Competency management and the financial results of the foreign subsidiaries of Polish MNCs: The empirical research findings

Abstract

BACKGROUND:

Competency management (CM) is one of the basic subfunctions of HRM, which can significantly affect the results achieved by organizations. This is because the competencies of employees have become the key capital of enterprises and a factor of their success. Research on the relationships between CM and organizational performance results in Polish MNCs creates a research gap due to the object and subject of research.

OBJECTIVE:

The main goal of the article is to identify the potential regularities that may exist between the advancement level of CM and its composing activities and the company financial performance results. Of particular interest are the relationships that may appear between the studied variables in the context of their relationships with other subfunctions of HRM and the significance of human capital as a competitive factor.

METHODS:

The research sample includes 200 non-financial business entities with Polish capital, whose headquarters are in Poland, and local subsidiaries are located outside the country. The research was conducted using CATI and CAWI methods. Descriptive and correlation statistics were used to analyze the collected empirical data.

RESULTS:

Two fundamental regularities are observable. It turns out that the higher the advancement level of activities within CM, and in particular its links with other HRM subfunctions, the better the financial results of enterprises.

CONCLUSIONS:

The empirical research results lead to the conclusion that human capital is treated as a company’s competitive factor, and CM is of significant meaning to the financial results of the organization.

Keywords

Competency management financial results multinational company human factor competitive factor

Marzena Stor - She is the head of Human Resources Management Department at the WrocŁaw University of Economics & Business and at the same time she occupies the position of an extraordinary professor of Strategic International HRM. She is also a scientific supervisor to two postgraduate programs: International Human Resources Management (in English language) and Human Resources Management (in Polish language). In the past, she was the director of the Executive MBA Program for several years. Her scientific and research interests encompass: the international and cross-cultural issues in HRM, business & HRM strategies, HRM impact on company performance, transnational corporations, competency management, interpersonal business communication, and managing international teams.

Łukasz Haromszeki - He is an assistant Professor in Human Resources Management Department at Wroclaw University of Economics & Business and at the same time he occupies the position of the head of two postgraduate studies: International Human Resources Management (in English) and Modern Human Resources Management (in Polish). He was the Coordinator of the Executive MBA Program for several years. His research interests cover: organizational leadership, management by values, ethics and CSR, strategic HRM, influencing and motivating people, talent management, cross-cultural issues in HRM and international human resources management.

1 Introduction

Competency management has been embedded in academic lexicon and management practices for several decades, although conceptual and methodical solutions aimed at its structural inclusion in the area of human resource management (HRM) have a slightly shorter history. In any case, it is now accepted that competency management is one of the essential subfunctions of HRM (although some prefer competency-based HRM), which can significantly affect the results achieved by organizations. This is because the competencies of employees have become the key capital of enterprises and a factor of their success. A review of Polish and foreign literature proves that many different studies have been conducted in this area, both in domestic and international enterprises. However, the research conducted so far in multinational companies (MNCs) concerned organizations whose headquarters (HQs) were located outside Poland. Therefore, there is a lack of research covering international economic entities based in Poland.

Against this background, the main goal of the article is to identify the potential regularities that may appear between the advancement level of competency management and its composing activities and the company financial performance results. Of particular interest are the relationships that may arise between the studied variables in the context of their relationships with other subfunctions of human resources management (HRM) and the significance of human capital as a competitive factor in foreign subsidiaries of Polish enterprises operating on foreign markets.

The intended goal is to be achieved through the presentation of the findings that have been made as a result of the empirical research, which is part of a larger research project financed by the National Science Center 1 . Firstly, the author conducts a brief review of the literature on the subject. Then the following issues are discussed: the methodics of the empirical research, the characteristics of the research sample and the obtained research results. And finally the summary conclusions are formulated.

