27 Competency Mapping and Balanced Scorecard

27.1 Competency — the Foundational Concept

The word competency entered HRM through David McClelland’s 1973 paper “Testing for Competence Rather than Intelligence” in the American Psychologist (mcclelland1973?). McClelland argued that traditional intelligence and aptitude tests poorly predicted job success; competencies — the underlying characteristics that produce outstanding performance — predicted it far better.

A competency is an underlying characteristic of a person that is causally related to effective or superior performance in a job. Three working definitions:

Three Working Definitions

Author	Definition	What it foregrounds
Lyle Spencer & Signe Spencer	“An underlying characteristic of an individual that is causally related to criterion-referenced effective or superior performance in a job.”	Behaviour-driven
Boyatzis	“A capacity that exists in a person that leads to behaviour that meets job demands and produces desired results.”	Capacity → behaviour
Hamel & Prahalad (firm-level)	“Core competence is the collective learning in the organisation, especially how to coordinate diverse production skills.”	Strategic

27.1.1 The competency iceberg model

Spencer & Spencer’s iceberg model is the most-tested visual in this topic (spencerspencer1993?). Skills and knowledge sit above the waterline — easily seen, easily trained. Self-concept, traits and motives sit below — invisible, slow to change.

The Competency Iceberg (Spencer & Spencer)

Level	What it is	Visibility	Trainability
Skills	What a person can do	Visible (above waterline)	Easily trained
Knowledge	What a person knows	Visible (above waterline)	Easily trained
Self-concept	Attitudes and values, self-image	Hidden (below waterline)	Difficult
Traits	Stable personality characteristics	Hidden	Very difficult
Motives	Underlying drives that direct behaviour	Hidden (deepest)	Hardest

flowchart TB
  S[Skills<br/>Above waterline] --> K[Knowledge<br/>Above waterline]
  K --> SC[Self-concept<br/>Below waterline]
  SC --> T[Traits<br/>Below waterline]
  T --> M[Motives<br/>Deepest]
  style S fill:#E3F2FD,stroke:#1565C0
  style K fill:#FFF3E0,stroke:#EF6C00
  style SC fill:#FCE4EC,stroke:#AD1457
  style T fill:#F3E8FD,stroke:#8430CE
  style M fill:#E8F5E9,stroke:#1B5E20
    classDef default fill:#003366,color:#ffffff,stroke:#ffcc00,stroke-width:3px,rx:10px,ry:10px;

The strategic implication: a firm should select for the deep, hard-to-change competencies (self-concept, traits, motives) and train for the surface ones (skills, knowledge).

27.1.2 Types of competencies

Three Common Classifications of Competencies

Classification	Categories	Example
Spencer & Spencer	Threshold competencies (basic, required) vs Differentiating competencies (separate average from superior)	Threshold: punctuality. Differentiating: customer obsession
Functional vs Behavioural	Functional / Technical (job-specific knowledge); Behavioural (interpersonal, attitudinal); Managerial (planning, leading); Generic / Core (organisation-wide)	Engineer: technical = CAD; behavioural = teamwork
Hamel & Prahalad (firm)	Core competencies of the corporation	3M’s adhesives; Honda’s small engines

27.2 Competency Mapping

Competency mapping is the process of identifying, defining and measuring the competencies required for effective performance in a particular role. The output is a competency framework used for selection, training, performance management, succession and pay decisions.

27.2.1 Steps in competency mapping

Standard Six-Step Competency Mapping Process

#	Step	What happens
1	Define performance criteria	What does superior performance look like in this role?
2	Identify high-performer sample	Pick known high and average performers
3	Collect data	Critical incidents, behavioural-event interviews (BEI), 360° feedback, observation
4	Analyse	Code behaviours; identify patterns that distinguish superior from average
5	Validate	Test the model on a fresh sample
6	Apply	Use the model in selection, training, appraisal, succession

The Behavioural Event Interview (BEI) — McClelland’s signature method — asks high performers to recount specific recent incidents in detail and codes the underlying competencies.

