Everything you need to know about competencies

July 8, 2022

A major component of better performance reviews and more equitable career progression is understanding what exactly is expected of an individual in both their role and within the organization at large. These skills are called “competencies,” and transparency into them is critical for employees and organizational leaders to empower just-in-time career progression, Pando's new paradigm for performance management.

What are competencies?

A role-specific competency is the behaviors, attributes, skills, and knowledge required to successfully perform a particular role. A well-developed competency describes what to do and how to do it,  so the behaviors are observable to assess and develop talent. A core competency is one applied to all employees of an organization. A core competency example is “communication,” where all employees are expected to demonstrate solid communication skills as it will drive the overall success of the organization.

Why are competencies important?

At its most basic level, competencies outline specific behaviors needed to succeed in the role and the organization. Function-specific competencies help organizations identify and communicate what excellence in a role looks like. Overall, competencies create a shared understanding of expectations. With this knowledge, both leaders and direct reports can build a culture of transparency, trust, and a commitment to the progression of both the business and individual careers.

Plus, competencies can be used during every stage of the talent lifecycle. For example, competencies can and should be used as the basis for hiring. Job descriptions should be crafted around them, highlighting the essential competencies to help both the organization in defining what is needed, and for individuals to better qualify themselves for a particular job. 

Beyond hiring, competencies should be used as the basis for performance management and continuous career growth frameworks to ensure employees have a clear understanding of expectations. It also allows for better collaboration between employees and supervisors to develop learning and development plans to bridge any competency gaps.

What are the consequences of poor or nonexistent competencies?

Without clear competencies, employees feel disempowered because they can’t impact their career progression. When you combine this factor with wide comp bands, employees can feel stuck without any indications of what they need to do to climb a career ladder. This issue leads to turnover, as talent leaves to find an organization with clearer paths for professional growth.

Without a competency library, high turnover is a major risk. It makes it difficult or even impossible to build an engaging and supportive organizational culture. Why? Because the best cultures are developed through the use of core competencies.

Plus, without competencies, organizational leadership has no insight into results. Competency-based talent management is associated with reduced turnover, significant improvement in employee performance, and increases in sales and overall profits. Competencies make these impacts visible, so without them, there is no benchmark against which to measure results of performance.

When should you create competencies?

If your organization isn’t using competencies, or are just starting to develop your people operations, it’s important to come up with competencies very early on in the process. Competencies can help with all stages of the talent management lifecycle, from hiring through succession management.

How do you ensure competencies are good?

In addition to being descriptions of what to do and how to do things in a role, good competencies are evidence-based, and created from a combination of subject matter insights and thorough research. Also, competency development should be viewed as an iterative process that can be refined over time and as organizational needs change.

How does Pando approach competencies differently?

Pando advocates for increasing the number of levels within a competency because this creates more opportunities for growth. Many companies use only three to five levels, and with so few levels, employees often find themselves “sitting” at a level for a year or more. This limits employee growth and can create an environment in which they feel stuck or disengaged. Expanding the number of levels helps remedy the issue, because it’s easier to progress within the competency, creating an environment of growth and improvement. This alone pays the organization in dividends by its ability to retain talent, resulting in more productivity, reduced costs, increased customer satisfaction, and more.

Competencies aren't simply nice to have. Instead, they build the foundation for a successful organization, starting with the success of its individual employees. Without a clear and understood set of both core and function-specific competencies, the margin for error is too great.