2 A brief literature review

In their organizational practice, companies use various competitive factors to ensure their market success [see 1]. However, a review of the literature on the subject proves that in most cases human resources are of fundamental importance for the success of an organization and its ability to gain a competitive advantage [2 –5]. This is accompanied by a perspective in which human resources are treated as a competitive factor, the quality of which determines the performance results of the organization [6 –12]. This leads to the conclusion that in the literature on HRM it is considered obvious that the value of the human factor as a competitive factor is the resultant of the level of implementation of various HRM subfunctions in the organization [13], including the competency management subfunction, which is the subject of interests in this work. At this point, it is worth mentioning that in our article we assume that competency means the skills, knowledge, personal qualities, and behaviors that are needed to effectively perform a role or work in the organization and help the business achieve its strategic goals in gaining and maintaining its competitive advantage. This means that they are related to the actual action or the results of this action obtained in a specific situation. Consequently, competency management is understood here as a set of activities aimed at identifying, acquiring, developing and retaining in the organization such employee competencies that enable the implementation of strategic goals of the company [c.f. 14:165].

Currently, in the context of the competitive advantage of an organization, the concept of human resources is increasingly being replaced by the concept of human capital. This is due to taking a slightly different perspective that will not be discussed here as it is not of particular interest in this article. However, it should be noted that in our research we define human capital of an organization as intangible collective resources owned by individual employees and various groups constituting the population of a given organization [15:412]. In the managerial handling of competitiveness this term is sometimes equated with human factor as a competitive factor [16] what we also do in our work for the empirical purposes.

The human factor as a competitive factor is usually considered broken down into managerial and non-managerial staff (employees) due to different scopes of duties, responsibilities, competencies or the importance of the decisions made [17 –21]. Hence, some competency management activities may be dedicated only to one or the other category of employees [22]. Nevertheless, all of these activities are expected to have a positive impact on the company’s performance. Such expectations are justified bearing in mind that many studies confirm the existence of positive correlations between the competencies of employees [23, 24] and managerial staff [21 , 26] and the performance results of enterprises [27, 28], including financial results [29], on which the empirical part of the article is focused.

The results of research on competency management published so far were very diverse, they included not only its various components analyzed from different perspectives, but also came from various scientific disciplines [30 –35]. It is also important that they were carried out in various types of organizations, i.e. private and public as well as national and international. The research in national organizations characterized the practices of companies from one country [36 –41], and the research in international organizations usually concerned the economic entities with headquarters located outside Poland [42 –47]. Therefore, it can be assumed that research on the relationships between competency management and organizational performance results in Polish multinational enterprises creates a research gap due to the object and subject of research. This is based on the assumption that although it is now over three decades since the collapse of socialism in Eastern Europe, of which Poland is a part, the point is that for that time MNCs have been developing under completely different political and economic régime bringing even differentiable societal developments [48] and resulting in different conceptualizations of appropriate management decisions. And the social, organizational and managerial changes, although visible all around, are not free of the encounters with the past managerial models [13].

3 The empirical research methodics

In view of the theoretical findings, it was considered justified to explore the issues of competency management in Polish MNCs. Simultaneously, it was assumed that competency management is one of HRM subfunctions. The main research problem (identified with the goal of this article) was formulated as a question, namely, are there any regularities between the advancement level of competency management and its composing activities and the financial performance results of companies in the context of the significance of human capital as a competitive factor and the relationships between competency management and other HRM subfunctions.

And the detailed research questions took the following form:

How is human capital assessed as a competitive factor in foreign subsidiaries compared to the assessment of this factor in the MNC’s headquarters?

What is the significance of competency management to the financial performance results of foreign subsidiaries of MNCs?

What is the advancement level of competency management and its individual components in the local subsidiaries of MNCs?

What impact do the individual components of competency management have on its overall advancement level?

How do the individual components of competency management interact?

How do the overall advancement level of competency management and the levels of its individual components influence on the financial performance of the organization?

The literature review, in turn, prompted the formulation of the following hypotheses:

H₁: The higher the advancement level of individual components of competency management, the higher the overall advancement level of this HRM subfunction.

