Understand how to build an effective approach to performance management, including the tools that can support it
Competency frameworks, when done well, can increase clarity around performance expectations and establish a clear link between individual and organisational performance. When developing and implementing a competency framework, care needs to be taken to balance detail with flexibility and avoid an overly prescriptive and non-inclusive approach.
This factsheet investigates the nature of competence and competency frameworks, both in theory and practice, and outlines the past and current use of competence terminology. It also highlights the strengths and weaknesses of competency-based approaches and offers guidance in the effective development and implementation of competency frameworks.
Competency frameworks can be extremely useful to support talent strategy and guide practice in a number of areas from recruitment, talent development and performance management. However they will only be successful in supporting decision-making if they accurately reflect the needs of both the job and the organisation in terms of skills, experience and behaviours. They should therefore take account of job and person specifications and the organisation’s medium- and long-term needs for talent, as well as reflecting the organisational ethos and values.
Communicating the purpose of a competency framework is essential for managers to engage and implement it effectively when making hiring decisions and assessing performance. The framework should be used as a starting point to define shared expectations of skills and performance, but can be applied flexibly depending on the context of the job and individual worker development levels and aspirations.
To reflect the changing nature of jobs and remain flexible to diverse career pathways, competency frameworks should be constantly reviewed and informed by future-focused workforce planning to assess the nature and requirements of future roles.
What are competence and competency frameworks?
Competence or competency?
The terms 'competency' and ‘competencies’ focus on the personal attributes or inputs of an individual. They can be defined as the behaviours (and technical attributes where appropriate) that individuals must have, or must acquire, to perform effectively at work.
'Competence' and ‘competences’ are broader concepts that encompass demonstrable performance outputs as well as behaviour inputs, and may relate to a system or set of minimum standards required for effective performance at work.
A ‘competency framework’ is a structure that sets out and defines each individual competency (such as problem-solving or people management) required by individuals working in an organisation or part of an organisation.
In the past, HR professionals have tended to draw a clear distinction between 'competences' and 'competencies'. The term ‘competence’ (competences) was used to describe what people need to do to perform a job and was concerned with effect and output rather than effort and input. ‘Competency’ (competencies) described the behaviour that lies behind competent performance, such as critical thinking or analytical skills, and described what people bring to the job. More recently however, there has been growing awareness that job performance requires a mix of behaviour, attitude and action and the terms are now more often used interchangeably.
In line with the approach taken in a number of CIPD publications, the term 'competency' is preferred in this factsheet except when specifically referring to the use of occupational standards (that is, an 'outcome-based' approach) in which case the term 'competence' is used.
Basic principles of competency
Competencies are a key performance indicator from the organisation to an individual of the expected areas and levels of performance. They provide the individual with an indication or map of the behaviours and actions that will be valued, recognised and in some organisations rewarded. Competencies can represent the language of performance management in an organisation.
Emergence of competency approaches
The concept of competencies emerged during the early 1980s as a response to organisational changes and drives for higher performance levels. During the subsequent decades, competency frameworks have become an increasingly accepted part of modern HR practice.
Our 2017 Resourcing and talent planning survey revealed that competency-based interviews were the most popular method of applicant selection.
Changing focus of competencies
While competency frameworks originally consisted mainly of behavioural elements - an expression of the softer skills involved in effective performance - increasingly, they have become broader and more ambitious in scope and include more technical competencies. This development has been given greater momentum by advances in technology.
Developing a competency framework
Which behaviours should be included?
In designing a competency framework, care should be taken to include only measurable components. It's important to restrict the number and complexity of competencies, typically aiming for no more than 12 for any particular role (preferably fewer), and arranging them into clusters to make the framework more accessible for users. The framework should contain definitions and/or examples of each competency, particularly where it deals with different levels of performance for each of the expected behaviours. It should also outline the negative indicators for that competency.
A critical aspect of all frameworks is the degree of detail. If a framework is too broad (containing only general statements about individual competencies), it will fail to provide adequate guidance either for employees as to what is expected of them or to managers who have to assess their staff against these terms. If, on the other hand, it is too detailed, the entire process becomes excessively bureaucratic and time-consuming and may lose credibility.
Employer competency frameworks may include different types:
Core competencies - support the organisation’s values and mission. They will usually apply to all jobs in the organisation.
