4-steps to developing employee competencies matrix and why It matters

Traditionally, hiring involves matching a candidate’s experience and qualifications with the role’s job description. With changing workplace dynamics, such an approach ceased to be effective. Without addressing employee competencies, you’ll soon be troubled by HR issues, including mounting frustration and disgruntlement among employees.

According to SHRM, including competencies evaluation as a part of the hiring process helps companies reduce employee churn rate. A healthcare organization in Colorado was experiencing a turnover rate of 60% when they hired strictly on paper credentials. Then, they added compassion as one of the key competencies for shortlisting candidates, which improved the churn rate to 15%. 

While competencies are vital in landing the right talents, they are also essential in performance management. Competencies assessment ensures employees are continuously aligned toward the organization’s values. Measuring and tracking competencies allow employees to identify behaviours that shape their past performance. 

In this article, we’ll explore employees' competencies, why they matter, and how to develop a framework for competencies in your organization.

What are competencies in HR 

Competencies are a set of skills, attributes, characteristics, and knowledge that HR can measure from the employees. They consist of qualities that shape desirable behaviours amongst employees. Simply put, competencies allow HR to assess employees beyond academic credentials and decide if they are the right person for the job. 

Competencies vs. skills

Competencies and skills are different. Skills are technical abilities that employees possess or hone over time to accomplish specific tasks. A single competency might be defined by several skills.  While skills are part of competencies, the latter’s definition goes beyond an employee’s skillsets. 

Competencies might include characteristics developed over time or behaviour in certain individuals. For example, maturity is a competency that describes a leader’s ability to manage challenging situations without losing composure.

What is a competency matrix?

A competency matrix, or competency model, is a framework that defines a collection of knowledge, skills, and behaviours that enable employees to contribute positively to the organization. Notably, each company is driven by different sets of values and hence, different competencies. A company’s success depends on hiring and upskilling employees on relevant competencies. 

The competency model is sometimes confused with job descriptions, but both are different elements in HR. A job description is an outcome expected from the employees, while competency indicates the behaviour they demonstrate toward achieving an outcome. There is no standard composition in a competency matrix, and it often includes corporate, managerial, and functional competencies. 

Why competencies are important?  

Competencies are vital in determining an organization’s long-term growth and eventual success. Here’s why. 

Hire the right talents 

It’s tough to hire the right people for your team with mere paper qualifications. By considering employee competencies during recruitment, you broaden the definition of what makes an ideal candidate. This allows you to filter and avoid onboarding candidates that seem highly qualified but don’t share the same values with the team.

✨ Pro-tip: Ask questions that allow candidates to score or express themselves and enable the HR team if they possess the required competencies. 

Consistent and accurate performance assessment

Annual reviews are no longer enough to evaluate performance accurately. Moreover, growth-driven employees feel that frequent, ongoing feedback is key to improving substantially in their job. Studies show that 70% of multinational firms are adopting a more regular feedback model, which shifts the focus to tracking competencies.

With a shortened feedback interval, managers need effective ways to compare appraisal data and relate past achievements to current performance. With competencies, managers can analyze performance indicators faster and provide insightful feedback. 

For example, they compare competency scores rather than reading through every open-ended feedback. More importantly, automating the process with software like Peoplelogic allows employees to receive feedback in real-time. 

Identify skill gaps and chart professional growth.

Your employees seek growth, but without knowing their strengths and weaknesses, it’s difficult to support them. Assessing their competencies, whether through self-assessment or a comprehensive 360 review, clarifies where and how they can improve. The same applies to identifying organizational skill gaps. If several employees lack the same competencies, you choose the appropriate training course to address them.

Knowing their competencies also help employees set a clear road map. Based on the appraisal results, they create professional growth plans that benefit the team and organization. 

Manage expectations for performance and compensation 

Discussing performance and salary is tricky and might be subjected to conflicting opinions. For example, the employee may feel they deserve better remuneration, but the management disagrees. 

Assessing competencies and ensuring they’re transparent to all employees is vital to create a fair and safe environment when discussing such subjects. Instead of relying on sentiments, both parties discuss compensations based on tracked progress within the competency framework. 