H₂: The higher the advancement level of competency management, the better the financial performance results of the organization.

H₃: The higher the advancement level of competency management associated with other HRM subfunctions, the better the company’s financial performance results.

The population of the companies under research made nonfinancial economic entities. According to the major international statistical institutions, like OECD, UNCTAD, Eurostat or Statictics Poland, nonfinancial economic entities are companies whose principal activity is the production of market goods or non-financial services. Thus, this enterprise category does not include banks, credit institutions, credit unions, insurance companies, brokerage and securities houses, assets management and investment funds, general pension societies and pension funds.

The sampling was of the purposive type to meet the requirements specified both for the businesses and their representatives. The companies participating in the research had to be headquartered in Poland, with a dominant share of the Polish capital, existing on the market no less than 2 years, which possessed at least one foreign subsidiary, and this subsidiary was an effect of a foreign direct investment (FDI). To describe this type of entities, the term Polish multinational companies (MNCS) has been adopted. The respondents had to be the people with the best knowledge on both business and HRM issues.

The research was performed in 2018 using CATI and CAWI methods. The survey was commissioned to the ICAN INSTITUTE at Harvard Business Review Poland (ICAN-HBR). They were responsible for creating the website and training the group of interviewers. They used their own database to select proper respondents and fulfill the requirements of the purposive sampling.

The study was conducted on a sample of 200 enterprises. The reference base for the number of business entities was the last report prepared by the Polish Central Statistical Office. The report said that there were 1760 Polish economic entities which confirmed possessing 4086 business entities in 150 countries in 2015 [49]. Hence, it was assumed that the size of a sample is sufficient to conduct the research because when the confidence coefficient stays at the level of 0.95 the maximum measurement error amounts to 0.065. The respondents were: business owners (1.5%), managing directors (42.5%), HR directors (35.5%), and HR managers (20.5%).

The structure of the surveyed population was diversified in terms of the profile of economic activity according to the European Classification of Business Activity (ECBA) (although not all of the sectors of the economy were represented), the period of operation on the market, the size measured by the number of employees and the ownership structure of shares or resources of foreign entities controlled by the Polish parent company (see Table 1).

Table 1
Basic descriptive statistics for the variables characterizing MNCs in the research sample

Variables Valid N Mean Median Min Max SD

Total number of entities 200 12.73 4.00 1.0 470.00 40.74

Number of foreign entities 200 7.76 2.00 1.0 240.00 21.44

Number of host countries 200 4.46 2.00 0.0 60.00 7.01

Ownership structure 200 3.28 3.00 2.0 4.00 0.63

Type of business activity according to the ECBA Name of business activity %of MNCs

A. Agriculture, forestry and fishing 1%

B. Mining and quarrying 2%

C. Manufacturing 36%

D. Electricity, gas, steam and air conditioning supply 1%

E. Water supply, sewerage, waste management and remediation activities 0%

F. Construction 18%

G. Wholesale and retail trade; repair of motor vehicles and motorcycles 11%

H. Transportation and storage 5%

I. Accommodation and food service activities 0%

J. Information and communication 1%

K. Financial and insurance activities 0%

L. Real estate activities 0%

M. Professional, scientific and technical activities 13%

N. Administrative and support service activities 1%

P. Education 0%

Q. Human health and social work activities 0%

R. Arts, entertainment and recreation 4%

X. Others 11%

Length of operation in years Number of years %of MNCs

to 2 0%

3–5 2%

6–10 6%

11–20 50%

> 20 42%

Size of organizations measured by number of employees Number of employed %of MNCs

to 9 1%

10–49 8%

50–249 23%

> 249 68%

Ownership share of the HQ in local subsidiaries Share of a direct investor in the ownership (capital) structure of a foreign entity in % %of MNCs

