As the evolution of skills-based organizations continues, using a competency model becomes increasingly important to ensure that individual jobs are clear on what success looks like and how to meet it. While organizations traditionally looked at job titles and roles, competencies require a different method of assessment.
What is competency modeling
Defined by the Training Industry as “a framework for defining the skill and knowledge requirements of a job. It is a collection of competencies that define the skills and abilities that enable successful job performance.”
As we shift to a skills-based workforce, traditional methods of assessment are no longer suitable. Fortunately, competency models can be created for specific jobs, job groups, occupations, industries and organizations. There is extensive research into the types of competencies needed in specific areas such as leadership, and there is universal agreement into the competencies needed to succeed in these roles.
Skills vs capability vs competency
While capability and competency are often used interchangeably, they are not the same thing. And while all three are codependent, it is important to differentiate between them for organizational planning and success. Acorn differentiates them as follows:
- Skills: A skill is a learned ability, talent or expertise needed to perform a task, usually to an industry standard or without supervision. Generally speaking, you can be technically skilled for a job role or possess soft skills that impact your relationships.
- Competencies: Competency assesses the application of a person’s knowledge and skills in the workplace. It is often used in performance reviews to evaluate an employee’s expertise in certain organizational capabilities.
- Capabilities: A capability is a combination of personal and technical skills, knowledge, processes, tools and behaviors that are critical to an organization’s success and future needs. When used as part of strategic planning, human resources and professional development, capabilities drive business outcomes.
Why organizations use competency models
Organizations with clearly defined competency models are shown to achieve greater performance success. In a competency survey by the Society for Human Resource Management (SHRM), 93% of 500 C-suite executives claimed that competency models were important to their organization’s performance success.
Here are the ways in which competency models benefit organizations:
- It sets clear, measurable direction for workforce performance that aligns with the organization’s strategy and goals
- Provides transparency to the employees’ skills and competencies across the organization
- HR can then do a competency gap analysis to inform learning and development planning
- Employees are empowered to take control of their own learning and development
- Provides a consistent framework to measure performance and success
Competency models are growing in popularity as they can be embedded into HR technologies to measure performance; support training; and link competency with organizational strategy.
Types of competency models
As there is no set list of competencies that must exist within an organization, there is no one specific competency model that fits all. The type of competency that feeds into the model is informed by what is needed for the job.
Imagine different levels of skills needed for a job, like climbing a ladder.
Core competencies
These are the first rungs on the ladder. These are the basic building blocks everyone in the company needs, regardless of their job. They’re like communication skills or teamwork – things you pretty much need anywhere to work well with others. The company’s goals also play a role here. For example, a delivery company’s core competency might be logistics (getting things from A to B), and for an employee there, it could be on-time deliveries.
Functional competencies
These are the next steps on the ladder. These are the specific skills and ways of doing things needed for a particular job. So, a waiter might need the skill to handle customer complaints calmly, while an accountant might need to analyze financial data to make reports. These skills help someone become a top performer in their role.
Leadership competencies
Finally, we get to the top rungs of the ladder. These are the skills and behaviors needed to lead others, like making good decisions. These are important for supervisors and managers but can also be useful in any job where you might need to guide or influence others, and feed into the leadership competency model.
How to Develop Competency Models in 7 Easy Steps
There are many processes for developing competency models including the five step process from Competency Model Clearinghouse, sponsored by the U.S. Department of Labor. Whichever you choose to follow, the premise is the same.
Step 1: Define the purpose of creating the competency model
Define who will use the model – a specific department, leadership or the entire organization – and what information you need to get out of it.
You will also need to define the purpose or goal of the model so that you know what competencies and information you should include in it. This may be:
- Performance: Run fair performance reviews, analyze skills gaps, streamline compensation structure
- Engagement: Promote horizontal mobility and create transparency around expectations at different levels
- Recruitment: Coordinate recruitment efforts to existing or missing competencies and ensure consistency across recruitment practices
- Career development: Enable more strategic training programs, succession planning, and career growth in your organization
Step 2: Select the relevant system for your organization
Depending on your goal of the model, you will then choose the type of competency model and what you will build it around:
- Core competencies – the core competencies relevant across the organization
- Departments or job families – those competencies relevant to, for example, engineering or marketing
- Roles – for example, those competencies required of a technical engineer or an SEO specialist
- Individual contributors or leadership – leadership will require additional competencies to those for individual contributors
- Company values – were the competencies chosen tie directly into one of your company values
While these structures are excellent foundations for developing competency models, they can be mixed and matched across the organization.
When defining the system you will need to decide on the number of competencies per model, although Deel recommends a maximum of 12 for individual contributors, and 15 for leaders.
