Competency vs Capability: What Matters Most in the Workplace?

Nowadays organizations are constantly seeking the right talent to drive success. But what should they prioritize: competency or capability?

Competency refers to the specific skills and knowledge needed for a job, while capability is the overall potential to apply those competencies in various situations.

So, which one holds more weight?

The answer may surprise you.

What is Competency?

• Competency refers to an individual's specific skills, knowledge, and abilities required to perform a job effectively
• It encompasses technical expertise and proficiency needed to carry out tasks and responsibilities associated with a particular role
• Understanding the difference between competency and capability is crucial for businesses to optimize their workforce and achieve organizational goals

Competency is a term that describes the specific skills, knowledge, and abilities an individual possesses to perform their job effectively. It is the foundation upon which an employee's performance is built, and it directly impacts their ability to contribute to the organization's success. Competencies are often acquired through education, training, and hands-on experience in a particular field or role.

When discussing competency, it is essential to understand that it is not a one-size-fits-all concept. Competencies can vary greatly depending on the industry, job function, and even the specific organization.

For example, a software developer's competencies would include programming languages, problem-solving skills, and knowledge of software development methodologies. In contrast, a sales representative's competencies would encompass interpersonal skills, product knowledge, and the ability to close deals.

Examples of Competencies

To better understand the concept of competency, let's explore some common examples:

1. Communication skills: The ability to effectively convey information, ideas, and thoughts through verbal and written means
2. Problem-solving abilities: The capacity to identify, analyze, and resolve complex issues or challenges
3. Technical knowledge in a specific field: The expertise and understanding of a particular domain, such as finance, marketing, or engineering

These examples demonstrate that competencies can be both general (e.g., communication skills) and specific (e.g., technical knowledge in a specific field). Possessing the right combination of competencies is essential for an individual to excel in their role and contribute to the organization's overall success.

Types of Competencies

Competencies can be further categorized into two main types: behavioral and functional.

Behavioral Competencies

Behavioral competencies focus on the soft skills and personal attributes that enable an individual to interact effectively with others and navigate the workplace. Some examples of behavioral competencies include:

1. Interpersonal skills: The ability to build and maintain positive relationships with colleagues, clients, and stakeholders
2. Leadership qualities: The capacity to guide, motivate, and inspire others to achieve common goals
3. Adaptability: The flexibility to adjust to changing circumstances and embrace new ideas or approaches

Developing strong behavioral competencies is crucial for success in any role, as they contribute to a positive work environment and facilitate effective collaboration.

Functional Competencies

Functional competencies, on the other hand, are directly related to the specific tasks and responsibilities of a job. They encompass the technical skills and knowledge required to perform the role effectively. Examples of functional competencies include:

1. Job-specific skills: The expertise needed to carry out the core functions of a role, such as financial analysis for a finance professional or coding for a software developer
2. Industry knowledge: A deep understanding of the trends, best practices, and challenges within a specific industry
3. Proficiency in using specific tools or software: The ability to effectively utilize the technologies and platforms relevant to a particular job or industry

Developing the right mix of behavioral and functional competencies is essential for individual success and organizational performance. By understanding the competencies required for each role, businesses can make informed decisions about recruitment, training, and talent management.

What is Capability?

• Capability refers to an individual's overall potential to apply their competencies effectively in various situations and contexts.
• It involves the capacity to adapt, learn, and grow, enabling individuals to take on new challenges and responsibilities beyond their current role.
• Understanding the difference between competency and capability is crucial for organizations to identify and develop their employees' full potential.

While competency focuses on the specific skills and knowledge required to perform a particular job or task effectively, capability takes a broader view. It encompasses an individual's overall potential to apply their competencies in diverse situations and adapt to new challenges.

Examples of Capabilities

Capabilities are not limited to a specific role or set of tasks. Instead, they reflect an individual's potential to grow and contribute to the organization in various ways. Some examples of capabilities include:

Ability to learn and acquire new skills

Individuals with a strong capability for learning are able to quickly grasp new concepts, technologies, and processes. They are curious, open-minded, and proactive in seeking opportunities to expand their knowledge and skill set. This capability enables them to adapt to changing business needs and take on new responsibilities as required.

