The Development Of A Competency Framework

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Marsh & McLennan Companies, Inc. (MMC) is a global professional services firm which provides advice and solutions in the various areas like risk, strategy and human capital. It was founded in 1871. MMC has its headquarters in New York with offices worldwide. It has more than 59,000 employees and boasts clients in more than 100 countries.

MMC is a publicly-held company with approximately $12.2 billion in annual revenue. Its stock (ticker symbol: MMC) is listed on the New York, Chicago, and London stock exchanges.

MMC was ranked the 207th largest corporation in the United States by the 2007 Fortune 500 list, and the 5th largest US Company in the Diversified Financials industry

The Group Companies

Mercer is part of Marsh & McLennan Companies (MMC), a $14 billion professional services firm.

(Source: Mercer Database)

Figure 1.1.1: Group Companies


(Source: Mercer Database)

Figure 1.1.2: Group companies


(Source: Mercer Database)

Figure 1.1.3: Timelines

1.2 About Mercer

Mercer is a leading global provider of consulting, outsourcing and investment services, with more than 25,000 clients worldwide. Its consultants help clients design and manage health, retirement and other benefits and optimize human capital. It also provides customized administration, technology and total benefit outsourcing solutions.

It is a wholly owned subsidiary of Marsh & McLennan Companies, Inc. It also provides access to the complementary services of our sibling companies, Marsh, Kroll, Guy Carpenter and Oliver Wyman.

It was started in the United States in 1937 as the employee benefits department of Marsh & McLennan,

It took the name of "William M. Mercer" in 1959, when Marsh & McLennan acquired William M. Mercer Limited, a Canadian firm founded by William Manson Mercer in 1945. In 1975, Mercer became a wholly-owned subsidiary of Marsh & McLennan Companies, Inc. In 2002, its name was changed to Mercer Human Resource Consulting. Recently in 2007, the company became simply "Mercer." Currently, Mercer is the world's largest human resource consulting firm.

The way they work

They work with their clients as partners and with each other as a team. Their advice and solutions are shaped by each client's unique needs and business context, and are designed to ensure that clients get the best return on their HR spending. They balance employer and employee advocacy in providing objective, expert guidance.

Why Mercer?

Clients choose Mercer when they want to work in partnership with their consultant, want strategic advice as well as flawless administration and execution of their HR programs, want best-practice advice and solutions tailored to their business and environment, or need global and/or local perspectives and resources. Recruits choose Mercer when they want to work on premier clients in a highly professional environment as part of a team.


Major clients include:

Defense: Boeing, Northrop Grumman, Science Applications International Corporation

Financial Services: AIG, Citigroup, Wachovia

Healthcare: Aetna, Blue Cross Blue Shield, Cigna, Kaiser Permanente, UnitedHealth Group, Health Net, Inc.

Industrial Good & Products: Deere & Company, Johns Manville, Lowe's, Toyota, TRW Automotive

Insurance: Allstate, Metlife

Media: Fox Entertainment Group

Retail & Consumer Products: Energizer, J.C. Penney, Mervyn's, Neiman-Marcus, PepsiCo, Wal-Mart, Yum! Brands

Public Sector: City of Los Angeles, State of Washington

Professional Services: Automatic Data Processing

Publishing: Advance Publications

Technology: Computer Sciences Corporation, Google, Toshiba

Telecommunications: AT&T, Sprint Nextel Corporation

Travel: American Airlines, JetBlue

Human Capital

Mercer's human capital business helps organizations to optimize their performance by meeting their most critical needs around

managing, rewarding and engaging talent

achieving responsible executive remuneration

enhancing HR effectiveness

To help clients drive value through people and produce measurable business results, Mercer combines:

High- impact strategic advice

Deep technical insight and knowledge

Credible facts and data

Proprietary technology and decision-support tools

Implementation services

Total rewards

1.5 The Managerial Problem under Study

1.5.1 Background of the Problem

There are several challenges driving leadership development across companies:

Increased competitive pressure in an environment where the actions of domestic and foreign competitors are unpredictable

Proliferating global and non-traditional competitors

Rapidly changing market conditions

Innovating and exploiting emerging technologies

Increasing customer expectations for greater quality,

cheaper products, and increased service

Increasing demand for talent and decreasing supply. Demographic patterns exacerbating the trend.

Sudden change is the nature of today's markets

Effective leadership has been identified as the critical factor for sustainable/profitable growth. But according to CEOs, the leadership capacity to meet business challenges & respond to sudden change is not upto the mark.

Source: The Conference Board, 2001 Research Report on Developing Leaders for 2010

Figure 1.5.1 Leadership Capacity

In most organizations the gap exists due to ineffectiveness of the leadership development initiatives

Strategic priorities are not reflected in leadership requirements or development

Leadership requirements are "rear view mirror," rather than future oriented

Leadership development is staff-driven with little line executive attention

State of the art modules and initiatives do not add up to a whole

Measurement of outcome and value is missing

Leadership development is done "out of context"

Today, an increasing number of organizations are looking at building a portfolio of leaders rather than depending on the concept of "superheroes". They realize that different kinds of leaders are required for different kind of situations and at different points of an organization's life cycle. Mercer has published its' point of view on situational leadership and how an organization needs to build a portfolio of leaders to meet various organization requirements. Mercer suggests that leadership competencies are built in individuals and teams to equip them to deal with a range of situations: growth, crisis, transition and stable state. Other situations should be addressed based on the company's needs. It contextualise related material to the organisation's specific requirements

Leadership is the primary driver to achieve an organization's strategy. Each organization's leadership requirements are unique since the mix of leadership capabilities required to implement the business strategy is unique. Developing an organization's leadership requires a systemic, integrated approach.