27.2.2 Tools

Common Competency-Mapping Tools

Tool	What it does
Job analysis	Captures what the job involves
Behavioural Event Interview (BEI)	Surfaces competencies through stories of high performance
360-degree feedback	Multi-source rating against a competency framework
Assessment centre	Battery of exercises (in-basket, role-plays, group discussion, presentation)
Critical-incidents technique	Catalogues effective and ineffective behaviours
Repertory grid	Helps individuals articulate their tacit competency model

27.2.3 Uses

A competency framework, once built, drives:

Selection — interviews and tests calibrated against competencies.
Performance management — appraisal on both what (results) and how (competencies).
Training and development — IDPs targeted at competency gaps.
Succession planning — pipelines built against critical-role competencies.
Compensation — skill-/competency-based pay.

27.3 The Balanced Scorecard

The Balanced Scorecard (BSC) is a performance-management framework developed by Robert Kaplan and David Norton in 1992 (kaplannorton1992?). The premise: financial measures alone are lagging indicators — they tell you what happened, not why. A balanced view requires four perspectives linked by cause-and-effect logic.

Kaplan & Norton’s Four Perspectives

Perspective	Question it asks	Sample measures
Financial	How do we look to shareholders?	Revenue, ROCE, ROI, EVA
Customer	How do customers see us?	NPS, customer retention, market share
Internal Process	What must we excel at?	Cycle time, quality, on-time delivery
Learning & Growth	Can we continue to improve and create value?	Employee competence, IT systems, culture, engagement

flowchart BT
  L[Learning &amp; Growth<br/>People · Systems · Culture] --> P[Internal Process<br/>What we excel at]
  P --> C[Customer<br/>How customers see us]
  C --> F[Financial<br/>How we look to shareholders]
  V[(Vision &amp; Strategy)] -. drives .-> F
  V -. drives .-> C
  V -. drives .-> P
  V -. drives .-> L
  style L fill:#F3E8FD,stroke:#8430CE
  style P fill:#FFF3E0,stroke:#EF6C00
  style C fill:#FCE4EC,stroke:#AD1457
  style F fill:#E8F5E9,stroke:#1B5E20
  style V fill:#E3F2FD,stroke:#1565C0
    classDef default fill:#003366,color:#ffffff,stroke:#ffcc00,stroke-width:3px,rx:10px,ry:10px;

The arrows in Kaplan & Norton’s strategy map run upward — investment in learning and growth improves internal processes, which improves customer outcomes, which translates into financial performance.

27.3.1 Strategy Map

Kaplan & Norton’s later contribution — the Strategy Map (2004) — visualises the cause-and-effect relations between objectives across the four perspectives. It is the diagnostic for whether the BSC actually expresses a coherent strategy.

27.3.2 BSC vs traditional performance measurement

BSC vs Traditional Measurement

Feature	Traditional	BSC
Focus	Financial only	Multi-perspective
Time orientation	Backward (lagging)	Backward + forward (leading + lagging)
Strategic linkage	Weak	Cascaded from strategy
Internal vs external	Internal	Internal + external
People perspective	Absent	Built in (Learning & Growth)

27.4 The HR Scorecard

Becker, Huselid and Ulrich’s HR Scorecard (2001) translates the BSC logic specifically into HR (beckerhuseliduri2001?). The four steps were covered in the previous topic. HR-specific measures fit the Learning & Growth perspective in the corporate BSC and become higher-resolution metrics in the HR scorecard:

Common HR-Scorecard Metrics

Category	Metrics
Productivity	Revenue per employee, profit per employee
Talent	Time-to-fill, quality of hire, internal mobility, attrition
Engagement	Engagement score, eNPS, retention of top talent
Capability	Training hours per employee, leadership pipeline depth
Cost & Compliance	HR cost per employee, compliance audit score

27.5 Practice Questions

Q 01 McClelland Easy

The concept of "competency" as a predictor of job success — distinct from traditional intelligence — is associated with:

ADavid McClelland
BFrederick Taylor
CRobert Kaplan
DHenry Mintzberg

View solution

Correct Option: A

David McClelland's 1973 paper "Testing for Competence Rather than Intelligence" launched the competency movement.

