Skills vs competencies: Which to prioritize as an HR pro?

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As a hiring manager, you know how important assessing a candidate’s skills is.

Or was that “competencies?” Wait – are they the same thing?

The difference between skills and competencies is subtle and explanations can quickly get confusing, but you must learn the difference.

Skills are foundational, and you can build competencies on various skills.

For example, strategic planning is a competency that uses the skill of content strategy.

Hiring for competencies has been a well-known strategy for more than 40 years, but skills-based hiring has recently taken the world by storm.

So is skills-based hiring or competency-based hiring the best model for your recruitment process?

This blog explores competencies and skills, their pros and cons, and examines which strategy gets you the best candidates.

What are skills?

Skills are learned abilities that affect an individual’s performance. You can learn them through experience or training.

Skills come in two distinct types, hard and soft:

  1. Hard skills: These skills are technical or quantifiable, such as Kotlin programming or intermediate Mandarin skills.

  2. Soft skills: These skills are non-technical and less specific, such as time management and problem-solving. Soft skills are generally more transferable not only between roles but also between industries.

When considering the difference between skills and competencies, skills are probably the first thing that comes to mind. Skills are all the pieces that make up the foundation of a job role and should be in the job description.

Let’s take a look at a handful of different skills to get an even better grasp on the concept:

  • Programming

  • Language proficiency

  • Market research

  • Graphic design

  • Editing

  • Search engine optimization

  • Using Google Docs

Skills have also become more relevant in recent years owing to widespread skills shortages. A 2022 study found that 77% of companies worldwide are reporting a 17-year high talent shortage.

This skills shortage creates large skills gaps within organizations and increases the demand for skills and skill-building.

A survey by McKinsey found that 58% of employers believe that closing skills gaps at their company is a priority, and 69% said that skill-building has increased in their organization to close the gap.

2 pie charts showing how companies are closing the skills gap

Skills are also driving the rapid rise of skills-based hiring.

Thousands of organizations are prioritizing skills more than work history, education, and experience to reduce bias and hire the best possible candidate.

According to TestGorilla’s State of Skills-Based Hiring report, 76% of companies used skills-based hiring practices in 2022.

A separate study found that 78% of HR professionals say the quality of their organization’s hires has improved because of skills assessments.

We’ve known about the importance of skills for some time but were never able to assess skills until recent technological advancements. We can now accurately and objectively evaluate candidate skills with tools like skills tests.

What are competencies?

Competencies are the behaviors and attitudes of an individual that help them succeed in their role. Competencies are generally how a person achieves a goal or does a job. 

Often, competencies are combinations of skill and behavior. Examples of competencies include selling, a competency that uses skills like qualifying leads but also behavioral capabilities like negotiation.

Let’s take a look at some competencies:

  • Making business decisions

  • Strategic planning

  • Improvement of business processes

  • International interpreting and localization

  • Patient care and bedside manner

  • Entertainment, such as public performance

The acknowledgment of these types of competencies started in the 1970s. Most notable was the study by David C. McClelland, “Testing for Competence Rather Than for ‘Intelligence.’” 

The study shows that behavioral traits and characteristics are more effective than aptitude tests in determining which individual is most successful in job performance.

The top performers in the study were able to make good judgments, solve problems, and establish challenging but attainable goals.[1]

Competencies are valuable in a candidate, and you should assess them.

They show how well a candidate can accomplish certain goals and can make one candidate stand out from another.

Another great thing about competencies is that you can use them to teach new skills. You could hire a candidate with excellent competencies and then upskill them in certain technical skills.

Although McClelland’s study showed that competencies were a better indicator of performance than aptitude tests across the board, we believe that the reality is more nuanced.

Weighing skills vs. competencies in the 1970s was an easy win for competencies. 

Aptitude tests several decades ago were problematic. They contained confusing, irrelevant questions and didn’t accurately evaluate skills.

We’ve come a long way since then.

The key difference between skills and competencies: Examples

So – what is the difference between skills and competencies?

Defining each concept separately helps, but let’s quickly compare skills vs competencies to clear the air and zero in on the key difference.

The simplest way to describe it is that skills are the “what” and competencies are the “how”:

  1. Skills: What you do

  2. Competencies: How you do it

Here’s a look at the two concepts:

Situation

Skills – the “what”

Competencies – the “how”

Speaking to a Mandarin speaker

The ability to speak Mandarin

Confidence in speaking, knowledge of cultural norms

Selling to a customer

The ability to organize leads and manage information

Reading a customer’s feelings, adapting to a customer’s reactions

Making a speech 

The ability to speak into a microphone properly, read a teleprompter, and understand signals from assistants 

Using body language, feeling comfortable in front of a crowd, and having charisma

Patient care

The ability to read and update charts, organize visitation, and manage time

Using bedside manner and showing empathy

Managing employees

The ability to delegate tasks, communicate clearly, and resolve conflicts

Adapting to changing environments and developing different management techniques to suit different workers

The difference between competency and skill is subtle, and there isn’t a clear “winner.”

