Skills and Competencies: How They Differ and How to Harness Both for Success

Skills and competencies are related but are not the same. Learn how they differ – and how they can work together to strengthen workforce performance.

As more companies move to skills-first hiring, business leaders often refer to the skills and competencies their employees need to succeed. This focus is increasingly vital as the future of work demands greater adaptability, making competencies—which encompass how effectively skills are applied in dynamic situations—essential for navigating ongoing change. The two terms, “skills” and “competencies,” are used together so often that many people think of them as synonyms.

Are they the same? Should “skills” and “competencies” be used interchangeably? The short answer is “no.” They are certainly related, but one is a building block of the other. Read on to learn more about skills and competencies – how they differ and how to harness both for success.

Skills vs. Competencies: What is the Difference?

Here’s how they differ:

Skills are specific learned abilities. They are what a person can (or cannot) do. Writing a blog is a skill. So is computer programming, data entry, oral communication, and truck driving. Skills describe what activities employees are trained to perform.
Competencies are how a person performs on the job. Competencies encompass skills, along with knowledge, behavior, and expertise. They represent the cumulative fundamental knowledge and abilities within a specific subject area and may also include personal characteristics that influence an individual’s level of performance. A person may be competent at managing customer relationships, building teams, and facilitating meetings – all of which require a range of skills, knowledge, and abilities. Well-defined competencies include proficiency levels, too, describing the degree of cumulative skills, knowledge, abilities, and behaviors that are needed for a job role.

At first glance, the distinction between skills and competencies can be subtle. Let’s break it down.

A Closer Look at Skills

Skills are a set of “trainable” building blocks for workforce performance. There are countless skills that can be learned – and they vary greatly in complexity. For example, “painting a wall” and “designing a car” are both classified as skills.

There are different categories of skills that are valuable in every organization.

Professional skills are needed by employees at all levels, regardless of their job role.
Leadership skills are necessary for people to lead well.
Occupational or technical skills are those things that people need to perform specific tasks in their career fields.

There are also subsets of “soft” and “hard” skills.

“Soft” skills are those attributes that describe how a person approaches their tasks and interacts with others. They are sometimes referred to as “transferable skills” because they can be applied in most industries and jobs. Examples of soft skills include active listening, empathy, collaboration, creative thinking, and problem-solving.
“Hard” skills refer to technical abilities that are typically learned through formal education or additional learning. Coding, data entry, writing, and operating a forklift are all hard skills.

To add one more facet, the “shelf life” of skills also varies. Demand for specific skills changes over time. There’s general agreement that most skills have a “half-life” (the time required for a skill to reduce to half of its initial value) of about five years. More technical and product-related skills come in at two and a half years. Which means many of today’s essential-yet-perishable technical and product-related skills will be obsolete in five years, becoming rapidly perishable commodities in a world of escalating technology and market changes.

Durable skills: Half-life of more than 7.5 years. These constitute a base layer of skills.
Semi-durable skills: Half-life of 2.5 to 7.5 years. These tend to be tied to frameworks that may remain relevant for only a few years.
Perishable skills: Half-life of less than 2.5 years. These are specific technical skills – especially those related to specific vendors, platforms, or programming languages – that must be updated frequently.

Individual and team skills assessments help managers understand whether their training has prepared those individuals and teams for a specific type of workplace activity. Where there are skills gaps, it’s relatively straightforward to build a targeted learning plan to close the specific gaps.

Though the more complex skills take longer to master than simpler ones, learning any skill will generally be faster than mastering a competency. Competencies are developed through applying and practicing skills in real-world settings over time.

More on Competencies

Ultimately, it is competencies, not just isolated skills, that define the requirements for high job performance. For example, someone who writes flawless emails and faithfully calls a customer regularly may possess strong technical skills, but if they lack the ability to truly understand and manage the give-and-take of a customer relationship, they may not succeed in building long-term partnerships. This distinction is important because, as many of us have observed, technical expertise alone doesn’t guarantee success in roles requiring strong interpersonal or adaptive capabilities.

Skills are components of competencies, but a competency is never part of a skill.

Competencies are a set of demonstrable proficiencies. They put skills, knowledge, and abilities in context, describing how well individuals contribute or function in the workplace. Competencies look at one’s behavior, so individuals and managers can see how well they are performing at work. Moreover, research indicates that organizations with well-implemented competency management programs often benefit from higher productivity and a stronger bottom line. Conversely, a mismatch between the skills and competencies required for a role and those an employee possesses can have far-reaching negative effects. The World Economic Forum’s Global Agenda Council on Employment has cautioned that such mismatches can negatively impact labor markets and hinder a society’s ability to capitalize on its workforce.

