Organisational competencies refer to an organisation’s collective capabilities to adapt to changes, compete in the market, and deliver value. Broadly, these competencies are of two types - core competencies and distinctive competencies. Core competencies include the fundamental strengths an organisation possesses. They are deeply ingrained and build the foundation upon which an organisation develops its products, services, and reputation. Distinctive competencies, on the other hand, are the unique strengths and attributes that make an organisation stand out against its competition.
How do organisational competencies drive success?
Organisational competencies are pivotal in determining a company’s ability to thrive amidst the competitive business landscape. They contribute to the different elements of an organisation and benefit in the following ways:
1.Employee engagement
Organisations that provide growth opportunities and encourage employee skill development showcase a commitment to their employee’s professional progress. Their effective talent management and development competencies lead to a skilled and motivated workforce.
For instance, Mahesh works as a customer service representative at one of the country’s leading banks. He feels valued and supported by his managers and colleagues. The bank’s positive work environment boosts his morale and encourages him to share his ideas and feedback. He listens to every customer query with attention and provides personalised solutions. He also educates them about financial services and products. This behaviour results in superior customer satisfaction, increased productivity, and better organisational performance.
2.Innovation
Competencies in innovation allow organisations to embrace the changing trends of the market and consumer demands. Furthermore, these competencies empower employees to explore new ideas and think creatively, developing novel products and unique processes that give the organisation a competitive edge.
For instance, technological advancements have made it necessary for banks to innovate their offering and provide mobile banking, online operations and processes, automation, etc. While some banks have embraced these changes, others have even gone a step ahead to explore recent trends like artificial intelligence to develop unique processes for fraud detection, credit scoring, and chatbots. Such innovations are possible only in organisations with the required competencies.
3.Operational efficiency
Organisational competencies enable a company to operate more effectively and smoothly, delivering higher output levels with fewer available resources. These improvements are a result of optimised resource allocation, streamlined internal processes, and minimised wastage, which lead to better utilisation of human and material resources, improved productivity, and cost savings.
Suppose a private bank updates its loan approval system to incorporate advanced automation capabilities. Previously, the traditional loan application process required extensive paperwork, manual verification, and multiple levels of approval, resulting in delays and inefficiencies. However, the new system enables online loan applications through the bank’s website and mobile app. The process is streamlined and accelerated, and the system collects and verifies relevant information, such as income verification and credit history, automatically. Consequently, it reduces the need for resources and the time required for loan processing significantly, improving operational efficiency.
4.Competitive advantage
Competencies are the impetus behind an organisation’s competitive advantage. Using these distinct attributes, organisations can offer superior products and services and outperform competitors. Moreover, by leveraging specific technical competencies only, organisations can attract customers who appreciate its specialised offerings and position themselves as an industry leader.
For instance, a bank that has invested heavily in technology and digital infrastructure can offer innovative online banking services, such as quick loan approvals, mobile banking apps, and seamless account management. Additionally, its data protection protocols and robust cybersecurity measures can instil confidence and trust among customers. This leads to a superior customer experience than other traditional banks. As a result, the bank gains a significant competitive advantage over its competitors due to its strategic investment in technology.
5.Value creation
Successful organisations capitalise on their competencies to deliver customer value. These strengths and capabilities lead to the creation of innovative products and services that solve particular problems and cater to specific customer needs.
For instance, a bank can offer expert advice and lucrative financial instruments to its loyal customers. It can create value for the customer by making wealth management easy. This value creation improves customer satisfaction and advances brand loyalty, leading to the organisation’s long-term success.
Conclusion
Organisational competencies are crucial to laying the company’s foundation, driving innovation, improving adaptability, and boosting growth. Employers and HR professionals must understand their significance in overcoming resistance and aligning strengths with evolving strategies. By investing in leadership development, performance improvement, and learning and development initiatives, companies can build a culture of excellence and innovation. Organisations that nurture these competencies through a culture of training and continuous learning are prepared for innovation and competitiveness.