Working Paper
Measuring the Impact of a Managerial Competency System: Does Identifying and Rewarding Potential Leaders Improve Organizational Performance?
The use of competency systems to evaluate, reward, and promote managers has become commonplace in large organizations in recent years. Yet despite their popularity, there is scant evidence that competency systems increase managerial effectiveness and improve organizational performance. We first analyze the individual-level determinants of progression within a competency system and the links of the system with individual managerial performance. We then examine whether the prevalence of managers who have progressed within a competency system is related to improved organizational unit-level results. The results indicate that managerial competency systems can contribute to organizational performance.
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