New era of competence management: How to unleash talent and drive success in today’s professional service firms?

In today's globalizing and digital world, organizations are increasingly recognizing that knowledge is the key to success. As businesses become more knowledge-intensive, skilled talent, data, and know-how are highly valued. However, many organizations are still relying on outdated management practices that focus on control and efficiency, hindering their ability to thrive in the rapidly evolving landscape.

However, there is a new wave of thought emerging, exemplified by companies like Softico, a forward-thinking software consultancy based in Finland. Softico recognized the limitations of traditional competence management systems and set out to create a model that works for both their people and the business. According to Softico’s CEO, Ossi Lerto organizations must embrace adaptability, creativity, and employee competence as the driving forces behind their leadership strategies.

“Traditional competence management systems, which have long been the backbone of firms, are no longer valid in the face of new demands. That’s why we at Softico want to understand the limitations of traditional approaches and explore innovative ways to manage competence effectively.”

How can organizations then lead competence without relying on old management practices?

Five Limitations of Traditional Competence Management

To understand how to manage competence more effectively, Softico recognized 5 limitations that needed a cure. Backed by research, these limitations were:

1. Passive Information Storage

Traditional HR systems store competence information without actively involving employees in specifying and managing their current skills. Competence data is thus easily outdated.

2. Lack of Value for Employees

Employees often see the stored competence information as irrelevant and unhelpful, which affects their engagement and career development. It is often seen as a mandatory “must have” for the company, not for the employee.

3. Predefined and Hierarchical Descriptions

Some competence management systems use fixed and hierarchical descriptions that limit employees' ability to explore and develop new skills. This only reinforces the old practices.

4. Limited Accessibility

Competence information is often accessible only to managers and HR professionals, hindering knowledge sharing and collaboration among employees.The systems are not designed for the right audience.

5. Inflexibility and Inability to Adapt

Existing systems look at competence at a single point in time and based on predefined groupings. They lack the flexibility to adapt to the changing business needs of the future.

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Due to these limitations, competence management is not used to drive value for the company or the employees. Instead they easily strengthen the old practices; designing the system for administration rather than actual competence management makes them in fact irrelevant. Softico needed to find a new approach.

New Approach to Competence Management that Drives Success

Knowing the limitations gives you an opportunity to change the game. Softico takes an approach that is 180 degrees different. They have created a model that works for both they people and the business and involve 5 key dimensions:

1. Active Employee Involvement

Softico encourages employees to actively specify and manage their current competencies, promoting a culture of continuous learning and growth. The people own the keys to actively manage their own development.

2. Value Creation for Employees

Softico ensures that their competence management system provides useful information. This creates value for employees and motivates them further in development.

3. Flexible Data and Focus in the Future

The system allows employees to provide input based on their interests and future goals. Taking employee interest into account enables individual competence development and alignment with employees' aspirations.

4. Transparent and Dynamic Use of Data

Softico promotes transparency and widespread use of competence data within the organization, fostering knowledge sharing and collaboration. This allows employees to find the best opportunities for development.

5. Flexible and Dynamic Capabilities

Softico's system is flexible and dynamic providing a view into the future and the long-term competence needs. This allows employees to track their competence development over time and identify areas for improvement independently from HR or administrative systems.

Redesign Your Competence Management Approach for the Benefit of the People

By redesigning competence management systems and addressing the traditional approaches’ limitations, companies are better equipped for adaptability, creativity as well as creating better work life for knowledge workers. Softico’s approach too has resulted in higher employee motivation and engagement as well as the opportunity to recruit the best tech talent in the market. By creating an environment that highlights the criticality of competence development, they are able to create better business too. It is a win-win, for both the company and its talent.

Softico chose Agileday as a tool because of their approach to competence management. Agileday is built on the premise to fix the broken management systems of the past and replace them with systems that value the knowledge-intensive talent. By promoting radical transparency across the organization and giving employees the opportunities to drive their development and find interesting projects for them, professional service firms can unleash their talent.

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