to 10.00% 0%

10.01–50% 9%

50.01–99.99% 54%

100% 37%

Variables	Valid N	Mean	Median	Min	Max	SD
Total number of entities	200	12.73	4.00	1.0	470.00	40.74
Number of foreign entities	200	7.76	2.00	1.0	240.00	21.44
Number of host countries	200	4.46	2.00	0.0	60.00	7.01
Ownership structure	200	3.28	3.00	2.0	4.00	0.63
Type of business activity according to the ECBA	Name of business activity	%of MNCs
	A. Agriculture, forestry and fishing	1%
	B. Mining and quarrying	2%
	C. Manufacturing	36%
	D. Electricity, gas, steam and air conditioning supply	1%
	E. Water supply, sewerage, waste management and remediation activities	0%
	F. Construction	18%
	G. Wholesale and retail trade; repair of motor vehicles and motorcycles	11%
	H. Transportation and storage	5%
	I. Accommodation and food service activities	0%
	J. Information and communication	1%
	K. Financial and insurance activities	0%
	L. Real estate activities	0%
	M. Professional, scientific and technical activities	13%
	N. Administrative and support service activities	1%
	P. Education	0%
	Q. Human health and social work activities	0%
	R. Arts, entertainment and recreation	4%
	X. Others	11%
Length of operation in years	Number of years	%of MNCs
	to 2	0%
	3–5	2%
	6–10	6%
	11–20	50%
	> 20	42%
Size of organizations measured by number of employees	Number of employed	%of MNCs
	to 9	1%
	10–49	8%
	50–249	23%
	> 249	68%
Ownership share of the HQ in local subsidiaries	Share of a direct investor in the ownership (capital) structure of a foreign entity in %	%of MNCs
	to 10.00%	0%
	10.01–50%	9%
	50.01–99.99%	54%
	100%	37%

Source: own research data.

The respondents were asked to answer questions about the last 3 years (2015–2017). Outlining the time frame was to enable the respondents to identify the cause-effect relationships of the studied variables in the context of specific internal and external organizational conditions, and not to refer to abstract ideas. Moreover, the effects of actions taken in the area of competency management and their assessment from the perspective of the company’s performance cannot be made in the short term perspective.

When it comes to measures used in research, it is worth noting at the outset that there are numerous publications in which the authors present empirical research findings on the relationship between the HRM or its subfunctions and organizational performance results. To measure organizational performance, researchers came across two types of measures, that is, objective and subjective measures. As about the financial results they use such measures as profits, sales, market share, financial liquidity, company’s goodwill, share price, firm value, and many others [13] which are considered to be objective. However, it is argued that in situations where objective performance data are not available, subjective (perceptual) measures may be used as a reasonable choice [41]. In our research project the measures we employed for the financial performance results are relative, or benchmarked, in the sense that they are derived from questions asking informants to evaluate the financial results of foreign entities by comparing them to the results of local competitors. Although the analysis of perceptual data is limited by increased measurement error and potential bias in one method, the use of such measures is not unprecedented [50]. Research has found measures of perceived organizational performance to correlate positively (with moderate to strong associations) with objective measures of company performance [51, 52]. In this context, the significance of competency management was also assessed, i.e. due to its contribution to the organization’s performance. In this same vein, the value (significance) of the human factor as a competitive factor of a foreign subsidiary was determined by the respondents by comparing this value with the value ascribed to the human factor at the headquarters. Such comparative studies were divided into managerial staff (competencies of managerial staff) and non-managerial staff (called human capital - employees’ knowledge and skills). When it comes to the advancement level of competency management, the benchmark for assessing the level of its solutions were global trends based on best practices. The seven selected components structuring competency management and the measurement scales that were applied to all variables are presented in Table 2.

