Creating a Culture of Competence

Preface

Since Creating a Culture of Competence was first published in the year 2000, obviously many things have changed. 9/11 happened, the 2008 mortgage crisis and recession occurred, and we have had a pandemic. Workers are working remotely in ways that most of us never imagined. Remote visual communication has expanded to create new efficiencies, and we have devices on our wrists that were only imagined by comic book characters a few decades ago. LinkedIn has become the global connector for professional workers. And artificial intelligence is changing the world.

In the realm of competencies, HR professionals are more aware of them now than they were in 2000. People understand behavioral interviewing much more than they did then. For most of the corporate world, however, the key messages in this book are as applicable now as they were when they were first published. The more rigorously the practices related to building a culture of competence are implemented and executed, the more effectively will the mission of organizations be achieved. This book has been updated with more recent examples provided, but the core content is as relevant today as it was when first published.

This book is about performance, results, satisfaction, and meaning. It is about helping organizations and people succeed in accomplishing their higher purposes. It is about building a culture of competence, an organizational system that encourages, motivates, and develops people to work cooperatively to accomplish the organization’s purposes and objectives in accordance with its values. This is a book about improving organizational performance and achieving superior business results. There is a substantial body of research that shows that developing people is good business.

As Robert Kegan and Lisa Laskow Kahey describe in An Everyone Culture,

In an ordinary organization, most people are doing a second job no one is paying them for. In businesses large and small; in government agencies, schools, and hospitals; in for-profits and nonprofits, and in any country in the world, most people are spending time and energy covering up their weaknesses, managing other people’s impressions of them, showing themselves to the best advantage, playing politics, hiding their inadequacies, hiding their uncertainties, hiding their limitations. Hiding¹.

This book is intended to contribute to the body of work to minimize this second job.

This book is divided into two parts. Part One, chapters 1 through 5, focus on understanding the relationship between among the three cornerstones of high-performance organizations: culture, competency, and leadership. The corporate culture of an organization determines the rules and norms that shape employee behavior. Employee competence determines the impact employees have on organizational performance. And leadership shapes both corporate culture and employee competence. Part One explains how culture, competencies, and leadership interact to determine organizational success.

Part Two, chapters 6 through 13, provide is the How To section of the book, detailing a step by step, pragmatic approach to creating that culture of competence. This section includes chapters on using vision and competencies for cultural transformation, creating competency models, and using competencies for selection and performance management.

Creating a Culture of Competence

This book is about creating an organization in which employees are learning and growing, working together, and doing their best. It will not discuss specific structures to improve organizational areas or functions, such as quality circles, Kaizen, self-directed work teams, and so on. Instead, we will concentrate on the development and implementation of processes that enhance competency in the organization: the use of vision to provide organizational and individual motivation and direction, the hiring and selection process by which people are brought into the organization and promoted, and the process of competency development. It is our view that managers and employees strong in the critical competencies and in the right culture will have little trouble determining the structures and systems needed to maximize organizational success.

It is the job of leadership to analyze the current state of the organization and its environment, envision the ideal state, and define a set of pathways to move the organization towards the ideal. It is a worthy journey for any leader to undertake, and one of the most satisfying. For at the end of the day, there is little more worthwhile than helping people improve themselves, work together to satisfy the needs of others, and at the same time greatly improve organizational performance.

Acknowledgments

Since the first edition of this book was published, innumerable people have contributed to my understanding of competencies and their application to the world of business. The desire of people to develop themselves and to contribute to their organizations and customers has made this book what it is. They are whom I want to acknowledge the most. This book is the result of the contribution of too many people to mention, the managers and employees of all the companies through whom I have learned about how organizations and people work.

Special thanks to Kavitha Rajendra, my assistant, for relentless encouraging me to work on this edition, and thanks to my wife, Lori Zwell, for rigorously rereading the manuscript. A big thanks to Robert Wright, who encouraged me to bring the best of social science to the world of business. Most of all, this book would not have been possible except for all the clients whom I have had the honor of serving for several decades.

