When to start job leveling with competencies

April 4, 2023

One of the first steps in your people strategy should be creating job levels with specific skills (competencies) outlined for each level. This step helps to define roles and responsibilities, giving all employees a clear idea of what they need to do to advance in their careers.

This process might seem less than exciting, but it is foundational for your company. By creating these levels and tying specific skills to them, employees and candidates will have clarity about how they fit into the company and what they need to do in order to grow within it.

The status quo

Unfortunately, most companies delay thinking through which skills (competencies) their employees need. The reason being, there is a widely held misconception that there needs to be a certain number of employees at the company before competency frameworks can be created. However, it is actually optimal to start thinking about competencies and competency frameworks early on and before the pace of hiring accelerates.

Pay transparency legislation now means that a strategy around leveling is critical for all companies, regardless of size. Even a company as small as fifteen employees will need to have a leveling strategy in place, as recent changes to the legislation are mandating that companies share pay band information. While navigating these changes can be stressful at times, these changes are helping to ensure that all individuals are paid fairly and equitably.

Although it can be tempting to delay the creation of job levels and competency frameworks early on in your company’s growth, there are benefits to tackling these early. For example, having a clear job leveling and set of competency frameworks in place early on helps to set expectations for all employees and enables everyone to work towards a set of shared goals. They also help you scale more fairly and effectively reducing the possibility for title inflation or over or under hiring. 

Think you can wait? Think again. 

Regardless of size of company or stage of growth, all companies should start to focus on competencies as soon as possible. Research from top HR executives in a national survey has shown that many companies struggle with keeping their best employees and aligning their strategies with their business goals (Human Resource Executive, 2018).

To retain top talent, employees need a clear path to growth. Competencies provide a clear understanding of what is required for someone to excel in a specific role. When we have a rubric of competencies for each role, it's easier for each person to know what they should do and the kinds of results they should strive to achieve.

In fact, a study by Lombardi and Saba in 2010 found that 89% of the best-performing companies had defined competencies for all roles. In contrast, only 48% of companies that didn't perform as well had defined competencies. Best-performing companies were those where most employees got a rating of "exceed" on their performance review, most key positions had at least one person ready to take over if needed, and managers were happier with the people they hired each year.

Competencies benefit the whole organization

To make sure everyone in a company is working toward the same goals, it is important to align strategy with the overall business objectives. One way to do this is by using competencies. 

Hire at the right level

When a company defines the important competencies for each role, leaders can use them to decide who to hire and how to train and develop employees fairly and consistently across the organization.

Contextualize growth conversations 

Having competencies helps individuals to look at their performance and see where they can improve. This way, employees can focus on improving in areas where they need to improve — or where they want to grow — with their manager's help.

Understand knowledge gaps 

Well-defined competencies help managers and HR teams understand what skills and knowledge their employees need to grow in their jobs. They can tailor development opportunities like training and mentoring programs to help employees improve their skills and advance their careers. By doing this, employees become more engaged and motivated, while managers can direct resources where they are most needed. This approach can ultimately lead to cost savings and increased profitability for the company.

No matter how big or small a company is, they should all approach competency frameworks in a similar way. First, they need to figure out what skills their employees should have and how to group them together. They should also make sure that these skills match the company's values. For example, if a company values respecting each person and creating a diverse and welcoming environment, they should ensure their employees have a skill that reflects that. This will help the company turn its values into something that can be measured and tested.

Once the company has figured out what skills their employees need, they need to talk to key people responsible for different job categories to decide which skills are essential for each job and how they should be applied at different levels.

Need help with competencies and job leveling?

Now that you know the importance of the early implementation of job leveling with competencies, connect with Pando to learn how we can help you with your job leveling and creating competencies for your organization.