Capacity to handle complex projects

Handling complex projects requires a combination of technical expertise, problem-solving skills, and effective communication. Individuals with this capability are able to break down complex issues, identify key challenges, and develop innovative solutions. They are able to manage multiple stakeholders, prioritize tasks, and deliver results in challenging circumstances.

Potential for leadership and decision-making

Leadership capability involves the ability to inspire, motivate, and guide others towards a common goal. Individuals with strong leadership potential demonstrate excellent communication skills, emotional intelligence, and the ability to make sound decisions under pressure. They are able to build and maintain relationships, foster collaboration, and drive organizational success.

Read also our guide about: What is a Capability Academy? Explore Its Relevance in the Future of Work

Key Differences Between Competency and Capability

While competency and capability are closely related, there are some key differences between the two concepts:

Competency focuses on specific skills, while capability encompasses overall potential

Competency is tied to a particular role or set of tasks, and it involves demonstrating the necessary skills and knowledge to perform those tasks effectively.

Capability, on the other hand, refers to an individual's overall potential to apply their competencies in various contexts and adapt to new challenges.

Competency is role-specific, while capability is transferable across roles

Competencies are often specific to a particular job or industry, and they may not be directly transferable to other roles.

Capabilities, however, are more broadly applicable and can be leveraged across different positions and industries.

For example, strong communication skills and problem-solving abilities are valuable capabilities that can be applied in many different contexts.

Competency is acquired through training and experience, while capability involves adaptability and growth

Competencies are typically developed through targeted training, education, and on-the-job experience. They can be assessed and measured against established standards or benchmarks.

Capabilities, on the other hand, are more closely tied to an individual's inherent potential and ability to learn and grow.

They involve a willingness to take on new challenges, adapt to change, and continuously develop new skills and knowledge.

In summary, while competency is essential for performing specific job functions effectively, capability is what enables individuals to take on new challenges, adapt to change, and contribute to the organization in meaningful ways.

By focusing on both competency and capability development, organizations can build a workforce that is not only skilled but also agile, resilient, and prepared for future challenges.

Benefits of Focusing on Competency in the Workplace

• Competency-based hiring and training ensures employees have job-specific skills
• Competencies provide clear benchmarks for performance evaluation and improvement
• Focusing on competencies aligns employee development with organizational goals

Ensures Job-Specific Expertise

Competency-based hiring practices involve identifying the specific skills, knowledge, and abilities required for success in a given role. By focusing on these competencies during the recruitment process, organizations can ensure that new hires possess the necessary expertise to perform their jobs effectively from day one.

Once employees are on board, competency-based training programs can help them further develop and refine their job-specific skills. These targeted training initiatives are designed to address any gaps between an employee's current competencies and the desired proficiency level for their role.

The Impact of Competency-Based Hiring on Employee Performance

A study by the Society for Human Resource Management (SHRM) found that organizations using competency-based hiring practices reported:

• 55% improvement in employee performance
• 50% reduction in time-to-hire
• 39% decrease in turnover rates

These findings demonstrate the tangible benefits of prioritizing competencies in the hiring process. By ensuring that new hires have the right skills from the start, companies can set their employees up for success and create a more productive, engaged workforce.

Facilitates Effective Performance Management

Competencies provide a clear framework for evaluating employee performance and identifying areas for improvement. By establishing well-defined competencies for each role, managers can assess an individual's proficiency level against objective criteria, rather than relying on subjective opinions or vague metrics.

This competency-based approach to performance management enables targeted skill development and training. When managers can pinpoint specific areas where an employee needs to improve, they can provide focused guidance and resources to help bridge those competency gaps. This targeted support not only benefits the individual employee but also contributes to the overall strength and capability of the team.

