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Article Excerpt
Abstract
Even though the literature on competence in organizations recognizes the need to align organization level core competence with individual level job competence, it does not consider the role of information technology in managing competence across the macro and micro levels. To address this shortcoming, we embarked on an action research study that develops and tests design principles for competence management systems. This research develops an integrative model of competence that not only outlines the interaction between organizational and individual level competence and the role of technology in this process, but also incorporates a typology of competence (competence-in-stock, competence-in-use, and competence-in-the-making). Six Swedish organizations participated in our research project, which took 30 months and consisted of two action research cycles involving numerous data collection strategies and interventions such as prototypes. In addition to developing a set of design principles and considering their implications for both research and practice, this article includes a self-assessment of the study by evaluating it according to the criteria for canonical action research.
Keywords: Canonical action research, competence management systems, core competence, design principles, HR management, prototypes, skill-based approach
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Introduction
The concept of core competence advanced by Prahalad and Hamel (1990) has not only reoriented the field of strategic management toward a focus on organizational processes and structures that produce competitive advantage, but has also prompted many organizations throughout the world including those in the United Kingdom and the United States to identify and develop their own core competencies (Scarbrough 1998). Core competencies are defined as the collective knowledge and capabilities that are embedded in the organization; they are central determinants of the organization's competitiveness due to their centrality to customer value, their resistance to imitation and their ability to extend to new business applications (Hamel and Prahalad 1994). The core competence perspective of strategic management reflects the resource-based view of the organization (von Krogh and Roos 1995), which argues that an organization's competitive advantage derives from the valuable, rare, and inimitable resources that it can marshal (Barney 1991). With its focus on organizational knowledge as a key strategic resource, the resource-based view in general, and the core competence perspective in particular, is well-suited to strategy formulation and management in knowledge-intensive organizations (Conner and Prahalad 1996).
Competence management involves the specification of an organization's competence needs, the identification of competence gaps (between needed and actual competence), competence sourcing, competence development through training and coaching, and the staffing of projects (Baladi 1999). While determining the organization's extant and desired core competencies is generally part of strategic management's macro focus (Simpson 2002), managing those competencies at an operational level is usually the responsibility of human resources (HR) management (Bergenhenegouwen et al. 1996). The HR discipline typically concerns itself with the concept of job competence at the level of the individual, i.e., the micro level (Nordhaug 1998; Simpson 2002). Job competence is defined as possessing skills that are critical for the individual to master if he/she is to achieve high performance in the completion of a task (Boyatzis 1982).
Given the recognition that organizational core competence is dependent on and inextricably intertwined with individuals' job competence, there has been considerable effort in the literature to bridge the macro and micro levels of analysis (e.g., Muffatto 1998; Nordhaug 1998; Rothwell and Lindholm 1999; Simpson 2002). These efforts point out that HR systems (processes, policies, and technologies) need to be aligned with the organization's strategy (Hagan 1996). Lado and Wilson (1994) explicitly highlight the possibility that HR systems can damage the organization's competitive advantage by inhibiting the mobilization of new or the exploitation of existing competencies. For instance, HR systems designed to achieve goals such as stability, predictability, and efficiency, which are typically associated with bureaucratic modes of organizing, are likely to generate core rigidities (Leonard-Barton 1992) and unmotivated employees (Morgan 1986).
Despite this prior research on the danger of misaligned HR systems, there appear to be no studies on competence management technologies, that is, information systems specifically designed to help organizations manage competence, both at the individual and organizational level. Given the importance of information technology (IT) in providing a common platform for competence management in such organizations (Alavi and Leidner 2001; Andreu and Ciborra 1996; Davenport and Prusak 1998), we regard this lack of research a considerable shortcoming, especially in light of the strategic role that knowledge and competence play in knowledge-intensive organizations (Alvesson 1993; Starbuck 1992). The research we present here is intended to address this shortcoming by studying competence management systems (CMS) with the purpose of developing and testing design principles that render these systems supportive of knowledge-intensive organizations that are embracing a core competence approach.
Design is central to the information systems discipline (Hevner et al. 2004; Markus et al. 2002), and the action research method, with its iterative hypothesis development and testing, is particularly appropriate for the development of system design principles (Walls et al. 1992). Thus, we conducted a 30-month action research study, which consisted of two cycles with the following phases: diagnosing, action planning, action taking, evaluating, and specifying learning (Susman and Evered 1978). The study involved six Swedish organizations that also partially funded our project. The remaining financial support came from VINNOVA. (2)
Due to the long duration of the research and the conditions of our funding, we published insights and intermediate results at various stages of the project so as to secure ongoing financial support. These publications reported on CMS implementation failures (Lindgren and Henfridsson 2002), CMS design assumptions (Lindgren et al. 2003), and CMS design principles (Lindgren and Stenmark 2002). The research contribution we offer here goes beyond these earlier publications in that our analysis considers the 30-month action research project in its entirety. We develop an integrative model of competence, a competence typology, and consider the unanticipated consequences of our design principles for the first time. We thus synthesize all the steps in our study and, based on the lessons learned, refine our initial design principles.
