You are probably aware that Competency management (CM) is important for identifying and optimising the competencies required for your organisation to reach its goals. But do you know how it helps your people to enjoy their work, stay at your company, and impacts your competitive edge?

Let’s take a closer look at competency management processes, the way a company strategy inspires people to develop, and why we shouldn’t forget the importance of personal growth – especially when hybrid work has become the norm for many people.

Competency management should be an ongoing process

In practice, competency management is the process of cataloguing, managing, and developing employee skills in the framework of a competency architecture. At its core, competency management comes down to ensuring that you have the right people at hand with the right skills for any given job.

Ideally, competency management begins before an employee even enters your company. Applicants read the job description in your job posting and consider whether their know-how and competencies are compatible with your organisation’s needs. If their skills are a match, they often apply. Well-defined needs clearly explained in job posts will help potential applicants consider whether they are suitable for the role or not.

Once the contract has been signed, the next step is refining the job description to match the competencies your new colleague will bring to the table. While defining and documenting a person’s job description, team leaders should study the new employee’s skills and the know-how they contribute.

But competency management doesn’t stop there. After an employee joins the organisation, there should be regular check-ups in order to track any new skills the person has developed, as well as comparing them to the competencies that the organisation needs. If there’s a gap, it should be closed for example with mentoring, coaching, webinars, or on the job training.

Seems simple enough so far, right? Spoiler alert: it’s not.

The ins and outs of the competency management process

Even though competency management sounds like a simple concept, it quickly gets tricky because it needs to be rooted in abstract concepts such as company strategy. In other words: it does not happen in a void, but it’s always heavily connected to the rest of the business strategy.

Competency management also needs to be based on the goals of the company – and on how it plans to reach those goals. You should have a clear vision, a strategy, goals, and a purpose in the back of your mind when approaching competency management. Without this, advancing your efforts will be difficult or near impossible.

Theoretically, a solid base for CM can be created in six steps:

  1. Define strategic starting points, core processes and goals for competency management and prioritise the competencies you need now and in the future.
  2. Assess the existing skills of each employee. This should be done on an individual level. Skill-mapping is easy when you have an HR system that allows personal assessment.
  3. Identify gaps by mapping the existing employee’s skills and compare the skills to the company strategy and goals.
  4. Identify individual steps towards the common goal, create a development plan, manage individual career paths and narrow the gaps with training.
  5. Recruit new competencies if needed.
  6. Continuously re-evaluate your company’s needs in the changing business environment.

Of course, the process is rarely clear-cut, and it often heavily depends on the size of the organisation: a global corporation and a small company will benefit from different models. Even so, competency management should be tightly connected to the organisation’s needs, and an individual’s personal goals should complement the company’s goals. Competency Management should help you clarify what the company’s overall goals mean in practice for individual employees, and how these goals are visible in their daily lives and tasks.

How does it benefit your company?

Employers should stay aware of their workforce’s knowledge and skill gaps. If the gaps grow too big, they can quickly result in wellbeing as well as financial issues. The ideal course of action is to map current skill levels and plan ahead to help the company avoid skill gaps and maintain its competitive edge and profitability.

Recognising gaps will also help with resource management. If a person leaves, the company knows exactly what they need to look for in a new candidate. Especially in large companies where recruitment is a separate function across teams, it’s important to have a clear sense of the talent the company should be looking for. Competency management also helps monitor whether necessary talent is distributed across teams and personnel to avoid bottlenecks.

In addition, competency management brings positivity to any workplace culture: it supports individual and peer-to-peer learning, which encourages an open, welcoming, and supportive work environment.


Competency management and HR systems

HR systems are great places in which to gather the information you need to build your competency management strategy. Training and competency data can be transferred to dashboards that management can follow. An HR system can also help with identifying knowledge gaps and the potential need for an in-house project or a specific position recruitment.

The benefits of managing competency management with an HR system:

  • Combining competency management data with other HR data helps build a clear overview of the skills and competencies that might be needed.
  • Any HR-organised training will allow you to add attendee info to the system and keep track of expiring certificates or other training needs.
  • If your organisation is big, having access to al employee CVs might help you screen out any potential internal candidates before deciding to open up an external recruitment.

Competency management can help you retain your people

While many companies acknowledge the benefits of competency management, its priority tends to be low. It’s understandable, especially in smaller organisations, where keeping the everyday business rolling and handling paychecks take up most of the time.

However, overlooking competency management has negative effects on both the wellbeing of the employee and even on the finances of a company. With proper competency management processes, costly failed recruitments can be avoided, and internal knowledge won’t go to waste if competencies and skills (even those outside one’s work description) are listed.

Without proper competency management, people’s skills can be overlooked and their development may suffer. This can push them out the door.

Think about it from an employee’s perspective. It’s hard to demand training, even when they know they have a skill gap. Identifying the type of training they need and the skills their workplace needs is not simple.

Instead, make training possibilities widely available. Those motivated to improve will actively work on their capabilities.

An open competency management conversation reflects an open culture

Competency management happens between the organisation and an individual – but the organisation should run the show. Even though self-learning individuals are highly valued, it’s too much pressure to ask individual workers to know the company’s needs and then train themselves accordingly.

Conversations regarding competencies should therefore be safe and open. A workplace culture can support silence and it might take a psychological toll on an individual. When questions like “What if they catch the fact that I don’t know X and Y?” arise, the employer should organise trainings and support the employee in learning.

The lack of competency management is especially difficult for team leaders. It’s hard enough to know your own “pack” and support them. But if a team leader needs to keep tabs on their team’s competencies, what they should work towards, and how their current competencies reflect on the company’s overall needs, workloads would soon ramp up.

If you want team leaders to help grow your organisation’s knowledge capital, narrow the gaps and know which trainings are best for individual people. Give team leaders the support, skills, and systems they need.

Competency management in the hybrid era

The hybrid world has complicated how trainings and individual development are handled. Many companies need to review their toolboxes to identify the trainings that work in a hybrid setting and develop processes for digital mentoring. However, the number of online trainings and events is bigger than ever, and they are usually cheaper than traditional events.

2020 & 2021 proved that the ways we work and communicate change constantly. We cannot make plans for the next years that we know won’t change. Competency management planning can help, as it supports quick decision making. Having a clear overall plan and active processes also prevent chaos.

And, once Competency management models and processes are operational they make your people happier and support your job as an HR professional. In short, they let people know exactly what their employer expects from them.

In the end, competency management is about empowerment. Organisations shouldn’t be afraid to talk about competencies, and employees should feel safe and not ashamed to speak up when they need more training.

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Creating and maintaining a successful talent management strategy is an ongoing process that requires continuous attention and development. But how should you approach the process? Which things are good to keep in mind?