Written by Dan Hughes, Senior Director of R&D
Many organizations are shifting or looking to shift towards skills-based hiring and development strategies. This offers the potential to enable a more agile, dynamic approach to hiring, internal mobility, and talent development. For example, organizations can move away from hiring based on years of experience or qualifications to focus more on skills – both the skills that someone needs to meet current organizational requirements and what skills may be beneficial in the future to support the organization’s strategic direction.
But what does this shift actually entail when it comes to skills vs competencies? Is one approach better than the other?
Organizations struggle to differentiate skills vs competencies
This increased focus on skills has created a debate about what this means for organizations who are already utilizing competency frameworks. In my experience, the terms ‘skills’ and ‘competencies’ are often used interchangeably and in practice, the difference between skills and competencies can be largely semantic. For example, in the World Economic Forum’s latest Future of Jobs report, the top five core skills identified by employers were:
- Analytical thinking
- Resilience, flexibility, and agility
- Leadership and social influence
- Creative thinking
- Motivation and self-awareness
These are all broad, behavioral capabilities which are transferable across a variety of roles and could just as easily be called competencies. Therefore, when deciding whether to apply a skills-based or competency-based lens, it’s essential to have clarity on the distinction between the two and what this means for hiring and talent development. So, what is the difference between skills and competencies, and what implications do they have on your talent strategy?
What is a skill?
At the outset, it is important to note that there is not one single agreed upon definition of what a ‘skill’ is. People have a general, intuitive understanding, but organizations take different approaches in building skill taxonomies. What matters most is that the approach fits the organization’s goals and can serve as an effective foundation for talent strategies.
For organizations who want to apply effective skills-based talent strategies, this makes it critical to establish a shared understanding of what skills mean for your organization. It is also important to avoid throwing away valuable existing foundations your organization may already have, such as competency frameworks, purely because there is a sense they are somehow different without making the connection between them.
A practical definition of skills is ‘Learned, applied abilities required to complete a task.’
Skills focus on specific key elements needed to perform a task(s) effectively in the role. They can be taught and developed through training, coaching, and deliberate practice. Skills can be broadly categorized into two types:
- Job-specific skills: Specialized areas of technical expertise and knowledge required for function-specific tasks. These are what some people refer to as ‘hard’ skills – for example, coding, UX design, digital marketing, data analysis, and P&L accounting. These can be either broadly described or very specific, for example focusing on specific coding languages required for a role or project.
- Transferable skills: These are core behavioral skills which are important for successful performance across many tasks and roles. They relate to both personal and interpersonal effectiveness and are sometimes called ‘soft’ skills. I personally dislike the term ‘soft’ as it minimizes the critical importance of transferable skills for sustainable performance in the long-term. Examples of transferable skills might be time management, giving feedback, showing empathy, or networking.
Skills tell you what someone can do. Any role typically requires a blend of both job-specific and transferable skills to perform effectively. Therefore, an organizational skills taxonomy should incorporate both types to be comprehensive. A benefit of the skills approach therefore is that it provides a common language to integrate these technical and behavioral skills together.
It is often helpful to adopt a hierarchical approach when building out a skills taxonomy, defining high level groupings and skills within them according to your needs. For example, you may want to define a core set of transferable skills that are common across roles in the organization. You can also then classify the major functional job families to map out which job-specific skills sit within them.
What is a competency?
When comparing competencies vs skills, it’s important to note that they both have a shared focus on individual capabilities which are observable, measurable, and influence job performance. Competencies, however, offer a more holistic view of an employee’s capability and potential.
Competencies can be defined as “Groups of specific, related behaviors and skills which are observable and important for people to perform successfully in their role.”
Competencies reflect a broader combination of skills, behaviors, knowledge, and other attributes which drive successful long-term performance in a role. They don’t just focus on what the person can do, but also how they do it. They can offer more insight into whether someone is a good culture-add and their long-term potential beyond the immediate skills they have today.
From one perspective, competencies can be viewed as higher-level ‘skillsets’ which might encompass several sub-skills. In some cases, they can also be heavily informed by an individual’s personality traits and motivational drivers. A strong example is a competency such as Integrity. While an individual can learn relevant skills around identifying ethical issues or practicing open communication, what is likely to matter more for effective performance on this competency is the individual’s core values and principles.
What is the difference between skills and competencies?
Here are some typical differences to help you differentiate between a competency vs a skill:
| Element | Skills | Competencies |
|---|---|---|
| Scope | Targeted, specific, and often task-focused | Broad, behavior-based and can inform culture fit |
| Coverage | Covers both technical and behavioral aspects of role | Mainly concerned with the behavioral aspects of a role |
| Focus | Can the person do the task? | How well and consistently do they perform the behavior across situations? |
| Development | Can often be learned relatively quickly through concentrated training, coaching, and practice | Often develops over a longer time via experience and feedback, sometimes requiring a shift in mindset |
| Measurement | Assess proficiency mainly through simulations, skills tests, and task-based demonstrations | Assess behavioral tendencies through simulations, psychometrics, behavioral interviews, and 360 feedback |
All of this highlights the importance of getting the basics right before embarking on a skills-based strategy, which means:
- Be clear about exactly what skills mean for your organization
- Define the difference between skills vs competencies and consider the implications
- Know what the goals are of introducing your skills-based strategy
You can then use this to produce a skills taxonomy that fits your organizational requirements. If you already have an existing competency framework or other forms of behavioral criteria which have been robustly developed, consider how you can adapt and extend these as you shift toward skills.
Instead of skills vs competencies, what about skills and competencies?
A key question to consider about competencies vs skills as you work to implement a skills-based hiring or development process is:
How will you accommodate the need to assess and develop not just what a person can do (their skills) but also how they do it (their competencies)?
In a hiring process, take a comprehensive approach and ensure you assess the individual characteristics that underpin the consistent and effective utilization of skills (i.e. their skills foundations) as well as the actual skills they can demonstrate. Evaluating someone’s personality, cognitive ability, values, and emotional intelligence can help predict what transferable skills an individual will be more inclined to use, as well as indicating new skills the individual has the potential to acquire.
Adopting a skills-based talent strategy can deliver significant benefits by providing consistent, structured, and measurable language for hiring, development, and internal talent mobility. To realize these benefits, you must have a clear understanding about not just what skills are needed for your organization, but also how you will measure other aspects of a person’s capability and behavior, too.
Laying the foundation for an effective talent strategy
Before even attempting to build a skills-based talent strategy, be sure to establish what skills mean in your organization so you are building on a solid foundation. Remember that skills can typically be categorized into job-specific and transferable skills, providing a common language for capturing varied role or project requirements. This common language is a valuable benefit of the skills approach. A comprehensive approach to hiring and development considers not just someone’s skills, but also the individual characteristics which guide their working style and approach, such as their personality, cognitive ability, and values.
So, the next time you’re questioning the difference between skills and competencies, remember that skills are often targeted and task-focused while competencies tend to be broader and reflect a blend of skills and other individual characteristics such as traits, behaviors, and values. Skills identify what someone can do while competencies consider not just what someone can do, but how they do it. Successfully distinguishing between the two will ensure your talent strategy is designed for long-term success.
About the author: Dan Hughes is a Chartered Psychologist and highly experienced R&D leader. He has worked in the field of business psychology for over 26 years and during that time has developed a wide range of innovative psychometric solutions and technology to help organizations with their talent management goals. He is passionate about designing scientific, evidence-based solutions which deliver practical business benefits. He also regularly shares research and thought leadership via industry conferences and publications.
