Capability models, performance management, and knowledge management: how they all fit together

Often the day-to-day demands of work prevent us from stepping back and seeing how the big pieces fit together. While you might not have the same ecstatic reaction of this guy discovering a rainbow in his backyard, hopefully this post will help you have an even better answer to “what does this mean” (if you can make it to 1:17 in the clip).

Capability (competency) model, performance management, knowledge management: many of these terms get interchanged, however, in my experience I have seen distinct and specific applications for the processes as businesses work to maximize their return on investment in human capital. Below the diagram is a quick definition of the terms with links for more information.

The whole is greater than the sum of the parts.
The whole is greater than the sum of the parts.
  1. Business Strategy: While Michael Porter has a longer answer, Jack Welch defines strategy (in his book Winning) as “making clear cut choices on how to compete.” In a previous post, I compiled the 9 Critical Questions on Strategy.
  2. Organizational Design: just as form follows function in art and nature (but not chickens), an organization’s structure should follow its strategy. Jaques takes a scientific yet pragmatic approach in Requisite Organization.
  3. Capability Model: while purists will prefer to use the term “competency” to emphasize demonstrated abilities (rather than future potential), in either case a model, such as SHRM’s, provides a framework for a hierarchy of skills that can be developed and applied at various levels of the organization.
  4. Role Definitions: each role (remember, each position can have multiple roles, just like a father can be a cook, landscaper and coach) needs a definition of its responsibilities and scope
  5. Role-based Capability Model: Combine 3 with 4, and you get an inventory of the capabilities (competencies) required to be successful in each role. This is an essential input to the processes below. Do not pass go, do not collect $89 (after taxes).
  6. Four related processes to improve an organization’s return on human capital
    1. Talent Intake: defining the requirements for each role will empower your recruiting organization to provide a better slate of candidates for vacancies, and help new hires get up to speed and contributing within the first phase of the talent cycle.
    2. Knowledge Management: a central repository for standards, policies, procedures, and other specific “tribal knowledge” accumulated with experience in any organization. A top-notch knowledge management system combines the “push” of compliance with the “pull” of recognition for contributors and highly accessible content (like wikipedia and TED).
    3. Performance Management: while a recent duel of data fit models has caught a lot of buzz, an effective performance management process gives employees meaningful, actionable feedback on their performance vs expectations in role, and allows the organization’s leadership to identify high-performing, high-capability players and put plans in place to address staff who are under-performing. Performance review surveys are typically more complicated than they need to be, and the best ones I’ve seen capture 360-feedback quarterly.
    4. Capability Development: programs combine training and succession planning to close development gaps identified in any of the above processes. Training can be delivered through self-study, online learning, classroom based training, and on the job coaching.

While none of these definitions go deep enough to be applicable on their own, hopefully differentiating between the terms with a few resources for further research will be a good start to helping your team go “all the way across the sky.”

What did I leave out? What other approaches have you seen work also? Leave a comment and let us know.

Use these metrics to rev your talent engine: Delivery and transition phases

Continuing the series on the four stages of the talent cycle, once the hard work has been done to bring new talent into your organization, it’s time for them to deliver value before transitioning to a new role. These metrics will help ensure a mutually beneficial and productive working relationship between employees and employers.


For the delivery phase of the talent cycle, the two most important aspects to manage are performance and engagement. Although the latest trend is to reject the bell curve (i.e., normal distribution) for a power function, any organization with a team size larger than 2 has to address performance management in both absolute and relative terms. Ensure that your performance management system–which could range from a piece of paper to an enterprise application–can help you answer the following questions in dialogue between leaders and employees:

  • Absolute performance: how is each employee performing relative to his/her potential? What is he/she doing well, and should do more? What is he/she struggling to do, and what support can the company provide? What are the employee’s career goals, and how is his/her current position aligned with them?
  • Relative performance: does the employee “raise the gene pool” of the organization? is the employee negatively impacting the quality and enjoyment of other employee’s work experience? What capabilities can the employee role model for the rest of the team?

Performance reviews (I recommend every 6 months rather than annually, to keep the feedback fresh) naturally lead to transitions. Some employees will be ready for more responsibility and promotion, others no longer fit the organization and need to rotate out. Succession planning and attrition will be the subject of an upcoming post.

Engagement is the most broadly applicable metric, providing insight across all phases of the talent cycle. The most straightforward and pragmatic way to gauge engagement is with a 2 question survey:

  1. How likely are you to recommend working at this company to a friend or colleague? Answer on a scale of 1-10, with 10 being most likely.
  2. What one thing would need to change for you to give a higher rating? Open text response.

Gallup’s method to capturing engagement data is another statistically validated, relatively brief (12 questions) survey.

