarking of practice across different sites and even help to standardise practice
across different countries (Hill, 2011). Beyond the requirements of a particular role, a
competency framework is also an effective way of identifying and encouraging
behaviours and capabilities within the organisation that can enhance competitive
advantage but are not specifically tied to a particular job role, such as with corporate
entrepreneurship (Hayton and Kelley, 2006). Ryan et al (2009) describe how a
competency framework was used to compare performance within and across different
organisations, highlighting the relative importance of different competencies in
predicting performance in two organisations. Finally, an integrated competency-based
approach to management has the benefit of improving the transparency of HR
processes, fostering employee respect and creating a better work environment (Bonder
et al., 2011).
Once the organisationally required competencies have been identified and
defined, one of the main areas of application for the competency framework is in the
selection interview to ensure as far as possible that candidates who can contribute to
the overall business objectives are chosen. Nearly all European employers interview
prospective staff (Dany and Torchy, 1994), and a review by Judge et al (2000) provided
support for the continued use of the employment interview in selection, despite the
range of validity coefficients being reported by past researchers. Several methods for
improving the effectiveness of interviews have been suggested. For example, Taylor and
Small (2002) noted that using a descriptively-anchored rating scale in the interview
process , such as is often used in competency assessment, could increase validity
estimates to 0.63. In addition, Schleicher et al’s (2002) comprehensive examination of
the construct validity of an assessment centre found that frame-of-reference training
was effective at improving the reliability, accuracy, convergent and discriminant validity
and the criterion-related validity of assessment centre ratings.
A second application of the competency framework is in the performance
appraisal, a process of identifying, observing, measuring and developing human
performance in organisations (Carroll and Schneir, 1982). While there has been
discussion over the accuracy of performance ratings, with some authors suggesting for
example that supervisory affective regard can skew ratings (Lefkowitz, 2000), and
others arguing that affective regard can be seen as a function of ratee performance
(Cardy and Krzystofiak, 1991)there have been clear demonstrations that, similarly to
selection interviews, rating accuracy can be improved using frame of reference training
(Sulsky et al., 2002).
Making use of up to date understandings of competency definition, rating and
accuracy, a competency framework that is embedded throughout the organisation has
the potential to bring large returns in terms of the management of talent. Using the same
competencies for both selection and later performance appraisal, and then making
comparisons of individual’s scores provides an effective means of evaluating HR
functions as well as individual development. Identifying competency ratings at interview
that are associated with later work outcomes such as increased likelihood of turnover,
potential for further development and promotion, and higher levels of performance
would be invaluable in assessing the utility of competency frameworks. This study seeks
to explore the benefits or drawbacks of an organisation-wide competency framework,
by addressing the following questions in a longitudinal study:
RQ1: Are competency ratings at the selection stage related to performance
ratings once the candidate is in post?
RQ2: Is it possible to identify, at the selection stage, competency ratings that are
associated with higher turnover?
RQ3: Can a competency framework provide a tool for identifying training needs
for future promotion?
Method
Data collection
The study was carried out within a single organisation, a leading operator of
managed pubs and pub restaurants with 16 brands in its portfolio, which has recently
adopted a single competency framework throughout its different locations. Structured
selection interviews for management roles were carried out by trained interviewers as
part of a longer recruitment day and typically lasted 45 to 60 minutes. The interview
questions followed the experience-based format that (Krajewski et al., 2006) reported
as producing a validity coefficient of r=0.32, p<0.01. Performance appraisals were
carried out by line managers, 6 to 12 months after recruitment, using the same
competency definitions but no structured interview questions. Ratings from the
selection interviews were drawn from the recruitment database, while performance
appraisal ratings were requested directly from line managers.
Measures
The seven competencies assessed in the selection interview and performance
appraisal were: Understands the Business (UTB), Building the Business (BTB), Focusing
on the Guest (FOG), Leads to Win (LTW), Building Capability (BC), Lives the Values
(LTV) and Making it Happen (MIH). Descriptions of the competencies are given in Table
1 and they were assessed on a behaviourally anchored scale of 1 to 5, with a zero
allocated if a candidate failed to provide any evidence for that competency.
------ Table 1 about here ---------
Candidate scores on Numeracy and Profit and Loss tests were also collected at
selection. These tests were developed with an external consultancy a number of years
ago and included simple mental arithmetic, calculation of profit margins and
understanding of profit and loss sheets.
