How to Build a Competency Management System for Your Business

Competency management systems allow organizations to ensure that the right employees are in the right roles. These systems also help identify competency gaps and integrate relevant competencies into talent management and professional development initiatives.  

However, creating an effective competency management system can be challenging and requires careful consideration. Read on to learn how Salary.com's Skill Library can help streamline the process. 

Understanding competency management 

Competency development is an essential part of effective competency management that involves the identification and development of key competencies required for various job roles. Utilizing a competency management system enables organizations to identify skills gaps, define core competencies, and align them with business objectives. 

Integrating competencies into HR processes lets management employ competency assessments and competency mapping, ensuring the right employees are in the right roles. For example, if a position requires strong communication skills to manage client relationships effectively, management can benefit from assigning someone with proven communication competency to that role.  

This approach reduces the need for extensive training and allows the individual to immediately contribute to meeting goals within the organization, freeing up resources and time for other critical competencies and business objectives. 

Why is competency management important? 

Competency management is crucial for managing both small and large-scale operations effectively. By having an effective competency management system, employers can streamline tasks by ensuring that individuals have the qualifications and capability to succeed in their job roles. 

Competency management can also lead to an increase in performance levels, as employees feel more motivated in an organized work environment that provides more than enough professional development resources. This effective competency management process supports succession planning by retaining experienced employees and attracting new talent. 

Strategic benefits of competency management systems 

As organizations scale, the need for competency management systems becomes increasingly evident for several reasons. Organizations that utilize competency management systems can expect the following: 

• Increased productivity: Businesses can match employee skills with specific tasks to ensure that assignments go to those with the necessary skills to complete them efficiently. This reduces the need for additional training or resources, enabling employees to finish tasks quicker and move on to new projects. 

• Improved employee morale: When employees are aware of their core competencies and feel confident in their abilities, they are more motivated to succeed. Competency management systems help employees understand their strengths and how they contribute to business objectives. 

• Better retention rates: Improves employee retention by ensuring the right fit between job roles and employee skills. By identifying and addressing competency gaps during the hiring process, companies can select candidates who are more likely to succeed and stay in their positions longer.  

• Reduced training costs: Minimizes training costs by selecting employees who already possess the necessary skills and competencies for their roles. This reduces the need for extensive on-boarding and training programs.  

• Opportunities for employee growth: supports employee growth and career development by identifying skill gaps and providing opportunities for competency development. Through regular competency assessments and the use of competency management software, employees can continuously improve their skills and move into higher-ranking positions. 

Components of a successful competency management system

While the specific components of successful competency management systems may vary depending on organizational needs and goals, several common components that can be replicated by other organizations include: 

Clear competency frameworks 

Outline the key skills and behaviors necessary for success in each job role. Identifying competencies required for specific roles allows organizations to pinpoint skill gaps and customize development programs. 

To help achieve this, organizations can utilize Competency Library which provides talent management, learning and development, and HR with a common language and set of expectations for success. 

Comprehensive competency assessments 

Utilizing a variety of assessment methods, such as manager assessments, self-assessments, and 360-degree feedback, allows organizations to have a clear understanding of employee competencies, which would become the basis for development plans and performance evaluations. 

Competency development programs 

Once competency gaps are identified, targeted training programs are necessary to address them. These programs are designed to improve employee engagement and improve performance. 

Competency management tools 

Leveraging competency management software or tools streamlines the entire competency management process. These tools provide valuable insights into employee competencies, proficiency levels, and skill development progress. 

Common challenges in implementing competency management initiatives

Implementing competency management systems in businesses often presents challenges that need to be identified and addressed promptly. This ensures that the system performs effectively as intended. Common examples include: 

1. Identifying relevant competencies: One of the key hurdles in competency management is pinpointing the essential skills required for each job role. This misalignment may result in organizations risking resource investment in developing competencies that do not contribute to organizational success. With Job Competency Model, organizations can acquire up-to-date skills and competency data for hiring, assessing, and developing top talent to fill the skills gap.

2. Assessing competencies effectively: Ineffective competency assessment methods can result in overlooking crucial skills gaps or overestimating employee capabilities. This can lead to inefficient training programs that fail to address the actual needs of the workforce. 

3. Addressing resistance to change: Introducing competency management processes may encounter resistance from employees who are unfamiliar with the process or worry about its impact on their roles. Employees who feel threatened by the changes may disengage from the process or actively resist implementation efforts. 

4. Integrating competencies into HR processes: Failure to integrate seamlessly can result in missed opportunities for leveraging competency data for talent management and performance improvement. This can lead to inefficient decision-making processes and hinder the organization's ability to identify and develop high-potential employees. 

5. Developing training programs: Involves creating learning resources tailored to specific competencies and proficiency levels. Without proper training, employees may struggle to meet job requirements and adapt to changing business needs.  

How to build a competency management system for your business

Now that you understand the significance of competency management systems for organizational success, here is a simple step-by-step guide to creating one for your business:

1. Step 1. Identify core competencies

   Define the core competencies and key skills required for each job role within your organization. Identify skills gaps by conducting competency assessments to understand where your employees stand in terms of proficiency levels. 

2. Step 2. Develop competency frameworks

   Build comprehensive competency frameworks that outline the required competencies for each job role within your organization. A competency framework serves as the foundation for effective competency management that guides talent management initiatives, professional development, and succession planning efforts.  

   Job Skills Model provides a solution for organizations looking to adopt a skills framework to guide their job architecture, career pathing, and skill-based hiring initiatives.  

3. Step 3. Make use of competency management tools

   Choose a competency management software that aligns with your organization's needs and facilitates the competency management process. Look for features such as competency mapping and assessment methodology to streamline the identification of competency gaps and the development of training programs.  

   Organizations can make use of Skills Library to gain access to software and data collection of skills and competency frameworks that enable HR teams to hire, evaluate, and develop top talent. 

4. Step 4. Close competency gaps through training and development

   Develop targeted training programs and development initiatives to address identified skill gaps and enhance employee competencies. Align training programs with the specific competencies required for each job role to empower employees to acquire the necessary skills to excel in their positions. 

5. Step 5. Monitor and evaluate performance

   Continuously monitor employee performance and assess competency levels using performance reviews and manager assessments. Use assessment methods such as skill gap analysis and competency mapping to identify areas for improvement and track progress over time.  

Competency management systems offer organizations a strategic advantage by ensuring that employees possess the necessary skills and knowledge to meet job requirements effectively. Following this step-by-step guide and using Salary.com's Skills Library can effectively address skills gaps, facilitate talent management, and take advantage of your new system to drive your business ahead of the competition.