1 Kegan, R. & Lahey, L.L. (2016). An Everyone Culture. Boston: Harvard Business School Publishing.

The Author

Michael Zwell, Ph.D., is Managing Director of the Human Emergence Group, and Professor of Transformational Coaching at Maharishi International University. He is also a certified coach for the Great Game of Business and Past President of the Graduate School Alliance for Education in Coaching. He is also a globally recognized competency and talent management consultant who has helped hundreds of organizations develop systems, processes and people. He has worked on both sides of the table, having founded and built several companies himself in addition to implementing solutions in other organizations.

Dr. Zwell received a B.A. from the University of Chicago with honors in 1970. A Woodrow Wilson Fellow, he received an M.Phil. (1972) and a Ph.D. from Yale University (1974), both in anthropology. After teaching at Rutgers University, Dr. Zwell began a career in executive search in 1980. He founded his own firm, Zwell International, in 1982, initially focusing on executive search in financial services. In 1989, realizing that the traditional executive search process did a mediocre job of predicting performance, he began to study the research on factors predicting job success. In the next few years Dr. Zwell developed and implemented groundbreaking tools for assessing and developing leadership competencies. Dr. Zwell has written, spoken, and published extensively on topics related to getting the best and the most from your people.

Part One.

The Three Cornerstones of Successful Organizations

Chapter 1.

What Makes an Organization Successful?

The Role of Culture and Competence

The question of how to help their organizations succeed is one that senior executives ponder over daily. Every organization has characteristics and features that drive managers crazy and keep them awake at night. If managers allowed themselves to complain out loud, here are some of the things they would say:

Why aren’t our employees more engaged?

Why do they come to me to solve their problems instead of coming to me with potential solutions?

Why do they keep making the same mistakes?

Why don’t they think about how they can do things better?

Why aren’t we closing more sales?

Why don’t more people come up with ideas to solve problems?

Why don’t people do what they say they’re going to do?

Why don’t they work harder?

Why am I doing my work and their work too?

Why don’t our managers work together to accomplish goals instead of protecting their turf?

If the readers of this book were to fulfill my vision for them, they would change their organization, managers, and employees in ways that diminish the causes that give rise to these questions. They would feel more satisfied with themselves and their organization, as employees initiate the actions that reflect their vision.

A Vision of Organizational Possibility

The vision I hold of organizations is that they are dynamic, vital, nourishing places to work in which people set and achieve challenging goals and take responsibility for their own success. Employees go out of their way to satisfy their internal and external customers, act to improve quality, and learn and grow to become more satisfied and effective team members and employees. Employees engage in conflict constructively to reach sound decisions and communicate openly and directly throughout the organization. They take initiative and seize opportunities for themselves and the organization, and act on their own to solve problems. They pride themselves on their innovation and their creative approaches to product and business development. They anticipate the consequences of different options and alternatives and make decisions based on their analysis. They work together across departments and cross-functionally to achieve optimal solutions. In this visionary organization, employees are encouraged and supported to work at their highest potential and succeed at doing so.

Managers in this organization lead by example. They display the above characteristics to an even greater degree than other employees. They are excellent motivators and developers of people, giving their subordinates constructive feedback and coaching to help them improve their performance. They help employees align themselves with organizational initiatives and objectives and build organizational commitment through creative and continually changing methods.

Senior executives are strategic thinkers and visionary leaders who understand industry trends and develop long term strategic plans based on the organization’s strengths, weaknesses, and competitive position. They communicate a vision for the organization and the individuals in it that inspires employees to stretch themselves and work together to achieve the vision. They view the development of leaders as one of their most important job functions and look for opportunities to expand managers’ responsibilities and opportunities.

Finally, all employees, from the CEO down to the most unskilled workers, are committed to continually learn and improve themselves. They are known for their honesty, integrity, and personal credibility. People can be counted on to do what they say they will do. They admit and take responsibility for their mistakes and put themselves at personal risk to take stands based on their deeply held values.

