The changing landscape of business and organisations
“If you’re given a candle, a book of matches and a box of thumbtacks, how can you light and fix the candle so it stands upright and avoid the wax dripping on the table below?”
Most of us may consider using methods such as melting the wax so the candle would stick to the wall, or using the thumbtacks to fix the candle directly onto the corkboard.
This famous problem—known as the Duncker’s candle problem—is meant to illustrate our brain’s bias in seeing each component only as its main function. The way to solve this problem is to actually empty the thumbtacks out of the box and then stick the candle inside the box before the box is tacked to the wall.
Results from this experiment showed that people generally would not view the thumbtack box as a container for the candle, which is evident for our tendency to fixate on what we believe is the main function of an item.
Similarly, this is the challenge for most organisations which run on functional competencies. Each function specifically contributes to the organisation in its own way, but is that helpful or harmful to the organisation especially in this day and age?
The changing definition of functional competencies
With the amount of human resource (HR) firms offering some sort of “competency framework design” as part of their solutions plus the number of LinkedIn articles describing the importance of using competencies as a measure of performance, one can hardly say that functional competencies no longer have a place in the current business environment.
But, when Bloomberg reported that a US$5bil software company made US$320mil in 2015 without a single salesperson, heads turned to Atlassian, a software development company.
Does this mean it is now possible for organisations to get by without specific functions and one as important as the salesperson?
Bersin by Deloitte defines functional competencies as “job-specific competencies that drive proven high-performance, quality results for a given position.”
Typically, these competencies are also technical or operational in nature and manifest as a specific set of skills. Thus, someone who has a certain functional competency is usually a specialist in his or her role, delving deep in the subject as an expert.
For generations, business models have survived by bringing together different functional expertise to run different parts of the organisational engine.
The salespeople would go out to hunt for business, the HR practitioner decides who gets hired, the administrator ensures office operations run smoothly, and the finance team keeps the accounts steady month-to-month.
In these cases, there is usually a manager or supervisor who may have some functional competencies, who would ideally lean more towards the strategic and people management competencies to manage or supervise the aforementioned functional teams.
But with emergence of megatrends such as technological disruption, we see changes in business models and thus, a change in how functional competencies contribute to the bottom line in organisations.
Using the Atlassian example, its founders are unruffled about the lack of sales staff and its impact on business growth. The founders believe that customers are more willing to search on a website for answers rather than speaking to a salesperson, which has led them to keep sales and marketing costs at 19% of the entire organisation’s cost.
One key thing that stood out in understanding Atlassian is that very early on, the founders are the ones supporting the running costs of the organisation. With a lack of investors at the back of their business, they are incidentally less pressured to meet unrealistic targets or crazy leaps of growth.
The founders were confident with a steady growth rate, and this—combined with the nature of the business (software development)—permitted Atlassian to thrive without the key functional competency of sales.
Moreover, expert of big data analysis and contributor to Forbes, Bernard Marr proposes that the future of jobs has five key roles or classes of roles. All these views are related to how technology has impacted each of our roles.
For example, the “Stepping Aside” of a role suggests that the role can be done better by technology. Automation is taking over industries by storm, leaving chief executive officers (CEOs) feeling pessimistic about the future of manufacturing in the global economy, based on the 2016 Industrial Manufacturing Trends by Strategy&, the global strategy consulting team at PricewaterCoopers.
In this cloud of pessimism, we can be certain that headcount for functional roles on the manufacturing floor will most likely decline since the machines themselves can be programmed to communicate with each other without the involvement of humans.
The Internet of Things (also known as IoT) is definitely challenging functional competencies, especially in the manufacturing industry.
With the changing definition of functional competencies, how do we measure performance?
A gig economy
Nevertheless, the case for functional competency survives when we think about the concept of gig economy—Intuit, an investors’ relation company forecasts the growth of contingent, on-demand workforce is likely to hit 43% in 2020, at least in America.
A gig economy is often made up of people who have a specific set of skills that can be leveraged for a short-term need. Interestingly, these skills are more likely to be functional as opposed to strategic or people-oriented.
We are less likely to hear of a temporary CEO or manager as compared to a temporary designer or consultant—both roles have certain functional competencies that can complement the business needs of an organisation without internal headcount.
To be fair,
…the idea of having an external person providing a certain functional support is not foreign as there have been outsourcing and professional services for years.
