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Employee Skill Assessment: Proven Tools and Methods for Success

13 min read

Nestor: Employee Skill Assessment Proven Tools and Methods for Success

As HR and business leaders seek innovative ways to adapt and improve their talent management strategies, one critical factor stands out — the constant evolution of (employee) skills. And, as a direct consequence, employee skill assessment, or the ability to accurately determine the proficiency levels of your people has never been more important.

If the old saying “knowledge is power” is true, then knowledge about employee skills is quickly becoming the ultimate power, at least for modern organizations navigating today’s work landscape. 

Let’s embark on this journey together and explore the ins and outs of employee skill assessment, its benefits, as well as the most effective methods and tools you should use.

What is employee skill assessment?

Employee skill assessment is a process that involves one or multiple evaluation methods with the aim of identifying the strengths and weaknesses of an individual’s skill set. The main goal is to determine their suitability for a current or future job role, the process being often used in:

  • hiring
  • personalized L&D initiatives
  • promotions
  • succession planning

To deliver the expected results, employee skill assessments should be holistic in nature, and look at all the skills types relevant to a given position or project, which means the process can be broken down into:

  • soft or power skills assessment
  • technical or hard skills assessment
  • job-specific skills assessment

The relevancy and accuracy of results are largely determined by how regularly this process takes place and by the type (or combination) of evaluation tools.

Why is employee skill assessment important?

According to a report from Mercer, 2 in 5 HR leaders acknowledge they don’t know what skills they have in their workforce. This is especially worrying in a business environment where skills and skills-based approaches are supporting organizations to make more informed talent decisions aligned with business priorities.

However, identifying employee skills and subsequently collecting and organizing them in a skills library is not enough. This is where the role of skills verification or validation comes in — something we’ll explore more in the next section.

In addition to revealing the proficiency level of your workforce, employee skill assessments also help:

Identify and retain the most skilled workers

Skill assessments will help you identify the critical people within your organization who are highly skilled for essential roles and difficult to replace. The focus should be on those workers who already have or are improving skills that are trending, in demand, or quickly emerging as crucial in your industry.

This is especially important in the current work landscape, where the labor market is tight, and talent shortages significantly impact business performance and development.

Support succession planning decisions and compare candidates

Skill assessment tools are also the first step in the process of identifying suitable candidates for (top) leadership positions and other business-critical roles.

The results of these assessments will help narrow down talent pools and compare different people, eventually leading to the creation of a leadership pipeline — ensuring that business continuity and knowledge loss won’t be an issue and a certain number of people are ready to step up when needed.

Learn more about identifying potential leaders and the succession planning process.

Select the best learning and development initiatives

Through strategic employee skill assessment, you will identify the most pressing development needs and select personalized or tailored programs that yield the best results.

By focusing only on the most effective and impactful L&D initiatives, your company will save both time and money and address real pain points or areas for improvement for every employee.

This shouldn’t be limited to formal learning opportunities, like training programs or courses. Instead, the focus should also be on selecting the best informal opportunities, including temporary projects, job shadowing, coaching, and mentorship — all facilitated by a talent marketplace.

Overcome personal biases in decision-making

Biases or subjective judgments can emerge during hiring, promotion talks, or career development plans. This doesn’t only affect HR or people managers.

Sometimes, employees themselves may not be fully aware of what they need, how to best use their skills, or what career paths they might pursue going forward. Thanks to the employee skill assessment process, it becomes clear what areas would benefit most from additional learning and lead to significant professional growth.

Ensure a higher level of performance

Since business needs are constantly evolving and shifting, it is critical to ensure that your employees have the right skills, capabilities, and the necessary expertise to execute business strategy and meet performance expectations.

And the best way to check if people within the company have up-to-date skills and meet the (minimum and desirable) requirements for their roles is through regular skills evaluations.

Nestor’s employee skill assessment tools

Let’s take a closer look at the solutions included in our platform, which enable you and your employees to enjoy a more seamless skill assessment process. Keep in mind that these are mainly targeted at your current workforce, not job candidates.

Employee Skill Assessment: Proven Tools and Methods for Success


Self-assessment is perhaps one of the most (if not the most) common ways employers use to evaluate the skills of their people. One of the key benefits is that its introspective nature encourages personal responsibility, helping employees become more objective in their assessments (in time) and learn how to classify and describe their capabilities more accurately.

The downside, however, is that this type of skill assessment can be quite biased, in both directions: people can either overestimate or underestimate their own abilities. Which leads us to an important point:

The most important aspect of employee skill assessments is knowing the actual skill level of people. This means self-evaluations are only useful when validated by other sources, like manager input or peer feedback.

If companies only (or mostly) rely on self-assessments, they run the risk of ending up with inaccurate data on skills and gaps, leading to ineffective L&D strategies and resources invested in development programs that fail to address critical pain points.

On the Nestor platform, employees can self-evaluate their skills very easily, using a 1-5 ranking system. However, these evaluations will only be displayed on their profiles after direct managers validate the proficiency level for that particular skill.

In addition to the typical hard, soft, and job-specific skills, we also offer the option to add and (self) evaluate abilities from previous experiences, which we refer to as acquired skills. These may or may not be relevant or necessary for a person’s current role within your company, and each employee can self-assess these skills without requiring the validation or approval of their manager. They will simply show up on the employee’s skill profile.

Manager assessment

This type of assessment has one main goal: to confirm (or not) the initial self-assessment of an employee — which, as we’ve seen, can be biased — for a particular skill or multiple skills.

Unlike the performance review or evaluation (which we’ll explore shortly), the (skill) assessment from managers or supervisors does not include a discussion or further plans for development. It’s just a quick confirmation that a certain proficiency level has been reached (or not).

