Development and validation of a customized competency‐based questionnaire : Linking social, emotional, and cognitive competencies to business unit profitability

Purpose – The purpose of this paper is to report data empirically linking competencies of individual leaders to business profitability and demonstrate that competencies are cross‐culturally valid. Design/methodology/approach – Participants in the initial competency study were 15 business unit managers identified as high performing. Data were collected using Critical Incident Interviews that were systematically coded using thematic analysis to identify the presence of competencies. Competencies identified were then adapted into a behaviourally‐based questionnaire used in a follow‐up validation study. Participants in the validation study ( n =70) were managers from North America and two European countries who were participants in a management development program. Boss ratings of competencies were then correlated with business unit profitability. Findings – A set of competencies was identified as predictive of unit profit growth in managers in both North America and the European Union. Subsequent regression analysis showed that 17 per cent of the variance in business unit profitability could be accounted for by four competencies, specifically team leadership, developing others, achievement orientation, and impact and influence. Cross‐cultural validity was demonstrated to the degree that similar competencies predicted performance in both North America and the European Union as evidenced by the correlation between boss rating of subordinate competencies and profit growth. Research limitations/implications – The initial study using Critical Incident Interviews was conducted with a small sample size and did not employ a comparison group of average performers. Practical implications – Initial competency research using empirical methods should be used to help focus competency models used for selection, feedback, training, and performance management. Originality/value – The study is one of the few published studies that link competencies to business unit profitability. The paper demonstrates that competencies have a degree of cross‐cultural validity.