EMPLOYEE COMPETENCY DESIGN

DEFINING THE EFFECTIVENESS OF EMPLOYEE COMPETENCY DESIGN

Trusted Data supported a regional Telecoms company with a HR analytics engagement to help the client better understand the situational relevance of their competency framework to performance and reward

Providing visibility between Competency, Performance and Reward

After investing signficant consulting fees with a global firm in the previous year, our Client was unsure if their new competency framework could rationalise performance measurement and payroll spend.

The client had nearly 3500 employees across 6 core functions with significant data at the employee level by job grade.

Determining the correlation between employee reward and competency design was centre to the Clients’ objectives in engaging Trusted Data.

 

Using analytics to rationalise performance benchmarking & pay

Challenge

Vast amounts of employee data on competency weighting, employee competency scores, employee performance assessment data and employee pay.

Individual competency scores were weighted 30% towards the final performance assessment score.

No present methodology to explain how this weighting was determined.

Rationalisation required on $232 mn annual payroll spend across 8 different job grades.

Trusted Data’s analytics approach needed to itemise answers to the following:

  • Is the new competency system effective
  • Is there a statistically significant relationship between individual performance and competency scores
  • Is the current weightage justifiable in annual performance appraisals
  • What is the impact of investment and process on the Clients’ organisation

 

 

Solution

Our findings were as follows:

1. Taking, the pre-determined 30% weighting of competency scores to the final performance score, derived an average employee performance score of 85.6%.

2. Undertaking a robust validation of the correlation between individual competency and performance scores, clarified that competency scores were not statistically explaining performance.

3. Competency scores were in fact only explaining a 10% weighting to an employees’ final performance score.

4. Utilising this ‘true’ weighting of 10% to the final employee performance score provided an adjusted average employee performance score of 68.65%, effectively 17% (one-sixth) lower than the current framework.

5. In summary, the current competency framework could not explain employee performance and was subsequently inflating both employee performance scores and pay.

6. With 17% of current annual payroll spend, totalling $39 mn, the Client faced a huge payroll exposure that could not be explained either by employee performance or employee competency. 

computed inflation of performance scores

17%

payroll spend unaccounted through current system

$39 mn