Effective leadership integrates and applies knowledge, capabilities, and expertise. Often, organizations employ leadership competencies and associated models to define the skills and behaviors effective leaders exhibit to influence positive organizational results. As a leadership practitioner, it is helpful to understand what the extant literature says about the relationship between leadership competencies and organizational performance. Therefore, this article conducts a brief literature review exploring coverage of leadership competencies as a concept and includes an overview of competency models and modes of measuring competencies. The review also discusses organizational performance as a concept, linking leadership competencies to organizational performance. Finally, the review briefly discusses limitations of leadership competency models and practical implications organizations should consider when employing them. Ultimately, this review concludes that scholars present mixed reviews on competency models; however, in practice, organizations strongly rely on them to identify, develop, and evaluate leadership skills and behaviors that influence positive performance.

Leadership Competencies

Bucur (2013) defined competencies as skills and behaviors that focus on the individual rather than the organization. Several other scholars defined leadership competencies as the knowledge, skills, abilities, and other characteristics required for leaders to perform effectively (Dai et al., 2010; Garman & Johnson, 2006; Joon Yoon et al., 2010; Shet et al., 2019). The original competency study is attributed to Harvard professor David McClelland, who rejected the notion that job performance was related to intelligence, and instead, he argued superior performance related to underlying skills, which leaders can develop (Chow et al., 2017). Thus, Chow et al. (2017) found scholars use the terms competence, competency, and skills interchangeably in the literature. Asree et al. (2010) asserted leadership competencies should consider the interactions of the leader’s characteristics, behaviors, and environment. Clemmer (2014) added to these considerations that organizations should consider how leadership competencies intersect with organizational values. For example, leadership competencies should not require leaders to achieve results at the expense of the environment, safety, customer satisfaction, or teamwork (Clemmer, 2014). To that end, Conger and Ready (2004) argued competencies should communicate the leadership skills and behaviors organizations value most.

Scholars identified a wide range of leadership competencies in the literature. For example, Conger and Ready (2004) asserted key leadership competencies include “modeling values, create external focus, anticipate change and prepare for the future, implement with quality, speed, and value, achieve results with people, evaluate and act, share key learnings” (p. 42). Erickson (2011), however, identified leadership competencies that include communication, influencing, motivation, inspiration, problem-solving, managerial skills, emotional intelligence, job-related knowledge, and integrity. In practice, organizations may leverage leadership competencies for developmental goals, performance review, or predictive modeling (Bucur, 2013).

Competency Models

Dai et al. (2010) purported practitioners widely embrace competency models. Conger and Ready (2004) agreed that competency models’ simple language brings clarity, consistency, and connectivity to skills and mindsets, making them tangible and measurable. According to Chow et al. (2017), the strengths of competency models are that they are flexible enough to be unique to an organization’s context and goals, with the potential to generate a competitive advantage if they are consistently developed among the organization’s leaders. Zingheim et al. (1996) described that competency modeling strategies may reflect common sense, role models, organizational challenges or shortcomings, or organizational strengths. Likewise, Clemmer (2014) argued competency models identify, define, and develop the leadership skills and behaviors that impact organizational performance most significantly. To that end, Conger and Ready (2004) and Zingheim et al. (1996) agreed that organizations that use competency models most effectively are those that construct future-oriented competency models in relation to their business environment and organizational goals.

Competency Model Failures

It is important to note the limitations of competency models. Erickson (2011) pointed out some practitioners find competency models fail to develop leaders and only reveal gaps by focusing on problem areas rather than excellence. Clemmer (2014) also asserted competency models fail when organizations apply them as a one-size-fits-all framework for effective leadership. Similarly, Conger and Ready (2004) found competency models may tempt organizations to overly rely on them, creating a one-dimensional approach to leadership development. As a result, competency models may become complicated and contain too many dimensions to be a realistic expectation for any individual leader to achieve (Conger & Ready, 2004). Patching (2011) took a different perspective and argues competency models create followers rather than leaders. In his view, leaders should hone and leverage their unique characteristics, values, abilities, and experience rather than try to copy someone else’s idea of effective leadership.

Measuring Competencies

According to Conger and Ready (2004), most competency models include feedback processes to quantify the extent to which a leader demonstrates a given competency. Scholars agreed that organizations most commonly use multi-source feedback instruments, also known as 360-degree feedback, to measure leadership competencies (Bracken et al., 2016; Campion et al., 2011; Conger & Ready, 2004; Dai et al., 2010; Shet et al., 2019). Dai et al. (2010) report 90% of Fortune 1000 companies leverage multi-source feedback for competency assessment. Multi-source competency measurements may include a self-assessment, as well as feedback from peers, direct reports, supervisors, and customers (Joon Yoon et al., 2010). The advantage of quantifiable assessment is that it allows for uniform measurement across all organizational leaders (Conger & Ready, 2004). Additionally, Joon Yoon et al. (2010) asserted measuring leadership competencies provides organizations critical data for leadership role selection and creating leadership development programs.

Organizational Performance

The concept of organizational performance relates directly to organizational survival (Asree et al., 2010). Collins (2001) defined organizational performance as the organization’s effectiveness and efficiency related to its strategic objectives. Asree et al. (2010) distinguished between two forms of measuring organizational performance, which include objective measures (i.e., actual performance data) and subjective measures (i.e., respondents’ perception). Similarly, Dai et al. (2010) warned against confusing leadership competency development measurement with organizational performance measurement. The former measures the influence of competency development on the individual leader, whereas the latter measures the impact of competency development on the organization (Dai et al., 2010). Overall, however, the literature suggests there is a relationship between the leadership competency development and organizational performance.

Leadership Competencies and Organizational Performance

Scholars appeared to agree that leadership competencies positively relate to organizational performance on some level (Asree et al., 2010; Bucur, 2013; Chow et al., 2017; Collins, 2001; Dai et al., 2010; Garman & Johnson, 2006; Joon Yoon et al., 2010; Shet et al., 2019; Zingheim et al., 1996). For example, Dai et al. (2010) found that when study participants improved their performance in targeted competencies they had selected for intentional development, there was a  positive relationship to improved team performance. Erickson (2011) also reported that studies demonstrate the relationship between leadership competencies and performance outcomes such as job satisfaction and employee motivation. Additionally, Shet et al. (2019) asserted competency-based performance management systems raise the bar for individual performance, which in turn improves organizational performance. Zingheim et al. (1996) agreed, stating that competency models and performance-based pay systems are “necessary partners” to connect competencies to organizational performance (p. 2). Collins (2001) offered a qualifying warning, however, that while there is an implied relationship between individual leadership competency development and organizational performance, the empirical relationship is tenuous at best, with only three percent of studies in her literature review conducted at the organizational level.

Conclusion

Leadership competencies and related models define the skills and behaviors effective leaders exhibit to influence positive organizational results. The extant literatures define leadership competencies as a concept and provides an understanding of competency models’ strengths and failures, as well as commonly-used modes of measuring competencies. There appears to be a positive relationship between developing leadership competencies and organizational performance, although the relationship may be more correlational than causational. Ultimately, it appears scholars present mixed reviews on competency models; however, organizations strongly rely on them to identify, develop, and evaluate leadership skills and behaviors that influence positive performance.

References

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