Skill vs Capability vs Competency: Understanding the Differences

Skill vs Capability vs Competency: Understanding the Differences

In the complex ecosystem of business success, three essential elements come into play – skills, capabilities, and competencies. While they are intertwined in many ways, their impact on your company’s performance varies significantly. In this guide, we’ll demystify these terms, highlighting their differences, and showing you how each one contributes to your organisation’s success.

employee being uplifted by skills

What is a Skill?

A skill is a learned ability or talent that enables you to accomplish a specific task effectively. You can acquire skills through life experiences, formal education, or workplace learning. These can be soft skills, also known as power skills, like emotional intelligence or technical ones specific to your job role. It’s important to keep up to date with the most in-demand workplace skills to benefit both yourself and your employer.

Consider, for instance, a construction worker. One of the essential skills they need is the ability to operate machinery, such as a forklift. This skill enables them to move heavy materials around a construction site safely and efficiently.

Examples of Skills:

What is a Capability?

A capability represents a blend of personal and technical skills, knowledge, and behaviours that allow an individual or an organisation to perform effectively. For individuals, it’s about the potential to apply skills and knowledge in different situations.

For instance, a project manager might have the capability to lead a team, meaning they possess the required skills (like communication and decision-making), knowledge (understanding of team dynamics and project management strategies), and personal traits (like confidence and empathy) to perform this role effectively.

In an organisational context, capabilities often refer to the collective abilities of the organization, which include the combined capabilities of its individuals and systemic abilities like effective communication channels, efficient processes, and organizational culture.

Examples of Capabilities

Examples of individual capabilities include:

  • Project management
  • Emergency response
  • Patient care management
  • Inventory management
  • Leadership
  • Decision-making
  • Strategic thinking
  • Problem-solving or analytical skills

Examples of organisational capabilities include:

employee stacking skills as blocks

What is a Competency?

Competency is the practical application of a person’s skills and knowledge in a work setting. Competency assessment is typically conducted during performance reviews to gauge an employee’s proficiency across various organisational capabilities.

Take the example of a nurse. Their competency isn’t solely about having medical knowledge (knowledge) or being able to administer injections (skill). It’s also about how they apply this knowledge and skill in real situations, such as managing a patient’s anxiety, administering the right treatment quickly, and ensuring the patient’s overall comfort and well-being.

Examples of Competencies

  • Patient care
  • Crisis management
  • Quick decision-making
  • Effective communication
  • Customer orientation
  • Analysis/problem-solving
  • Quick thinking
  • Decision-making

Differences Between Skills, Capabilities, and Competencies

Understanding the differences between skills, capabilities, and competencies can be confusing. This is because there is often some overlap between them, however, while they all contribute to an individual’s effectiveness in the workplace, understanding the nuances between them is key. Here, we’ll explain these distinctions in a simple and precise manner.

Skills vs Capabilities

Skills refer to individual learned abilities, while capabilities are a broader concept that encompasses multiple skills along with knowledge, processes, and behaviours. Think of skills as the building blocks that contribute to the formation of capabilities. For example, while data analysis is a skill, an individual’s capability to make data-driven decisions encompasses this skill, along with others like critical thinking and understanding of business contexts.

Skills vs Competencies

Skills and competencies are often used interchangeably, but they aren’t the same. A skill is a specific ability, like operating machinery, while competency is the application of that skill in a workplace scenario. For example, a construction worker may be skilled in operating a forklift, but their competency is determined by how effectively they can use this skill to meet the job’s requirements, like safely transporting heavy materials across a busy construction site without causing accidents or delays.

Capabilities vs Competencies

While capabilities refer to a person’s or organisation’s collective skills, knowledge, and behaviours required to deliver a certain outcome, competencies focus more on an individual’s application of skills and knowledge in a work setting. For instance, a firefighter might have the capability for emergency response. This includes a blend of various skills like quick decision-making, physical agility, and knowledge of safety procedures. However, their competency would be assessed on how effectively they leverage these skills and knowledge in real situations, such as efficiently extinguishing a fire while ensuring the safety of all involved.

Example of Overlap Between Skills, Capabilities, and Competencies

Now that you know the differences between these three areas, let’s look at how they can also overlap. Just because something is classified as a skill, it doesn’t mean it can’t also be a capability or a competency. It’s important to understand the specific situation that they apply to in order to better differentiate them.

For example, let’s look at time management. Time management can be seen as all three – a skill, a capability, and a competency, depending on how it is applied and evaluated.

  1. Time Management as a Skill: As a skill, time management refers to the ability to use one’s time effectively or productively, especially at work. It involves organizing and planning how to divide your time between specific activities. Skills like prioritizing tasks, setting goals, planning your day, and using tools to keep track of tasks and deadlines, all fall under time management skills.
  2. Time Management as a Capability: As a capability, time management involves the ability to apply these skills to various tasks and situations. It’s about the potential to apply your time management skills effectively in diverse contexts, which may require adapting to different types of workloads, adjusting to unexpected changes, and managing multiple tasks or projects simultaneously.
  3. Time Management as a Competency: As a competency, time management refers to the practical application of time management skills in a workplace scenario. This often means how efficiently and effectively an individual can manage their time to complete tasks, meet deadlines, balance multiple responsibilities, and contribute to the team or organization’s objectives. It’s typically evaluated during performance reviews and is seen as a critical competency in many job roles.

So, essentially, the skill is about having the ability, the capability is about the potential to apply the skill, and the competency is about the practical application of the skill.