Both concepts bring value to a role, but different organizations prioritize one more than the other.

Let’s look at each one and why companies value them.

Skills vs competencies: Which to prioritize in your organization?

There are differences between a competency vs. skill matrix, but both have their place, depending on the organization.

Let’s take a look at the pros and cons of prioritizing skills vs competencies and a few examples of each in action.

The case for using competencies in hiring and employee development

First, let’s start with examining competencies. You can use competencies to grow your employees.

The pros

Since competencies are a mix of behaviors, attitudes, and skills, they can be a powerful element to consider. 

One study found that only 11% of hiring failures are due to a lack of technical skills, but 89% are due to the wrong attitude or personality. 

The study’s results show that many hiring managers are willing to train certain technical skills, but the wrong competencies are hard to correct. Proponents of competency-based hiring like to say, “Skills can be taught, attitude can’t be.”

Competencies are valuable, and because they’re subjective to particular roles and companies, they can be useful when you find a good culture add.

You’re probably more familiar with the term “culture fit,” so what’s “culture add?”

Culture add is hiring a diverse candidate whose values align with your organization.

Culture fit has traditionally perpetuated homogenous organizations and the idea that a candidate must rigidly “fit” within a firm. Culture add opens the door for unique individuals with different perspectives.

If you assess a candidate with our Culture Add test and find a great match, you can rely on their solid competencies as you develop a few of their technical skills.

Let’s take a look at a few other pre-employment behavioral tests:

  • 16 Types test: Assesses how a candidate makes decisions, what energizes them, and how they process information

  • Big 5 (OCEAN) test: Evaluates a candidate’s openness, conscientiousness, extroversion, agreeableness, and emotional stability

  • Enneagram test: Assesses a candidate’s worldview and core beliefs

  • DISC test: Evaluates a candidate’s dominance, influence, steadiness, and conscientiousness

  • Leadership and People Management test: Evaluates a candidate’s ability to lead others within an organization using both influence and guidance

All tests except the leadership test are included in TestGorilla’s free plan.

Competencies are crucial elements in hiring, and you can see why many organizations prioritize them. Focusing solely on skills can lead to hiring an asshole genius. Moreover, assessing people skills and compassion helps ensure a healthy work culture.

The cons

Competencies are useful when hiring, but you shouldn’t solely rely on them.

Here are the top disadvantages of hiring for competencies:

Con

Description

Competencies are subjective

Unlike skills, they can’t be objectively proven and assessed. Two HR professionals could have different ideas about making “solid business decisions.”

They vary from culture to culture

Similar to the above point, competencies shift depending on the organizational culture. For example, some sales teams think a “skilled salesperson” is aggressive, but many appreciate a more passive attitude.

Creating a competency model is complicated

Creating a competency model takes time, and the world, including your firm’s priorities (or the role itself), could change before you have one.

They’re limited on their own

When you evaluate competencies alone and don’t use multi-measure testing, it leaves out many crucial elements that indicate performance (but more on that later).

They’re non-transferable

Since competencies are specific to certain roles and companies, they can’t transfer from company to company (let alone industry to industry).

They aren’t agile

Competencies are somewhat rigid and tied to specific roles, making them less adaptable to change than skills.

That last point is crucial: Recent times have kept modern organizations on their toes with several unprecedented events. Unexpected events mean that agility and adaptability are essential tactics for companies to prioritize.

For more information, read our article on how skills-based organizations increase their agility.

Examples

Let’s take a look at a few real stories about competency-based hiring.

First is Renee Adams, a senior human resources professional who adopted a competency-based hiring process when she worked for Devereux Cleo Wallace, a healthcare organization.

Renee discovered a turnover rate of 60% and knew she had to make a change. She was recruiting people with the right degrees and experience, but somehow that wasn’t enough. 

Renee implemented a new system to measure which employees had the right competencies instead of relying on resumes.

She found that it was critical to prioritize empathy, composure, and listening ability. 

“We could train people on the technical skills, but it’s really hard to teach things like compassion and understanding.” [2]

Another great example is this anonymous story:

A job-seeker wanted to work as an online customer service bank clerk, but no company would invite him to answer interview questions because he didn’t possess a bachelor’s degree.

This candidate then joined a competency-based hiring program where he displayed his capabilities through job simulation tests.

After the assessments, not only was the candidate hired, but the bank that hired him also removed its four-year degree requirements for the position.

The case for using skills in hiring and employee development

Now, let’s take a look at prioritizing skills in hiring and job requirements.

The pros

Skills are the foundation of every role, so it makes sense that they’re a valuable tool in hiring and development.

Skills are also the foundation of competencies – competencies are generally a combination of behavioral attributes, soft skills, and hard skills. 

So, essentially, you need a set of skills to have competencies.

Focusing on skills also opens the door for talented individuals, like STARs candidates, who may not have specifically developed competencies but still have excellent base skills.