Sample
Scores from the recruitment day were available for a total of 207 employees
(73% male). Data was also collected on the current employment status of these
employees: whether they were still in employment with the organisation (N = 127) or
had left (N = 80). The main analyses were conducted on the sub-sample of employees for
whom both selection interview performance appraisal ratings were available (N = 58,
81% male). At the time of the performance appraisal, 45% of these were Assistant
Managers, 45% were General Managers and the remainder in “holding” or “designate”
manager roles.
Results
Table 2 shows the descriptive statistics and correlations for all variables.
Competencies at each assessment time were all significantly inter-correlated. The mean
competency rating during appraisal was 3.19 (SD = 0.58), lower than in the interview
(mean = 3.57, SD = 0.51). Comparison using paired t-tests indicated that this difference
was highly significant (t57 = 4.41, p < 0.001) and had a large effect size (partial eta
squared = 0.25).
------ Table 2 about here ---------
To investigate RQ1 (Are competency ratings at the selection stage related to
performance ratings once the candidate is in post?), bivariate correlations were
calculated for corresponding interview and performance appraisal competencies. The
results showed that these were generally weak, with only UTB demonstrating a
significant correlation (r = 0.33, p < 0.05). Interestingly, scores on this competency at
selection were significantly correlated with ratings at performance appraisal of FOG (r =
0.30, p < 0.05), LTW (r = 0.31, p < 0.05), BC (r = 0.34, p < 0.01) and MIH (r = 0.37, p <
0.01). In addition, interview FOG was significantly related to appraisal BC (r = 0.31, p <
0.05), and interview MIH was significantly related to appraisal FOG (r = 0.30, p < 0.05)
Table 3 shows the means and standard deviations for ratings at selection
interview, split by current employment status (leavers and those still at the
organisation). To address RQ2 (Is it possible to identify, at the selection stage,
competency ratings that are associated with higher turnover?), one-way ANOVA was
conducted to compare leavers’ scores with the scores of those still in employment.
Results demonstrated that leavers were rated significantly lower than active employees
at the selection stage on three competencies: UTB (F (1, 205) = 3.92, p < 0.05), BC (F (1,
205) = 5.12, p < 0.05) and MIH (F (1, 205) = 4.71, p < 0.05). In contrast, Numeracy (F (1,
205) = 1.93, p > 0.05) and Profit & Loss (F (1, 201) = 2.13, p > 0.05) scores were not
significantly different between the leaver and active employee groups.
----Table 3 about here----
Finally, stepwise discriminant analysis was conducted on the selection interview
competency ratings to explore RQ3 and determine whether job role (Assistant Manager,
General Manager or Holding Manager) could be distinguished by selection criteria. A
single function emerged with an eigenvalue of .37, explaining 98% of the variance
(Wilks’ lambda = .725, 2 (6) = 60.7, p < .001), and containing three variables: Profit and
Loss, UTB and BC. The standardised discriminant function coefficients demonstrate the
unique contribution of each independent variable to the function and were as follows:
Profit & Loss = .52, UTB = .45 and BC = .5. The discriminant function was able to classify
cases correctly 55% of the time. Assistant Managers could be distinguished from General
Managers very well, scoring lower on the combination of competencies captured by this
function, while General Manager Designates were intermediate between the two (Table
4).
----Table 4 about here ----
Discussion
The combined means for interview and appraisal competency ratings were
significantly correlated and had a large effect size, a result comparable with those found
by previous researchers (DeGroot and Kluemper, 2007, Hermelin et al., 2007), though
there remains a question mark over whether the selection interview is as strong a
predictor of future performance as hoped (e.g. Cook, 2009). Overall, appraisal ratings
were lower than selection interview ratings. This could be due to either exaggeration
during the selection process (many candidates now are comfortable with competency-
based interviews and understand how to sell themselves well), the influence of other
work-related factors on day-to-day performance or how the competencies are
understood by selection interviewers and line managers.
Of further note is the high inter-correlation between competencies measured at
the same time, possibly representing the well-known halo effect (see for e.g. Haurani et
al., 2007). Although the training provided to raters at both selection and appraisal would
hopefully mitigate against these problems somewhat, it is worth considering how useful
it is to continue to measure seven different competencies in this organisation. It may be
that a single, overall rating is of more use. A similar finding was reported by Haurani et
al (2007) in their study of competency ratings of medical residents, which found high
inter-correlations between the competencies they studies. They suggest that raters may
not be able to differentiate between the competencies when rating performance.