Keep your team aligned

Team works better when you set competencies for the members. By outlining the competency matrix, teams develop a common understanding of goals, efforts, and collaborations. Unsurprisingly, they might organize activities to support their mutual growth, such as hanging out, attending conferences, or developing internal processes. Some team members might also take the initiative to lead and mentor their teammates in improving those competencies. 

How to develop a competencies matrix 

Here’s a 4-step approach to developing your competencies model.

1. Establish the purpose and approach

First, you determine how the competencies will benefit your company. For example, are you using competencies as part of the recruitment assessment? Or do you intend to make competencies one of the criteria for performance appraisals? Perhaps, you’re targeting specific roles and expanding to other teams later on? 

Once decided, work on linking your business goals with the competencies. You could list relevant competencies that your team resonates with and are helpful to their growth. Also, consider if you need an external expert to advise in setting up the competencies framework. 

2. Set up a team and gather competencies data.

To create a list of relevant competencies, start by discussing them with your team. Talk to your team leads, or create a committee comprising different leadership roles. Sometimes, inviting external HR experts help in determining the right attributes and behaviours for workplace success.

HR experts recommended companies analyze their own team as they catalogue competencies. Specifically, observe the most efficient employees in their respective position. Analyze and pay attention to skills, characteristics, values, and motivations that result in exemplary performance. 

3. Draft the competency framework

Then, consolidate the competencies you’ve shortlisted and group them by categories. For example, you’ll want to separate leadership competencies from functional competencies. And group the latter into marketing, software development, customer support, and other departments. Involve your employees as you associate each competency with behaviours and validate them to ensure they’re relevant. 

For competencies to be helpful in evaluation, assign them with a rating scale that determines which behaviours are acceptable. Consider using third-party libraries of KPIs and tailoring them to suit your company’s needs. This speeds up the process. Then, select competencies that align with your company’s vision, mission, and goal. 

Make sure you don’t have too many competencies for each role or type. We recommend narrowing it down to 3-5 core competencies and not more than 20 for role-specific competencies. 

4. Implement across the organization. 

With the competencies framework in place, you’ll need to roll it out to the employees involved. Proper communication is key to ensuring smooth implementations.

I believe it’s important to involve senior management to get the message across. Hold a briefing to explain why competencies are essential at the individual, team, and organizational levels. Highlight key competencies to develop as an employee and explain how the company will support them in achieving the KPIs. 

Examples of competencies 

These are competencies with examples that will help create your company’s competency matrix. 

Soft skills competencies

1. Decision making (The recipient makes quick, clear, and confident decisions even when faced with limits and empowers others to do the same)

• Considers the impact of decisions before action
• Involves the right stakeholders when making decisions
• Takes initiative to solve problems
• Has an optimistic attitude
• Sees and analysis different options and alternatives 
• Makes confident decisions even in new and uncertain difficult situations
• Takes personally responsible for own and team decisions 
• Understands and considers the impact of own decision on the activities of others/organization
  

2. Collaboration (The recipient forms and nurture relationships with others for good teamwork and develop ideas together)

• Builds a strong relationship with others, has a wide professional network 
• Shows respect to others, makes people feel important and appreciated 
• Discusses the ideas and problem issues with the colleagues/team and involves them in the decision-making process
• Builds team based on each member`s strengths and trust
• Open and clear in communication, listens and accepts different points of view
• Win-win oriented, comes to a consensus about common goals and solutions
• Proactive team member, set team/organization goals ahead  
• Collaborates with others effectively, helps team/others achieve common goals
  

3. Problem-solving (The recipient can examine a problem and find a suitable solution)

• Has a system mindset, sees the causes of the problem and connection between elements 
• Analyses the problem and context before decision-making and activities
• Effectively communicates the problem to others and helps others in problem-solving
• Provides creative and useful solutions to a problems 
• Understand the impacts and dependencies of a problem
• Identifies, prioritizes, and selects alternatives for a solution 
• Actively anticipate potential future problems and act to prevent them or mitigate their effects
• Use modern tools for analyzing problems and finding the right and effective decisions
  

