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Competency Management – What are Competencies?

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While competencies are not new, what is new is their increased application across human resource functions to drive Talent Management and both employee and corporate performance and realise results that are relevant to the organisation’s business strategies and vision.

Competencies are general descriptions of the behaviour or actions needed to successfully perform within a particular job or role context (e.g. job, group of jobs, function, etc).

Why Use Competencies?

When done correctly, implementing competencies within your organisation gives you the means to:

  • Translate the organisation’s vision and goals into expected employee behaviour;
  • Implement more effective and legally defensible recruitment, selection and assessment methods;
  • Reduce hiring costs and absenteeism / turnover rates;
  • Identify areas for employee development that are directly linked to desired outcomes and organisational objectives;
  • Target training budgets in areas that are will realise the most return on investment;
  • Set more effective (and valid) criteria for developing and evaluating performance;
  • Identify gap between present skill sets and future requirements; and
  • Ensure retention of the essential competencies for the success of the organisation.

Furthermore, by communicating these competencies to employees, organisations empower employees to take charge of their careers, direct their own personal development, and continually self-evaluate and improve.

What is a Competency Profile?

A Competency Profile is a set of competencies, and includes associated behaviours, that link directly to the work to be performed, as well as the levels of proficiency for each behaviour.  Competency Frameworks typically have between 3 and 5 levels of proficiency.  Usually there are several competencies (10 – 20) for any given position.  Each Competency Profile, or set of competencies, is specific to a job or group of jobs.

With valid, fair and unbiased Competency Profiles, management can recruit, select, train, develop and reward employees in a manner that is consistent with the strategic vision and objectives of the organisation. Therefore, any investment an organisation makes in competency profile development has benefits far beyond the usefulness of the results for employee development purposes.

What is a Competency Framework

A Competency Framework is the full set of competencies, over a number of levels, that are required for a department (e.g IT Competency Framework), area of learning (e.g. Accounting Competency Framework) or, for the organisation as a whole.  Typically the organisation’s Competency Framework would consist of a number of Competency Frameworks relevant to the different areas of business.

It is not possible to have effective Talent Management (see our articles on Talent Management) without a good Competency Framework that describes the full set of competencies required for effective performance and business delivery.

Why do we Need Competencies when we already Have Job Descriptions?

In contrast to a job description, which typically lists the outcomes, responsibilities and tasks or functions required of a particular role, a set of competencies (or competency profile) lists the abilities needed to conduct those tasks or functions.

Job Descriptions do not, and should not, include the level of detail necessary for the assessment of competence.  They are more about the Job.  Competencies on the other hand are described in terms such that they can be observed, measured and rated against criteria that are standardised and required to do the job effectively.

Why do Competency Frameworks have Different Levels?

Different levels describe increasing levels of complexity within the Competency Area.  The level of Competence does not generally align with the level of the Job, however.  For instance, even a senior Developer is expected to have some knowledge of Networking and Communication, but only at a foundational level.  Whereas a Network Engineer, that could be at the same job level as a Senior Developer, is expected to have more advanced competence in the area of Networking and Communication.

Commercial Competency Frameworks generally have been 3 and 5 levels.  The TalentAlign IT Competency Framework has four levels.  This was specifically done to prevent “middle-of-the-road” choices being made.

How do We Use a Competency Framework?

Competency Frameworks are essential for key Talent Management (Human Capital Management) purposes, such as:

  • A foundation for Workforce Planning
  • A source for Workforce Analytics
  • The source of information for employee search and selection
  • A guide for employee selection using behaviour-based job interviews.
  • The basis on which to conduct Skills Audits
  • A self-assessment tool for employees and managers
  • A training development and evaluation tool
  • The heart of performance management
  • The basis of reward management

and so on…

How do We Create a Competency Framework?

Creating a Competency Framework is a lengthy and costly process – no matter what way you look at it.  To do the work from the beginning for an entire organisation, each job has to be evaluated and broken down in competencies.  Then detailed research is required to build the required evidence of competence for the different levels of competence required in the organisation.

Whereas it is seldom possible “buy” Competency Frameworks for an entire organisation, it is both possible and feasible to purchase different frameworks for specific areas of the organisation and customise them to organisational requirements.  With these frameworks as a foundation, it is necessary only to build the parts of the framework that address company specific or specialist competencies.

Where to From Here?

In 1994 Edward E Lawler wrote an article entitled “From Job-based to Competency-based Organisations”[1].  In this article Lawler hypothesizes that “Despite its historical utility, there is growing evidence that it may be time for many organisations to move away from a focus on jobs and towards a focus on individuals and their competencies (Lawler and Ledford, 1992).  In many situations there is good reason to believe that the concept of an individual holding a job is no longer the best way to think about organising and managing individuals.  Instead of thinking of people as having a job with a particular set of activities that can be captured in a relatively permanent and fixed job descriptions, it may be more appropriate and more effective to think of them a human resources that work for an organisation.”  In support of this, it is becoming evident in business today, that knowledge of the organisation, it’s business, goals, vision and method of doing business is one of the core competencies necessary for effective performance in the workplace.

A Competency-based Organisation, however, requires different approaches to organisation design, work design, employee selection, career development, pay and overall competency management.  It also requires different systems and processes.  Traditional methods and systems do not facilitate the efficacy of a Competency-based Organisation.

Most of these areas have, since 1994, been addressed, both methods and systems through the advent of Human Capital Management systems.  The area that remains problematic is the area of pay.  A competency-based approach focuses on individuals, and pays them according to the competencies they have – that are applicable to the work environment.  It starts from the assumption that individuals have value, not jobs.  “Blocks” of skills that are needed by the organisation, rather than jobs, are the basic units of analysis.

At the heart of a competency-based reward system is the assessment of individual skills and capabilities.  Key concerns in this area are the level of consistency applied within the organisation and between organisations, who assesses the competence, and what type of process needs to be set up to do the assessments.

Virtually all remuneration benchmarking tools today are “job-based” and little or no effort has been made to accommodate the move to competency-based reward.  This will need to change in the future as we move from Job-based to Competency-based organisations.


[1] “From Job-based to Competency-based Organisations”, Edward E Lawler, Center for Effective Organisations, School of Business Administration, University of Southern California, 1994

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