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What is Competency Modeling?

By Jacob Queen
Updated May 17, 2024
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Competency modeling describes a strategic business practice designed for choosing new employees. Businesses generally want to be as efficient as they possibly can, and hiring the best employees is often a major key to success. Companies use competency modeling to determine what qualities and skills are most important for success in each different job position. Once they have this data, they can use it to make hiring decisions and other strategic changes.

When a company begins competency modeling, it has a couple of different options. It can either do a study of its own employees, or it can buy data from people who’ve already gone through the process. The first option is generally more specific to the exact business model, while the second might be easier and less expensive. The choice will often depend on the uniqueness of the business and research availability.

If a company decides to do its own research, it'll generally start by figuring out which employees are most successful in each position. Then, it’ll put those people through a set of tests to determine what qualities they have. This will include information about their psychology as well as their background and skills. The company might also ask candidates about specific elements of their approach to the job.

Once the company has all this data, it will analyze it and look for patterns that could potentially cause these individuals to be especially successful in their respective positions. For example, the business may determine that successful stock managers tend to have some specific personality trait or an approach to dealing with conflict or a great aptitude for mathematics. The qualities could be very different depending on the position.

Once a company has done some competency modeling, it has to figure out a way to identify employees with these qualities. This may be relatively informal, or it could involve testing, depending on the approach of the specific business. The business may also change its background requirements for certain positions.

Some companies use competency modeling to improve their weaker performers. They may create courses designed to impart certain competencies to employees who currently lack them. This approach might not always make these employees into experts, but it could give the company a slight edge. There are also companies that fire employees who fall too far short of their competency models. This may even happen on a fairly massive scale across a large company as part of a strategic overhaul.

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