What is competency management?

Competency management is a business strategy for identifying crucial employee skills (competencies) that can help reach company goals and long-term objectives. Competencies typically include the values, abilities, behaviour, and experience employees bring to the organization. Below are some competency examples:

• leadership
• teamwork
• critical thinking
• active listening
• social skills
• project management
• performance management
• creativity
• coordination
• dexterity
• self-confidence
• resilience
• communication
• organization

When team leaders identify these competencies, they can determine the requirements for reaching individual role targets and combine their findings to optimize workplace operations. Competency management typically follows four steps:

1. Determining the necessary skills for achieving company goals.
2. Identifying current skills within the workplace.
3. Creating a roadmap to help employees get from point A to point B.
4. Implementing and sticking to your competency management process.

Here’s an example of how competency management works:

A residential construction company requires someone with advanced blueprint skills to construct high-level drawings. Management would benefit more from assigning someone with measuring, drawing, and estimating competencies to the role rather than putting time and resources into training someone without the necessary skills. This strategy allows management and employees to dedicate time to other responsibilities.

Related: The Difference Between Leadership and Management

Why is competency management important?

Competency management can help small and large businesses streamline their tasks while ensuring they’ve assigned employees with the right capabilities and qualifications to succeed in their roles. This strategy can also raise employee retention rates as people generally enjoy their job more when it aligns with their skills and they excel at what they do. Employees who are happy at work are typically more productive, collaborative, motivated, and engaged, leading to increased morale and confidence in the company culture.

When team members commit to their roles, their experience can help them to advance in the company, keeping talented employees in the workplace. Employee retention is becoming exceedingly important as many businesses face challenges keeping highly skilled employees in a competitive market.

Read more: Employee Satisfaction Surveys: What They Are and Why They’re Important for Your Business

Competency management benefits

An effective competency management system encompasses more than creating traditional job descriptions. It typically involves building a framework of core competencies that outline the behaviours and skills for each company role. Competency management can empower you to align employees with your organization’s strategies, goals, and values to drive higher performance. Below are some additional benefits for enhancing competency management in the workplace:

Improved employee performance

You can keep employees on track and productive by establishing clear expectations about their responsibilities. Competency management helps department leaders identify, develop, assess, and enhance key competencies so everyone’s skills align with company goals. Eliminating the need for additional training, guidance, or resources can significantly boost productivity as employees and team leaders can finish their duties quicker and move on to new tasks.

Effective talent acquisition and retention

Hiring and retaining talented staff can be easier with competency management. As you determine the proper role for candidates based on required competencies rather than experience and qualifications, you’ll likely keep top talents in your workplace, especially when you provide growth opportunities based on their skills.

Lower training expenses

A competency management approach can help you reduce costs associated with onboarding and training new hires. Because this strategy leads you to the best candidates for each position, applicants will generally require less training as they should already have the experience and competencies necessary for succeeding in the role. Higher retention rates can also reduce training expenses as you’ll require fewer new hires, resulting in spending less on outreach and recruitment. The money you save can go towards strengthening the competencies of your current employees.

Encourage growth

A large part of competency management relies on encouraging employees to build on their skill sets and expertise. Rather than limiting them to the characteristics or skills that landed them their role, you can increase their motivation and success by helping them optimize their skills in one sector and move on to mastering others. This strategy allows them to explore different responsibilities and roles and can help promote them to higher-ranking positions within your workplace.

Target employee development and training

Individualized learning and development training can be challenging without competency management. This process lets you focus on specific employee skills and then develop training that addresses their needs. There are a few strategies you can use to enhance your employee development and training:

• Outcome-based: Competency-based training starts with well-defined learning outcomes. By focusing on the results of the role, you can work backwards to develop short- and long-term objectives.
• Learner-centric: This tactic focuses on the individual learner by providing opportunities for each employee to strengthen skills at their own pace by collaborating with others and collecting data that shows improvement.
• Assessment-centered: Developing tools to measure employee performance can help you decipher which areas require additional training and which the employee excels at. Once you determine the skills that need work, consider offering additional training, courses, or mentorship to help improve these competencies.

Enhanced workplace safety

Validating competency before assigning roles can enhance workplace safety by reducing the potential for workplace accidents. A competent workforce can create a safer, more comfortable workplace while minimizing the risk of injuries, property damage, fines, and lawsuits. For example, someone clumsy or irresponsible wouldn’t be the best choice for high-risk roles, but their exceptional time management, negotiation, and people skills can help them excel at the front desk.

Gain employee buy-in and leadership support

Support from your senior leaders can help ensure your competency management system is successful. Encourage your management and leaders from all departments to share their experiences to show their employees that all organizational levels continuously work to improve their skills and abilities. This strategy can boost employee motivation and engagement and inspire them to prioritize their own skill competency development.

Offer higher-quality service

When you assign competent employees to their positions, they generally work more effectively and efficiently to produce better results. As quality improves, so does your level of customer service. For example, someone with excellent communication, listening, empathy, and problem-solving skills would be an ideal candidate for a customer service role, particularly when dealing with complaints.

Better succession planning

Succession planning refers to passing down leadership roles to another employee or team of employees. Unfortunately, many companies don’t think about this strategy until it’s too late, and they’re left scrambling to replace specialized talent when a valued employee leaves. You can use competency management as a proactive approach to succession planning by identifying which current employees have the potential to fulfil future roles. Being proactive can help reduce the time and costs associated with external hiring and drive retention and engagement among existing talent.

Read more: How to Develop Emotional Intelligence to Become a Better Leader

Develop and enhance competency management

When taking an in-depth look at your competency management process, have your management teams create a list of eight to ten must-have competencies for each role within your organization. These skills will help build a competency model that can help employees understand what you expect of them and empower them to achieve their performance goals and targets more easily. Below are some tips for developing and enhancing your competency management model:

• Identify essential workplace skills: These include the core competencies, technical skills, and behaviours you’d like to see from all employees regardless of their position. Examples of essential competencies are teamwork, communication, and problem solving.
• Identify necessary job-specific skills: These competencies are required to succeed in each role. Examples can include technical skills such as proficiency in specific software programs or behavioural skills like strong leadership.
• Create an action plan: Be transparent about your company’s core values, strategies, and goals. The clearer you are, the better you can align employee competencies—on an individual and team level—with your key objectives.
• Gather input: Work closely with your employees, management, and senior leaders to correctly identify all competencies to be relevant for each role. You can gather data through individual and team meetings, informal evaluations, self, peer-to-peer, and management assessments, surveys, job analyses, and on-the-job scenarios.
• Keep your team informed: Sometimes roles change, meaning competencies can change. Keeping your team informed as your goals and targets progress can provide valuable feedback for continuous improvement. A shared competency map visually represents skills for each position and how they align with your organization’s objectives.
• Use your competency model across your organization: Once you have your process in place, you can apply it company-wide for more efficient talent management, recruitment, training, and performance assessment.