Ultimate Guide for Developing a competency framework

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A competency framework is one of the most talked-about subjects today in the field of human resource management. All of us are aware that this is not a subject that is new to the area of H.R.

For the last four decades, David McClelland spoke about this concept in 1973.

David Mcclelland

But many people have researched, who have studied, and defined what competencies are.

So let us look at a few fundamentals to be followed before implementing this concept of competency-based management (framework). 



Firstly, let’s not jump into this because many other organisations follow this practice, and you are not one among them. 

So, as an H.R. practitioner, you must sit with the business leader to understand. They want from this initiative and why they feel that competency management could help them take the business to the next level.

I have come across business leaders who declared it very clear that they would want to see this initiative succeed.

In seeing that many future leaders emerge in the organisation. Employees have opportunities to understand what their strengths and weaknesses are.

Employees are allowed to work on their competencies for them to see growth in the organization. 


A competency is a fusion of skills, knowledge, attributes, and behaviour, which helps a worker play his role effectively in any organization.

You can observe and evaluate any worker’s competency (potential, performance, skill, and will),

This will help you in job recruitment, retaining human resources, sorting existing staff, and development.

A competency framework is a tool that helps the organisation of any sector achieve its goal with its employee/workforce.

With the competency framework, every worker will know about his role. When he understands the value, importance, and contribution of his job, he will be excited to value such significance in my work. Am I going to do such an outstanding job? He will do his work more efficiently because he can do a much better position where the person gets a reward.


Potential –

It means how much your worker can grow further. For this, ask him a situation based and complex question, and when he gives you an answer, you can find out his potential.

The performance –

It will tell you how he has performed in his previous jobs. You can check his last results, score sheets, mark sheets, awards, rewards, and talent progression.

Skill – 

You see how much work efficiency, the knowledge he has, and how fast he can work.

Will – 

You can use this for the hiring of new staff as well as for your existing team because in every organization there are workers who have a lot of skills and they also know how to do any work, Why to do, When to do, With whom to do but they do not do it because there is no will. 

You can eliminate such types of workers from your organization.


Competency-based management is a development process aligned with the strategic direction of the organization.

The process aims to.

  • Build a high performing organization with capabilities to proactively address business needs.
  • Communicate the competency continuum and the criteria for the competent employee openly.
  • Provide a structure that links the needs of individuals with the needs of the organization.
  • Encourage every individual to be proactive in development (innovative approach, Superior delivery, and equipping for higher roles).
  • Provide opportunities for every individual to identify and enhance strengths and reduce gaps.


How do you reach out to an employee communicating to them that this is the competency framework of our organization, and this is where we want all of you to work on and develop.

For this, you have to tell them the core competencies, leadership competencies, and functional competencies of your organization.

Core competencies –

These are critical for all employees. They are the reflection of the organization’s values.

These are required for excellent performance across all levels and functions.

Leadership competencies- 

These are the success factors that differentiate performance across levels. 

(e.g. – First level, middle, executive).

In other words, it is critical for managerial/executive roles.

Functional competencies- 

These are success factors that distinguish functional groups. Specialized know-how or abilities. It is Function/job-specific.

Remember one thing that all the above competencies also have different names.

For example-

Core competencies are also known as 

  • Foundational competencies.
  • Generic competencies.
  • Cultural competencies.

Leadership competencies are known by-.

  • Professional competencies.
  • Personal competencies.
  • Management competencies.
  • Behavioral competencies.

Functional competencies common names are-

  • Technical competencies.
  • Occupational competencies.
  • Domain competencies.


We talked about the three different clusters of competencies. So how do you map what skills are required for whom?

First is Core competency- 

You consider this as a house of competency. Everyone in the organization is required to process fundamental competencies.

The core competencies are pretty familiar to all in the organization, so we need to identify the 2 or 3 critical competencies that you would like every employee in your organization to possess.

They could be teamwork, innovation, and customer orientation, which fundamentally emanates from its values and philosophy.

