24 November 2020

Skills and Competencies: Differences, Utility, and Messaging

Heather Gilmartin Adams

TL;DR

  • This readout presents the highlights associated with our first skills roundtable, including an explorable mindmap and key points from the discussion.
  • Things we learned:
    • Skills tend to describe what an individual or organization can do, while competencies tend to outline expectations for behavior.
    • Skills are the new currency in many organizations.
    • In some organizations, employees struggle with competencies because they are associated with performance evaluations and feedback.
    • Measuring skills proficiency in a simple and scalable way remains a challenge.
    • Organizations can simplify their approach to skills and competencies by leveraging tech and setting clear priorities.

Continuing our collaborative exploration of the skills landscape, we recently gathered leaders together for the first skills roundtable. This session focused on skills and competencies. It included questions such as: 

  • What’s the difference, in practice, between skills and competencies? 
  • Under what conditions might organizations shift from competencies to skills? 
  • How do competencies drive organizational results? How do skills drive organizational results? 
  • How do you measure skills proficiency? 

Mindmap of Skills and Competencies Roundtable

The mindmap below outlines the conversations we heard as a part of this roundtable.

Key Takeaways

We had a rich, energizing, and informative discussion that helped us learn how skills and competencies are defined, perceived, and used in organizations. Here are 5 key takeaways. 

Skills = “what;” competencies = “how”

Leaders agreed that, in general, skills tend to describe what an individual or organization can do, while competencies outline expectations for how a job should be done or an individual should behave. 

There was less agreement about whether skills or competencies are job-agnostic. Some organizations use competencies to describe broad behaviors that any employee should exhibit in order to succeed. In these organizations, competencies apply to any job in the company and include the knowledge, skills, and abilities needed to get things done.  

In other organizations, skills are the job-agnostic ones. They are still more granular and specific than competencies, but they are not tied to specific jobs or roles. Rather, they are portable building blocks that an employee can apply to any role they might be in. 

Skills as currency

A number of leaders mentioned skills as currency: skills represent what an employee does for or offers to the organization 

Treating skills as currency makes them portable. With a clear understanding of the skills they can offer, employees can move around an organization more easily. Internal mobility and gig work become easier to implement organization-wide. 

Leaders drew a distinction between the longevity of skills and competencies, citing the shorter shelf-life of skills as one reason they are a strong currency. Because many skills must be developed (and sometimes abandoned) much more quickly than competencies, they are more susceptible to supply-demand imbalances. This makes certain skills highly valuable when they are in high demand.  

This transactional concept applies best, however, only to non-durable skills.  

The struggle with “competencies”

Interestingly, many leaders in the roundtable said the word “competency” is viewed negatively in their organization. Because competencies tend to include proficiency ratings, they are perceived as a way to tell employees how they don’t measure up. By contrast, skills are perceived more positively and are associated with employee development. As one leader put it, “I have an opportunity to get better at a skill, as opposed to not having the competence to do a role.” 

As a result of the way competencies are perceived, some organizations have changed their messaging. One leader reported, “competencies are actually used more, but we call them skills because competency is associated negatively with performance.”  

The group noted this strategy will not work long-term unless skills stay simple, easy to understand and use, and focused on employee development. If skills become as burdensome as competencies are today, they will take on the same negative associations as well.  

Measuring skills proficiency is a challenge

Most leaders reported their organizations are not measuring skills proficiency at all, are just starting to measure proficiency, or are measuring in ways that will not scale. Current tech limitations are partly responsible for the fact that most organizations are not measuring skill proficiencies to the extent they want and need to. Most skills platforms currently treat skills as binary: I have a skill or I don’t. They do not yet offer ways to denote skill proficiency. 

Another challenge lies in the subjectivity of skill assignment. Leaders agreed it is not enough to simply ask employees whether they have a skill; there needs to be some kind of verification process. However, asking a manager to verify all their reports’ skills is burdensome and can introduce bias. Managers also may not be able to accurately assess skills or skill levels if they do not have the skill themselves.  

As burdensome as it can be to input and verify skills and skill levels, leaders noted most employees appreciate the conversation this exercise prompts. Employees find it helpful to understand from their manager how they are perceived and where they can improve. 

Orgs want to simplify

Leaders emphasized that they are trying not to simply replicate competency frameworks in the skills space. Instead, they are employing two main strategies to simplify their approach 

  1. Grassroots. Organizations are building skills databases from the ground up rather than creating unwieldy conceptual models to fit skills into. In this approach, employees input their skills into a database, then data analysis is applied to draw out skill groups, themes, and commonalities. 
  2. Prioritization. They are prioritizing the key skills they would like people to work on. They are looking at the desired end state, identifying the strategically important skills, and focusing on only those skills rather than trying to map the universe of skills 

A special thanks

This discussion helped us refine our understanding of the differences between skills and competencies, the value each brings to organizations, and the challenges associated with finding simple ways to understand “what we can do as an organization. Thank you again to those of you who attended and made our conversation enriching. And as always, we welcome your suggestions and feedback at [email protected]. 

ABOUT THE AUTHOR

Heather Gilmartin Adams

Heather is a senior consultant at RedThread Research. Trained in conflict resolution and organizational development, Heather has spent the past ten years in various capacities at organizational culture and mindset change consultancies as well as the U.S. Department of the Treasury. She holds a masters degree in international affairs from Columbia University and a bachelors degree in history from Princeton University. She has lived in Germany, China, Japan, and India and was, for one summer, a wrangler on a dude ranch in Colorado.

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