Skills vs Competencies: Key Differences and Why They Matter

While the title of this article — skills vs competencies — could make one think these two are conflicting concepts, the exact opposite is true. Skills and competencies complement each other and play a crucial role in the hiring, engagement, performance, and promotion of your employees.

While we’ll be comparing skills and competencies, our focus will be on highlighting the subtle differences between them. We’ll look at their definitions, and their importance, and explore a specific example that highlights the differences of skills vs competencies. Let’s dive right in!

Skills vs competencies: what is the difference?

To establish a clear distinction between the two, we’ve had to go beyond common dictionary definitions, which roughly describe both skills and competencies as “an important skill or ability to do something well”.

What are skills?

Skills are abilities developed through training, education, or experience to perform a specific task well. Usually, they can be easily demonstrated through practical assignments and measured using various proficiency levels or standards, such as:

• beginner
• intermediate
• advanced
• expert

For example, on the Nestor platform, skills can be assessed on a customizable grid starting with the first level – Aware of -> Beginner -> Familiar with -> Proficient and finally the last level defined as Advanced.

Most skills fall into one of these categories:

• soft or human skills: communication, time management, persuasion
• hard or technical skills: programming, graphic design, accounting

Despite ranging in terms of complexity, skills can be improved rapidly over time, especially when the necessary support is in place. They are also more transferable (especially human skills), which means mastering a skill in one area can serve both the employee and the company when they move to a different role or department.

What are competencies?

Competencies are a combination of knowledge, behaviors, attitudes, traits, and personal abilities that enable individuals to be excellent performers in a particular role or job. There are different types of competencies, including:

• core competencies: those abilities or traits that give a particular individual or organization the edge
• management competencies: abilities and behaviors that make people managers effective and successful

Check out other types of competencies.

Due to their more complex nature, competencies aren’t always easily measured and can take longer — sometimes many years — to develop. One of the reasons why competencies take longer to develop is that changes in personal behaviors and attitudes are more difficult to make and track than changes in skills, as a result of upskilling or reskilling initiatives.

Competencies vs skills: what is the relation between these two concepts?

As we were saying before, competencies are usually job-related and reflect the desired behaviors to perform well in a particular role. The bad news is that “behaviors” are difficult to define and measure.

The good news is that typically, each competency can be translated into multiple skills that together can reflect that competency. Breaking down competencies into specific skills allows organizations to assess in a more accurate way employees’ strengths, weaknesses, and areas for improvement.

This process facilitates targeted skill development and the overall improvement of that competency based on assessing the proficiency level of an individual in each specific skill. Also, by defining multiple skills, it becomes easier for individuals to understand what range of abilities within that competency they should develop.

Unlike skills, competencies are not transferable and may vary depending on the industry standard, type of organization, team, or project.

To understand the difference between competencies and skills, let’s have a look at a practical example.

Strategic planning is a competency involving multiple skills that may vary depending on the job role you are looking at.

Strategic planning for an HR Manager may require soft skills like decision-making or prioritization and also some technical skills or job-related skills like Strategic Workforce Planning or Skill Gaps. By comparison, Strategic planning for a CEO may include the same soft skills mentioned before but also some specific skills like Budget Management or Business Growth. We can see very easily from this example that the same competency means different things for different roles since not all skills are not relevant across roles.

Skills vs competencies: which are more important?

Does the example above means we should drop off competencies and look more at skills? The truth is that both skills and competencies are important and play a crucial role in the overall performance and development of an employee or organization.

In fact, since they are intertwined, it’s not a matter of which one is more important but rather how they are important. We can look at skills as the ‘what’ in this equation. They represent what a person can do and at what level.

Competencies, on the other hand, are the ‘how’. They are the ones that enable employees to be top performers and achieve a high level of success.

However, while you can still consider both skills and competencies based on determining the connection between these two models, a structure focused on skills has certain benefits.

Benefits of skills vs competencies for the future of work

You can track skills’ progress over time

Instead of relying on an aspirational approach and showing the big-picture, skills are more pragmatic and pinpoint specific areas where individuals need improvement.

Skills are the foundation of the internal talent marketplaces

Skills are also the foundation of talent marketplaces, which are the new dynamic way of working fueling agility and continuous growth. Through skills, people are matched with the best-fit opportunities for development inside their organization, with new roles assignments, projects, or learning opportunities.

Skills enable intelligent workforce planning

The transferability of skills that can be decoupled from job-specific functions is the first step in tapping hidden potential and enabling intelligent workforce planning. Skills allow organizations to surface widen candidate pools, and redeploy talent toward the highest priorities.

Skills support smart decisions about internal development vs external hiring

Sometimes the best person to fill out a vacant position or a leadership role is someone already working inside your organization. Skills assessments help organizations understand the level of skills an employee has and what steps need to take to be prepared for the next role. Depending on the conclusions, there will be times when upskilling an internal candidate will make more sense than bringing in someone new.

Final Thoughts

Don’t forget: in today’s fast-changing world, business success is heavily reliant on understanding the unique skills and competencies that your organization needs in the short and long term and whether your workforce is prepared for it. If you need help getting started, we’re always here to help.