Mercer uses the Leadership Pipeline as the strategic roadmap for leadership development. Each Passage Represents a Major Career Transition

Source: The Leadership Pipeline, by Ram Charan, Stephen Drotter, and James Noel

Figure 1.5.2 Leadership Pipeline Model

Skill Requirements

New capabilities are required.

Work Values

What people believe is important becomes the focus of their efforts; different sources of satisfaction are also available at each passage.

Time Applications

Allocation of time shifts according to priorities.

Potential for the leadership pipeline to become clogged

Each passage in the leadership pipeline requires new learnings and behaviors.

Development is cumulative: successful development at one passage enhances the probability of success at the next passage.

Conversely, incomplete development (or skipping a passage) can hinder success at the next passage.

The result is a leadership pipeline that becomes clogged-the flow of talent is blocked.

Literature Review

Behaviour is defined as an individual's physical action or verbal statement. Behaviour is not what a person would like to do or thinks he/she should or would have done. Behaviour is directly observable in that the action can be seen or the verbal statement can be heard. Certain behaviours, for example, analytical thinking, can be inferred from an individual's self-report of his/her thinking process or from the content of a written report or other work output.

Competence today has become an essential competitive factor and to be able to optimally use its resources, an organization must be aware of what competence and competency based systems are all about.

Organizations need people to be able to reach their objectives. They need competent managers to be able to achieve these objectives both effectively and efficiently. High performing people or the competent managers are critical for high performing organizations. Whether driven by the need to improve efficiency, productivity, or profitability, or by the desire to provide world-class customer service, the combination of two components is critical: (Mansfield, 2000)

Selecting talented and high potential people to carry out the organization's mission.

Creating culture that supports them.

2.1. What are competencies

What superior performers are more likely to do more often in your organisation, more completely and consistently

Statements of observable behaviour that "make a difference"

Strengthening the contribution of the individual to the organization's objectives

A competency is an underlying characteristic of an individual that is causally related to criterion-referenced effective and/or superior performance in a job or situation.

Underlying characteristic means the competency is a fairly deep and enduring part of a person's personality and can predict behavior in a wide variety of situations and job tasks.

Causally related means that a competency causes or predicts behavior and performance.

Criterion-referenced means that the competency actually predicts who does something well or poorly, as measured on a specific criterion or standard. Examples of criteria are the dollar volume of sales for salespeople or the number of clients who stay "dry" for alcohol-abuse counselors.

(source: David C.McClelland, Competence at Work)

2.2 Competency Characteristics

Motives: These are the things a person consistently thinks about or wants that cause action. Motives "drive, direct, and select" behaviour towards certain actions or goals and away from others.

Traits: These are the physical characteristics and consistent responses to situations or information.

Self-Concept: It is a person's attitudes, values, or self-image.

Knowledge: It is the information a person has in specific content areas.

Skill: It is the ability to perform a certain physical or mental task.

As shown in Figure 2.2.1, knowledge and skill competencies tend to be visible, and relatively surface, characteristics of people. Self-concept, trait, and motive competencies are more hidden, "deeper," and central to personality.

Figure 2.2.1: The Iceberg Model of Competencies

2.3 Elements of a good Model

Focuses on the critical differences of top performers - not everything in the job or about the person

Simple Structure

Uses common language and cultural icons unique to the company

Well specified, observable indicators of the competencies that can be reliably assessed

Focuses attention and is easy to remember

Research Objective and Rationale

3.1 Backgound of Hypothesis formulation

Mercer usually uses competency dictionaries for various projects and activities. However, with the changing business environment, it sees a need for a generic framework based on "The Leadership Pipeline" model by Ram Charan. This model focuses on three key areas: Skills, Time Applications and Work Values. The project is looks at literature as its main source.

To build the leadership base, one must understand the natural hierarchy of work that exists in the organization (the focus here is on managerial-leadership work rather than technical or professional contributions). In a large, decentralized business organization, this hierarchy takes the form of six career passages or pipeline turns. The pipeline is not a straight cylinder but rather one that is bent in six places. Each of these passages represents a change in organizational position-a different level and complexity of leadership-where a significant turn has to be made. These turns involve a major change in job requirements, demanding new skills, time applications, and work values.(Source: The Leadership Pipeline" by Charan, Drotter & James Noel, Jossey-Bass 2007)

Figure 3.1.1: Leadership Pipeline

Adapted from "The Leadership Pipeline" by Charan, Drotter & James Noel, Jossey-Bass 2001

Managing Functions


Team play with other functional and business managers

Competition for resources based on business needs

Blending functional and business strategies

Working with a variety of people

Time applications

Participating in business team meetings

Meeting with other functional managers


Value work and areas outside of one's own area

High Level of maturity in dealing with business and others

Having a profit perspective and long term view


4.1 general methedology

Results and discussions

After 5 weeks of training, two parts of the summer training project has been done with iidentifying the key traits which define the functional leadership and developing a generic competency to measure these traits

Behavioural Competency Framework: 9 competencies were identified and a KCIs were developed. The framework is yet to be freezed after review.