What Is The Competency Framework And Why It Matters In Business

A competency framework broadly describes performance excellence within an organization. These frameworks usually include specific competencies that are applied to a variety of occupational roles.

Understanding the competency framework

Although many no doubt classify competency frameworks as corporate jargon, they are nonetheless a crucial aspect of any successful business. Indeed, an organization that neglects to create a competency framework is neglecting to define performance standards. With no standards to judge against, performance metrics are highly subjective.

Competency frameworks are developed for each distinct role within an organization. They must use clear and identifiable language that define excellence and how it might be achieved. Indeed, excellence becomes the performance standard that each employee is measured against.

How to develop a competency framework

Developing a competency framework consist of four steps:

1. Determine the purpose of the framework

When determining purpose, it’s important to realize that context is everything. A framework which determines which employees are eligible for a raise will be vastly different from a framework whose primary goal is to reduce product shrinkage. 

2. Research

Once the purpose has been determined, relevant information must be collated. This can be done by:

  • Observing the relevant role within the organization and making competency-based notes. That is, analyzing the behaviors for each role that constitutes competency.
  • Liaising with employees who are the most familiar with the competency being measured. For example, a key part of reducing product shrinkage may be checking best before dates three times a day. In any case, lines of communication must be opened to glean important details. This can be done in the form of surveys or questionnaires, if not through face-to-face interviews.

3. Construct the framework

With the list of behaviors and actions, the framework should be constructed by grouping similar behaviors and actions together. An employee involved in reducing shrinkage may have grouped behaviors such as:

  • Thrice-daily checks of perishable goods according to best before date.
  • Logging products that will come out of date in the coming days on to a hand-held device.
  • Ensuring that the device is charged and a report printed for tomorrow’s best before check routine.

4. Implement the framework

Once implemented, employees should be informed of the reasons for creating the competency framework and what the business hopes to get out of it. Such frameworks need total buy-in to be effective, and full disclosure is one way to get it. Employees should also be trained in certain areas if they do not already possess the relevant skills.

The benefits of competency frameworks to businesses

Recruitment guidance

When a business is hiring, competency frameworks guide the suitability of interviewees for a specific role. Once employed, employees are naturally more motivated, satisfied, and remain with the company longer.

Succession planning

Many businesses are facing awkward transition phases as their predominantly baby-boomer workforce retires from management and is replaced with a younger generation. Competency frameworks can help smooth this transition by ensuring that the next generation has the requisite abilities and behaviors to be leaders of the future.

Improves productivity

Competency frameworks reduce cost overruns that result from poor employee performance and high employee turnover. It may also reduce the costs of inefficient leadership where a lack of communication on expectations creates confusion and low morale.

Key takeaways

  • A competency framework broadly defines how an organization might strive for excellence – either within the organization itself or in the sector as a whole.
  • Developing a competency framework is a four-step process that is iterative and specific to individual employee roles.
  • Competency frameworks have several benefits including increased staff retention, morale, and productivity. They may also assist in succession planning and hiring.

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Published by

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"