Common competencies - relate to certain jobs. For example: in management roles common competencies may include strategic awareness, leading a team, managing team performance.
Technical or job specific competencies - apply to certain roles or a ‘family’ or ‘group’ within the organisation. These competencies outline any technical expertise required and assess the depth and breadth of that skill and knowledge.
Leadership competencies - skills and behaviours that contribute to leadership performance. By using a competency-based approach to leadership, organisations can better identify and develop their next generation of leaders. Essential leadership competencies and global competencies have been defined by researchers. However, future business trends and strategy should drive the development of new leadership competencies. While some leadership competencies are essential to all firms, an organisation should also define what leadership attributes are distinctive to a particular organisation to create competitive advantage.
'Meta' competencies - relate to the recruitment of high-potential individuals who the organisation would like to promote and develop, for example, into senior management posts in the next five to ten years. They characterise competencies required in the future.
When preparing a framework, it's important to take account of the legal background (for example, discrimination law) to ensure that none of the competencies discriminate against any particular group of employees or potential employees.
It's also important that when frameworks are used to assess competence, they recognise an individual’s potential to develop and don't just collect evidence of a certain behaviour in the past.
Internal versus external approaches
Competency frameworks can be developed in a number of ways. Methods range from importing an existing off-the-shelf package through to developing the entire structure from scratch.
It's possible to draw on the external competency or competence lists produced in support of occupational standards and the framework of National and Scottish Vocational Qualifications. Frameworks developed in this way are often linked with progression towards recognised qualifications.
Alternatively, organisations may develop their competency frameworks through an internal research programme – sometimes aided by advisers from an external consultancy.
The ideal solution might seem to lie between these two extremes, internally generating a framework that builds in business relevance while also drawing on external models that have been widely used and have proved successful.
Our research suggests that frameworks are usually designed in-house (with or without the help of consultants), while only a small minority use frameworks produced by an external organisation (for example a trade association or government body). Nevertheless, many of the subjects that are included in individual employers’ competency frameworks tend to fall under expected generic headings.
The practical use of competencies
An Erasmus+ strategic partnership project ComProCom described competence for higher-level occupations in six EU countries. It provides useful guidance on competence standards and frameworks that can be applied across sectors.
How do employers use competencies?
Early applications of competencies and competency frameworks focused mainly on performance management and development, particularly of more senior staff. Today, however, it's recognised that an effective competency framework has applications across the whole range of human resource management and development activities. The approach has become more popular in recruitment, for example, because it enables recruiters to assess against a clear range of criteria and behaviours.
Competency frameworks are now often seen as an essential vehicle for achieving high organisational performance through focusing and reviewing each individual’s capability and potential. Moreover a competency framework can be a key element in any change management process by setting out new organisational requirements.
According to our research, employers most commonly use competency frameworks with the aim of achieving the following goals:
- consistency across recruitment practices
- fair performance reviews/reward
- enhanced employee effectiveness
- greater organisational effectiveness
- better analysis of training needs
- enhanced career management.
Implementing competency frameworks effectively
Steve Whiddett and Sarah Hollyforde, co-authors of our Competencies Toolkit (now out of print), argue that:
'Many organisations develop a competency/behaviour framework with a view to managing performance and progression more effectively. However, many managers and individuals find it hard to use the frameworks to help achieve their goals and, therefore, the goals of the organisation.’
The most common reasons for this are that people do not see the benefit of the framework and are not trained adequately; there are no clear links to what the business is aiming to achieve; and many frameworks are a mix of different concepts, which makes them unwieldy.
The authors suggest the following simple steps to check whether a competency framework is fit for purpose:
Communicate the purpose – The first step is to find out if employees understand what the purpose is. If they don’t understand how behaviours contribute to personal and organisational success, there is little point in updating or developing the framework.
Identify key themes – Even if staff are clear about the purpose of the framework, it still needs to support the organisation’s aspirations (goals, values, business plans, and so on). If people aren’t all working towards these aspirations then some individual efforts are likely to be diversions from organisational success.
Get conditions right – The organisation’s procedures need to support the framework, and the culture, resourcing and management structures must be supportive too. Be realistic: if conditions inhibit behaviours then change the conditions or change the behaviours.