Table 2

Basic descriptive statistics for the main variables under study: human factor, competency management, and company’s financial performance results

Variables		Valid N	Mean	Min	Max	SD
The significance of competency management to company’s results		200	3.32	2.00	5.00	0.59
Human factor as competitive factor	Human capital - employees’ knowledge and skills	200	3.41	2.00	5.00	0.56
	Competencies of managerial staff	200	3.37	2.00	5.00	0.56
The advancement level of activities within competency management	Identifying competencies of the managerial staff relevant to the realization of the company’s strategy	200	4.20	3.00	5.00	0.70
	Identifying knowledge and skills of employees relevant to the realization of the company’s strategy	200	3.80	3.00	5.00	0.54
	Cyclical measurements of the competency state of managerial staff	200	3.47	2.00	5.00	0.60
	Cyclical measurements of the knowledge &skills state of employees	200	3.64	2.00	5.00	0.55
	Regular examination of the competency gap of managerial staff and designing solutions to fill it	200	3.64	2.00	5.00	0.58
	Regular examination of the knowledge &skills gap of employees and designing solutions to fill it	200	3.59	2.00	5.00	0.60
	A dynamic (changing over time) competency database	200	3.64	2.00	5.00	0.61
	Competency management associated with other HRM subfunctions	200	3.75	2.00	5.00	0.58
	The overall mean for competency management	200	3.71	2.50	4.63	0.37
Financial performance results			200	3.74	2.00	5.00	0.51
Scales:
•Significance (contribution) of CM to the company’s performance results: 1 –not important, 2 –slightly important, 3 –important,
4 –very important, and 5 –of critical significance;
•Competitive factor ⟶ comparison to the HQ: 1 –strongly lower, 2 –rather lower, 3 –similar to an average, 4 –rather higher,
5 –strongly higher;
•Advancement level of CM ⟶ comparison to the general trends based on the best worldwide practices: 1 –very low, 2 –low,
3 –average, 4 –high, 5 –very high;
•Financial performance results ⟶ comparison to the main competitors: 1 –poor, 2 –below average, 3 –similar to others,
4 –above average, 5 –very good;

Source: own research data.

The general characterization and analysis of the collected empirical data was performed with the use of descriptive statistics, while the analysis of the relationship between the variables was performed using the non-parametric rank order correlation test - Spearman’s rho, as the studied groups of variables were measured on ordinal scales. All calculations were performed using Statistica v. 13.3 - an advanced analytics software package with the level of significance set to alpha = 0.05.

4 The empirical research findings

The basic descriptive statistics, including the measurement scales used, are presented in Table 2. They show that the value of the human factor as a competitive factor in foreign subsidiaries is comparable to the value assigned to it in the company’s headquarters. This applies to both the knowledge and skills of employees $(\bar{x} = 3.41)$ and the competencies of the managerial staff $(\bar{x} = 3.37)$ . Managing the competencies of these two categories of employees had a significant impact on the results obtained by the company $(\bar{x} = 3.32)$ , and it is worth noting that compared to local competition, the financial results of foreign subsidiaries were above average $(\bar{x} = 3.74)$ . Certainly, the key role was played by the advancement level of solutions within competency management $(\bar{x} = 3.71)$ , which was assessed as high compared to global trends based on best practices.

Of the eight components included in competency management, the highest advancement level of solutions is characterized by the identification of competencies of the managerial staff $(\bar{x} = 4.20)$ and knowledge & skills of employees $(\bar{x} = 3.80)$ which are relevant to the realization of the company’s strategy. Competency management associated with other HRM subfunctions ranks third $(\bar{x} = 3.75)$ . The distribution of the remaining elements on the ranking list is presented in Graph 1.

Graph1

Ranking of competency management components according to the advancement level of their solutions. Source: own research data.

Before undertaking a detailed correlation analysis between the studied variables, the reliability of the scale was verified using the Cronbach’s alpha test, in which the index obtained the value of α= 0.765. As a result, the item concerning the cyclical measurement of the competency state of managerial staff was removed from further analyzes. Although it has a borderline value (α= 0.769), it nevertheless reduces the reliability of the scale (see Table 3). When removed, the reliability for the whole scale improved slightly (α= 0.769).

