TL;DR
Skills, capabilities, and competencies often overlap, yet each describes a different layer of workplace ability. Skills are single learned abilities and act as the building blocks of capabilities. Capabilities combine skills, knowledge, processes, and behaviours, and in turn form the building blocks of competencies. Competency is the practical application of both, so each layer needs its own measurement and training approach.
- Skills: Practical tests, simulations, certifications, and on-the-job assessment, plus a skills matrix for gaps.
- Competencies: On-the-job reviews, role-play, and behavioural interviews, with external verification of competency reducing bias.
- Capabilities: Multi-party 360 reviews and self-assessments, visualised across the workforce in a capability matrix.
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 future business success.
What are Skills?
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 job descriptions. It’s important to keep up to date with future workplace skills that could benefit both your business and your employees.
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
Some examples of workplace skills that you may want to develop in yourself or your teams include:
- Operating and maintaining machinery
- Injury and first aid response
- Manual handling techniques
- Customer service
- Data gathering and analysis
- Graphic design
- Analytical and critical thinking
- Accounting
- Time management techniques
What are Capabilities?
A capability represents a blend of personal and technical skills, a person’s knowledge, and behaviours that allow them 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 undergo capability training, meaning they’ll learn the required skills and knowledge to perform their role effectively. This training might involve honing soft skills like communication and decision-making, and gaining a better understanding of team dynamics and project management. On top of personal traits like confidence and empathy, these capabilities will put the project manager in a strong position to lead their team.
In an organisational context, capabilities often refer to the collective abilities of the organisation. These may include the combined capabilities of its individuals and systemic abilities like effective communication channels, efficient processes, and organisational culture.
Examples of Capabilities
Individual capability examples that you may want to train your teams in include:
- Project management
- Emergency response
- Inventory management
- Leadership and supervision
- Decision-making
- Strategic thinking
- Problem-solving
An example of capabilities for organisations that you may want to foster include:
- Effective communication
- Efficient Standard Operating Procedures (SOPs)
- Using innovation to find unique solutions
- Customer relationship management
- Operations management and efficiency
- Talent management
- Change management
- Strategic workforce planning and execution
What are Competencies?
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 or the skill to administer injections. It’s also about how they apply their abilities in real situations to manage patient anxiety, administer correct treatments quickly, and ensure patients’ comfort and well-being.
Examples of Competencies
Some examples of competencies that focus on applying skills and mission-critical knowledge in job-specific situations include:
- Emotional intelligence
- Cultural awareness
- Patient care
- Crisis management
- Conflict management
- Customer orientation
- Adaptability
- Risk awareness
Difference Between Skill vs Capability vs Competency
| What it Describes | Example | What it's Used For | |
|---|---|---|---|
| Skill | A specific, teachable ability to perform a task | Can operate a forklift | Identifying training needs and who can perform which tasks |
| Competency | Meeting a defined standard, combining skills, knowledge, and judgement | Assessed as meeting the site's safe operating procedure for forklifts | Proving a worker meets the required standard |
| Capability | The capacity to apply skills and knowledge to achieve outcomes, including in new situations | Adapts safely to a new warehouse layout and traffic flow | Workforce planning, succession planning, and organisational growth |
Understanding the difference between skills vs competencies vs capabilities can be confusing. They all contribute to an individual’s effectiveness in their job role, but the terms often overlap. Understanding the nuances between them is key, and looking at the differences between each term can help you distinguish between them simply and precisely. Essentially, skill involves having an ability, capability is using multiple abilities together, and competency is the practical application of human abilities.
Skill vs Capability
The difference between skills and capabilities lies in their scope. Skills refer to individual learned abilities, while capabilities encompass multiple skills, knowledge, processes, and behaviours. Think of skills as the building blocks that contribute to forming capabilities.
Example of capabilities vs skills: 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 business contexts.
Skills vs Competencies
The difference between skills and competencies lies in their application. A skill is a specific ability, like operating and maintaining machinery. A competency is knowing when and how to use that skill in the workplace.
