November 19, 2008 Discover and Use Your Core Competency Presented by Tom McIntire Tom McIntire Three Sigma, Inc.

Overview What are core competencies and why are they important Identifying your core competencies Developing core competencies

Why are core competencies important? They are the skill sets your organization possesses that set it apart from its peers. They are what make your organization unique. They are sources of competitive advantage. They are the building blocks to future opportunities and earned income ventures.

Organizational competencies Functional capabilities and experience a firm possesses by virtue of the way it integrates and blends the individual skills of its personnel to achieve a benefit. Examples : Workers with knowledge and experience in receiving and distributing donated goods. Workers with knowledge and experience in supervising and maintaining overnight shelters. Workers with knowledge and experience in controlling costs. Workers with knowledge and experience in fund raising.

Table stakes. Certain competencies are required by all organizations in order to operate effectively and carry out their mission. These fundamental competencies are called “table stakes”. They define the standard level of competency needed to sustain operations

Fundamental competencies Marketing-provides the customers and clients Operations/ production- provides the products and/or services Human resources- provides the personnel Fund raising- provides supplementary income Administrative- provides essential support Accounting/ book keeping- provides financial control Payroll- Provides paychecks

Marketing skills Personnel with knowledge and experience in: The activities needed to identify the client problems and the product characteristics and service attributes that can help solve these problems and how to package these into the product or service offering. Determining the price for the products and services offered including discounts, sliding scale fees, etc. and how payment will be accepted. Determining how and where the products and services will be offered and by whom. Promoting the products and services, communicating with the prospective clients, and selling.

Production/ operations skills Personnel with knowledge and experience in: The production of the product or the delivery of service to the client. For organizations that produce or sell a product this may include purchasing and inventory management activities. For distribution, retail, and food service type organizations this may include procurement and inventory management.

Human resource skills Personnel with knowledge and experience in: Interviewing prospective employees and managers. Hiring and indoctrinating employees and managers. Determining the compensation for employees and managers and establishing the process to pay employees and managers. Determining the employee and manager training requirements needed to perform their jobs and providing or making arrangements to provide this training. Reviewing employee and manager performance and discharging ineffective personnel.

Administrative skills Personnel with knowledge and experience in: Invoicing and bill paying. Facility maintenance and repair Customer service and phone answering

Defining a core competency A bundle of skills that enables an organization to provide a particular benefit to customers. It is not product or service specific. It contributes to the development of a range of products and services. Examples: –Sony- customer benefit is pocket ability and core competence is miniaturization. –Federal Express- benefit is on time parcel delivery and core competence is logistics management. –Rosecrans- benefit is freedom from addictive behavior and core competence is adult and adolescent education. –Carpenters Place- benefit is a changed lifestyle and the core competency is customized client case management.

Tests for core competency Organizational competencies must pass three tests to be considered core competencies. It must make a significant contribution to customer perceived value or to the financial health of the organization. It must be unique or performed in a way that is substantially superior to its peers. It must be capable of being applied to new products and services.

Identifying your organization’s core competencies Not all organizations possess core competencies. Very small organizations and organizations that provide standard services that are in high demand will usually not possess or need core competencies. –Table stakes are more than adequate for their success. The clients using these organizations value adequacy not uniqueness. Examples are food pantries, homeless shelters, and soup kitchens.

Identifying your organization’s core competencies Develop an inventory of your organizational competencies Use the core competency tests to determine the competencies that are core.

Develop an inventory of your organizational competencies List your organization’s competencies. Examples: Workers with knowledge and experience in providing youth recreational programs. Workers with knowledge and experience in supervising and maintaining overnight shelters. Workers with knowledge and experience in controlling costs. Workers with knowledge and experience in fund raising.

Develop an inventory of your organizational competencies Identify the benefit from each competency Examples: The customer benefit from experience in providing youth recreational programs is constructive youth development. The benefit from knowledge and experience in controlling costs is a reduction in operating expenses.

Develop an inventory of your organizational competencies Separate the competency from the product or service. Examples: The competency associated with providing youth recreational programs is youth education. The purpose of education is to change behavior and that is what the recreational programs want to achieve. The competency associated with experience in controlling costs is financial management. The purpose of financial management is to control the financial health of the organization.

Inventory of Competencies Competency: Workers with knowledge and experience in providing youth recreational programs. Benefit: constructive youth development. Competency: youth education. Competency: Workers with knowledge and experience in controlling costs. Benefit: reduction in operating expenses. Competency: financial management.

Determine the competencies that are core. Indentify those competencies that meet all of the following criteria: They make a significant contribution to customer perceived value or to the financial health of the organization. They are unique or performed in a way that is substantially superior to your peers. They are capable of being applied to new products and services. These are your organization’s core competencies.

Developing Core Competencies Management commitment- developing core competencies takes time Focus- define the competencies needed People with appropriate skills –Train current personnel –Recruit personnel with needed skills Integration of these skills –Usually a function of management Institutionalize the activity through processes and procedures