Interestingly, in this study, a single competency at interview, Understanding the
Business, was positively related to five of the seven competencies at appraisal. It seems
that an individual who is skilled in understanding the business is likely to outperform
his or her colleagues on all the other competencies as well. Similarly, Haurani et al
(2007) found that communication and professionalism were related to higher scores on
other competencies. A burgeoning area of research in selection interviews is their use in
assessing Person-Organisation Fit, and in their review Judge et al (2000) highlight how
the interviewer’s judgement of P-O fit may be based candidates’ personal characteristics,
such as congruence between their career goals and the organisation’s business goals.
Clearly, an applicant with a greater understanding of the business would be able to
demonstrate this congruence more effectively and therefore may well be perceived as
having greater fit. Taken together, these results indicate that there may be a critical
competency (or two) that determine an individual’s success in an organisation. Although
it waits further investigation, it may be that understanding the requirements of the
organisation, whether this is industry-specific knowledge or an understanding of how
high-performing individuals in that organisation tend to behave.
The competency framework in this study was also useful in identifying training
and development needs. General Managers had higher scores at selection on Profit and
Loss understanding, Understanding the Business and Building Capability. This highlights
which competencies future training and development should focus on if the organisation
wishes to develop its current Assistant Managers to fill General Manager roles.
Development focused specifically on helping Assistant Managers to understand the
business and its requirements is likely to help the organisation to develop its talent from
within. Given that understanding the business is so important to high performance in
this organisation, developing talent within the organisation rather than trying to bring it
in from outside is likely to be the best approach. It would be interesting to see if similar
research in other organisations showed the same results.
Finally, it was found that ratings at selection interview ratings were related to
employment outcome, with leavers scoring significantly lower than those who stayed in
employment with the organisation. This demonstrates the utility of using well-defined
and developed competency ratings at selection in order to improve selection decisions,
as well as highlighting the utility of a competency framework in evaluating and
improving HR processes.
Although the findings of this study are very promising, identifying clear benefits
to the organisation in terms of maximising and building on its talent, the results should
be understood in context. The organisation studied for this research had historically had
a clear split in culture and operations between two divisions and had recently attempted
to bring them together, partly through the use of a combined competency framework.
The raters, therefore, may have been slightly unfamiliar with these competencies. In
addition, the large number of interviewers and appraisers mean that there could be
issues with inter-rater reliability.
In summary, this study demonstrates that an organisation with a single
competency framework underlying both selection and performance appraisal can use
the information it gathers to manage its talent more effectively.
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Table 1: Definitions of competencies
Competency Abbreviation Description
Understands the Business UTB Understands and applies commercial and financial principles, and views issues in terms of
sales, costs, profits and markets. Demonstrates an ability to work with and interpret
numerical information. Is profit conscious and appreciates the commercial impact of
activities on business profits. Is aware of competitor activity and market trends. Seeks out
information on guests, markets and competitors, and commits to keeping up-to-date with
market and industry developments.
Building the Business BTB Focuses on new business opportunities and activities that will build the business and bring
the largest return. Is focused on maximising business return and understands key business
drivers. Utilises appropriate selling techniques that are consistent with the brand / offer.
Shows a commitment to brand / offer goals and standards and follows through to ensure
that these are delivered in running and building the business.
Focusing on the Guest FOG Is committed to meet and exceed guest expectations by providing a prompt, efficient and
courteous service and going the extra mile. Reinforces the importance of providing
personalised service to guests without compromising the brand / offer and business
offerings. Quickly builds rapport with guests and works hard to exceed their needs.
Develops and maintains professional relationships with guests. Encourages a guest service
orientation within the business.
Building Capability BC Actively seeks to improve the capability of individuals and teams by providing coaching and
development opportunities. Identifies developmental needs, arranges appropriate learning
experiences and motivates people to develop themselves. Values teamwork and ensures the
practical needs of teams are met. Builds and aligns teams with the vision of the brand / offer
and the business and organisation, and supports and fosters effective teamwork.
Competency Abbreviation Description
Leads to Win LTW Provides the team with a clear sense of direction and takes time to explain to individuals
how they can contribute to the business goals. Takes charge, organises resources and steers
others towards successful task accomplishment. Creates empowering conditions that
enable individuals and teams to achieve their goals. Enthuses and motivates others by
providing a clear sense of purpose, inspiring a positive attitude towards work, and arousing
a strong desire to succeed amongst team members. Communicates clearly and persuades
others around to their point of view.
Lives the Values LTV Maintains high ethical standards and acts in a way that is consistent with the organisational
and business values. Shows integrity and fairness in dealings with others and is reliable and
trustworthy. Is committed to the achievement and maintenance of quality. Encourages
organisational and individual responsibility towards the community and the environment.
Actively promotes compliance with legal and safety requirements, and demonstrates
commitment to the organisation.
