These days, everybody is talking about competency review and raving about its benefits. What is it exactly and how can you initiate competency-based reviews in your organization? Most organizations spend a lot of money on training their employees. With technology changing by the day, training and development processes are no longer just choices but are a must and continuous in nature. They are investments that organizations cannot ignore.

Similarly, performance reviews that are once-a-year mundane processes make no sense to either the organization or the employees. Both training and development and performance monitoring need to be backed by a solid platform – competency review as a process fits that bill perfectly.

Competency is a mix of skills, attitudes, and behaviors that help solve a specific problem or do a specific task.  

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The need for competency reviews

Organizations have certain needs in terms of employee skills. They invest in compensation, training and learning programs, and rewards and recognition practices, expecting the employee skills to align with organizational goals. 

While we are talking about aligning individual goals with organizational goals, our blog on goal setting and performance management through OKR methodology is something you definitely need to read. 

When this does not happen, the resources spent on the above practices go in vain. Competency reviews are done exactly to tackle these issues. A competency-based performance review will help understand the skills needed to achieve organizational goals, and if the employee skills match up to what is needed.

You will be able to understand the gap in available competencies and the organizational requirements and then match with training and development programs or performance-review-based actions when the competency review is done right. 

Initiating competency-based performance reviews in your organization

If you want to initiate a competency-based performance review in your organization, then there are certain ways to go about it. Check out these smart ways to initiate the process right and benefit.

  • Set the right expectations 

This is one of the most important things to keep in mind when you initiate competency review processes at the workplace. The management should discuss the process in detail and mention what is expected from the employees. Identifying goals need to be a team process, and employees should be ready to follow through with the process for it to be effective. 

  • Take time to define competencies and job responsibilities

Creating the competency database will probably be one of the most tedious but critical tasks in the entire competencies and performance review process. The management can make use of tools like questionnaires, self-review sheets, one-on-one discussions, and surveys to identify critical competencies and responsibilities each job and role entitles. Do note that this is a database that needs to be updated regularly. Competencies and skills required for a job do keep changing with time.

  • Identify competency gaps

Now that you have the required competencies and the actual skill levels, do a comparison and find out the competency gaps that need to be filled. You can now work on the right measures to fill these gaps. These measures can include investing in training and development, bettering the recognition system, or taking up practices like job rotation. Organizations also choose to hire new talents to fill the gap in some cases after the competency review. 

What are the different types of competencies you need to look out for?

Competencies do not just mean just the technical skills to finish a job. It is more of a holistic term that includes different aspects like behavior, attitude, performance, and management skills. Here are a few examples to help you understand better.

  1. Technical competencies

     Technical competencies are technical skills needed for a specific role, to fulfill it effectively. It might include knowing how to work with specific software or using a tool or subject matter expertise. A competency review will help you clearly understand existing technical competencies in the workforce, the actual required skills, and compare. 

  2. Behavioral competencies 

    Behavioral competencies include a person’s behavior and its effects on peers, teams, and the organization. For a salesman, this could be his rapport and genuine interest while talking to clients, and in other cases, it could be a person’s interest in learning and re-skilling without being asked to do it. 

  3. Performance competencies

    Performance competencies are job-specific skills needed to perform effectively. It could be a mix of technical, behavioral, or operational skills based on the role in question. Performance competency examples might include the ability to quickly close tickets in a supportive environment or the way an employee uses a tool to its maximum efficiency. 

  4. Core competencies 

    These include a combination of functional, behavioral, performance-based, and task/project management competencies a person needs to set their organization apart from competitors. Examples can include a specific skill or methodology an employee needs to give the organization a competitive advantage. In this case, competency review skills can be a game-changer for the organization to move forward.   

  5. Management competencies

    Organizations are always on the lookout for individuals who would make a good fit for the overall management. Such individuals can be great assets, and that is why measuring management competencies and trying to fix gaps in the right employees may be beneficial. These are really useful in succession management.

Conducting competency-based performance reviews in the organization

Once the basics are all in place, you can start using the data for conducting competency-based performance reviews within the organization. 

  • Start by setting an expectation of the competency review with the employee.
  • The most important thing to do here is to link the goals with competencies/behaviors that were a hit or a miss.
  • There should be a preference to discuss in detail (an option later), with conversations flowing both ways. The management must be ready to listen to the employee’s point of view and make changes to the review if needed. 

Let’s consider this performance competency example. An employee who is a part of the customer support team managed to close just 75% of the raised tickets when compared to other peers. A generic performance review discussion will only tell the employee where there was a problem and suggest they fix it next time.

In a competency review, the problem will be stated, and the competency gap that caused the problem will be discussed. This will make it very easy for the employee to exactly understand the problem and what to do to fix this. Isn’t this a more logical and fruitful approach?

Benefits of performance reviews based on competencies

Goals, Competencies, and performance reviews need to be closely tied. By monitoring a person’s competencies and using that data to conduct performance reviews, the process can be made more specific, efficient, logical, and result-oriented. Here are some of the benefits of competency reviews in organizations.

  1. Help employees raise the bar
  2. Help employees understand their skill gaps and facilitate upward growth
  3. Give clear data on what employees need to do to perform better
  4. Make performance reviews effective and data-driven
  5. Know if the current workforce is pulling back or pushing forward the organization’s growth
  6. Know if changes like job rotation, training investments, and new employee hiring are actually needed
  7. Bring down the cost of disengagement and redundancy in the workforce (read about how employee engagement can improve employee performance here)
  8. Motivate employees by showing that their skills (and which ones) matter
  9. Help employees move forward in their career
  10. Help employees understand what is expected of them


Competency reviews are, without a doubt, one of the best ways to understand your existing workforce and know how best to improve productivity and performance. Competencies are everything. Most times, employees with exceptional specific skills may not be utilizing them in the role needed. A competency-based performance review will help both the employer and the employee to realize this and correct it as needed.

In other cases, an employee may not be performing as well as expected because of the lack of one (or more) specific competency. Facilitating this via training programs can be a game-changer. So, how effective are your performance review processes? What do employees get out of them, and how better do they get as a result? You will be able to answer all these by switching to competency reviews.

By telling your employees that you value their competencies enough to review and upgrade them, your competency-based performance review process will also help employees stay loyal to the workplace and trust the system. 

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