As the modern economy shifts more towards services and technology, managing the talent cycle is an increasingly important skill for leaders to master in order to maintain a competitive advantage. While it will always be a subjective, personal experience, the intent of setting out these metrics across the talent cycle is to help reduce the complexity of the process by introducing some standardization and objectivity.

Use these metrics to Rev your talent engine: Development

In this third post in a series on maximizing the talent in your organization, we’ll highlight five metrics focusing on the development of your team members. Last time we looked at talent intake: from the first touch in recruiting through day 90 of employment.


Now that your new employees know where to find the coffee machine, the emphasis shifts to building competency in role quickly so that the organization can maximize the contribution each employee makes in role. By my rough math based on surveys from OECD, BusinessInsider, and US Department of Labor, companies should expect about 2 years of contribution from each employee. So getting each person up to speed quickly and delivering in role is essential.

The essential component of the Development stage is competence in role. Reaching full competency in role doesn’t mean never making a mistake, like a fat-finger trade, it just means being able to do a job effectively and independently. Being able to measure competency in role means that your organization:

  • has a competency model in place for each role
  • assesses competency during hiring/selection
  • uses on-the-job training and assessment to close any remaining gaps
  • actually verifies that the written capability requirements for roles match reality over time

This can seem like a lot of paperwork to manage, but the alternative is an ad hoc system where new employees get thrown in over their heads, ask the people that sit nearby “do you remember how [person who had my job before] used to …,” and then just make it up. So the effort to document tribal knowledge into a current competency database supporting hiring and training can pay off quickly. especially when the cost of low productivity can easily outpace an average cost per hire of $5,100.

Now that we’ve covered a high level introduction to competency in role, here are the essential metrics for the Development stage of your organization’s Talent Engine:

  • Engagement: go beyond satisfaction to measure engagement, especially if you use Gallup’s method which has been validated to correlate to productivity
  • Percent at fully competent in role: this snapshot can be summarized by functional group, business segment, level, or geographical location across an organization
  • Time to reach fully competent in role: show this as a histogram over a certain time period with lines demarcating the current period and previous period averages
  • Percent attrition: total exits divided by approved headcount during a time period (can be summarized as in percent fully competent above)
  • Percent regrettable exits: same calculation as above, but in the numerator only include voluntary exits for which the hiring manager would re-hire the individual into the role

Accelerating the development period of your talent cycle is the “tide that lifts all boats” in the organization, because both your above- and below-average employees will benefit from learning their jobs faster. While we all hope to avoid suffering from the Peter Principle, reaching competency faster is something every employee will welcome.

Get your Talent Engine Revving: the Four Stages

Most leaders would agree that having the right talent on their teams is essential for success, and recently Build Network has confirmed this hunch in a leadership survey. The goal of this post is to provide some structure to the talent cycle and help leaders get the most from their talent by segmenting the tenure of any employee into four phases: Intake, Development, Delivery, and Transition. While similar to the four stroke engine cycle, we’ll try to limit the amount of compression and ignition we put our employees through.


Except for the stereotypical Japanese salarymen, very few employers expect to need more than one hand to count the average tenure of staff. And while the US Department of Labor’s 2012 data showed average tenure across all industries has increased to 4.6 years from 4.4 in 2010, data compiled earlier in 2013 by Payscale showed employers in retail and IT companies should expect closer to 2, as reported by Business Insider. And based on the bankrupt and bailed out companies at the other end of the Payscale list, and the bankrupt and bailed out countries in the OECD data set from 2011, seeing tenure rise above 10 years should be a warning sign (especially when long tenure comes along with unsustainable pension obligations).

So let’s make the math easy and propose you’ll get 2 years of contribution, on average, from your employees. I’m defining the Intake phase as the period from the first touch during recruiting through the first 90 days of employment. Take off the last month before exit for Transition, and we are left with 20 months. So if the goal is to maximize the contribution to the business from each employee, it’s important to “compress” the Development period, which I’m defining as the length of time required for an employee to become fully competent in role.

  1. Intake: starts with first contact with a prospect during recruiting, ends at day 90 of employment. Recruiting, onboarding, and orientation are key processes. Coordination between HR, Facilities, IT, Finance, and hiring managers is essential to establish new employees with high engagement and reduce early exits.
  2. Development: from day 91 through the point at which an employee is fully competent in role. Coaching, training, and peer support will help ensure employees can contribute high quality work, independently, as quickly as possible.
  3. Delivery: could be as short as a few months for organizations with low overall tenure and long intake and development periods.
  4. Transition: allowing for knowledge transfer from an outgoing staffer to the incoming hire. Internal promotions will allow for longer transition periods, but most US employment agreements expect only 2 weeks notice.

An upcoming series of posts (linked in the list above) will look at the key metrics to track in each of these phases of the talent cycle, along with the most important processes to streamline in your organization to ensure your team is happy, developing, and delivering at each phase of the cycle.