Example of skill vs competency: A construction worker has the skills to operate forklifts, use trolleys, and effectively handle manual lifting. When she needs to transport materials across a construction site, her competency lies in deciding whether to use a forklift, a trolley or her manual handling skills. She analyses the risks involved and adapts to the specific situation to make a decision.
Capability vs Competency
The difference between capability and competency also lies in their application. If skills are the building blocks of capabilities, then capabilities are the building blocks of competencies. It’s about how a business or individual uses the skills and knowledge that they have to make the right decisions in specific scenarios.
Example of competencies vs capabilities: A firefighter has the skills and knowledge to effectively respond to emergency situations. They can problem-solve and make quick decisions based on the evidence in front of them. They also have the physical ability and knowledge of safety procedures required to be effective in fighting fires. Their capability is how they use that knowledge and those skills when faced with a real-life situation of a burning building. A competent firefighter may freeze in a high-pressure situation. A capable firefighter will use their skills and knowledge to decide which entrance to use, calm the people around them, and put the fire out as quickly as possible.
Overlap Between Competencies, Skills and Capabilities Examples
Now that you know the differences between competencies, capabilities and skills, 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 core capability or a competency.
For example, time management can be seen as a skill, a capability, and a competency, depending on how it is applied and evaluated.
- Time Management as a Skill: Using one’s time effectively or productively, especially at work. As a skill, time management may include prioritising tasks, setting achievable goals, organising files, planning your day, or using tools to keep track of deadlines.
- Time Management as a Capability: Making use of multiple time management skills and techniques to improve productivity. As a capability, time management may include adapting different tools and techniques to meet various purposes, managing unexpected changes, and working on multiple projects simultaneously.
- Time Management as a Competency: Strategically applying time management skills to meet business objectives. As a competency, time management may include allocating resources, setting realistic timelines for projects, and maintaining a balance between short-term deadlines and long-term project goals.
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Are Skills, Capabilities, Or Competencies 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?
Skills form the foundation of an employee’s ability to perform job-specific tasks. 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 or business. They give a broader view of what is achievable and where development is needed. Fostering capabilities lead to improved performance management, smoother problem-solving, and more effective work outcomes. This not only helps individuals shape professional development but also contributes positively to the overall success of the teams and organisations they are part of.
Are Competencies Important in the Workplace?
Competencies are vital for helping employees use their skills and knowledge in real-world scenarios. They help companies identify high performers, pinpoint areas for professional development, and provide a framework for fair and consistent 360 performance reviews.
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How to Measure Skills, Competencies and Capabilities
Understanding how to measure skills, competencies, and capabilities is essential for personal development and your organisation’s success. Accurate measurement can help you identify skill gaps, highlight strengths and foster growth throughout your workforce. This is a continuous process and should be incorporated into regular development conversations and training plans to ensure ongoing personal growth and continuous professional development. However, different types of assessment can be used for competency vs capability vs skill measurement.
Measuring Skills
Practical tests, simulations and certifications are good ways of measuring employee skills. On-the-job training and assessment is also particularly effective for skill development and measurement, as you’ll be able to witness the first-hand application of skills in the work employees do.
A skills matrix can be a valuable tool in helping you identify skills gaps and address them through targeted and specific training initiatives. It can also help you recognise where employee skills are being underutilised, aiding in succession planning, business strategy and larger talent management.
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Measuring Competencies
Competencies are more complex to measure than skills since they require employers to determine how well skills and capabilities are being applied within a role. Measuring competencies in specific situations can help, making on-the-job reviews, role-playing scenarios and behavioural interviews a good fit for competency assessments.
However, it’s important to ensure that these reviews and interviews are unbiased, as it can become easy for assessors to make subjective judgements. This is why verifications of competency by outside parties are common, especially in Australia.
A competency matrix can help companies track the levels of proficiency and areas for improvement across teams performing various tasks.
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Measuring Capabilities
Employee capability is the most difficult to measure. It’s often context-specific, making it difficult to apply a standardised assessment which highlights proficiency across different areas and applications. Getting feedback from multiple parties through a 360 review, or asking employees to perform self-assessments, where they review their own performance, can help with gauging capability levels.