Table 3

Reliability and item-total statistics for the components of competency management

Variables	Summary for scale: Mean = 29,7100; Std. Dv. = 2,94209; Valid N:200
	Cronbach alpha:,765522; Standardized alfa:,765327
	Average inter-item corr.:,292797
	Mean if deleted	Var. if deleted	StDv. if deleted	Itm. Totl. Correl	Alpha if deleted
Identifying competencies of the managerial staff relevant to the realization of the company’s strategy	25,51000	6,338209	2,517580	0,508291	0,732979
Identifying knowledge &skills of employees relevant to the realization of the company’s strategy	25,91500	7,092314	2,663140	0,427364	0,746843
Cyclical measurements of the competency state of managerial staff	26,24000	7,305871	2,702937	0,293883	0,769621
Cyclical measurements of the knowledge &skills state of employees	26,07500	7,143656	2,672762	0,399053	0,751290
Regular examination of the competency gap of managerial staff and designing solutions to fill it	26,07000	6,602090	2,569453	0,559067	0,724008
Regular examination of the knowledge &skills gap of employees and designing solutions to fill it	26,12000	6,652338	2,579213	0,517011	0,731104
A dynamic (changing over time) competency database	26,07500	6,606343	2,570281	0,523439	0,729806
Competency management associated with other HRM subfunctions	25,96500	6,779875	2,603819	0,493476	0,735543

Source: own research data.

The results of the correlation test for the advancement level of solutions within competency management and the company’s financial performance results are presented in Table 4. The analysis of the internal correlations contained therein between the individual components making up competency management indicates that the emerging relationships are positive, apply to all components, and the strength of the identified correlations is in the range from r = 0.20 to r = 0.45. Thus, these are relationships of low or moderate intensity, albeit clear and statistically significant. Therefore, it can be assumed that an increase in the advancement level of one component positively influences the advancement of other components. Moreover, each of the competency management components is strongly correlated with the overall mean of competency management. The identified correlations are high and range from r = 0.57 to r = 0.64, which means that increasing the advancement level of solutions within each of the components results in an increase in the advancement level of comprehensively assessed competency management (the overall mean of competency management). Thus, the hypothesis H₁ is positively verified.

Table 4

The results of the correlation test for the advancement level of solutions within competency management and the company’s financial performance results

Variables			The advancement level of solutions within competency management
			Managerial staff		Employees
			Identifying competencies relevant to the realization of the company’ss strategy	Regular examination of the competency gap and designing solutions to fill it	Identifying knowledge & skills relevant to the realization of the company’ss strategy	Regular examination of the knowledge & skills gap and designing solutions to fill it	A dynamic (changing over time) competency database	Competency management associated with other HRM subfunctions	The overall mean for competency management	Financial results
The advancement level of solutions within competency management	Managerial staff	Identifying competencies relevant to the realization of the company’s strategy	1.00	0.40 ^*	0.45 ^*	0.37 ^*	0.33 ^*	0.35 ^*	0.64 ^*	0.35 ^*
		Regular examination of the competency gap and designing solutions to fill it	0.40 ^*	1.00	0.31 ^*	0.39 ^*	0.31 ^*	0.38 ^*	0.59 ^*	0.22 ^*
	Employees	Identifying knowledge &skills relevant to the realization of the company’s strategy	0.45 ^*	0.31 ^*	1.00	0.36 ^*	0.29 ^*	0.20 ^*	0.59 ^*	0.18 ^*
		Regular examination of the knowledge &skills gap and designing solutions to fill it	0.37 ^*	0.39 ^*	0.36 ^*	1.00	0.32 ^*	0.27 ^*	0.63 ^*	0.25 ^*
		A dynamic (changing over time) competency database		0.33 ^*	0.31 ^*	0.29 ^*	0.32 ^*	1.00	0.38 ^*	0.65 ^*	0.24 ^*
		Competency management associated with other HRM subfunctions		0.35 ^*	0.38 ^*	0.20 ^*	0.27 ^*	0.38 ^*	1.00	0.57 ^*	0.34 ^*
		The overall mean for competency management		0.64 ^*	0.59 ^*	0.59 ^*	0.63 ^*	0.65 ^*	0.57 ^*	1.00	0.28 ^*
Financial results				0.35 ^*	0.22 ^*	0.18 ^*	0.25 ^*	0.24 ^*	0.34 ^*	0.28 ^*	1,00

^*Pearson’s r significant at p < ,05000. Source: own research data.