5 benefits of using skills in hiring and employee development

Let’s take a look at the top pros of hiring for skills:

  1. You can develop skills: You can expand and develop skills, so your hiring managers can hire a candidate that fits 80% of the qualifications and develops the rest

  2. Skills are adaptable: A candidate with solid skill sets can move into different roles and adapt to new competencies

  3. You can count on easily transferable skills: A candidate with a career portfolio of unique roles with similar core skills can easily switch careers and industries

  4. You can measure and standardize skills: Although different hiring managers have different ideas of what makes a “good salesperson,” skills are measurable and objective

  5. You can assess skills through a skills gap analysis: You can find gaps in capabilities in your organization with a skills gap analysis, but it isn’t easy to find competency gaps

Skills are a broad category, comprising role-specific skills, language proficiency, and even soft skills like communication and verbal reasoning.

Skills aren’t just the foundation of a role or competencies – skills are the foundation of your organization.

The cons

It could sound a little boastful, but there aren’t many cons to hiring for skills. Many of the “cons” of skills-based hiring are myths we’ve already busted.

Here are the top disadvantages of hiring for skills alone:

Con

Description

Some skills, like interpersonal skills, are hard or impossible to test

You can’t assess every skill through standard means and could require special tests to evaluate it

Skills don’t automatically mean a candidate knows how to apply them

While assessing skills assures you a candidate has the right ones, it could take time for them to learn how to apply them properly

Assessing skills without personality could lead to hiring toxic employees

Candidates who have the right skills but haven’t been assessed for personality and culture could be detrimental to your positive environment

Regarding that last point: Assessing technical skills and personality is important.

That’s why we recommend multi-measure testing to ensure you determine a candidate’s role-specific skills, cognitive abilities, and personality (more about multi-measure testing below).

Examples

Skills-based hiring has been gaining traction in the recruiting world, producing the desired result of hiring better candidates.

According to TestGorilla’s State of Skills-Based Hiring report, of companies that used skills-based hiring practices:

  • 89.8% saw a reduction in cost-to-hire

  • 91.2% saw an increase in retention

  • 91.4% saw a reduction in time-to-hire

  • 91.1% saw an increase in diversity

  • 92.5% saw a reduction in mis-hires

One of these companies is Revolut, a British-Lithuanian financial services firm.

Being a multinational, the company needed a way to quickly, efficiently, and accurately assess language proficiency, and its existing methods were time-consuming and tedious.

After adopting skills-based hiring and using skills tests, it streamlined its hiring process and reduced time-to-hire by 40%.

Another company that found success with skills-based hiring is ADP, an HR management software company.

The firm developed a skills-based recruiting strategy to focus on skills so it could hire nontraditional candidates and increase its overall diversity.

In only one year, ADP saw an increase in Black and Hispanic representation in the candidate pool and higher numbers of candidates with no college degrees.

For more examples of skills-based hiring in action, read our case studies about skills-based success.

The verdict: Skills over competencies

If we’re comparing skills vs competencies, we have to side with skills.

Competencies convey a candidate’s behavior and attitude, but skills are the foundation of work in any specific job.

They help you break down each position’s roles and responsibilities into achievable outcomes, which increases agility and adaptability and opens opportunities for employees.

A focus on skills also facilitates employee development, upskilling, and reskilling. Developing your employees nurtures a company mindset of continuous improvement.

It isn’t just private businesses that are leaning towards skills. Colorado recently made an executive order supporting state agencies that prioritize the knowledge, skills, and abilities specific to open jobs.

For more on this topic, read our article about the 5 US states that can teach us about skills-based hiring.

Although there’s a distinct difference between skills and competencies, and we believe you should prioritize skills, it’s important to note the importance and value of competencies.

But you don’t have to choose – with skills-based hiring, you can have the best of both worlds.

Pre-employment assessments enable you to use multi-measure testing to evaluate a candidate’s skills and competencies. 

Multi-measure testing has the highest predictive validity of all methods of candidate assessment.

Try using different test types to build a candidate assessment that evaluates role-specific skills, cognitive abilities, personality, and culture to get the most accurate match for your open positions.

Skills vs competencies: Use skills tests to hire for both

The difference between competency and skill seems complicated at first, but when you examine them, it becomes clearer how each serves a purpose.

We believe that you should prioritize skills to facilitate career switches, learning and development, and better organizational agility when looking at competencies vs skills.

Using skills-based practices enables you to value and evaluate skills and competencies to find the best match for your open role.

If you want to learn more about the advantages of skills-based practices, read our blog on the business benefits of skills-based hiring.

To check out more than 300 tests that assess skills and core competencies, visit our test library.

Sources

  1. McClelland, David C. (January 1973). “Testing for Competence Rather Than for ‘Intelligence'”. Psychotherapie breve. Retrieved May 2, 2023. https://www.therapiebreve.be/documents/mcclelland-1973.pdf 

  2. Katz, Lee Michael. (January 2015). “Competencies Hold the Key to Better Hiring”. SHRM. Retrieved May 2, 2023. https://www.shrm.org/hr-today/news/hr-magazine/pages/0315-competencies-hiring.aspx

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