Understanding, Evaluating and Developing Competencies

The shortage of skilled workers is worsening, AI tools are fundamentally changing job profiles and Remote Work Places new demands on collaboration. In this environment, it is no longer enough to judge employees based on formal qualifications or professional experience. Companies need a differentiated understanding of which competencies exist in their organization, where gaps exist and how they can be closed strategically. Those who systematically record, evaluate and develop competencies create the basis for resilient teams that remain able to act even in uncertain times.

This article shows what competencies mean in a business context, how competency models and competency matrices work as control tools, and what role digital competence management plays for modern HR and project organizations.

What are competencies anyway?

The term “competencies” is often used synonymously with skills, abilities or qualifications in everyday business life. However, these terms describe different dimensions:

Knowledge Refers to theoretical knowledge acquired, for example, through training or study. Skills Are practical skills that can be learned and trained. Skills On the other hand, describe the ability to apply knowledge and skills appropriately in specific work situations, i.e. to act independently under uncertainty, time pressure or in complex contexts.

In a business context, we usually distinguish between four central areas of competence:

Professional competencies include professional or industry-specific knowledge and technical know-how. In a IT companies This includes programming skills, cloud architectures or database design. In consulting, this includes, for example, industry expertise or process modelling.

Methodological skills Describe the ability to obtain information, analyze and solve problems in a structured manner. This includes Project management methods, analytical thinking, or using data analysis tools.

interpersonal skills Relate to dealing with other people: communication skills, conflict management, empathy or the ability to work constructively in heterogeneous teams.

Personal competencies Relate to self-organization and personal development: self-reflection, resilience, willingness to learn or the ability to deal with change.

This differentiation is more than academic theory. It enables companies to specifically identify why an employee is successful in their role or where exactly there is a need for development. An experienced software developer may be professionally brilliant, but may fail in team management because he lacks methodological competence in managing employees or social skills in resolving conflicts.

Why competency management is crucial today

While HR departments used to work primarily with static job descriptions and organizational charts, the focus is increasingly shifting to dynamic competence management. The reasons for this are obvious:

Strategic competitiveness: Companies today compete less on capital or infrastructure, but on the skills of their employees. Anyone who builds up new competencies faster or makes optimum use of existing ones gains market shares.

Data-based personnel development: Good feeling and length of service alone are no longer enough to make promotion decisions or to distribute continuing education budgets. Systematic competence management provides an objective basis for decision-making and makes development potential transparent.

Integration with talent management: Competencies are the link between recruiting, onboarding, performance management and succession planning. A consistent understanding of competencies makes it possible to specifically promote talent across the entire employee life cycle.

Agility and ability to change: In agile organizations, employees switch between projects or roles more frequently. Competency-based skill management makes it possible to assemble teams flexibly and identify know-how gaps at an early stage.

Especially in knowledge-intensive industries such as IT services, Management consultancies or agencies Competence management has long been a critical factor for success. Projects are no longer staffed according to availability, but according to competence profiles. Offers do not only calculate person-days, but also specific expertise. And employees expect transparent development prospects instead of vague career promises.

Competency models as a strategic basis

A competency model defines which competencies are relevant for specific roles, teams, or the entire company. It serves as a reference framework for personnel selection, performance appraisal and development planning.

The development of a competency model usually follows these steps:

1. Strategic derivation: What competencies does the organization need to achieve its business goals? An IT service provider with a focus on cloud migration requires different skills than a creative agency.
2. Role definition: What specific competencies are required for individual roles or functions? A product owner needs different skills than a backend developer.
3. Competency levels: How can different characteristics be described? Common models work with 3-5 levels, for example: basic knowledge — advanced — expert — thought leader.
4. Behavioral anchor: Which observable behaviours characterize the respective competence level? Instead of speaking abstractly of “good communication skills,” it is specified: “Conduct moderated workshops with 15+ participants” or “Successfully mediate between conflicting stakeholder interests.”

practical example: A medium-sized software company with 80 employees is developing a competency model for its project teams. It defines 25 relevant competencies, which are assigned to three clusters: technical competencies (e.g. frontend development, API design), project management skills (e.g. Scrum Master, resource planning) and business skills (e.g. customer advice, contract negotiation). Each competence is described in four stages and backed up with specific examples.