It is important from the perspective of the research because the results of the correlation test also allowed to identify positive and statistically significant relationships between the individual components of competency management and the financial performance results of companies (interval from r = 0.18 to r = 35), and as a result also between the comprehensively assessed competency management (overall mean) and the financial performance results of the surveyed organizations (r = 28). This allows the hypothesis H₂ to be considered true, because the findings show that the higher the advancement level of competency management solutions, the better the financial performance results of the companies.

In this context, it should be noted that the strongest relationships with financial results are demonstrated by two components, i.e. the identification of managerial competencies relevant to the realization of the company’s strategy (r = 0.35) and competency management associated with other HRM subfunctions (r = 0.34). This leads to the conclusion that good-quality associations between a high level of solutions in competency management and a high level of solutions in other HRM subfunctional may contribute to increasing the financial performance results of the organization. This in turn leads to the confirmation of the hypothesis H₃ which states that the higher the advancement level of competency management associated with other HRM subfunctions, the better the company’s financial performance results.

Another noticed regularity also deserves attention. Well, among all the components, it is the dynamic (changing over time) competency database that shows the strongest correlation with the overall mean of competency management (r = 0.65), and this suggests that this mean is shaped to the greatest extent by this component. However, the degree of correlation of this component with the company’s financial performance results (r = 0.24) occupies only the fourth position among the six examined components. This may be a bit surprising because in such a correlation ranking it is preceded by components whose activities include the identification of the required competencies (r = 0.35), diagnosing the competency gap and filling it (r = 0.25), which seems to create opportunities for appropriate modification of the existing competency database. This phenomenon can be explained by the fact that in organizational practice the identification of the necessary competencies (in the sense of their conceptual definition, and then using them in the organization’s resources as a result of positively concluded searches for their owner) is less complicated and less time consuming than filling the competency gap. Filling this gap may, after all, mean the need to recruit new employees to the organization and / or training & development of current or new employees, and this may reduce the dynamics of changes in the competency base. Hence, a slightly smaller impact of the dynamics of changes in the competency database is visible than the mere identification of the necessary competencies with the possibility of their automatic use on the company’s financial performance results.

5 Summary and final conclusions

The results of the conducted analysis of the collected empirical data allow to conclude that the main goal of the article has been achieved. We have successfully identified certain regularities that appear between the advancement level of competency management and its composing activities and the company financial performance results in the context of the value ascribed to the human capital as a competitive factor and the associations between competency management and other HRM subfunctions.

The research findings lead to the conclusion that human capital, in its two basic categories (i.e. knowledge & skills of employees and the competences of managerial staff), is treated as a company competitive factor and, consequently, competency management of people whose human capital creates these two categories is of significant importance to the financial performance results of companies. In the organizations under study, the advancement level of solutions in the field of competency management is relatively high. The ranking gives the highest scores to: the identification of those competencies of managerial staff and knowledge & skills of employees that are important to the implementation of the company’s strategy and competency management associated with other HRM subfunctions. In the case of the first activities, along with the competency database dynamically changing over time, they also show the strongest statistically significant links with the overall assessment of competency management. In turn, the financial performance results of companies turn out to be positively correlated not only with the overall assessment of competency management (understood as the mean of its individual components), but also with each of its components. It should be noted, however, that two components seem to have the greatest positive impact on the financial performance results of the organization, i.e. the aforementioned identification of managerial competencies relevant to the realization of the company’s strategy and competency management associated with other HRM subfunctions. In general, it can be concluded that the higher the advancement level of solutions within competency management, and especially its links with other HRM subfunctions, the better the financial performance results of enterprises.

