What is a competency model, and how do you develop one for your business? The complete guide

Why do some organizations consistently outperform others? A key ingredient often lies hidden within their approach to talent management— competency models. These structured frameworks go beyond simply listing required skills. They are strategic tools that align employee behaviors with business goals. 

Here, we’ll explore the world of competency models and explain how and why they can transform ordinary workforce management into a true asset. 

If you’re looking to unlock your team’s full potential and drive your organization forward, understanding competency models is not just beneficial— it’s essential.

What is a competency model?

A competency model is a defined list of knowledge, skills, and behaviors required for an employee to perform their job successfully. In larger organizations, these guidelines are typically created by HR, with the support of each department’s leader. 

At its core, a competency model helps align individual performance with an organization’s strategic goals. Everyone works towards the same goals with efficiency and clarity.

Key elements of a competency model

Core competencies
These are the essential skills and behaviors required of all staff across the organization. They focus on things like communication, teamwork, and problem-solving.

Functional competencies
These focus on abilities that are position-specific. For example, a competency model for a marketing manager might emphasize skills in digital marketing.

Leadership competencies
These are designed for individuals in leadership and management positions. They highlight abilities crucial for leading teams and making strategic decisions, such as leadership, influence, and strategic thinking.

Behavioral indicators
Behavioral indicators provide tangible examples of how a competency can be demonstrated. They help assess an individual’s performance against the model.

A visual representation of the model provides clarity of the competencies. Facilitating quicker comprehension is the goal so staff can begin to practically apply their knowledge. 

Levels of competency
Skills typically take time to learn and master. Providing the levels of competency helps guide the employee through the learning process. 

The importance of developing a competency model

Incorporating a competency model into your organizational framework offers many benefits. It provides structure to employee recruitment, development, and performance management. Clearly defined expectations help identify gaps within a team. Armed with this information, your organization can create targeted training programs to address these gaps. 

Competency models also clearly show what success looks like in various roles. This alignment maintains focus while achieving objectives. Competency models should be updated and refined to reflect changing needs. Doing so ensures your workforce stays adaptable and capable. 

Additionally, a well-defined competency model plays a crucial role in promoting diversity and inclusion. Establishing uniform standards means assessments are based on relevant skills and behaviors, and not personal biases. A fair and inclusive work environment supports accessible opportunities for all, regardless of background.

Competency model types

Competency models vary across industries and organizations, but generally have similar structures. Understanding the three types of competencies can help better tailor them to align with your strategic objectives. 

Let’s dive into the three main types of competencies: 

1. Core competencies

These are fundamental skills and behaviors all employees must adhere to. They support foundational business strategies, maintaining culture and overall success. 

Here are some examples:

  • Communication skills
  • Problem-solving
  • Adaptability
  • Teamwork

To ensure all staff has access to learning this core competency a company-wide training

program might be developed. The skills related to this core competency could be delivered through an online workshop with interactive sessions.

2. Leadership competencies

Individuals working in management or leadership positions must develop these competencies. They help guide their teams, drive strategy, and manage change. 

These include:

  • Emotional intelligence
  • Strategic thinking
  • Decision making
  • Influence 

Targeted leadership training is needed to develop these competencies.

3. Functional competencies

These are job-specific competencies within an organization. Every position requires technical skills and knowledge to perform tasks. Functional competencies vary greatly depending on the industry. 

For instance: 

  • Healthcare providers need strong skills in managing patient interactions, understanding their needs, and providing compassionate care. 
  • Food and beverage staff must know food handling, preparation, and storage to ensure safety. 
  • Tech developers need a firm understanding of managing complex software systems for scalability and reliability. 

Outlining these competencies in job descriptions helps attract the right people for vacant positions. Expectations are clear from the beginning, and these can in turn be used during employee performance reviews

Each competency serves a unique purpose. By implementing them, your company can recruit, manage, and develop your valuable workforce more effectively. 

Competency model examples across industries

Before diving into specific industry applications, let’s answer the following question: What are competency models? 

Competency models are frameworks that outline the essential skills, behaviors, and attitudes that employees need to perform their roles effectively. 

These models are crucial for aligning workforce capabilities with strategic business goals. They are implemented across various industries to drive performance and efficiency.

Manufacturing industry

In the manufacturing sector, competency models often focus on technical skills, safety, and production efficiency. 

Implementation occurs through: 

  • Rigorous training programs
  • Closely monitored certification requirements and performance metrics

Benefits include: 

  • Improving product quality
  • Increasing overall operational efficiency
  • Reducing production errors and workplace accidents
  • Aid in workforce planning by identifying skill gaps and planning for future needs

Food and beverage industry

In the food and beverage industry, competency models are implemented to enhance service quality and operational standards.

Implementation occurs through:

  • On-the-job training programs
  • Customer service workshops
  • Health and safety compliance training

Benefits include:

  • Higher compliance with health and safety standards
  • Enhanced customer satisfaction through improved service quality
  • Increased profitability through successful upselling

Software and tech industry

In the rapidly evolving software and tech industry, competency models focus on both technical insight and innovation.

Implementation occurs through:

  • Hiring processes that assess technical and soft skills
  • Project assignments tailored to skill sets
  • Professional development programs

Benefits include:

  • Keeping pace with technological advancements
  • Improved project management and resource allocation
  • Fostering innovation and maintaining a competitive edge

Healthcare industry

In healthcare, competency models combine medical expertise with essential interpersonal skills.