4. Efficiency (The recipient plans, organizes, and does the work effectively)

• Demonstrates business awareness, knows what and how the organization acts
• Completes the tasks effectively and on time
• Creates a sense of collaboration when working with others
• Finishes the work to the right level every time
• Provides high standards in the work, uses tools for work improvement
• Breaks up projects into tasks, and tasks into subtasks 
• Completes tasks based on priority
• Minimize distractions

Examples of hard skills competencies

These competencies will be very company- and role-specific.These are examples for a marketing role:

Competency: Customer Focus

Indicators:

1. Aligns the organisation around the customer 

• Intern: Supports internal communication to build strong external customer relationships
• Junior: Supports internal communication to build strong external customer relationships
• Middle: Assists with the development of internal communications to build strong external customer relationships
• Senior: Collaborates internally to build strong external customer relationships
• Lead: Leads and creates an organisation-wide customer orientation and infrastructure for customer relationship building

2. Works collaboratively

• Intern: Works with others to meet customer needs
• Junior: Works collaboratively with colleagues to deliver good practice and meet customer needs
• Middle: Works as customer champion in cross-functional teams
• Senior: Works as customer champion in cross-functional teams
• Lead: Leads and creates an organisation-wide customer orientation and infrastructure for customer relationship building

3. Manages change

• Intern: Recognises the need for change and supports the implementation of change through positive behaviour 
• Junior: Supports change plans and the implementation of change to meet customer needs
• Middle: Works with managers and team colleagues to implement change initiatives
• Senior: Leads both communication of the need for change and the implementation of change through others 
• Lead: Articulates the strategic need for change and leads the implementation of change on behalf of the customer

Read more: Change Management Survey — Top Questions You Need to Ask

Examples of competencies for managers

1. Leadership (Question/Description: The recipient demonstrates mature/strong/target leadership on daily basis):

(Indicators):

• Inspires to achieve goals, highlighting the tasks that cannot be solved without enthusiasm and dedication
• Supports employees considering the specifics of their motivation/personality type
• Role model and mentor for others, helps others in the development and career growth 
• Takes a responsibility for the difficult issues, ready for risk
• Demonstrates empathy and emotional intelligent
• Build trust with others, creates a space of trust with the team
• Creates an environment where everyone can succeed
• Promotes visibility to the contributions and work of the team

2. Strategic mindset (The recipient focuses on the future and takes a strategic perspective on issues and challenges)

• Purpose oriented
• Has a vision mindset, can prognose and model the future 
• Sets a clear strategy for achieving goals
• Adapts and aligns with changes in business priorities
• Good in planning, setting goals, and analysis 
• Sees opportunities not obstacles and limits
• Sets ambition goals for his/herself and agrees on it with other`s goals/business strategy 
• Motivates others to reach their goals

3. Management (The recipient manages people and processes effectively)

• Gives clear instructions and personally leads the work if necessary
• Increases the productivity of teamwork by involving subordinates in it
• Chooses a leadership style that helps achieve team goals
• Distributes tasks among subordinates to achieve timely and high-quality execution of current tasks
• Effectively coordinates the work of subordinates/team members
• Excellently organizes work and rationally uses all resources
• Clearly separates what can be done by others and what should be done by his/herself
• Delegates specific tasks to subordinates/team members and empowers them accordingly

How do competencies fit into performance management process 

Performance management is a necessary process that helps employees align their goals with the company. During appraisals, employees discuss ways to improve their future performance based on past achievements with managers and peers. Competencies connect the dot between what employees have achieved and how they’ve done so. 

Integrating competencies with performance management helps employees create career development plans that fast-track their growth in the right direction. Managers use analytical tools to determine skill gaps and generate reports for employees.

So, how do you introduce competencies into existing performance reviews with ease? 

Start by including competencies-driven questions into the assessment to learn behaviours that shape the employee’s past accomplishments. Then, use performance management software to calculate and analyze the competency scores automatically. 

Conclusion 

Competencies help managers understand key behaviours that influence employee performance. When used in performance management, they allow employees to chart their professional growth accurately and receive valuable feedback. 

Use Peoplelogic to automate performance reviews and track employees’ competencies. Peoplelogic also helps managers identify skill gaps and manage professional development plans.