You will also need to define the levels employees can achieve or measure themselves at per competency. While more levels will give you a more detailed view of your talent, it also requires more work to clearly define and differentiate each level. Three levels are usually the minimum and use variations on the following: basic or beginner; intermediate or competent; and expert or master.
Step 3: Conduct your research
Once you have an idea of how the model will be used and what structure it should follow you can begin your research.
It is easiest to begin with readily available information such as
- Organizational goals, strategies and objectives
- Future plans that must be taken into account as they may impact the framework
- Organizational architecture to inform departments, roles, hierarchies, etc.
- Job and role descriptions. Using a predefined AI-powered ontology either on its own or with your existing naming conventions can help organizations deduplicate capabilities, skills, tools and technologies and automatically update as new ones enter the market.
Once you have exhausted your readily available information including online research, you can then look to your internal subject matter experts who will have a more nuanced understanding of the intricacies of roles in their department.
Step 4: Compile and organize your data
As you gather more information during your research phase, try to structure it in a way that makes the next steps easier. Grouping relevant documents in folders and including summary documents, tables and charts will make this data easier to work through. You can also break down the information into key categories such as technical skills, soft skills, behavioral competencies, and industry trends.
- Identify the most crucial competencies. Highlight any recuring themes across your research, and rank competencies based on their importance and the frequency that they appear.
- Define role-specific competencies. Identify and collate he most role-specific competencies by reviewing job descriptions, performance data and interviewing specialists.
- Create definitions for each competency. As well as defining the competency it is important to include specific, measurable components to ensure clarity and develop a baseline for measurement across the organization.
- Decide how you will measure proficiency levels. Identify the behaviours of each competency, and then define the different levels so that you can differentiate between beginner, advanced and expert levels of mastery. Make sure that the behaviors identified can be assessed and actioned.
Step 5: Organize your competency profiles into draft models
Deel recommends following a checklist to ensure consistency across profiles, and then a competency matrix model to map out the required competencies against different job roles within your organization.
The checklist:
- Relevant: Competencies directly relate to the tasks and behaviors for specific jobs
- Objective: Competencies include observable behaviors, and their descriptions are clear and actionable
- Measurable: You can measure and evaluate competencies according to a standardized scale (proficiency levels)
- Manageable: The number of competencies does not surpass 15 per role
- Differentiated: Competencies are sufficiently distinguished from one another to minimize overlap and confusion
- Trainable: Competencies can be trained, developed, and applied in day-to-day work
Step 6: Develop an implementation plan
Develop your plan for implementing these models or frameworks into your company. The plan should include a timeline, the people responsible, and the specific actions, including training, for each step.
To ensure successful implementation, the organization must allocate sufficient resources including time, budget and people.
Phase 1: training and communication
Change management is essential to get your people on board and ensure the smooth adoption of new practices. Clear and frequent communication is critical during change to keep employees up to date with what is happening and how it will impact them, as well as allow them the opportunity to ask questions. Ensure all employees know the competency framework, why it is being introduced, and how it is used.
Leaders and managers must be trained in these new competency models to ensure that they use them correctly when evaluating their team’s performance, doing development planning, and any other relevant HR processes.
Creating resources such as guides, FAQ documents, checklists and toolkits will all help make the adoption of new processes easier.
Phase 2: Pilot
Choose a few groups or departments to roll this out to initially. Ensure there are standardized processes and clear ways of working so that the implementation is the same across all departments.
Collect feedback regularly during the trial and evaluate whether any key competency need adding or removing.
Phase 3: Implement changes based on feedback
Use the feedback to remove anything redundant and to add anything that may be missing. If necessary, you may also need to update the definitions of some of the competencies to ensure consistency across the organization.
Phase 4: Full rollout
Finally, you are ready to roll out the competency frameworks across the organization. While you have already run a pilot test, there will still be many questions that arise, and HR must be on hand to answer questions and provide support to ensure successful implementation.
Remember, this rollout is not a race. While organizations report this taking up to 16 months, partnering with companies that specialize in developing and implementing these frameworks can significantly shorten this timeline and embed the new process more effectively than doing it on your own.
Step 7: Review and update as necessary
Given how quickly the world of work is evolving, it will be necessary to review your framework regularly to ensure that it is kept up to date. Surveys, focus groups, one-to-one meetings, and AI can all help keep your models up to date as your organizational strategy and industry trends evolve.
Final thoughts on competency models
Competency models are an excellent way to benchmark your organization, departments, teams and individual employees against industry metrics and your current performance. While developing and implementing competency models is no small task, specialized organizations can take on a lot of the heavy lifting so that your company can continue with its day-to-day operations. Once developed and implemented, you can either take on the maintenance of the competency models internally or reach out to the specialists as and when needed.
Still convincing your C-suite to switch to skills? Download the report “Ready for anything: How skills drive organizational resilience