Implementation occurs through:

  • Clinical training
  • Accreditation requirements
  • Continuing education programs

Benefits include:

  • Improved patient care and satisfaction
  • Compliance with healthcare regulations
  • Enhanced risk management and provider reputation

Retail industry

In retail, competency models are centered around customer interaction, sales efficiency, and inventory management.

Implementation occurs through:

  • Regular performance reviews
  • Role-specific training sessions
  • Mystery shopping to gauge service quality

Benefits include:

  • Optimized inventory management
  • Higher sales conversions and customer loyalty
  • Development of a flexible workforce adaptable to market changes

Consulting industry

Consulting firms prioritize competency models that enhance client engagement and strategic execution.

Implementation occurs through:

  • Client engagements
  • Mentorship programs
  • Training in industry-specific knowledge and consulting methodologies

Benefits include:

  • Delivery of higher value to clients
  • Rapid adaptation to industry trends and maintaining competitiveness
  • Improvement in internal efficiencies and consultant career development

Developing a competency model

Creating a competency model is a strategic process. The key is to ensure that it aligns employees’ skills, behaviors, and attitudes with organizational goals. 

Here’s a step-by-step guide to creating a competency development model, along with key considerations, best practices, and common challenges in model development.

1. Define goals

Begin by clearly defining the strategic objectives of the organization. Doing this helps in pinpointing the competencies that are necessary to support these goals.

2. Identify key roles

Focus first on the most critical roles within the company. Then, develop the competency model that will have the most impact on achieving business outcomes.

3. Conduct a job analysis

Gather information about the tasks, skills, knowledge, and abilities required for each key role. This can be done through interviews, surveys, and job observations.

4. Develop a competency framework

Based on the job analysis, develop a framework that lists the competencies needed for each role. These should be categorized as core, leadership, or functional.

5. Validate

Validate the competency model with stakeholders from various levels within the organization. This will improve the model’s effectiveness and increase buy-in.

6. Implement and integrate

Roll out the competency model at relevant access points. Consider recruitment, training, performance management, and career development.

7. Monitor and update

Review and update your model regularly. It will only be valuable if it remains aligned with changing organizational strategies and market conditions.

Considerations and best practices when developing a competency model

First, be sure to engage stakeholders from all levels during the development process to ensure buy-in and relevancy. Balance matters. Include a mix of technical, behavioral, and leadership competencies tailored to the organization’s specific needs.

Design the model to be scalable and flexible to accommodate future changes in business strategy or job roles. Always lead with clear communication. Communicate the purpose and benefits of the competency model clearly across the organization.

Common challenges and solutions

  • Challenge: Lack of alignment with business goals
  • Solution: Regularly revisit the organizational goals and ensure you’re aligned with these goals.
  • Challenge: Resistance from employees
  • Solution: Involve employees in the development process and clearly communicate the benefits to their personal and professional growth.
  • Challenge: Overcomplication
  • Solution: Keep the model simple and focused. Too many competencies can dilute the model’s effectiveness and make it difficult to implement.
  • Challenge: Keeping the model current
  • Solution: Establish a routine review process to update the model based on new business strategies, technological advancements, and feedback from users.

Developing a competency model is a comprehensive process that requires careful planning and execution. Keeping the steps and information in mind will ease the transition.

Boost competency across your entire company with a powerful mobile training app


What is the key competency model?

Organizations use the key competency model to define the core skills, knowledge, and behaviors their employees need to be successful in their roles. Some of these include communication, problem-solving, and teamwork.

What is the competency-based model theory?

Competency-based model theory is an approach that focuses on defining specific skills, knowledge, and behaviors necessary for effective job performance. It is used in organizational development to align employee performance with strategic goals.

What are the 3 types of competencies?

The three main types of competencies are core, functional, and leadership. 

  1. Core competencies are fundamental skills all employees must possess. 
  2. Functional competencies are position-specific skills. 
  3. Leadership competencies are skills that leaders and managers hold.
What is the difference between skills model and competency model?

A skills model offers a more measurable view of employees’ abilities. It is usually easier to obtain and measure. A competency model offers a more holistic and job-specific view. An example of a skill is active listening, and a competency is communication.

Where strategic alignment meets innovative training

If you’re looking to optimize the alignment of your organization’s goals and employees’ capabilities, it’s time to develop a robust competency model. Having a structured framework that outlines necessary skills, behaviors, and knowledge is a must across all industries. 

Competency based training shouldn’t be a one off, or a once a year event for employees in your company. By leveraging a mobile training platform, you can ensure the smooth and consistent delivery of essential training, while also making it convenient for employees to access. Delivering competency based training in this format allows your team members to go back to it on a regular basis, ensuring that competencies aren’t just understood, but mastered.

In addition to easy access, mobile training platforms also leverage gamification features to engage employees, and make training feel more like a habit, and less of a burden.

Key takeaways

  • Competency models outline essential skills and behaviors needed for effective job performance across industries.
  • These models ensure individual performance supports organizational objectives.
  • Skills are categorized into core, leadership, and functional competencies to meet specific organizational and role requirements.
  • Leveraging mobile learning platforms enhances training effectiveness and accessibility.
  • Competency models help organizations adapt to changes and maintain a competitive edge in dynamic environments.

Deliver competency based training to employees, right in the palm of their hands

Training for construction workers should focus on safety and technical skills