As a consequence of the commitment, behaviors, and traits manifested by all its employees, the organization is recognized as an industry leader and universally respected for its integrity, values, and business success. Its retention rate is among the highest in its industry, and it attracts quality candidates more easily than any of its competitors. It is known as a place where people work hard and morale is high.

The Three Competency Cornerstones Supporting Organizational Success

There are three cornerstones that form the foundation for organizational

success:

The competence of its leadership.

The competence of its employees.

The degree to which the corporate culture and systems foster and maximize competence.

By strengthening these cornerstones, organizations can improve almost every aspect of their functioning and come closer to achieving the vision described above. To understand how these cornerstones interrelate, let us begin with the concept of culture.

Culture is defined as the way of life of a people that is transferred from generation to generation. In business, corporate culture is the way of life of an organization that is passed on through successive generations of employees. Culture includes who we are, what we believe, what we do, and how we do it. Most people are not aware or conscious of their culture: culture is to people as water is to fish. Unless we have been exposed to different cultures, we are largely unconscious to our own. We maintain a set of beliefs, act in certain ways, and follow rules and customs, assuming that this way of life is the natural order of things.

When I speak on the subject of corporate culture, I sometimes begin with the following scenario:

Imagine that you are driving on a highway in the desert. It is completely flat, devoid of vegetation, and absent of any sign of civilization. You come to an intersection with another road, and you can see that there is no car in any direction for at least three miles. There is a traffic light at that intersection, and the light is red. Do you stop at the light?

Typically, one-third of the audience say they will keep driving, one-third say they will slow down and then keep driving, and one-third say they will stop. I then ask the people who said they would stop, Why? They answer, Well, because it’s the law. In other words, they follow the rules because they are the rules. They do not think about whether they fit the circumstance in which they find themselves. Everyday each person unconsciously performs hundreds of small acts in customized ways that form the fabric of their culture.

Another story that illustrates the concept of culture is the custom in the U.S. of men opening doors for women. If you ask men why they do it, the response is generally that it is the courteous or right thing to do. If you then ask them what the right or proper thing to do is in the case of revolving doors, you get a more uncertain and confused answer. Should they allow women to go first, because that’s the right thing to do at doorways? Or should they go first in order to push the revolving doors, thereby making it easier for the woman?

The anxiety men experience in this situation results from the conflict between two cultural rules: On the one hand, men should let women go first. On the other hand, men should do the hard work and make it easier for women. Notice how much the word should appears in these examples. The concept of correct behavior, the behavior we should be doing, shows the process by which the culture conveys its norms and rules to people. Almost all cultural norms and rules operate on a subconscious level. Once they have been learned, we never consciously think about them unless they’re broken. The invisible walls of culture only become apparent when someone bangs into them.

These examples seem innocuous and irrelevant to business. But what if that red light is a bureaucratic procedure in your company that prevents people from being innovative or satisfying customer needs? And what if that revolving door is a new information system that your employees are not comfortable with and that breaks some unconscious tradition in the organization that is no longer relevant to the current environment? Resistance to change resulting from an adherence to unconscious cultural rules is a problem facing all organizations.

Corporate culture defines the rules of the game. It says, This is how we do things. This is what we believe. This is how we interact with each other. These are our attitudes towards work. The rules of corporate culture set the limits of organizational capabilities and effectiveness. One manufacturing client recently related to me a story about an individual who took over the job of operations manager at one of the plants. He was in the job for two years, and during that time made some significant changes in procedures that improved productivity and efficiency in the plant. Because of this success, he received a promotion to a position in another plant. However, six months after he left his initial post, the operations area he had improved had abandoned all his procedures and reverted to the prior practices. The result, of course, was decreased productivity and efficiency. This story illustrates how cultures work: they tend to reject new and different behaviors and operate to maintain the traditional behaviors that people know and are comfortable with.

