An Exploratory Study on Business Strategy, Competency and Firm Performance

In the last two decades competency based HRM has been increasingly used across the world. In India also the companies have started using competency based approach to HRM. However in the Indian context there is paucity of data on the extent of usage, reasons for adoption etc. The impact of competency adoption on firm performance especially financial impact has not been established. This paper reviews the available literature on competency based human resources management and its application. The paper also provides data on a pilot study done on 101 Indian organisations to study the extent of adoption of competency in India. The authors found that adoption of competency is extensive in India with over 71% of the companies using competency for various purposes. The biggest reasons for adoption of competency framework are increasing quality of candidates selected, employee effectiveness and employee efficiency