The model is used for several purposes: In recruiting, specialist departments check whether applicants have the required competence profile. In the annual meeting, employees and managers reflect on their current level of competence and define development goals. And in project planning, resource planning ensures that sufficient critical competencies are available.

A well-structured competency model not only provides clarity about requirements, but also transparency about career paths. Employees recognize which competencies they need to build up for the next development step, and managers can derive individual support measures in a targeted manner.

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From analysis to matrix: making competencies visible

While a competency model forms the conceptual framework, the competency analysis makes the current situation measurable. It systematically records which competencies exist in which form.

One Competency analysis Is typically carried out by:

• Self-assessment: Employees evaluate their own competencies based on defined criteria.
• External Assessment: Managers, Colleagues or Customers provide feedback on the observed level of competencies.
• Skills Assessment: Structured tests, case studies or practical exercises test specific skills.
• Data-based evaluation: Project documentation, certificates or continuing education certificates are included in the evaluation.

The 360-degree feedback approach, which combines several perspectives, has become particularly established. This reduces subjective distortions and provides a more differentiated picture.

The results of the competency analysis are often presented in a Competency matrix Visualizes. This represents employees, roles or teams in rows and the relevant competencies in columns. In the Cells, the respective characteristic is marked in color or with symbols.

Example of a competency matrix for a project team:

Legend: ○○○ = no competence | ●○○ = basic knowledge | ●●○ = advanced | ●●●○ = expert | ●●●● = thought leader

The Matrix shows at a glance:

• Where are competence clusters located? (The team is strong in backend development and API design)
• Where are critical gaps? (Only one person knows frontend at expert level)
• Who can coach whom? (Thomas could further develop Julia in React)
• Which continuing education courses are a priority? (Scrum Master training is useful for several team members)

In practice, competency matrices are created not only for individual teams, but at organizational or departmental level. They support strategic decisions such as:

• Which projects can be implemented with existing resources?
• Which competencies must be purchased externally?
• How resilient is the organization in the face of staff losses?

Modern Project Management Systems Integrate Competence Matrices directly into resource planning, so that Project Managers automatically see which competencies are available when putting together a team.

Skills Assessment and Digital Competence Management

The manual maintenance of competency matrices in spreadsheets quickly reaches its limits, particularly in growing organizations or when there are frequent changes. Digital solutions for skill management offer significant advantages here:

Central data storage: All competence data is recorded in a system and can be viewed transparently by authorized persons. This avoids isolated solutions and redundant data collection.

Automated skill gaps: The system compares target and actual competencies and automatically identifies gaps at individual, team or organizational level. Managers receive dashboard views with prioritized recommendations for action.

Skill-based resource planning: With the Project planning Availability is no longer just checked, but also specifically filtered by competencies. Who needs a Java expert with Scrum experience for three months? The software lists suitable candidates with their current competency profile.

Development recommendations: Based on defined career paths, the system suggests individual continuing education measures. Employees see transparently which competencies they still lack for the next step.

Historical evaluations: How have competencies developed over time? Which continuing education courses have resulted in measurable leaps in competence? Search analyses help to use development budgets more effectively.

Integration into Existing Systems: Professional skill management tools can be connected to HR systems, learning management systems, or project management software. In this way, continuing education qualifications are automatically incorporated into the competency profile and project bookings update the competency certificates.

Best Practices for Implementing Digital Competency Management

1. Start small: Start with a manageable set of competencies and a pilot department, instead of covering the entire company at once.
2. Create acceptance: Explain the benefits to employees, not as a control tool, but as a development opportunity. Transparency about uses is crucial.
3. Ensuring data quality: Define clear processes for when and how competency profiles are updated. Unique registrations quickly become obsolete.
4. Empower managers: Managers must be able to work with competency data, both technically and with regard to competency-based development discussions.
5. Iteratively improve: Competency models are not static. Get regular feedback and adapt categories or evaluation criteria to changing requirements.