Making it Happen MIH Takes responsibility for actions, projects and people, initiates action and generates activity.
Delegates work effectively and monitors progress against delegated activities. Maintains
high professional standards and shows commitment to the organisation and building the
success of the business. Drives projects along, gets results and ensures that key business
objectives are met. Utilises planning skills to identify actions and objectives and clearly
articulates them. Schedules activities to ensure optimum use of time and resources. Shows
enthusiasm and maintains energy and commitment in the face of setbacks and pressure.
Table 2: Means, SD and Pearson correlation co-efficients for all variables
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.
Mean SD
1. Numeracy 4.07 .915
2. Profit & Loss 2.91 .786 .360**
3. Int UTB 3.45 .841 .028 .249
4. Int BTB 3.52 .778 .023 .248 .444**
5. Int FOG 3.66 .664 .069 .251 .533** .522**
6. Int LTW 3.72 .790 -.095 .020 .348** .408** .518**
7. Int BC 3.55 .680 .022 .160 .327* .380** .585** .550**
8. Int LTV 3.50 .682 .084 .184 .275* .430** .504** .554** .378**
9. Int MIH 3.62 .721 -.199 .159 .285* .325* .418** .521** .398** .464**
10. PA UTB 3.13 .798 .048 .329* .330* .074 .235 -.026 .060 .024 .056
11. PA BTB 3.04 .938 -.004 -.031 .175 .065 .038 .135 .127 -.075 .193 .391**
12. PA FOG 3.25 .768 .175 .184 .299* .220 .258 .217 .235 .176 .301* .519** .387**
13. PA LTW 3.06 .636 .219 .294* .309* .024 -.012 -.001 .043 -.172 -.064 .616** .525** .364**
14. PA BC 3.18 .730 .309* .260 .337** .188 .312* .164 .184 .150 .183 .592** .655** .481** .695**
15. PA LTV 3.29 .744 .228 .212 .235 .067 .084 -.114 .091 .052 .047 .556** .535** .522** .611** .660**
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.
Mean SD
1. Numeracy 4.07 .915
2. Profit & Loss 2.91 .786 .360**
3. Int UTB 3.45 .841 .028 .249
4. Int BTB 3.52 .778 .023 .248 .444**
5. Int FOG 3.66 .664 .069 .251 .533** .522**
6. Int LTW 3.72 .790 -.095 .020 .348** .408** .518**
7. Int BC 3.55 .680 .022 .160 .327* .380** .585** .550**
8. Int LTV 3.50 .682 .084 .184 .275* .430** .504** .554** .378**
9. Int MIH 3.62 .721 -.199 .159 .285* .325* .418** .521** .398** .464**
10. PA UTB 3.13 .798 .048 .329* .330* .074 .235 -.026 .060 .024 .056
11. PA BTB 3.04 .938 -.004 -.031 .175 .065 .038 .135 .127 -.075 .193 .391**
12. PA FOG 3.25 .768 .175 .184 .299* .220 .258 .217 .235 .176 .301* .519** .387**
13. PA LTW 3.06 .636 .219 .294* .309* .024 -.012 -.001 .043 -.172 -.064 .616** .525** .364**
14. PA BC 3.18 .730 .309* .260 .337** .188 .312* .164 .184 .150 .183 .592** .655** .481** .695**
15. PA LTV 3.29 .744 .228 .212 .235 .067 .084 -.114 .091 .052 .047 .556** .535** .522** .611** .660**
16. PA MIH 3.23 .774 .248 .269* .370** .085 .244 -.025 .133 .122 .160 .567** .370** .505** .529** .653** .662**
* p<0.05
** p<0.01
I = Interview, PA = Performance Appraisal, UTB = Understands the Business, BTB = Building the Business, FOG = Focusing on the Guest, LTW
= Leads to Win, BC = Building Capability, LTV = Lives the Values, MIH = Making it Happen
Table 3: Functions at Group Centroids
Function 1
Assistant Manager -.561
General Manager .682
General Manager Designate .444
Table 4: Selection data by employment outcome
Still employed (N=127) Left organisation (N=80)
Mean SD Mean SD
Numeracy Score 4.01 .930 3.83 .911
Profit and Loss 2.93 .879 2.74 .938
Interview - UTB 3.53 .898 3.28 .886
Interview - BTB 3.56 .720 3.41 .724
Interview - FOG 3.76 .672 3.63 .603
Interview - LTW 3.69 .753 3.61 .720
Interview - BC 3.61 .680 3.38 .769
Interview - LTV 3.60 .759 3.54 .655
Interview - MIH 3.63 .722 3.41 .669