Why competency mapping is important for your company

In my time at McKinsey, one of the associate partners once said, “Our client may have the knowledge, but we have the skill — specifically, the problem-solving skill — to overcome the knowledge barrier.” These words represent the bedrock of management consulting: Teams with no prior knowledge of fields as deep as oil and gas exploration can counsel clients who have spent decades in these industries.

Just three months after learning about oil and gas offshore exploration, we told a boardroom full of veterans in that industry what their five-year strategy should be. This shows that knowledge and skills are not the same. The client had the knowledge of the dynamics of the oil and gas industry. We as a consulting company had the skills around business strategy, problem solving and analytical reasoning.

Knowledge, skills and behaviors, together called competencies, define each role in the corporate world, from the CEO to the production worker.

If you are a startup founder, after defining your functions and roles (read my previous post on this here), it’s important to define your competency map. This will form the basis of your people strategy.

So, what is a Competency?

According to the University of Nebraska-Lincoln, competency is defined as “the combination of observable and measurable knowledge, skills, abilities and personal attributes that contribute to enhanced employee performance and ultimately result in organizational success.”

At my current company, a skills acceleration platform for enterprises, we believe a well-defined competency map is the foundation of success. This activity requires the active attention of founders, and it could mean the difference between a unicorn and a failed startup.

Unfortunately, I’ve found that many companies fail to fully leverage competency mapping. Some companies don’t do it at all, despite growing to hundreds of employees.

HR functions of large corporations usually leverage competency mapping, but they often face fatal flaws  — being dated or too leadership-skills focused. In today’s AI era in which new roles and competencies are constantly being created, it’s important for competency mapping to be kept up to date.

Still other companies conduct competency mapping implicitly, but putting it on paper and making it the immediate assignment of their HR function would reap them a host of benefits.

How should you think about Competencies?

There are different ways to think about competencies, but at my enterprise-skilling company, we think about it in four dimensions (most documented literature on the subject will mirror this thinking):

1. Knowledge areas: These are specific to your industry (for example, oil and gas exploration, rubber manufacturing or SaaS), your company (your company history and values) and regulations in your industry (for example, HIPPA). These knowledge areas should be common to everybody in the company, from the production worker to the CEO.

2. Functional skills: These are the hard skills required for each role. They are role-dependent. For a digital marketing manager, functional skills would be LinkedIn marketing, Facebook marketing and Google Analytics. For a data scientist, these might be data visualization, data modelling and Python. Note that digital skills are a part of functional skills, but some list them as a separate competency category. It doesn’t matter where you want to place them, as long as you think about them.

3. Leadership skills: These are the soft skills required for different levels of leadership, irrespective of function. A widely accepted industry norm here is to think about it in three levels: leading self, leading teams and leading businesses.

Individual contributors need skills around leading self, which include time management, work-life balance, emotional intelligence and analytical thinking. Managers need skills around leading teams, including conflict resolution, coaching and mentoring, and collaborative team leadership. Finally, business heads need skills around entrepreneurship and business strategy.

HR departments are good at defining these skills; this is where a lot of the values of a company are reflected. For instance, building sustainable businesses could be a leadership skill for a company that promises to make products that are environmentally friendly. Customer orientation could be a leadership skill for a company that has a strong customer-first philosophy.

4. Behaviors: This is where it gets interesting. The first three categories are measurable in some way, while behaviors are observable. Examples include ownership, trust, sensitivity and approachability.

What do you do with Competency Mapping of Employees?

In an ideal company, every employee clearly knows their list of competencies across the four categories (it will come to between 10-15 competencies total) and strives to improve every day. Companies that attract and retain the best people use this common shared understanding of competencies to drive all their people decisions in recruitment, training and career advancement.

1. Recruitment: When you recruit, assess candidates along these competencies. Defining your company’s competencies gives you an objective scale to decide who to hire and who not to hire. Communicate the expected performance on each competency. We lay out the competencies in the offer letter itself.

2. Training: Structure learning pathways around your defined competencies. Our goal is to help companies create personalized learning journeys for employees by combining digital learning and social learning interventions.

3. Appraisals: Assess individual employees’ proficiency levels on each competency through manager evaluations, assessments and 360-degree feedback. Communicate the results to each employee.

4. Promotions/career advancement: The resulting proficiency levels on each competency should drive promotion decisions. For example, a software engineer should know the proficiency levels they need to hit in each competency in order to get to the next role of senior software engineer. Make it transparent.

There are many management books out there on how to build great companies that focus on strategy, team building and culture. The science of competency mapping is often overlooked, but it is just as important.

(This article originally appeared on Forbes)