The Role of Competencies in Continuous Improvement

Competency-based performance management is not a one-time event but an ongoing process of assessment, feedback, and development. By regularly evaluating employees against established competencies, managers can:

• Identify emerging skill gaps as job requirements evolve
• Provide real-time feedback and coaching to support continuous improvement
• Adjust training programs to address common competency gaps across the team

This continuous improvement cycle ensures that employees are always developing the skills they need to succeed in their roles, even as the demands of their jobs change over time.

Aligns Employee Development with Organizational Goals

When companies focus on competencies, they can create a clear link between individual employee development and broader organizational objectives. By identifying the key competencies that drive business success, HR leaders can design training programs and career paths that align with the company's strategic priorities.

For example, if a company has identified innovation as a core competency for its product development team, it can invest in training programs that help employees build the skills needed to generate and implement new ideas. By targeting competency development in this way, the company can ensure that its workforce is well-equipped to support its innovation goals.

The Business Impact of Competency Alignment

Research by the Brandon Hall Group found that organizations with a strong alignment between their learning and development programs and their business goals achieved:

• 40% higher revenue growth
• 37% higher employee productivity
• 28% higher customer satisfaction

These findings highlight the real business value of aligning employee development with organizational priorities. By focusing on the competencies that matter most to the company's success, HR leaders can create a workforce that is well-positioned to drive key business outcomes.

Benefits of Nurturing Capability in the Workplace

TL;DR:

• Nurturing capability drives employee growth and prepares them for future roles
• Capable employees enhance organizational adaptability and innovation
• Capability development aligns with long-term strategic goals

Fosters Employee Growth and Development

Nurturing capability in the workplace is a powerful way to support employee growth and development. By encouraging continuous learning and skill acquisition, organizations create an environment where employees feel valued and motivated to improve their abilities. This approach not only benefits individual employees but also prepares them for future roles and responsibilities within the company.

According to a our study about the eLearning market, 94% of employees would stay at a company longer if it invested in their learning and development. By providing opportunities for capability development, such as training programs, mentorship, and stretch assignments, organizations demonstrate their commitment to employee growth.

Capability Development Strategies

Effective capability development strategies include:

1. Skill-based training programs
2. Cross-functional projects
3. Job rotations and shadowing
4. Mentorship and coaching
5. Self-directed learning resources

Enhances Organizational Adaptability

Nurturing capability in the workplace ensures that employees are equipped with the skills and knowledge needed to adapt to evolving business needs. Capable employees are better positioned to tackle new challenges, drive innovation, and solve complex problems.

A study by McKinsey & Company found that organizations with higher adaptability outperformed their peers by 15% in long-term financial performance. By fostering a culture of capability development, organizations can build a workforce that is agile, resilient, and ready to embrace change. This adaptability not only helps companies navigate uncertainty but also enables them to seize new opportunities and stay ahead of the competition.

Capability and Innovation

Nurturing capability also promotes innovation within the organization. When employees are encouraged to expand their skills and knowledge, they bring fresh perspectives and ideas to the table. This diversity of thought can lead to breakthrough innovations and creative solutions to business challenges.

According to a study by PwC, 61% of executives believe that innovation is a key driver of organic growth. By investing in capability development, organizations create an environment where innovation can thrive. This not only fuels growth but also positions the company as a leader in its industry.

Aligns with Long-Term Strategic Goals

Nurturing capability in the workplace aligns with an organization's long-term strategic goals. By developing a highly skilled and adaptable workforce, companies can better execute their strategies and achieve their objectives. This alignment ensures that capability development efforts are not viewed as isolated initiatives but rather as integral components of the organization's overall success.

When capability development is tied to strategic goals, it becomes easier to prioritize learning and development initiatives. Organizations can focus their resources on building the specific skills and knowledge needed to drive business results. This targeted approach maximizes the return on investment in capability development and ensures that employees are equipped with the competencies needed to support the company's long-term vision.