Which Are More Important in the Workplace?

All three – skills, capabilities, and competencies – play pivotal roles in the workplace, each serving a different but interconnected purpose.

Are Skills Important in the Workplace?

Absolutely! Skills form the foundation of an employee’s ability to perform tasks. They are especially important for technical roles where specific knowledge is required. Moreover, soft skills like teamwork, communication, and problem-solving are essential in virtually every job.

Are Capabilities Important in the Workplace?

Capabilities are crucial as they represent the collective abilities of an individual. They give a broader view of what a person can achieve and where they may need development. Fostering capabilities lead to improved performance, smoother problem-solving, and more effective work outcomes. This not only helps individuals grow professionally but also contributes positively to the overall success of the teams and organisations they are part of.

Are Competencies Important in the Workplace?

Without a doubt, competencies are vital. They show how effectively an individual can use their skills and knowledge in a work scenario. Competencies help to identify high performers, pinpoint areas for professional development, and provide a framework for fair and consistent performance evaluations.

How to Measure Skills, Competencies, Capabilities

Understanding how to measure skills, competencies, and capabilities is essential for personal development and organisational success. Remember, the aim of measuring skills, competencies, and capabilities is not just to identify gaps, but also to highlight strengths and areas of growth. This is a continuous process and should be incorporated into regular development conversations and training plans to ensure ongoing personal and professional growth.

Let’s dive into how you can effectively measure these three key aspects.

Measuring Skills

Skills are typically measured by testing a person’s ability to perform a particular task. For instance, if a construction worker claims to have the skill of operating heavy machinery, a practical test where they operate a forklift or excavator could be a way to measure this skill.

However, measuring skills isn’t just about testing.

A comprehensive skill matrix can help track and identify gaps in skills. This matrix usually lists the necessary skills on one axis, and the individuals on the other, with the level of skill marked for each person. This helps to identify where training is needed or where skills are under-utilised.

Measuring Capabilities

Capabilities are the hardest to measure of the three, as they involve a blend of skills, knowledge, and behaviours. Self-assessment, peer reviews, or 360-degree feedback can help measure capabilities. For instance, in a 360-degree feedback system, an individual receives feedback from their peers, subordinates, superiors, and even clients to get a comprehensive understanding of their capabilities.

Capabilities are often more abstract and situational, which can make them harder to quantify. For instance, while it might be relatively straightforward to assess a skill like machine operation or a competency like problem-solving in a specific context, it’s more challenging to assess a capability like adaptability or potential for leadership, as these depend greatly on the complexities of the situations at hand.

Therefore, capabilities require a more holistic and dynamic approach to assessment, which can often make them trickier to measure accurately.

A capability matrix is also a valuable tool here, helping you visualise the blend of skills, knowledge, and behaviours that make up an individual’s capability, and where there may be room for development.

Measuring Competencies

Competencies are more complex to measure than skills since they involve the application of skills in the workplace. Competencies are measured through performance assessments or reviews, where a manager evaluates how well an employee has performed specific job-related tasks.

Like skills and capabilities, a competency matrix can be useful here, tracking the levels of competency in various job-related tasks across the team. By identifying gaps in the matrix, you can target areas for improvement in future training and development initiatives.

How to Uplift Skills, Competencies, and Capabilities Through Training

The continuous enhancement of skills, competencies, and capabilities is pivotal to personal and professional growth. Training is an effective strategy for uplifting these aspects. Always remember, the goal of any training is not just to “fill gaps” but to enable individuals to grow, adapt, and excel in their roles. So, when designing employee development plans, focus on enabling individuals to apply what they’ve learned in real-world situations, and provide opportunities for continuous learning and development.

Here’s how you can achieve this:

Uplifting Skills

Skills are specific learned abilities that can be improved through focused training and development. For instance, a mechanic could attend a workshop on a new type of engine repair, or a healthcare worker could learn a new patient care technique. Skill-based training often involves a combination of theoretical learning and hands-on practice (blended delivery approach), allowing individuals to apply what they’ve learned in a practical context.

Uplifting Capabilities

Enhancing capabilities can be a bit more complex, as it involves improving an individual’s overall capacity to perform various tasks effectively. This often requires a combination of skill and competency training, alongside development activities aimed at boosting personal traits and behaviours.

Leadership training programs, for example, aim to uplift capabilities by improving a range of skills (like decision-making), competencies (like team management), and behaviours (like resilience or emotional intelligence). Mentoring and coaching are also effective methods to uplift capabilities, as they provide personalized guidance and feedback.

Uplifting Competencies

Competencies involve the application of skills in the workplace and can be enhanced through experiential learning or on-the-job training. Role-playing, simulations, and job rotation are effective methods for competency-based training. For example, a deskless worker like a firefighter could participate in simulated emergency situations to improve their competency in emergency response. You can also choose to employe a competency management system which will help you keep track of workplace competencies and also give you opportunities to train.


Skills form the backbone of task completion, capabilities reflect an individual’s strengths, and competencies help assess performance and potential. While this guide provides a comprehensive overview, remember that practical application and continuous learning will further enhance your understanding of these concepts in real-world scenarios.

Understanding the differences between skills, capabilities, and competencies is critical for effective talent management. Each of these elements is crucial in its own right, contributing to individual and organisational effectiveness.

Next read: Find out how you can improve skills, capabilities, and competencies with on-the-job training using employee training software.

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