This applies to the organisation concerning the roles and concerning the position that they handle.

The second is about leadership competencies-

One methodology that is predominantly used to identify leadership competencies is ‘BEI.’ It stands for behavioral event interviews.

It is one of the proven methodologies widely used by most professionals involved in this competency management practice.

Some people handle leadership roles and responsibilities, such as roles required to have leadership competencies.

Examples of leadership competencies coaching, Innovation, Entrepreneurship, decision-making, and risk-taking.

The last one is about having functional competencies-

The conventional methodology, which is applied for mapping functional or technical competencies, is called role analysis.

It also has the name of the job analysis. We call it role because any competencies that we’re trying to map are all role-based, and therefore we call it role analysis.

Examples of functional competencies are budgeting, production planning and management, Networking, negotiation.

So mostly, if you put together all the three clusters of competencies for any individual, it should not go beyond 8 or 12 in number.

The ideal number to keep is a maximum of 12 as competencies for any individual.

So it’s essential to keep it manageable in terms of numbers; only then you would see the result, and only then you would know an appreciation from their employees.


Let’s look at how we go ahead, creating dictionaries or what needs to be considered while creating dictionaries.

The most crucial aspect is defining the Likert rating scale.

Many companies use the 3 points Likert scale, 4 points, 5 points, and 6 points Likert ranking.

rating scale

But you can use 4 points Likert scale to be more objective, more manageable in terms of helping employees understand the competency requirements. 


It also helps the accessors in terms of arriving at the right proficiency level during the assessment.

The second most important thing is to understand what a dictionary is. 

Now, the reason why we say every competency should have a dictionary. Let’s say if I define communication as one of the competencies which are part of the leadership competency cluster.

When I define it, I am setting it with my understanding of what communication is all About.

But if communication as a competency applies to someone who was a supervisor at the shop floor level and someone who was a general manager, and somebody handling the business.

How do you define behavioural indicators that would consider the various behaviours you would expect all three roles to demonstrate?

The critical aspect is that the dictionary means it is a standard reference document for every employee to understand the competency. In the same way as the project champion of the organisation would want them to understand.

While you are defining the dictionary, there are three things that you need to keep in mind that the dictionary should reflect the knowledge element, skill element, and the attitude or otherwise call as the behavioural element. 

Now you will not be able to dissect and mention all these three in the dictionaries explicitly, but you would put it up in the form of behavioural indicators.

When you are putting this in the form of behavioural indicators, make sure that those indicators are relevant to your defining competency. They are measurable, and finally, they are absorbable.


So we have identified and mapped all the competencies of fundamental leadership and technical competencies. We also created dictionaries. So how do we go about doing the assessment?

Typically there are two methodologies, i.e., assessment and development centre methodology, followed across organisations.

Assessment Centre-

If the object is only to assess employees and then identify who among them face well, and therefore you do a ranking and then decide whom to give the opportunity in terms of career progression, you call it an assessment Centre.

Assessment Centre is also a methodology use during recruitment when you want to select people and when you want to access them on competencies before deciding them. All the candidates who appear for the selection process that participate in the simulation exercises and the best among them will get chosen.

So one of the differentiating factors here is you don’t necessarily give the participants feedback on how they fared on competencies. 

You should only decide whether they are selected or not selected, and that’s why it’s called the assessment centre.

Development Centre- 

If your objective is to help the employee understand where they stand on various competencies and develop an Individual Development Plan.

For this, the development centre methodology becomes relevant and the prominent one.

In all these methodologies, whether it is the assessment centre and development centre, the stimulation exercises are the base.


So what are a few things that we need to look at while conducting assessments?

If you decide to go ahead with the assessment development centre methodology, make sure you have the training in place.

Either they are professionals or experts who are helping you from outside, or you have to train your people, who are good at assessing people, so they must be ready to determine in place.

The second is, you should have a lot of simulation exercises and tools created for assessment.