The paper proceeds as follows. First, we review the literature on competence and develop a model that integrates macro and micro level definitions of competence and incorporates a typology of competence. This is followed by a method section that describes action research in general, the criteria by which it should be evaluated, and details about our particular action research project. Then, we present our two action research cycles. In our discussion of the research findings, we highlight both the anticipated and unanticipated consequences of our interventions. We conclude with not only a set of revised design principles, but also an assessment of our research vis-a-vis the criteria for evaluating canonical action research.
Competence in Organizations
The literature on competence in organizations appears to be divided along disciplinary lines. The strategy literature focuses on the macro or organizational level of analysis and concerns itself with the notion of core competence as a means of generating competitive advantage (Prahalad and Hamel 1990). According to Lado and Wilson (1994, p. 702), core competencies
include all firm-specific assets, knowledge, skills, and capabilities embedded in the organization's structure, technology, processes and interpersonal (and intergroup) relationships.
Thus, at the organizational level, structural features such as culture (Barney 1986), routines (Nelson and Winter 1982), and learning (Hamel and Prahalad 1994) are sources of a firm's core competence, and hence, its competitive advantage.
In contrast, the HR literature focuses more on the micro or individual level of analysis and views competence as "an underlying characteristic of a person, which results in effective and/or superior performance in a job" (Boyatzis 1982). The personal characteristics that facilitate high performance (and that are therefore part of individual competence) include motivation, disposition, self-image, values, moral standards, norms of social behavior, and traits, as well as communication, general reasoning, and learning capabilities (Bergenhenegouwen et al. 1996; Rothwell and Lindholm 1999).
Given the recognition that macro level competencies are highly dependent on and largely embedded in an organization's human resources (Scarbrough 1998), that is, individual members of the organization, there are considerable efforts to integrate these two perspectives on organizational competence through the development of taxonomies and theoretical frameworks (e.g., Muffatto 1998; Nordhaug 1998; Rothwell and Lindholm 1999; Simpson 2002). Indeed, competence-based theories of the firm have been developed (Sanchez and Heene 1997; von Krogh and Roos 1995).
A number of these integration efforts highlight the need for alignment between the organization's strategic orientation and the assumptions underlying its HR practices (Bergenhenegouwen et al. 1996; Lado and Wilson 1994). Hagan (1996) suggests that an organization's adoption of a core competence perspective will require shifts in job and reward system design, as well as in staffing and training practices. For instance, in a core competence organization, more work is done in project teams and individuals move around the organization to complete different assignments. In addition to challenging the individual employee by demanding more effort, flexibility, and motivation in such a competence-based organization (Bergenhenegowen et al. 1996), these changes in job design challenge the value of job descriptions and HR practices such as hiring and training that are based on assumptions of more stable jobs and individually-assigned tasks (Lawler 1994).
Lawler and Ledford (1992) distinguish between job-based and skill-based approaches to HR management, and argue that HR departments need to adopt a skill-based approach in order to support their organizations' development of core competencies. They highlight that the traditional, job-based approach develops job descriptions and then tries to find and shape individuals to fit them. They contend that this paradigm is problematic in contemporary organizations because job descriptions are generally based on how the organization has operated in the past, with little or no appreciation for its future needs. Furthermore, the job-based approach fails to take into account individuals' abilities to contribute to the organization's success beyond the boundaries of their job. By incentivizing and evaluating employees within their job description boundaries, capabilities such as learning, flexibility, communication, collaboration, and innovation across organizational boundaries, all crucial in an organization that seeks competitive advantage through core competencies, are generally neither acknowledged nor developed in the job paradigm.
In contrast, the skill-based approach to HR management focuses on the individual and his/her ability to contribute to the organization's core competence and competitive advantage (Lawler 1994). Instead of relying on job descriptions, a skill-based approach relies on person descriptions, which identify the skills and behaviors that an individual needs to be effective in a particular work area. With its emphasis on competence, the skill paradigm focuses more on behavior than on tasks and processes. The skill-based approach is particularly effective in situations requiring knowledge and/or team work, as both imply a relatively high degree of self-management and the individual worker's ability to add unique value to products and services. Furthermore, skill-based remuneration systems reward employees for learning and flexibility, and for developing skills that allow them to complete multiple tasks.