Q 02 Iceberg Medium

In Spencer & Spencer's iceberg model, which competency is hardest to develop through training?

AKnowledge
BSkills
CMotives
DBody of facts

View solution

Correct Option: C

Motives sit at the deepest level of the iceberg — hardest to change through training. Hence: select for motives, train for skills.

Q 03 Threshold/Differentiating Medium

In Spencer & Spencer's classification, "threshold competencies" are:

ACompetencies that distinguish superior from average performers
BBasic competencies required to do the job at all
CTop-management competencies only
DCompetencies that drive innovation

View solution

Correct Option: B

Threshold = minimum required to perform the job adequately. Differentiating competencies separate superior from average performers.

Q 04 BEI Medium

The Behavioural Event Interview (BEI), the signature method for surfacing competencies, was developed by:

ARobert Kaplan
BDavid McClelland
CEdgar Schein
DEdwin Flippo

View solution

Correct Option: B

BEI is McClelland's method — high performers narrate specific incidents in detail, and competencies are coded from the stories.

Q 05 BSC Easy

The Balanced Scorecard was developed by:

ARobert Kaplan and David Norton
BMichael Porter and Mark Kramer
CEdward Hay and Donald Kirkpatrick
DSpencer and Spencer

View solution

Correct Option: A

Robert Kaplan and David Norton's 1992 Harvard Business Review article launched the BSC.

Q 06 Four Perspectives Medium

Match the BSC perspective with a typical metric:

(i)	Financial	(a)	Net Promoter Score
(ii)	Customer	(b)	Cycle time
(iii)	Internal Process	(c)	Employee competence index
(iv)	Learning & Growth	(d)	Return on capital employed

A(i)-(d), (ii)-(a), (iii)-(b), (iv)-(c)
B(i)-(a), (ii)-(b), (iii)-(c), (iv)-(d)
C(i)-(b), (ii)-(c), (iii)-(d), (iv)-(a)
D(i)-(c), (ii)-(d), (iii)-(a), (iv)-(b)

View solution

Correct Option: A

Financial → ROCE; Customer → NPS; Internal Process → cycle time; Learning & Growth → competence index.

Q 07 Strategy Map Medium

Kaplan and Norton's "strategy map" is best described as:

AA geographic map of operating regions
BA visualisation of cause-and-effect relations between BSC objectives across the four perspectives
CA list of competitor moves
DA SWOT analysis

View solution

Correct Option: B

The Strategy Map (2004) is the diagnostic for whether the BSC actually expresses a coherent strategy — arrows of cause-and-effect run upward from L&G to Financial.

Q 08 Hamel-Prahalad Medium

"Core competence of the corporation" — collective learning that is hard to imitate — was popularised by:

ASpencer & Spencer
BHamel & Prahalad
CKaplan & Norton
DMcClelland & Boyatzis

View solution

Correct Option: B

Gary Hamel and C.K. Prahalad's 1990 HBR article "The Core Competence of the Corporation".

Quick recall

Competency = underlying characteristic causally related to superior performance. Term: McClelland (1973). Standard text: Spencer & Spencer (1993).
Iceberg model: above-water = Skills, Knowledge (trainable); below = Self-concept, Traits, Motives (select-for, hard to train).
Threshold vs differentiating competencies. Mapping methods: Behavioural Event Interview (BEI), 360° feedback, assessment centre, critical incidents, repertory grid.
Hamel & Prahalad firm-level core competence.
Balanced Scorecard (Kaplan & Norton, 1992): four perspectives — Financial · Customer · Internal Process · Learning & Growth. Cause-and-effect runs upward.
Strategy Map visualises cause-and-effect across BSC perspectives.
HR Scorecard (Becker–Huselid–Ulrich, 2001) — HR-specific scorecard nested under the Learning & Growth perspective.