Changing Culture Today is a Necessity, not a Luxury

Improving corporate culture (though they may call it something else) is a top priority of almost every major corporation. The values and behaviors associated with organizational improvement – becoming more customer-focused, becoming more efficient, cutting costs, becoming more results-oriented, thinking globally – are all aspects of corporate culture.

The demands of today’s marketplace mandate these kinds of cultural changes. Global competition has put a downward pressure on pricing that has never been seen before. Having employee-friendly policies is more important than ever. Having a work culture that fosters retention is paramount. Being agile to respond to changing markets and population demographics is essential.

Another factor driving corporate culture to change is how employment is viewed by the workforce. While in the past it was common for people to have a small number of employers in their career, today it is common on resumes to see people with several jobs with durations of a few months to a couple years. In the past an employer would view this as a sign of instability or an employee’s weakness. Today it can mean any number of things: company instability, employee performance issues, poor management, and so on. Also, switching jobs more frequently is viewed by many employees as an assertive means of taking charge of their careers. The effects of the pandemic, coupled with a new generation of workers, has also changed the nature of the workforce. In a recent poll, 33% of poll participants said they would prefer to be jobless than dissatisfied at work. 58% replied that they would not accept a job if they believed it would have a detrimental impact on their work-life balance. And more than two-fifths (41%) would resign if their company didn’t take suggestions for better working conditions into account. It is evident that respondents view workplace flexibility as a crucial element of pleasure and fulfillment.

A natural consequence of these changes is that organizations that create a culture that fosters and rewards employee development and flexibility will be more successful at achieving their objectives than those that don’t. From this perspective, the ideal culture has several specific characteristics:

A successful culture fosters employee development and flexibility and appreciates their contribution to the organization. The culture has programs and processes to help employees take initiative, set challenging goals, innovate, become effective leaders and managers, and in general, take responsibility for the success of their work unit as well as for the organization as a whole. The well-being of employees is embedded throughout the corporate culture.

The culture provides an avenue for highly competent employees to exercise their talents and impact the organization. If an employee comes up with a good idea to improve production, it will be implemented, and the employee will be recognized for the contribution.

The culture creates a work environment in which employees are engaged, challenged, and motivated. Leaders take responsibility for hiring and developing managers who motivate their subordinates. They structure jobs and teams in ways that keep employees stimulated and help them improve their skills and abilities. Work is a source of pride for employees.

Emotional intelligence is a stated value and is encouraged and rewarded. As we will discuss in future chapters, EQ is a key element of organizational behavior and culture that affects almost all interpersonal relations both internally and externally for the organization.

The culture’s systems of compensation and recognition reward employees for their performance and their contribution to the organization’s success. Compensation may be financial, but it may include other rewards that for many people are at least as important. These rewards include recognition and acknowledgement for their contributions, leadership opportunities, training and development that improves competence, and work opportunities that are challenging, stimulating, and important to the organization. If employees significantly impact the organization and are not rewarded for that impact, expect them to go to other organizations where they feel more appreciated.

The Current Situation

Most organizations struggle to maximize success and productivity. First, few organizations have the quality and quantity of leaders they need. The abilities and experience needed in leaders today are daunting, and most organizations need more leaders with those qualities than they have.

Second, the degree of change in external conditions - the changing marketplace, supplier issues, labor shortages, inflationary pressures, and changing employee attitudes - can lead to companies focusing on short-term challenges rather than developing their cultures to most effectively address those problems and be prepared for dealing with the long-term.

Third, the level of emotional intelligence in most company’s leadership does not create an interpersonal environment that fosters a developmental culture. Engaging a team requires a high degree of rapport, communication skill, emotional awareness, and understanding that requires more EQ than many leaders have.

