Skill tree

Skills vs. competencies - what are the differences?

Share :

Nearly every day, we all have heard about the two terms “skills” and “competencies”. They both are highly relevant to employees and employers both. According to a survey, 76% of the employees will be delighted by their company if they offer them skills and competencies training. Organizations often discuss the kinds of skills and competencies their employees require to succeed in the job role. Many people think that these two terms are synonymous with one another. These two terms are not the same and cannot be used interchangeably. There exists a real difference between skills and competencies. 

What are skills and what are competencies?

In simpler terms, it is the ability that an individual has. It is applied in a setting to achieve the desired results. In other words, they are known as those specific intellectual abilities which an employee requires to perform his job.  They are learned through experience or training at various levels i.e., basic, intermediate, or expert levels.  Competencies refer to the individual knowledge and behaviors which leads them to effective and efficient in a job. In simple words, it refers to how an individual performs on the job. They are also referred to as the capability to use the set of abilities, skills, and knowledge to perform critical work functions in a workplace.

Examples of skills and competencies:

To further grasp the understanding of skills and competencies let us go through the following examples. 

Software Developer:

Let’s assume that you are looking for a software developer. There are various factors that you will consider before hiring. Employers will want him to have the technical skill of developing software. But unfortunately, that will not be enough.

He would also require the ability to be patient with clients. The “what” part of a software developer is known as skills and the “how” part is competency. The technical requirements of the job are skills, whereas the ability to be patient and have attention to detail at work will be referred to as competency. 


Let’s take another example of a writer. An employer will look for writing skills in a candidate. This skill will be enough to make the client satisfied with the work. Along with excellent writing skills, the employer would also want commitment and motivation to continue excellence. 

Being committed and motivated are an example of competencies that a writer should have. They are different from his ability to write.  It is essential for a writer to have both skills and competencies to efficiently perform his job. He cannot excel in his position as writer without being committed and motivated to his work.

Data Analyst: 

If we look at the job profile of a data analyst, one of the most essential skills required to perform the job without any doubt is excel skills. A data analyst cannot perform his or her job without knowing how to do it.

He would require a combination of skills, knowledge, and behavior. For example, without having the ability to plan, organize and make intelligent decisions, he will not be able to successfully perform the job. In short, being efficient in excel is a skill, and planning, organizing, and decision-making are competencies. 

Competency-based Model vs. skill based approach

Competency-based covers roughly ten to twenty meta-competencies, e.g., communication or resilience, from a not changing set of competencies. Thus, every employee or candidate is evaluated with the same set of competencies regardless of their actual job role. This is sometimes also referred to as the “on-fits-it-all” approach since employees are always evaluated on their competencies. In contrast, the skill-based approach is more on the practical side. Skills are used to describe in detail different job profiles. Often a company has set of thousands of different skills for multiple different job roles. Employees or candidates are evaluated only for the skills relevant to their positions.
The competency-based model and skill-based approach; both have their benefits. Organizations can choose any of them, considering their needs, requirements, and dynamics. However, if we compare both approaches, we can conclude that the competency-based model helps HR and top management understand their employees from a bird’s eye perspective and supports the decision-making process in all HR domains, from recruiting to talent management. However, it is limited when it comes to in-depth decisions due to a usually reduced number of competencies, and the “one fits it all”-approach. Nevertheless, setting up a competency-based HR compared to a skill-based system in most ways is the fast track to have first results.

In contrast, a skill-based approach requires more time to implement but eventually leads to better decisions since it follows not the “one fits it all”-path. Essepcaily in recuring, we see a strong trend towards skill-based hiring. Big organizations such as IBM and Walmart have shifted their hiring process to skills-based recruiting rather than focusing on degree requirements. They feel that it’s a powerful solution to their problem as employers struggle to find the top talent. Additionally, we also witness the trend to use skill data to structure the overall employee life cycle and training and give transparency to employees, executives, and HR alike.

In conclusion, understanding skills and competencies are highly beneficial for both employees and employers. However, what approach is chosen depends on the number of resources available in HR.