This effort pays off, particularly in knowledge-intensive industries. An IT service provider with 200 employees reported that it was able to increase its project margins by an average of 8% through competency-based project staffing because over- and underqualifications were reduced. At the same time, employee turnover fell as transparent development prospects increased employer attractiveness.

Competency-based resource planning with ZEP

The targeted planning of employee resources and skills is crucial precisely where competence management meets operational project work. The ZEP module resource planning Makes it possible to systematically record, maintain and specifically match skills with project requirements. Instead of manually searching for suitable competencies in spreadsheets, you can manage all project resources centrally and get an overview of available capacities and competency profiles at any time.

The real-time function not only takes into account availability, but also time bookings, estimates of remaining expenses and vacation periods. This allows you to flexibly adapt resource planning to changing project requirements and ensure that critical skills are available in the right project at the right time. The integrated forecasting function It also helps to precisely predict future sales based on planned competencies. An important basis for strategic decisions about personnel development or external resources.

Competence development as a continuous process

Identifying competencies is just the first step. What is decisive is how companies derive systematic development measures from the knowledge they have gained.

Individual development plans: Based on competency analysis, employees define concrete development goals together with their managers. These are stored with learning formats, time frames and success metrics. A development plan could include: “Expanding the 'API design competence' from level 2 to level 3 within 6 months by: participation in external training, taking on API review tasks in two projects, pair programming with Senior Architect.”

Blended learning: Competency development works best through a mix of formal training, practical application, and social learning. Digital learning platforms offer on-demand courses for theoretical basics. The application is carried out in real projects, accompanied by mentoring or coaching. Communities of practice enable the exchange of experiences with colleagues.

Combining skill management and learning management: Modern learning management systems are directly linked to competence management. In their competence profile, employees not only see their current status, but also suitable continuing education opportunities. After completing a course, the competency profile is automatically updated.

Development of competencies in the context of new forms of work

• AI competencies: Dealing with generative AI is becoming a basic skill in many professional fields. Companies must not only impart technical skills, but also promote ethical reflection and critical questioning of AI outputs.
• Agile ways of working: The transition to agile methods requires not only process knowledge but also new social and methodological skills: self-organization, iterative work, constructive feedback culture.
• Remote Work and Digital Collaboration: Virtual team leadership, asynchronous communication or secure use of digital collaboration tools are competencies that rarely appear in classic job descriptions, but are becoming increasingly critical to success.

Measuring development successes

How do you recognize whether competence development is actually effective? In addition to updating competency levels, the following indicators help:

• Project Performance: Are Projects Completed on Time and Within Budget?
• Customer satisfaction: Is the rating by customers improving?
• Internal mobility: Can more employees take on more demanding tasks?
• Employee Retention: Is Turnover Falling in Areas with Systematic Skill Development?

A continuous competency development process combines strategic corporate goals with individual development needs. Employees do not see their continuing education as just any measure, but as a targeted step in their career development. And companies are systematically building up the skills they need for future challenges.

Conclusion: Skills are the new capital

In an economy where knowledge and skill determine competitive success, systematic competence management is becoming a management task. It is no longer enough to maintain organizational charts and archive job descriptions. Companies must understand what competencies they have, where critical gaps exist and how to continuously develop their organization.

The journey from traditional qualification thinking to competency-based talent management requires a cultural change: away from rigid hierarchies and towards learning organizations. Away from unique personnel files, towards dynamic competence profiles. Away from good instinct decisions, towards data-based development strategies.

The good news: The tools are available. Competency models, competency matrices and digital skill management systems have proven effective in practice. What is decisive is the will not to regard competence management as an HR bureaucracy, but as a strategic lever for organizational development.

Companies that invest in competence management today are creating resilient teams that can react flexibly to change. They reduce dependencies on individual Knowledge Carriers, improve their project performance and increase their employer attractiveness. In short: They make themselves fit for the future.

Because in times of accelerated change, it is not those who have the best degrees that win, but those who have the relevant competencies, continuously develop and use them in a targeted manner. Competencies are the new capital and successful competence management is the investment that pays off in the long term.