In recent years competences have not only been subject to studies on strategic management, where a company’s core competences are seen as a source of competitive advantage. Competence and competence development have also provided new approaches in personnel development. Valuing and managing the human capital of an organization can benefit from the experiences, results, and approaches developed as part of these competence-based views.
The term competence differs from qualification in that it refers to the ability of an individual to actually apply knowledge whereas qualifications and skills are basically “mechanically demanded evaluation activities”. Competence involves “interpreting knowledge”, the independent transfer of knowledge to new problems, or applied knowledge. “Competence is disposition for self-organized acting.” Considering this important difference, “competence” is preferred to terms such as “qualification”, “skills” and “knowledge”. “Continued eduction” is transformed into “competency-based training” (CBT) which in turn is based on “strategic competence management”.
“Key competencies” differ from core competencies, in that the latter resemble a unique proposition on the market, while the former describe general problem-solving abilities. Examples of key competencies are service-, cooperation-, innovation- or reorganization competence which all have been linked to improved company performance. Such key competencies of an organization are often based on the competence of one single employee – specifically in small and medium-sized companies.
In the context of an organization’s Human Capital valuation and reporting, one faces the dilemma that competence is considered subject-oriented. A qualitative measurement can only be done on an individual basis as part of a bottom-up approach. In comparison, Human Capital valuation and reporting is typically a top-down approach and is most often based on certain indicators instead of aggregated individual measurements. Even though “competencies” have their origin as a property of an individual and are in the above mentioned case still linked to individual properties, some researchers now use the term “organizational competence” to identify certain competitive advantages of organizations that are not linked to individuals. “Core competencies” are also considered “organizational competencies”. Just as individual competencies are considered as a result of individual learning and development, organizational competencies are seen as a result of organizational learning. This idea is very much linked to the resource-based view in strategic management.
Following a list of some of the relevant resources on competence, SME and human capital valuation:
- “Kompetentzkapital. Verbindungen zwischen Kompetenzbilanzen und Humankapital” (See section “Books to buy”)
- Qualifikations-Entwicklungs-Management – QUEM : German research group providing several publications on competence development. A specific focus on SME can be found in Kompetenzentwicklung in Start-Up Unternehmen
- “Kompetenzmanagement in der Praxis – Mitarbeiterkompetenzen systematisch identifizieren, nutzen und entwickeln.”