However, what differs is that the gig economy is literally made up of individuals who have specific skills to offer, and they may not fall under a particular governing or managing agency.
In a case like this, one would imagine that having functional competencies may mean that these people have more career options within their reach.
As for a business, having the choice of people with various functional mastery levels (that need not sit under their cost structure) could mean a win-win situation.
Valve, a gaming corporation, takes this to the extreme as they chose to run their business model purely on functional experts without bosses. Having self-organised teams seem to have worked well for Valve as they have created some of the top-selling games in the market (i.e. Left for Dead).
Despite the controversies surrounding its performance management, there is no denying that having 400 employees manage themselves based on common principles have empowered them to deliver the best products.
As Professor Cliff Oswick from Cass Business School comments, “peer pressure is a fantastic way of organising a business and so long as everyone is well paid, people don’t mind being in the bottom earning quartile.”
In my personal experience of consulting and designing talent management programmes, there are advantages and disadvantages when an organisation focuses on functional competencies.
Having executed talent programmes to transform individual contributors into people managers, it can be challenging and it can leave these people feeling demotivated because their personal passion is to have expertise and depth.
However, the organisation’s career pathway and business model require a level of managers to oversee these individual contributors. They are caught in a dilemma between personal passion and career growth.
In most organisations, it is hard to discount the importance of functional competence, but even harder to deny the need for people who go beyond their specific functions.
As a matter of fact, in most future-competencies-prediction-list, the top 10 lists are often non-functional competencies (i.e. collaboration, novel thinking, cross-cultural adaptability).
Thus, it is a significant disadvantage for an individual and an organisation’s business model to focus purely on building functional competencies.
The main advantage of functional competencies is that it is easier to break down processes in an organisation because it can be left to a specific function to handle well as opposed to handling everything.
The saying, “You can’t have your cake and eat it,” may not be applicable to this dilemma of functional competency versus non-functional competencies, fortunately. Why can’t we promote the focus of both?
Developing competencies in accordance with today’s evolving business landscape
To ensure functional competencies have a place in today’s organisation, we can do three things:
1. Have a growth mindset
In my work with technical talents, those who have made a successful transition into leadership positions have a growth mindset with relation to their role.
The “growth mindset” is a concept posited by education researcher Carol S. Dweck who suggests that people often give up before they have put in their maximum effort and thus feel like they are not able to perform beyond what they are born with.
For people with a natural inclination toward technical expertise, building a growth mindset can help them view a wider capacity of their skills.
This is because people with a growth mindset believe in the value of effort, and are more likely to take up tasks that are not in their usual functional comfort.
In this way, they feel a sense of autonomy in their own growth and this would inevitably contribute to the organisation’s holistic output.
2. Provide cross-functional opportunities
While an individual can have a growth mindset, it is also the onus of the organisation to make the best of functional competencies by providing cross-functional opportunities.
Whether this is in the form of leveraging people’s subject matter expertise and having them run a project or allowing job rotation, this sort of exposure can challenge the functional expert’s fixation on their own role.
For example, when the technical talents I work with realise that they can combine their deep experience with the right coaching skills to guide a younger person, they are more fulfilled because there is a sense of purpose that stretches beyond their usual operation.
For the organisation, it was rewarded with strong supervisors who have functional depth and an engaged group of younger employees from the talents’ guidance.
3. Design a system that enables holistic functional competencies
Human behaviours are a result of a strong ecosystem. To continue building holistic functional competencies, how people are rewarded and trained would make a significant impact.
If people with strong expertise are valued for their depth as opposed to how they have coached their team, chances are they would rather expend energy in the technical areas.
In addition, a continual focus on purely functional training is likely to promote a mindset that focuses on function rather than how the function can be applied to the bigger business.
What we find that works in increasing effectiveness of functional trainings is to complement it with non-technical skills training suitable for the specific level or have activities that require applying that function to the bigger picture aspects of business.
The functional competencies “cake” is not likely to be out of trend soon, but the icing on this cake is when it can be adjusted to various flavours and allowing the functional cake to suit different tastes within an organisation.
Evelyn Teh is a practitioner of occupational/industrial psychology with a passion for behavioural change, organisational design and people development. She believes that with consistency every organisation can be developed into its optimal condition. And the stamina for this journey can definitely be sustained by cake. For more Hard Talk articles, click here.