It could be In-basket exercise, Case analysis and presentation, Roleplays,  competency-based interview with group simulations depending on the list of competencies. Whether you observe them on behavioural competencies or fundamental competencies, you could decide on the simulation tools list.

However, 5 or 6 tools would require a fair judgment about the person in the organisation.

If your organisation is a small organisation with about 50 to 100 member teams, it becomes easier for you to involve most of them as part of the assessment development centre process.

But, If your organisation has an employee strength of 2000, 3000 because, in any assessment development centre, you can’t go beyond participant number 15 or 16, I am talking about the junior level.


We don’t encourage it to go beyond 8 and 12 in an assessment development centre for senior-level.

Therefore, you could either go ahead with doing the assessment. Development centre only for the top leadership team or some of the critical positions at the middle and the junior level or go ahead with those positions which are found to be highly crucial where the future leaders are required, where the talent needs to be retained which is essential for the business continuity.

So you could decide based on such criteria. The most important aspect is to make sure the report writing is done on time, and the feedback is given on time.

The first assessment centre or the development centre where after the assessment is over. Then the second day of the evaluation, employees give very brief feedback regarding how they have fared on various competencies.

feedback is necessary in competency framework

Detailed feedback with the report will be given within 15 days from when the employees have completed their assessment process.


So the all process of a competency framework is okay, but has it benefited the employee? Has it helped the organisation? 

It can create awareness among employees regarding what competencies they would be required to move up in their career beyond that would push them to develop in their competencies. It’s not.

Therefore the essential aspect is linking competencies to the other H.R. practices.

Competency management should never be a standalone practice. Competency dictionaries must be used for recruitment.

Now BEI is one of the most popular methodologies and proven methodologies in assessing people’s selection and recruitment competencies.

You could also run a mini-assessment centre using the various competencies for a particular role and select the right kind of person.

So straight away, you could link it to recruitment practices.


The second area where you could link competencies is employee development or training when you create a training calendar at the beginning of the year apart from taking the feedback during the annual appraisal process. 

You can also take the feedback from the assessment development centre and link it to the training needs.

Beyond training, if your organisation is keen on institutionalising coaching interventions, it sends employees for continuous education,  encouraging people to attend programs,  conferences and reading various articles and materials. 

All these are part of employee development practice. It is the best methodology called the adult learning principles used in any employee development where competency can be linked.

The third and most important aspect is what next for me is the question that an employee will ask.

So from an employee point of view, career planning and career progression are critical questions that need to be answered. The competency framework and the design work that has been done and the assessment that has been done would be of great help in answering employees’ questions on career progression.

So you could straight away link into career progression as well.

Note- Do not link the competency feedback or the ratings to deciding compensations.


To become a role model and a trendsetter for others to follow you in this competency management practice.

The vital aspect is sustaining the practice like any other initiative; competency management also goes through many tough times. Therefore, putting up specific systems in place to ensure continuous review and continuous thirst is very important.

We suggest forming a steering committee, which would comprise people from business leaders and people from line leadership. 

Let them review the model regularly, let them understand how relevant the model concerns the changing business context, and therefore, if any macro-level changes are required, they can suggest.

Also, the other important thing is to go ahead with forming a review committee. It is a micro-level Management Committee.

They go into the dictionaries’ details,  what kind of tools are supposed to be used, the assessors’ reliability, and their effectiveness.

So they do a micro reviewing of the fundamental aspects related to competency management, so that is very important.


An essential element to be looked at is to make decisions based on competencies.

Provide opportunities based on competencies.

Now you have your competency Framework,  set of competencies. Still, if you are making decisions on career progression without looking at the competency rating, then I am sure employees will start losing faith in this whole framework.

So decisions related to an employee,  career progression, role changes, selection of employees, and the kind of development opportunities you would want to provide with an employee are vital to consider the competency rating. After that, you make a decision.

If you continue to do that, I’m sure that as the initiator becomes practice at some point in time, then the course becomes a habit at some point in time.

Also, you can read our blog on How To Run Competency-Based Interview


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