Effective workforce management is a central strategic element for business growth. One key component of this process is assessing employee competencies, including the skills, behaviors, and knowledge that determine how well each team member is suited for their role.
Competencies are critical benchmarks for evaluating an individual’s capabilities and potential for optimal candidate selection and workforce development. But how can leaders consistently and accurately gauge competencies across roles and departments while responsibilities vary greatly?
While interviews, resumes, and performance reviews provide starting points, a structured competency assessment is a useful tool for conducting systematic evaluations of employee abilities, skills, and behaviors with their work.
In this article, we will explain the nature of competency assessments, competency frameworks, and their importance for business success. We will also detail the benefits and challenges associated with these tools, explain different methods, and provide best practices for conducting competency assessments for your team.
What Is a Competency Assessment?
A competency assessment is a business tool for evaluating an individual’s skills and knowledge related to job requirements. These assessments are based on a defined competency framework, which lays out the most critical requirements and expectations for different roles across an organization. People managers and HR leaders often perform competency assessments, but they can also be undertaken by third-party assessors and in-house subject matter experts. For self-assessments, employees analyze their competencies.
Starting with the competency framework, the party conducting the assessment will run through the list and rate how proficient an employee or candidate is for each competency. By regularly assessing employee competency, business leaders can create a culture of continuous improvement, drive workforce development, and demonstrate a commitment to employee growth while moving the entire company toward its goals.
Types of Competencies
The term competency encompasses many different types of skills, behaviors, and attributes that contribute to professional success. Competencies differ from skills, which are learned abilities that allow employees to handle particular tasks.
The term competency is quite broad, making it useful to divide competencies into smaller categories:
Core competencies
Core competencies are the skills, knowledge, and behaviors considered essential and foundational for a particular role. They tend to be more general than other types of competencies. Some key examples of core competencies are industry-specific knowledge, technical skills, and project management.
This term can also refer to an organization’s and individual employees’ attributes. In these cases, core competencies are the resources, skills, and capabilities that distinguish a business from its competitors, like high-quality products or excellent customer service.
Functional competencies
Functional competencies, also known as technical competencies, are the specific skills and attributes that allow an individual to perform in a particular role. They tend to be specific to a job area or field of work. Recruiters often prioritize functional competencies when hiring to ensure new hires possess all the necessary specialization and subject-matter knowledge to thrive in their new roles.
Functional competency examples include research, sales, project management, and computer skills.
Behavioral competencies
Behavioral competencies are less tangible than functional competencies and vital to employee performance. These competencies involve the attitudes, approaches, and behaviors that contribute to success at work. They refer to how individuals perform their job responsibilities, not just what employees know or do.
Behavioral competencies can be identified through practical observation and qualitative surveys, and include attributes like communication skills, emotional intelligence, self-awareness, adaptability, and intrinsic motivation.
Importance of Competency Assessments
Competency assessments help leadership build a foundation for growth and success while aligning their employee base with organizational goals. Here are some of the most critical ways competency assessments benefit businesses:
1. Identifies competency and skill gaps
Managers and other business leaders use competency assessments to identify skill and talent gaps affecting their teams. By defining critical competencies, managers can more readily observe which ones still need to be met and understand variability in skills and knowledge across teams.
From here, leaders can use assessments to create employee development plans for team members who need additional training. Assessments can also be useful for identifying employees who possess all the necessary competencies, making them ideal candidates for promotion or additional responsibilities.
2. Tell employees what action to take
Competency assessments provide clear, quantitative ratings of employee skills, offering managers and employees an unambiguous understanding of performance and needed areas of development. By identifying specific competencies and making apparent the extent of improvement needed, these assessments give employees a clear roadmap for growth and professional development. This clarity helps employees focus their efforts and empowers managers to tailor their support to meet the unique needs of each team member.
3. Enables a more targeted training program
Competency assessments also aid in the design and development process for workplace training programs by establishing the base needs of each role, and apparent employee skill gaps across an organization. Learning and development teams can use information pulled from competency to guide the development of training programs. Understanding team members’ base needs makes designing engaging and relevant training activities possible, making upskilling more efficient and effective.
4. Reduces recruiting costs
Competency analyses allow managers to choose well-suited candidates for each position on their team and establish clear expectations for employees. This facilitates employee development to ensure employees stay engaged and grow with your company. Over time, this reduces employee turnover, lowers recruiting costs, and frees up resources for other business priorities.
5. Supports employee career development
By conducting regular competency analyses, performance reviews, and workplace training, business leaders show employees that their work and progress are valued. As part of a more extensive employee development program, competency assessments help leaders provide the precise direction and necessary resources for growth and keep employees eager to move along their growth trajectories.
What Is a Competency Framework?
A competency framework is a tool that lays the foundation and structure for competency assessments by defining the standards, knowledge, behaviors, and skills required for all job roles within an organization. These frameworks provide clear, detailed descriptions of different competencies needed for success while aligning role-specific requirements with the broader values and goals of the organization.
Competency frameworks establish a shared understanding of job expectations across business functions, such as HR operations, learning and development, and executive leadership. They ensure consistency and clarity in performance assessments and offer employees a valuable blueprint for their professional growth.