In some range, our research not only confirms, but also broadens and complements the findings made by other researchers. To name just a few of them, we can refer to studies in which M. Salman et al. empirically validated the relationships between employee competencies and organizational performance [41] or to the research findings in which S.V. Shet at al. present an empirically confirmed positive relationship between competency-based superior performance and organizational effectiveness [53]. These both cases lead to the conclusion that that managing competencies makes sense from the company’s perspective. This conclusion can be supported by some other research, like the one performed by F. Draganidis & G. Mentzas who proved that competency management supports organizational performance [54] or the other one conducted by J. Kolibáčová in which she confirmed the hypothesis that investing time and money in the development of employees, aimed at improving their competences, enables the achievement of higher employee results, and thus the entire company [55]. Additionally, basing on the research results gained by P. Špar et al. from Austria and Slovenia we can justify our expectation that competency management may look differently in MNCs coming from the so-called western countries and those headquartered in Eastern Europe [56]. Furthermore, in our research we theoretically assumed and empirically confirmed that better company performance results are achieved when the high level of competency management developments is properly tied with other HRM subfunctions. V. Korenková at al. to came similar conclusions although her study oriented toward the exploration of the role of HRM and competency modeling in improving organizational performance [57]. And finally we should refer to H. Heinsman at al. whose research data showed that competency management implemented with a commitment approach brings about a more positive attitude towards the use of competency management than when implemented with a control approach [58]. In our understanding it proves that the context in which the relationship between competency management and company performance results is considered - really matters. In our research it was the value ascribed to the human capital as a company competitive factor which in both cases, managerial and non-managerial, was valued high. Such rating suggests that human factor is perceived not as an object utilized to reach the company’s goals but as precious human assets or means that demand winning their hearts and minds by proper motivating and competency development. This interfered understanding goes in line with the concept of a commitment approach assumed in the above mentioned study by H. Heinsman at al.

The value of our research findings is determined by certain contribution that is made to the development of the theory of management science and to the development of HRM practice in companies. On the one hand, the identified regularities not only confirm the validity of the assumption made in the literature on the subject that solutions in the field of competency management can positively affect the financial performance results of enterprises, but also outline to some extent an innovative interpretation of the mutual relations between the advancement levels of individual components of competency management as well as between the advancement levels of these components and the financial performance results of the organization. On the other hand, on the basis of these findings, practical recommendations can be formulated, which may support the managerial staff in answering the question of how to manage competencies in order to obtain the expected company financial results. It is primarily about creating solutions that are useful in making decisions regarding, for example, the number and type of competency management components, their interrelationships, as well as the relationship between competency management and other subfunctions of HRM.

Certainly, the conducted research has some limitations. These may include, for example, the adopted competency management structure, the assessment of the financial performance results of companies not on the basis of hard measures, but on the basis of comparisons to local competition made by respondents, or the lack of representatives of specific types of economic activity in the research sample. Despite these limitations, the presented research findings show certain cognitive and functional values, especially with regard to the relations that appear between the studied variables in foreign subsidiaries of Polish international companies.

Footnotes

Acknowledgments

This work was supported by National Science Center, Poland [No 2016/23/B/HS4/00686].

Author contributions

CONCEPTION: Marzena Stor and Łukasz Haromszeki

METHODOLOGY: Marzena Stor and Łukasz Haromszeki

DATA COLLECTION: Marzena Stor and Łukasz Haromszeki

INTERPRETATION OR ANALYSIS OF DATA: Marzena Stor and Łukasz Haromszeki

PREPARATION OF THE MANUSCRIPT: Marzena Stor and Łukasz Haromszeki

REVISION FOR IMPORTANT INTELLECTUAL CONTENT: Marzena Stor and Łukasz Haromszeki

SUPERVISION: Marzena Stor

Project No 2016/23/B/HS4/00686, entitled Human resources as a strategic competitive factor of companies realizing foreign direct investment.

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