Developing people requires a complex set of skills. It requires getting to know them, understanding their strengths and weaknesses, developing rapport and a relationship with them, and finding out what motivates them. It requires developing a plan for strengthening weaknesses, utilizing strengths, and providing the right kind of support to help them change their behavior. It is a daunting task, but it is a task demanded by the workplace today.

Finally, most managers do not have a sufficiently broad vision of their job as manager. Many are not even aware that there are things they should be doing that they are not. For example, one key function for many managers is developing the leadership ability of their subordinates. Yet if you ask most managers about the purposes of their job, this would not be mentioned. (It is not a surprise that most organizations do not reward managers for developing the leadership ability of their subordinates.)

Most employees have developed beliefs and behaviors that are at odds with those necessary to function in the ideal corporate culture. From the earliest experiences at home and at school, they developed relationships with authority figures that often stray far from the collaborative, free-flowing interaction required to maximize innovation and productivity. The attitude represented by the statement, It’s not my problem, expresses the basic orientation of many employees. They would like to do a good job, but do not feel ownership of or act in accordance with the larger mission, vision or goals of the organization.

Many people don’t have the competencies and skills to reach or maintain the high level of performance that organizations need today. Competencies like results orientation, initiative, teamwork, innovation, and conceptual thinking are weakly represented in the general workforce. The development of these critical competencies has usually not been fostered by the American educational system, the home, or prior work experiences.

Finally, work cultures themselves are often not conducive to bringing out the best in people. The customs, rules, norms, and systems seldom fully promote the behavior needed to maximize motivation, learning, efficiency, and productivity. I do not know of any organizations that have in place all of the programs and processes necessary to train leaders, develop employees, resolve conflicts productively, and continually improve processes and systems.

On the positive side, the inherent nature of human beings is probably the most powerful force to help us overcome these deficiencies. In general, people have an innate desire to exercise their creative intelligence and natural abilities. They usually want to learn and grow, be engaged, be challenged, solve problems, and be successful. They have hopes, dreams, passions, and wants. They have a desire to be affirmed, to be recognized, and to be appreciated. They want to be in relationships with other people, to work together and interact in ways that provide mutual satisfaction. These characteristics are common to people of every culture.

The aim of cultural transformation is to create integrated structures, processes, and systems that harness the basic human nature of employees. Organizations can become the vehicles through which employees exercise their drives, motivations, talents, and needs, as they work together to achieve the corporate mission.

Creating a Strategy for Changing Your Culture

Changing an organization’s culture is one of the most challenging things a leader can do. A culture is a complex system. Culture by its very nature is designed to resist change, to keep in place the things that have worked in the past and repel elements that threaten the rules and beliefs that worked in the past. Similar to how the body produces antibodies to attract external threats to the organism, organizational cultures have mechanisms to isolate and expel threatening ideas, policies, behaviors, and points of view.

This book is not about theories and practices related to organizational change. It suffices to say that change is more challenging that most of us are willing to admit, and that any large-scale change will involve winning the hearts and minds of all the stakeholders in the organization.

As you attempt to transform your culture you will have battles and skirmishes. You will win some battles and lose others. You will need to choose your battles carefully. The challenge is daunting, but as worthy an endeavor as any you will pursue. If you successfully transform your corporate culture, you will create a work environment that supports people to maximize themselves and their contribution to the company. As a result, employees will have more challenging, stimulating lives, the company will be more successful, its customers will be better satisfied, and you will have more reason to be proud of your leadership. What follow are the elements of a culture change strategy.

Elements of a Culture Change Strategy

A clear vision of your desired culture. In the preceding pages I outlined some of the key elements of a successful culture. By articulating in some detail what your desired culture looks like, you will provide the foundation for your strategy. You will need to communicate this vision over and over again and use it as a source of inspiration and motivation as you transform the culture.

A statement of organizational mission. This is the Why?, the reason for an organization’s existence and the source of the need for cultural change. The combination of vision and mission provides the reason the culture needs to change and is key to communicating to employees, shareholders, and customers.