It’s important to measure the results from capability assessments using a capability matrix. This will help you visualise varied abilities and how they interact with each other across your workforce. In the long term, this can help you address your business’s current and future needs.
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How to Uplift Capabilities, Skills and Competencies Through Training
The continuous enhancement of skills, competencies, and capabilities is pivotal to personal and professional growth. Training and development not only fills skills gaps, but enables employees to grow, adapt, and excel in their roles. When designing employee development plans, focus on helping your teams apply what they’ve learned in real-world situations, and provide opportunities for continuous learning and development.
Uplifting Skills
Skill-based training often involves a combination of theoretical learning and hands-on practice. This can be best achieved through a blended learning approach which provides both online and in-person training. This allows employees to learn the theory behind skills in a self-paced environment and apply learning in a practical context. This approach ensures that employees can confidently apply new skills in their day-to-day job roles, leading to better job performance.
Example: A mechanic could enrol in an eLearning course that covers the theory and steps of a new engine repair technique. He could then attend an in-person workshop where the technique is demonstrated and practised.
Uplifting Capabilities
Enhancing capabilities requires a multi-pronged approach. You’ll need to develop specific skills that can boost capabilities and foster specific traits and behaviours essential to effective performance management. Training programs that cover multiple topics, accommodate different learning styles, and incorporate various employee training methods can provide a comprehensive and cohesive learning experience. Mentoring and coaching can also be effective techniques for guiding employee capabilities.
Example: An employee could enrol in a leadership training program which focuses on soft skills like decision-making, competencies like team management, and behaviours like conflict management styles.
Uplifting Competencies
Enhancing competencies means improving the ways in which employees apply their knowledge and capabilities. Providing opportunities for experiential learning and on-the-job training can be invaluable for helping employees put their skills and knowledge into practice. Role-playing, simulations, and job rotation are effective methods for competency training, especially for deskless workers who don’t have as much time for classroom training. Combining this with regular feedback and the use of a competency management system can also help you provide relevant and personalised training opportunities.
Example: A firefighter could participate in simulated emergency situations to improve their competency in emergency response. This will ultimately help them stay calm and boost their performance in real-world emergencies.
How Cloud Assess Can Help
Cloud Assess is designed to help organisations track and develop skills, competencies, and capabilities. The platform gives teams one place to train, assess, and record workforce ability.
Organisations can deliver blended training and assess skills on the job. They can verify competency against their own standards and set expiry dates for reassessment. They can also run self-assessments and collect feedback from multiple reviewers to gauge capability.
Managers can then view results across teams and sites in a live matrix. That view helps them plan training, prepare for change, and identify future leaders.
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Workforce Skills
Workforce Skills gives you a live view of every skill, every gap and every expiry across your workforce. Automate training assignment or manually enrol. Purpose built for frontline workers.
Frequently Asked Questions (FAQs)
Skill vs Capability vs Competency FAQs
What is the difference between competence and competency?
Competence is a person’s overall ability to perform a role to the required standard. A competency is one specific, measurable ability that contributes to it. Organisations assess individual competencies to judge a worker’s overall competence.
Why do some organisations focus more on competencies than skills?
Many companies emphasise competencies because they go beyond technical skills, focusing on how employees apply their abilities in real-world situations. Competency assesses both capabilities and skills, making it better suited for evaluating overall job performance. This focus helps organisations ensure employees have necessary workforce skills and use them effectively to meet business goals.
Is a qualification the same as workplace competency?
A qualification shows a person was assessed as competent at a point in time. Workplace competency is shown by applying those skills in a specific role and site. Conditions, equipment, and procedures vary between workplaces. This is why high-risk industries often verify competency after induction.
How often should competency be reassessed?
It depends on the role’s risk level, relevant regulations, and any licence expiry dates. Organisations also reassess after incidents, procedure changes, or long absences from a task. Setting expiry dates on each competency keeps reassessment on schedule.
What role do skills, capabilities and competencies play in succession planning?
Skills, capabilities, and competencies are critical in helping companies identify future leaders. Skills ensure candidates have the foundational knowledge for specific roles, while capabilities highlight their potential to adapt to new challenges. Competencies ensure candidates can apply skills effectively in leadership positions.