Lawler and Ledford identify a number of challenges that face organizations wishing to manage competencies. Shifting from a job-based orientation to a skill-based one requires significant change in the physical (e.g., systems and practices) and conceptual (e.g., assumptions and beliefs) infrastructure of HR departments. For instance, the selection of individuals for organizational membership rather than for a particular job is relatively foreign to organizations that have traditionally operated in a top-down, planned manner rather than an emergent one. Furthermore, organizations will need to invest in new technology that supports a skill paradigm (Lawler and Ledford 1992).
Having highlighted the need for alignment among the structural features of organizational competence, especially between the organization's strategic orientation and its HR infrastructure, we now turn our attention to individual-level competence and its development. Individual competencies are skills that are critical for individuals to master if they are to achieve high performance in the completion of a task (Boyatzis 1982). Even though knowledge is central to individual competence (von Krogh and Roos 1995), the concept of competence couples practice (Bassellier et al. 2003) and action (Muffatto 1998) with this knowledge component. Furthermore, Sandberg (2000) highlights that workers' own conception of the work is central to our understanding of competence.
Emphasizing that competence is the enactment of knowledge, Muffatto (1998) suggests that competence is an ongoing accomplishment (also see Orlikowski 2002). It is not an object that either an individual or an organization owns, but rather a continuous process of production and reproduction (Scarbrough 1998). In this ongoing process, competence plays a dualistic role, serving both as input to and output of competent action. Kim's (1993) model of learning is helpful in identifying the various components of the competence development process at the level of the individual. Kim's model is made up of two parts: (1) a dynamic learning cycle consisting of the phases of experiential learning (Kolb 1984), i.e., experience, reflection, abstraction and testing, and (2) memory, a stock of conceptual frameworks and operational routines. Memory is both the source and the destination of the learning process.
Viewing competence as ongoing accomplishment and applying Kim's model of learning to competence development, we can distinguish between different types of competence. In order to act competently, individuals rely on their stock of competence, which is derived from past actions accumulated over time. However, as with the use of knowledge (Stehr 1994), the use of extant competence is not a mere transfer from stock to a specific situation or action context. Instead, applying stored competence implies a process of re-creation that transforms the competence taken from stock. As such, the previously accumulated stock of competence is distinct from competence-in-use.
Taking a life-cycle perspective of competence, the literature not only suggests a past (competence-in-stock) and a present (competence-in-use) stage of competence, but also a future stage. For instance, Lawler and Ledford emphasize that "a critical element in an individual developing along a career track is the individual's desire, interest, and learning capability" (p. 386). This suggests that, in addition to developing competence merely through the reproduction of past competencies in a situated context, individuals are also purposive in their competence development, motivated either by their own competence interests or organizational competence needs. We label this form of competence competence-in-the-making.
Informed by the literature reviewed thus far and by Giddens' (1984) structuration theory as a way of integrating the mutually dependent realm of organizational structure (macro level) and individual action (micro level), we now develop a model of competence in organizations (see Figure 1). Given our research objective, namely the development of design principles for competence management technology, we chose Orlikowski's (1992; also, Orlikowski and Robey 1991) adaptation of structuration theory for our conceptual infrastructure as it highlights the role of IT in the recursive, organizational structuring process.
According to structuration theory (Giddens 1984), the structural properties of social systems (the structure level in Figure 1) are enacted through recurrent human action and interaction (the agency level in Figure 1). Such enactment is mediated through a number of elements (i.e., facilities, norms, and interpretive schemes) that both enable and constrain human action. Technology embeds these mediating elements (Orlikowski and Robey 1991). As individuals use technology and thereby draw on these mediating elements (shown as technology mediating between the structure and agency level in Figure 1), they recursively produce and reproduce the social structures that shape their action.
Thus, recurrent actions of organizational members draw not only on extant competence (competence-in-stock) to generate new competencies, but also on a variety of assumptions, expectations, and norms embedded in the structural features of the organization, which include core competencies and HR practices (arrow c), and CMS (arrow b). By applying these mediating elements, organizational participants create and re-create the core competencies that characterize the organization's competitive advantage (arrows a and b).
This structurational perspective on organizational competence and its development informed our action research study, which was motivated by our quest to develop and test CMS design principles. As our integrative model demonstrates, CMS form part of the mediating structure that facilitates the smooth interaction between competencies at the macro and micro levels of the organization. In order to support organizational competence management in day-to-day action, the design of CMS must appreciate the reciprocal relationship of the three competence types (competence-in-stock, competence-in-use, competence-in-the-making) and the organization's core competencies.
Method
Action Research
Given our objective of developing and testing design principles that render CMS supportive of knowledge-intensive organizations with a core competence orientation, we selected action research as our mode of inquiry. Action research has been described as "a post-positivist social scientific research method, ideally suited to...
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