A set of values and principles that underlie and support the desired culture. A calling to higher purpose inspires us. By grounding your vision and mission in a set of inspiring values and principles, it will be easier to align the organization with your objectives. You will also have a foundation from which to challenge old assumptions and beliefs and replace them with agreements based on these values.

A language and associated conceptual framework that helps change the way people think and act. The words people use reflect attitudes, beliefs, and behavior. By building a common vocabulary that embodies the vision, mission, and values to which you aspire, people will begin to think and act in accordance with the vision.

An in-depth analysis of your current culture to identify the elements of support and those that will sabotage change efforts. Analyze your systems of hiring and promotion, compensation, production, communication, technology, management style, decision-making, and so on, to determine how they function to support and resist your desired culture.

A set of goals to bring about the change in beliefs, behaviors, and systems needed to create your desired culture. These provide the organizational direction and context in which specific initiatives will be developed and implemented.

A plan with initiatives, tactics, action steps, and timelines, whose purpose is to create a detailed pathway to lead you from your current culture to your desired culture. This plan will include specific objectives and action steps with clearly defined, measurable results to be achieved by specific times. This is the battle plan to which you and the organization can be held accountable.

Systems to measure, monitor, and improve progress towards the achievement of the culture. This includes procedures to regularly measure how each initiative is progressing and processes for making prompt adjustments to keep the cultural change effort on track.

The Role of Leadership

There is probably no domain in which the role of leadership is more important than that of cultural transformation. The scope of the project should not be underestimated. As we are reminded every New Year’s Eve, it is difficult for even one person to change entrenched habits. Our neural pathways have been programmed to create a sense of comfort that is associated with performing a sequence of behaviors that have become routine. These behaviors have been continually reinforced by reward and punishment, often in the form of others’ approval or disapproval. Once behaviors have become routine, they feel as comfortable as an old shoe.

Try sleeping on the side of the bed opposite from the side on which you usually sleep. Even a behavior change as minimal as this produces feelings of discomfort that are relieved only when you return to your usual habits. Imagine a more significant behavioral change, such as taking initiative when you haven’t before; or coming up with new ways of doing some of the things that you have done the same way every day for years. Or, imagine giving subordinates direct, honest feedback about their behavior when you have never done it before. Multiply this by the number of employees in your organization and you see the magnitude of the effort you face trying to change an entire culture.

Leaders of corporate cultural transformation need a full range of leadership skills. Ideally, they will be visionaries. They will be able to articulate a vision of the ideal culture, one that inspires others not only to want the new culture, but to commit themselves to its achievement. They will model the behavior that exemplifies the vision and show people by example what they want to create. They will be excellent communicators, conveying the mission, vision, values, and plans throughout the organization. They will be mentors and coaches who help people see their potential, identify barriers to improvement, and create plans to change their behavior. They will provide ongoing encouragement and support as the culture change progresses. Finally, they will see that progress is measured, monitored, and maintained.

In my experience, there is nothing more rewarding or challenging than transforming corporate culture. The real legacy of leaders is not in their short-term successes or failures but rather in the quality of the cultures they create. Managers and leaders who develop a culture of competence and help people become their best can truly take pride in their accomplishment.

The Use Of Behavioral Competencies

To Drive Cultural Transformation

A strategic plan is only as good as its components. One of the most critical elements in the plan to change corporate culture is the conceptual framework that contextualizes the change. The concept of behavioral competencies provides such a framework and can serve as the core of a system and practice that can help you create the culture you want.

Competencies can be defined as the enduring traits and characteristics that differentiate outstanding performance. Examples of competencies are results orientation, initiative, influence, teamwork, innovation, and strategic thinking. The competency methodology grew out of research whose goal was to determine the traits and characteristics that differentiate superior performers. For example, influence and results orientation are two of the competencies that most differentiate superior salespeople from average salespeople.

You may notice that these individual competencies include the same terms and concepts that describe a culture of competence. This should not be surprising, because