Peer endorsements

Peer endorsements are similar to assessments from managers or supervisors — they confirm, or at least provide further evidence that a particular employee has certain skills, and expertise, and has (significantly) contributed to their team goals.

People who aren’t from the same team or department, or simply don’t have insights into someone’s actual hard and job-specific competencies, can still provide feedback on soft skills, based on their experience of collaborating and communicating with a given colleague during cross-departmental projects.

Performance management reviews

Since we fully embrace the power of skills, which are at the heart of all our talent solutions, it’s only natural that performance management is also focused on skill development on our platform.

By adopting this skill-centric approach to performance reviews, we make it easier to highlight the current status and level of a worker’s skill set as well as their actual potential for improvement. With this model, you actually look at how well the employee performs or uses/develops the skills necessary to meet their (performance) goals.

Similarly to self-assessment, individuals first evaluate themselves, using the same 1-5 skill grading system. Then, the manager uses the same evaluation criteria and system to assess employees from their perspective.

The results are then compared, or overlapped if you like, using easy-to-understand visual representations, such as interactive dashboards, through which you can quickly notice the differences in perspectives and skill evaluations.

Unlike simple supervisor assessments, the insights that emerge during performance reviews act as the basis for future discussions and feedback between the manager and the employee, and the establishment of updated personal development plans — which are mutually agreed.

360 feedback

Taking advantage of input from multiple sources is another way of strengthening the accuracy and relevancy of your employee skill assessment process.

And this is what 360 feedback is all about on our platform. It provides a more complete and accurate image of an employee’s behaviors, attitudes, EQ, strengths, and weaknesses based on manager, peer feedback, and direct reports feedback.

Depending on the organization and its specific policies, 360 feedback can also play a critical role in promotions to leadership positions as it provides a more holistic view of a person’s full potential, still strongly connected with behaviors and competencies but including qualitative data also.

Other employee skill assessment tools and practices

Besides the evaluation methods presented above, it’s worth highlighting that there are also some more specific tests and examinations, mainly designed to evaluate the job fit of potential hires or to ensure compliance and risk management for employees with very specific skill types. So let’s explore together some popular skill assessment tools available in the market that can help you achieve your goals.

Skill tests and knowledge examinations

These evaluation tools work best for hard or job-specific skills, or, in other words, skills that are easy to quantify and measure.

They are most relevant for highly specialized fields, like power plant management or civil engineering, for example — with both public and private institutions using them for either job applicants or promotion decisions.

However, it’s not uncommon for companies in other industries (e.g., IT, telecommunication) to use either internal skill tests or external ones (provided online by various institutions) to quickly and objectively assess how well an employee can use a specific tool, software, machinery, etc.

Modern skill examinations can go beyond the traditional test format, using cutting-edge technology, like AI, to deliver accurate benchmarks for large numbers of people in a short time.

Compliance tests

Compliance tests are most useful in specific industries, such as finance, insurance, construction, and engineering, among others. These types of tests help to evaluate whether employees have the right understanding and ability to follow specific laws, regulations, and policies.

They are very common in high-risk industries, where both (senior) employees and site managers or coordinators are responsible for the safety of others as well as for following current best practices and standards.

The topics or themes of compliance tests can vary from one industry to another, but they usually cover things like workplace safety, financial regulation, data protection, or ethical conduct.

Job simulations

Job or work simulations are an excellent opportunity to see how a potential employee uses their skills to respond in the face of unfamiliar or difficult situations.

Since simulations involve practical exercises, they provide quick and clear insights that go beyond skill sets, highlighting how someone’s mentality and attitude toward a challenge influence their result or that of their team — revealing whether they are a good cultural fit in the process.

Behavioral tests and interviews

Behavioral tests are somewhat similar to work simulations, in that they also look at personality or character trains (in addition to skills) in relation to a specific situation or task.

For job candidates, this often means presenting a situation in which they use a combination of skills and personal qualities to overcome a challenge or rapidly adapt to unforeseen events.

You can also make use of gamification approaches so that the evaluation process is more seamless and can happen through more interactive fun activities and casual interactions.

Frequently asked questions (FAQ) about employee skill assessment

How do you assess employee skills?

There are various ways to assess employee skills. Some of the most common methods we’ve presented are self-assessment, performance reviews, 360 feedback, skill tests, job simulations, and behavioral examinations. Strategically selecting and combining these tools will often yield the best and most accurate results.

What is a work skills assessment?

A work skills assessment represents either the whole process or just an instance (of this process) during which a specific method or set of tools is used to determine the current skill levels of a particular employee.

How do you prepare for a skills assessment?

The best way for organizations and HR departments to prepare for a skills assessment is to determine the objectives of this process and the skills they want to evaluate, followed by selecting the skill evaluation methods and setting the metrics that will be used to determine the success of the entire process.

Final thoughts

Employee skill assessment shouldn’t be regarded just as a task, but rather as a strategic investment in the future success of your organization.

By embracing a comprehensive approach and consistently evaluating and nurturing the skills of your people, you can create a culture of continuous improvement and adaptability, thus laying the foundation for a resilient and agile workforce.

With Nestor’s People Intelligence Platform, you can simplify, speed up, and improve the accuracy of employee skill assessment. That’s because skills are at the center of every solution we provide, ensuring decisions regarding L&D, promotions, and performance are based on real-time data.

Schedule a free demo to learn how we can enable your organization to accurately assess and develop the skills of your talented workforce.

Make smart, fast, and confident decisions with Nestor's skills-based talent management solutions

Make smart, fast, and confident decisions with Nestor's skills-based talent management solutions