The performance of companies depends mostly on the quality of their human resource. For obvious economic and business reasons, organizations have always been concerned about the competence of its people. This paper seeks to delve deeper into the concept of competency, tracing its history and its role in the present context. It explains how the concept has constantly evolved over the years, its applications in human resource management, and development in the present scenario. It also aims to study its future prospects in the light of other emerging areas like talent management. The paper proceeds with the examples of companies, which have successfully integrated competency-based systems in their HR initiatives.

Despite the growing level of awareness, competency-based Human Resource (HR) still remains an unexplored process in many organizations. The underlying principle of competency mapping is not just about finding the right people for the right job. The issue is much more complex than it appears, and most HR departments have been struggling to formulate the right framework for their organizations.

In 1973, David McClelland, Professor of Psychology at Harvard University wrote a seminal paper that created a stir in the field of psychology (McClelland, 1973). According to his research, traditional academic aptitude and knowledge content tests seldom predict on-job performance. He went on to argue that the real predictors of job performance are a set of underlying personal characteristics or `competencies'. Hence, the history of competency can be traced to the early 1970s when industrial psychologists and human resource managers were seeking ways to predict job performance. There was significant evidence to show that personality testing was very poor at predicting job performance (about 10 percent success rate was achievable). At the same time, a number of studies showed that traditional academic aptitude, knowledge tests, school grades and credentials did not predict job performance. Evarts (1988) defined competency as an underlying characteristic of a manager which causally relates to his/her superior performance in the job. According to Jacobs (1989), it is an observable skill or ability to complete a managerial task successfully. Hornby and Thomas (1989) defined it as the ability to perform effectively the functions associated with management in a work situation. In the recent years, many meanings and new labels have evolved through common usage for the terms `competence' and `competency' (Strebler et al., 1997). Usually, the term `competency' has been used to refer to the meaning expressed as behaviors that an individual needs to demonstrate, while the term `competence' has been used to refer to the meaning expressed as standards of performance (Hoffmann, 1999).

This definition is synthesized from the suggestions of several HRD specialists who attended a conference on the subject `competencies', in Johannesburg, South Africa, in October 1995. A competency is "A cluster of related knowledge, skills and attitudes that affect a major part of one's job (a role or responsibility), that correlates with performance in the job, that can be measured against well-accepted standards, and that can be improved with training and development".

Competency Mapping, Managing Talent, Human Resource, Human Resource Management, Competency-based Systems, Harvard University, Management Competency, People Capability Maturity Model, PCMM, Harvard Management, Personnel Management, Training and Development, Career Planning.