Tackle the root cause – As well as goals and conditions, behaviour is also influenced by underpinning characteristics (knowledge, skills and attitude). One underdeveloped characteristic, such as communication skills, can affect many different behaviours. If managers don’t understand this distinction they may focus on trying to improve the behaviour without tackling the root cause.
Keep it simple – There are two key elements to ease of use – language and structure. However ‘perfect’ the framework, if it’s too complicated, long or detailed it won’t be used. The language has to be meaningful to the people who use it.
Train, don’t blame – Once the structure has been tidied up, make sure that everyone who uses the framework is trained in how to use it. A framework is a tool and, as with any tool, if users don’t know how to use it, it will fall into disuse or fail to meet its full potential.
Strengths and weaknesses
The main benefits of a competency-based system are considered to include:
- Employees have a well-defined set of behaviours required in their work and are clear about how they are expected to perform their jobs.
- The appraisal and recruitment systems are fairer and more open.
- Recruiters are able to assess transferable skills and identify required behaviours regardless of career background.
- There is a link between effective individual inputs to work and organisational performance.
- Processes are measurable and standardised across organisational and geographical boundaries.
The main criticisms of competency frameworks usually suggest that they:
- focus on the past and therefore cannot keep up to date with rapidly-changing environments
- fail to deliver on anticipated improvements in performance
- are unwieldy and not user-friendly
- create clones, as everyone is expected to behave in the same way.
While such criticisms have been levelled with justification at poorly-developed frameworks, they also reflect a lack of understanding of competencies. The criticisms do not so much detract from the need and usefulness of competency frameworks as highlight the need for care and understanding when developing and implementing such frameworks.
Useful contacts and further reading
INCOMES DATA SERVICES. (2012) Competency frameworks. HR studies. London: IDS.
ULRICH, D., BROCKBANK, W. and YOUNGER, J. (2013) Global HR competencies: mastering competitive value from the outside in. New York: McGraw Hill.
WHIDDETT, S. and HOLLYFORDE, S. (2003) A practical guide to competencies: how to enhance individual and organisational performance. 2nd ed. London: Chartered Institute of Personnel and Development.
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COHEN, D.J. (2015) HR past, present and future: a call for consistent practices and a focus on competencies. Human Resource Management Review. Vol 25, No 2, June. pp205-215.
JACKSON, H.G. (2014) The competency factor. HR Magazine. Vol 59, No 7, July. p6.
LOEW, L. (2016) Competency management: challenges and benefits. Training. 25 February.
REDMOND, E. (2013). Competency models at work: the value of perceived relevance and fair rewards for employee outcomes. Human Resource Management. Vol 52, No 5, pp771-792.
STEVENS, G.W. (2013) A critical review of the science and practice of competency modeling. Human Resource Development Review. Vol 12, No 1, March. pp86-107.
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This factsheet was last updated by Ksenia Zheltoukhova and Ally Weeks.
Ksenia Zheltoukhova: Head of Research
Ksenia is responsible for leading research innovation and capability development at the CIPD. She joined in 2013 as a Research Adviser, leading a number of projects, including a major research programme, Profession for the Future, investigating principles-based approach to professional standards as a way of driving ethical and sustainable decision-making by the business.
Prior to the CIPD, Ksenia was a researcher at The Work Foundation, working on Future of HR, Leadership, and Health and Well-being streams. With a background in organisational psychology, she holds a PhD in Management from Lancaster University, where her research examined the effects of leaders’ sacrificial behaviours on followers.
Ally Weeks: HR Consultant
Ally is an HR practitioner with 20 years UK and international experience within small, medium and large blue chip businesses. A subject expert in talent management, succession planning, workforce planning and recruitment, Ally is currently an HR consultant and trainer for the CIPD and lead tutor for the Level 7 RTM (Resourcing and Talent Management) programme. She advises clients on integrating learning activity with wider commercial issues and the strategic direction of their organisation. Ally is highly adept at determining the most appropriate delivery methods, including online learning, and is experienced in 'hands on' training delivery. She also advises on monitoring the impact of learning interventions.
More recently she has focussed on writing content for CIPD’s online digital Certificate qualifications and Future of HR in partnership with Avado. She speaks at CIPD branch events and conferences on attracting talent, resourcing strategies and trends, strategic workforce planning and new learning technologies.
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