8 Methods for Assessing Competencies
Competency assessments can be approached in different ways depending on the needs of your department or organization, and varying by process, criteria, and goals. Here are some of the most common methods:
- Text-based assessments: Individuals fill out a text-based survey comprised of rating scales and open-ended questions which help managers determine their competence in different areas.
- Observation-based assessments: Employees or candidates are monitored in real-life work scenarios.
- Interview-based assessments: Individuals engage in a one-on-one interview, in which assessors ask specific questions to deduce the interviewee’s capabilities for a particular role.
- Project-based assessments: Candidates or employees engage in work-based projects to demonstrate their competencies.
- Previous experience or portfolio-based assessments: Assessors review documents like resumes, curriculum vitae, or portfolios, which show an employee or candidate’s competency based on previous experience.
- Performance review assessments: Assessors review the results of periodic performance reviews to determine an employee’s competency in different job requirement areas.
- Self-assessments: employees engage in introspective exercises to rate their own proficiency in different competencies.
- 360-degree peer feedback assessments: 360-peer assessments are performed by multiple evaluators including managers, peers, and subordinates who work with the employee frequently to provide a holistic assessment.
Best Practices for Running Competency Assessments
When designed and carried out effectively, competency assessments bring many benefits. Here are some standard best practices to follow when designing and conducting competency assessments for your organization:
1. Build your own competency model
First, create a structured competency model by analyzing established job roles, responsibilities, competencies, and overarching business goals. This will provide a solid foundation for both managerial success and employee growth.
Establish a scale that defines the various levels of expected proficiency for each competency and includes specific examples to ensure employees and managers understand what is expected. This structured approach will clarify performance standards and facilitate growth across teams.
2. Align competency assessments with job requirements
Competency frameworks need to be specific and relevant to be effective. Approach competency assessments by tailoring assessment methods to the specific competencies relevant to each role. Communicate with managers and subject matter experts to identify the essential competencies for every role in your organization. Be sure to involve stakeholders from leadership who can include competencies aligned with overarching business objectives.
3. Blend multiple data sources with your competency assessment
To build a comprehensive and accurate evaluation, combine your competency frameworks and assessments with data from multiple sources, such as employee feedback, performance reviews, skill matrix assessments, 9-box grid exercises, and other relevant assessments and metrics. This approach helps managers mitigate potential biases from relying on a single data source, leading to more balanced and objective assessment results.
Incorporating a range of perspectives allows for a more holistic understanding of employee performance, making the entire process more effective.
4. Use competency assessment results to create individual upskilling plans
Collecting people analytics data for data’s sake is no reason to conduct a competency assessment. Instead, put results to use by sharing results across your organization and encourage managers to use the insights for talent development. Talent development plans can also benefit from multiple data sources – integrate them with other HR processes like performance reviews to create a cohesive approach to employee talent development. You can enhance training effectiveness and drive meaningful outcomes by aligning competency assessments with ongoing performance management.
5. Run competency assessments on an annual basis
Regular competency assessments are vital for cultivating a high-performing and adaptable workforce and a culture of continuous improvement. By conducting these assessments periodically, managers gain a more accurate and up-to-date understanding of their team’s strengths and weaknesses. This keeps employees engaged and empowers their managers to make more informed decisions about development, training, and talent management, ultimately leading to higher performance.
6. Be transparent with the results
Keeping honesty at the forefront can be difficult when discussing individual strengths and areas for improvement. However, transparency in competency assessments and performance reviews is essential for building trust and accountability between managers and their teams. When employees understand how they are being evaluated and let in on the results of those evaluations, managers can create realistic development plans aligned with each team member’s growth needs. Transparency also helps prevent employees from feeling blindsided if assessment results lead to action.
Challenges of Competency Assessments
While competency assessments are valuable tools for evaluating employee performance and potential, their usefulness depends on their development and execution. Assessments should be thoughtfully designed to minimize bias and include the most critical skills for each role. Here are some of the most common challenges presented by competency assessments:
- Subjective observations or interpretations: Despite their rigid structures, competencies like behaviors and aptitudes can be challenging to quantify and measure. Personal relationships, unconscious preferences, and past experiences can also influence assessors. If not safeguarded, this combination can lead to inaccurate or unfair evaluations.
- Context dependency: Many competencies can manifest differently in different situations. For instance, one employee’s problem-solving skills may be strong, but show up differently when a customer conflict needs to be resolved versus a manufacturing issue. Factors like team dynamics, workload, and external challenges may also impact performance but are not likely to be reflected in competency assessments. This can lead to unnecessarily low ratings and mismatched development plans.
- Lack of competency benchmarks: One of the most common missteps managers make when creating competency frameworks and conducting assessments is skimping on the structure and standardization. Without establishing clear, measurable benchmarks, many of the benefits of competency assessments are lost.
- Not aligning competencies with business objectives and needs: An organization’s workforce must move in conjunction to meet company-wide business goals. Without aligning competency frameworks with business needs and objectives, individual progress does not necessarily lead to organizational growth. Competency assessments should be geared toward furthering departmental and company-wide goals to provide maximum benefits.
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