Assessing Competency and Capability in the Hiring Process

• Competency-based interviews and capability assessments are key tools for evaluating candidates
• Combining both approaches provides a comprehensive understanding of a candidate's potential
• Structured evaluation processes help reduce bias and improve hiring decisions

Competency-Based Interviews

Competency-based interviews are a popular method for assessing a candidate's suitability for a role. These interviews focus on evaluating a candidate's past experiences, behaviors, and achievements to determine if they possess the necessary competencies for the job.

Interviewers ask targeted questions that require candidates to provide specific examples of how they have demonstrated relevant competencies in their previous roles.

For example, an interviewer might ask, "Tell me about a time when you had to manage a challenging project deadline. How did you approach the situation, and what was the outcome?"

By asking behavioral and situational questions, interviewers can gain valuable insights into a candidate's problem-solving skills, communication abilities, and leadership qualities.

This approach helps to identify candidates who have a proven track record of successfully applying their competencies in real-world situations.

Capability Assessments

While competency-based interviews focus on a candidate's past performance, capability assessments aim to evaluate a candidate's potential to learn, grow, and adapt to future challenges. These assessments are particularly valuable when hiring for roles that require innovative thinking, problem-solving abilities, and the capacity to navigate complex, ambiguous situations.

Capability assessments often involve presenting candidates with simulations, case studies, or real-world scenarios that test their ability to analyze information, generate creative solutions, and make sound decisions under pressure.

For example, a candidate might be asked to develop a strategy for launching a new product in a challenging market or to identify potential risks and opportunities in a complex business case.

By observing how candidates approach these challenges, assessors can gain valuable insights into their critical thinking skills, learning agility, and potential to succeed in the role. This approach is particularly useful for identifying high-potential candidates who may not have extensive experience but demonstrate the capability to quickly learn and adapt to new situations.

Designing Effective Capability Assessments

To create effective capability assessments, consider the following best practices:

1. Identify the key capabilities required for the role, such as strategic thinking, adaptability, and emotional intelligence
2. Design assessments that simulate real-world challenges and require candidates to demonstrate relevant capabilities
3. Use a combination of individual and group exercises to assess candidates' abilities to work collaboratively and communicate effectively
4. Provide clear instructions and evaluation criteria to ensure consistency and fairness in the assessment process

By incorporating capability assessments into the hiring process, organizations can identify candidates with the potential to thrive in dynamic, fast-paced work environments and contribute to the company's long-term success.

Combining Competency and Capability Assessments

While competency-based interviews and capability assessments each provide valuable insights, the most effective hiring processes often combine both approaches. By assessing both a candidate's past performance and future potential, organizations can make more informed decisions and identify candidates who are well-suited for both the immediate demands of the role and the company's long-term goals.

To successfully integrate competency and capability assessments, consider the following tips:

1. Align the assessments with the key requirements and priorities of the role
2. Ensure that the assessments are fair, objective, and free from bias
3. Provide training and support for interviewers and assessors to ensure consistency and accuracy in evaluations
4. Use the insights gained from both assessments to inform hiring decisions and develop personalized onboarding and development plans for new hires

Balancing Competency and Capability: The Key to Workplace Success

Both competency and capability play crucial roles in the workplace. Competencies ensure employees have the specific skills needed to excel in their current roles, while capabilities foster adaptability and long-term growth.

By focusing on competencies, organizations can ensure job-specific expertise and effective performance management. Nurturing capabilities, on the other hand, promotes employee development and enhances organizational adaptability.

To create a skilled and adaptable workforce, strike a balance between developing competencies and nurturing capabilities. Identify core competencies aligned with your organizational goals and prioritize them in your hiring and training processes.

Simultaneously, provide opportunities for employees to develop their capabilities through learning, mentoring, and cross-functional exposure. This approach not only benefits individual employees but also strengthens your organization's ability to navigate future challenges.

How can you incorporate competency and capability assessments into your hiring and succession planning strategies? Consider implementing competency-based interviews and capability assessments to identify the right talent for your organization.

By leveraging the power of both competencies and capabilities, you can build a workforce that not only excels in their current roles but also has the potential to grow and adapt, driving your organization towards long-term success.