What is Competency Management? Process and Best Practices
Being an effective HR leader isn’t easy. Competency management is key for ensuring that leaders possess the right skills, behaviors, and knowledge to perform their roles successfully. It involves identifying, managing, and developing employee competencies that align with organizational goals and drive performance.
To help you succeed, we will take a close look at its basics in this article, including what it is, why it's important, and how it works. For a tool designed to support management in competency, Salary.com offers a solution with the Skill Library feature that helps you align job roles with the necessary skills and competencies for your organization.
What is competency management?
Competency management is the process of identifying and developing the skills, knowledge, and behaviors needed for employees to excel and meet company goals. It includes defining key competencies, assessing employees' strengths and weaknesses, and creating development plans to improve performance and achieve business objectives.
Competency management systems make the process easier and more effective for managing and improving employee skills.
Key benefits of competency management
Organizations that effectively implement management in competency enjoy several key benefits, including:
Strategic alignment and performance improvement
Management in competency ensures employees' skills match company goals, leading to better performance and achievement of targets.
Talent management and succession planning
It helps identify and develop employees for future leadership roles, ensuring a smooth transition when key positions need to be filled.
Risk mitigation and operational efficiency
Managing employee competencies reduces the risk of skill shortages and performance issues, which leads to smoother and more efficient operations.
Cultural alignment and employee engagement
It ensures that employees’ skills and behaviors align with the company culture, improving team cohesion and employee motivation.
Data-driven decision making
Management in competency provides insights into employees’ skills, helping them make informed decisions about training, promotions, and hiring.
Competitive advantage
A skilled and well-managed workforce can give a company an edge over competitors by improving performance and attracting top talent.
You can achieve most of these benefits by utilizing Salary.com's Skills and Competency Library. This AI-powered tool helps HR teams hire, evaluate, and develop top talent with its extensive skills and competency data.
Competency management process: a step-by-step guide
This process includes key steps to ensure employees have the skills needed for success:
Identify core competencies: Identify the key skills and behaviors needed for success by reviewing job roles and aligning them with the organization's goals.
Evaluate employees against the defined competencies: Evaluate employees' skills and performance using tools like appraisals and feedback to find their strengths and areas needing improvement.
Develop talent based on competency gaps: Create development plans to address skill deficiencies. This may include training, mentoring, or job rotations to improve the necessary competencies.
Track employee competency development and adjust if needed: Track the progress of development initiatives. Adjust as needed to stay aligned with goals.
Best practices to improve your competency management
Effective competency management ensures employees have the right skills. Here are some best practices to improve it:
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Get input from everyone involved
Include employees, managers, and stakeholders in defining competencies. Their input helps identify the skills needed for success in various roles and the organization.
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Create a skilled team to manage abilities and skills
Form a dedicated team for management and competency model creation with a strong understanding of the organization's goals and job roles. This ensures focused and expert handling of the process.
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Make sure skills match company objectives
Align competencies with the company's strategic goals by identifying the skills needed to achieve business objectives and ensuring employees have them.
For example, Salary.com's Skill Library offers competency frameworks, such as the Human Resources Framework, with specific competencies and skills for HR roles. This helps HR teams align their strategies with the organization's goals and boost performance.
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Use technology to work more effectively
Technology can simplify the process by identifying skill gaps and tracking development. Tools like LMS, competency management software, and talent platforms improve efficiency and data analysis.
You can use software like Skill Library to provide talent management, learning, competency mapping, and HR with a common language and clear expectations for success, as well as to conduct competency assessments.
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Encourage ongoing learning and development
A culture of continuous learning keeps your workforce skilled. Provide training, development programs, and career growth opportunities to help employees improve their skills.
Competency management examples
The scenarios below show how it can be applied in different contexts:
Scenario 1: Skill gap identification
A growing tech company needs to expand its software development team but faces a shortage of developers skilled in AI and machine learning. The challenge is to identify the specific skills needed, assess current employee skills, and create a training plan to address the gap.
Possible solution: The company should identify the required skills, assess current employees’ abilities, and identify competency gaps. Then, create a training plan with different learning methods, mentorship, and projects. Regularly review and adjust the plan to keep it effective.
Scenario 2: Performance improvement
A pharmaceutical sales team is not meeting its targets, and the manager thinks the problem is poor negotiation, customer relationship, and communication skills. The challenge involves identifying the key skills needed for success, evaluating the team’s current skills, and creating a plan to improve these areas.
Possible solution: To improve the sales team's performance, identify key negotiation and customer skills, assess current proficiency, and create a development plan with training, coaching, role-playing, and practice.
FAQs
Here are some common questions about the topic:
What are the 3 components of a competency?
The three components of competency are skills, knowledge, and attitude. Skills are practical abilities, knowledge is theoretical understanding, and attitude is the mindset and approach to the task.
What is the framework of competency management?
A competency framework is a system that lists the specific skills, knowledge, behaviors, and attitudes required for successful job performance. For companies, it serves as a blueprint for talent management, recruitment, development, and performance evaluation.
How is it related to performance management?
Competency management and performance management are closely related and both aim to improve employee development and organizational success. The former identifies the skills and behaviors needed for each job role, while the latter evaluates how well employees meet these requirements.
What challenges might organizations face in implementing it?
The challenges organizations might face in implementing competency management include defining and measuring competencies consistently, getting support from employees and managers, integrating the competency management system with current HR processes, and keeping it updated with changing job requirements.
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