Competency model

What it means

A competency model is the set of knowledge, skills and behaviours a company expects in each role, with levels described from beginner to expert. It covers not only what a person should do but how, for example how they communicate with clients or solve problems.

A model usually contains core competencies for everyone, such as reliability or customer focus, leadership competencies for managers and technical competencies for specific roles. For an accountant these might be knowledge of tax law, accuracy and the ability to explain results to a client.

Its value is a common language. When recruitment, appraisal, development and pay are all based on the same competencies, employees know what is expected of them and what they need to master to progress, and managers assess against the same criteria.

How it works in practice

Building a model starts from the company's strategy and interviews with top performers in each role. Every competency needs concrete, observable behaviours at each level so that it can be assessed without guesswork, rather than vague words such as proactivity.

In recruitment, the model helps prepare interview questions and scoring criteria. In annual appraisals and 360-degree feedback, actual behaviour is compared with the expected level, and the gaps form the basis of a development and training plan.

The model can be linked to pay bands and career paths. When it is clear which competencies distinguish a junior from a senior, pay rises and promotions are easier to justify, and there is less sense of unfairness, which often leads people to leave.

What to watch out for

An over-complicated model with dozens of competencies and levels is not used in practice. A smaller company is better served by a few key competencies with clear descriptions. The model needs regular updating as technologies, services and customer expectations change.

Competency-based assessment must rest on concrete examples, not impressions. Otherwise it becomes a subjective tool that can lead to unequal treatment. Appraisal results are personal data, so the rules on processing them must also be followed.