Competencies, Capabilities and Skills
Competencies, Capabilities, and Skills: Every Leader’s Guide to Their Evolving Use
Terri Baumgardner Ph.D., SPHR



Most companies today have or had a leadership competency framework in place. Popularized in the 1990s, competency frameworks defined the knowledge, skills, abilities, and other characteristics (KSAs) that were important to success in various roles and organizations. While there are debates about how “competency” is defined, depending upon which consulting firm might be defining it, there really should not be a debate. The most recognized and technically-sound definition of competencies is, as noted above, the knowledge, skills, abilities, and other characteristics important to success in various roles or organizations.

Often companies developed competency frameworks that were built around an infrastructure of what were called factors or super-factors. One of the most popular factor structures used was some variation on a framework originally developed by a major international leadership consultant firm. The framework was based on the factors of Thought Leadership, Results Leadership, People Leadership, and Self Leadership. Even today, this factor structure remains a strong one that almost any competency can be linked to for building a solid competency framework.

The way that most organizations built this framework is by identifying the important competencies for them related to each factor, and then titling and defining them somewhat different for different levels of employees and leaders (e.g., individual contributors, first-line leaders, mid-level leaders, executives, senior executives).

While HR organizations were developing competency frameworks, which found their most obvious application in the performance management process, executives were already objecting to the term “competency” and how extensive some of the frameworks were becoming. “Who uses the term ‘competency,’ anyhow, in everyday language?”, they asked. “How are we possibly supposed to be able to assess 20 or more competencies in a performance management process?” they complained.

When the competencies were simply and well-defined and relevant to the organization, and the framework they linked to was also simple and easy to understand, leaders had different reactions. For example, it was very each for executive teams to sit in succession meetings and compare and contrast the people on their teams based on Thought Leadership, Results Leadership, People Leadership, and Self Leadership. They are very easy constructs to understand and apply related to all people processes, including selection, performance management, succession management, and development. They are as sound today as they were in the 1990s, and when constructed well, a competency framework still has the power to align an organization and to build exactly the talent that the organization needs.

Today, there is much less written about competencies and competency frameworks, and more written about things like capabilities frameworks or skills taxonomies. They, like competency frameworks, are meant to identify the kind of talent any particular organization needs to build.

Capabilities are broader than the idea of competencies, in general. For example, in today’s world, many organizations are focusing on their need to build digital capability. They can define digital capability in a way that makes sense for them, but in general, the definition will contain various competencies (e.g., knowledge, skills, abilities, and other characteristics), or focus on just skills. The idea of using capabilities to identify the kind of talent the organization needs to build does not have to be dissimilar to how competency frameworks can be used. If done well, the framework will work to build the kind of talent the organization needs. You can call it a competency framework or a capabilities framework, depending on what language works in your organization, and still produce the same results and outcomes (e.g., building the kind of talent the organization needs).

Where capabilities tend to be broader than competencies, skills are more specific and narrowly defined typically. For example, organizations that are trying to build digital capability will often define the specific skills they need to build (e.g., programming language skills). The use of skills taxonomies is becoming more popular for a few reasons. One, technology solutions have used skills to organize their processes. For example, career development software may allow for searching for opportunities to use and build particular skills. Two, in a world where digital skills are important for every organization, it is easy to identify, list, and build all the particular digital skills that the organization might need. Third, in a world where people are engaged in gig work and have several careers at any one time, they can search for and apply for work that targets the use of particular skills. Organizations, of course, can search for and recruit people with these particular skills.

It is important for every leader to understand that these three concepts are so related and intertwined and you can integrate the best of them to build the kind of talent needed in your organization. If the competency framework you have in place is not working, then improve it. Change the language. Simplify the messages. Reference capabilities and skills more prominently. Make the framework and its components do the work for your organization, which means starting with the business outcomes you need from any framework or taxonomy.

It is not difficult to evolve your competency/capability frameworks and skill taxonomies, but it does take a certain experience and skillset to do it well and efficiently. It does take a vision for how all of the pieces can work together for the right outcomes, and how you can tackle every phase of the employee life cycle with the focus you need, and that employees deserve.