To succeed in a job, employees must demonstrate the right mix – and the right level of proficiency – of skills, knowledge, and abilities. As one example, someone who is highly proficient in managing conflicts will have strong communication and problem-solving skills, knowledge of when and how to engage disputing parties to find common ground, and an ability to guide conversations with confidence, respect, and empathy.

Indeed breaks competencies into three categories:

Behavioral competencies are used to manage one’s daily and personal needs. Sometimes called life skills, they include the abilities tied to activities of daily living such as cooking healthy meals, managing money, and building and sustaining relationships.
Functional competencies are what professionals need to succeed in their roles. Also considered technical competencies, these are proficiencies employees need to fulfill the technical requirements of their jobs and contribute to the overall function of the workplace. These may include revenue management, strategic planning, or product development.
Professional competencies are more general competencies that, like functional competencies, help one succeed in the workplace. But these are not tied to any one job role. Instead, they describe behaviors such as building and sustaining professional relationships and managing conflict that apply to employees across job roles and levels in a company.

While competencies are an established tool in many organizations, their full potential is not always realized. A Brandon Hall Group study revealed that while about two-thirds of organizations utilize workforce competencies, only a third of those believe their competency initiatives are effective in meeting business goals. This highlights a potential disconnect between implementation and impact, emphasizing the need to mature competency management programs and align them closely with strategic business objectives. Competencies give individuals, managers, and HR professionals a clearly defined benchmark to assess employee development at every stage of their career. A highly competent workforce can significantly advance an organization’s agenda and bring about desired outcomes within and beyond the organization.

Comparing Skills and Competencies

Skills are discrete learned behaviors. Competencies reflect one’s knowledge, abilities, and skillset applied to a task, goal, or outcome. To bring the difference to light, here are a few examples of skills vs. competencies.

Skills	Competencies
Creative thinking	Leading teams
Active listening	Managing conflicts
Oral communications	Facilitating meetings
Data entry	Forecasting finances
Software coding	Developing product strategies
Time management	Managing change

A Matrix View of Skills and Competencies

Skills and competencies come up in so many business conversations because business leaders want to understand which employees have the skills and competencies that they need for them – and the company – to succeed. This understanding is particularly crucial as future work environments will require employees to continuously build on their knowledge, effectively communicate across diverse teams, and expertly adapt to new realities daily—success in which hinges on mastering relevant competencies. And when there are gaps, that information helps inform HR leaders and managers where to invest in training and employee development.

An employee skills matrix can help to pinpoint where individuals or teams have the skills or competencies that management desires. This AIHR article describes a skills matrix, also called a competency matrix or capability matrix, as, “A tool to map required and desired skills for a team or project. It is a grid that visualizes the required and available skills and competencies in a team.” In one of its simplest forms, some companies use a simple 9-box grid to capture a point-in-time view of skills and competencies.

It’s helpful to assess both the skills and competencies of your workforce. Where there are important skills gaps, you may want to offer learning opportunities to introduce or shore up those skills. More formal upskilling and reskilling initiatives can help to keep perishable skills updated or to get ahead of major industry shifts.

Given that competencies are multifaceted and innately tied to multiple proficiencies, some organizations may be hesitant to fully adopt comprehensive competency-based talent management programs; however, the strategic benefits are compelling, especially for addressing complex development needs. Competency gaps generally require a longer-term approach to close them – in part because most competency-driven organizations measure competencies by levels. Someone can have a beginner, intermediate, or advanced level of proficiency for the desired competency. Moving to the next level may require a series of experiences designed to give employees a chance to take on increasing levels of responsibility or visibility in their jobs over time.

Of course, you can create your own employee skill matrix or employee competency matrix, but it’s a tough tool to keep updated on your own. For a ready snapshot of which skills and competencies your employees have (or need), your best bet is to use technology. Indeed, technology plays a crucial role in maximizing the effectiveness of these efforts. For instance, the same Brandon Hall Group study found that ‘fully automated organizations are 79% more likely than other organizations to rate their top competency objectives as effective.’ A competency management system, such as Avilar’s WebMentor Skills™, will support your assessments, centralize your data, and produce reports at a push of a button to provide the visibility you need, whenever you need it.

If you’re ready to build and assess the skills and competencies of your workforce, our How to Unleash the Power of Competencies white paper is a good read to get started. Or contact us to learn how our WebMentor™ Skills competency management system can support your next steps.

This blog was originally published February 19, 2020 and has been updated to include new research, best practices, and insights.”