Competency vs. Skill Matrix: Understand the Differences and How to Use Both Strategically

A competency matrix is a strategic talent management tool, aiding recruitment, development, and retention. A skills matrix is instrumental in pinpointing skill gaps and informing targeted development plans for teams. Understanding the distinctions between a competency vs. skills matrix can significantly enhance HR practices.

This article will explore how competency and skills matrices can be used as strategic tools in talent management. You will understand the similarities and differences between a competency vs. skill matrix and how, when used together, competency and skill matrices provide a comprehensive framework for assessing, developing, and leveraging talent at your organization.

What is a skill matrix? How is it used in an organization?

A skill matrix is a grid that maps specific skills against employees to identify strengths and skill gaps. You can view skill matrices as inventories of your people’s skills. They also help to identify skills gaps that can be addressed through training and development.

The benefits of skill matrices are:

• Identify skills gaps: Skill matrices offer a systematic way to highlight skill gaps in teams or departments
• Support decision-making: They assist task allocation and project planning by clearly outlining the skills within each team
• Simplify recruitment: They offer a template for the skills required from new hires, streamlining the recruitment process

What is a competency matrix? How is it used in an organization?

A competency matrix is a tool for mapping the required competencies—skills, knowledge, behaviors, and capabilities—against specific organizational roles or individuals. It visually represents which competencies are necessary for which roles and at what proficiency levels.

Its purpose is to:

• Assist in identifying employee skill gaps and training needs
• Facilitate workforce planning and talent management
• Support performance reviews and career development planning

A competency matrix maps competencies to different organizational roles and searves as a benchmark for measuring and assessing those competencies. So, a competency matrix is more comprehensive than a skills matrix, offering a holistic view of the attributes required for performing in different roles.

A competency matrix would map different types of competencies, such as leadership, core, functional, and technical.

For example, the core competencies of managers, for instance, would include:

• Results orientation
• Communication skills
• Decision-making expertise
• Giving feedback
• The ability to set expectations and goals

Other examples of core competencies required in organizations include:

• Willingness to learn
• Building work relationships
• Negotiation
• Time management
• Data handling

However, the expected level of mastery for each competency would be different across levels.

For example, there will be considerable differences between an intern content marketer and a senior content marketer. The competency matrix shows the differences in skill mastery and behaviorally anchored expectations from the role. The focus is on what the employee has to achieve and how they do it.

Competency matrices are more intimately connected to performance expectations across functions and role levels.

The benefits of competency matrices are:

• Holistic employee evaluations: A competency matrix considers hard skills and soft skills, behaviors, and attitudes. This enables a more comprehensive assessment of an employee’s suitability for their role
• Targeted professional development: By identifying gaps in skills and behaviors, a competency matrix can guide more personalized and effective professional development plans, enhancing individual and team performance
• Improved succession planning: By identifying high-potential employees based on a wide range of competencies, succession planning becomes more accurate and efficient

Competency vs. skill matrix: Key differences and similarities

In this overview, we’ll explore the key differences, similarities, and appropriate applications of competency and skill matrices to help you determine which tool best suits your organizational needs.

Differences between competency and skill matrices

The key differences between competency and skill matrices relate to their scope and application.

Scope

A competency matrix has a broader scope than a skill matrix since it includes attributes beyond skills, such as knowledge, abilities, behaviors, and attitudes. A skill matrix, on the other hand, is focused on specific skills for employees.

Application

A competency matrix is used for organization-wide purposes, including strategic planning for recruitment, performance management, and career progression frameworks.

A skill matrix is used in a more operational manner, such as for workforce planning, task allocation, and identifying areas for training and development.

Similarities between competency and skill matrices

The key similarities between competency and skill matrices are:

Purpose

Both are used to assess and manage talent within an organization. They help to identify gaps, plan for future needs, and align individual capabilities with company goals.

Structure

Both take the form of grids that map competencies or skills along one axis and job roles or individuals along the other axis. Each cell in the grid indicates the individual’s or role’s proficiency in the competency or skill.

Facilitating career development

Both skills and competency matrices are used to support career development by identifying training needs and areas for improvement, whether for an individual or a team.

More relevant and targeted training programs can be deployed based on skill and competency-based evaluations.

When to use a skill matrix vs. a competency matrix

Which type of matrix is best to use in different situations? Let’s consider a few examples.

When should organizations use a skill matrix vs. a competency matrix: 7 Scenarios explored

Here are some real-world scenarios to further illustrate how competency and skill matrices are applied.

Scenario 1: Industry undergoing significant change

If your industry is undergoing significant change, use a skill matrix to audit your people’s skills. Then, compare them against expectations for future skill demands.

Consider the case of a traditional publishing company facing the rise of digital media. The company needs to transition from print to digital publishing to stay competitive.

With a skill matrix, you can survey the skills of the company’s people and identify what’s missing for future adaptability.

You may find, for instance, that strong skills exist in traditional publishing but are lacking in digital media, e.g., search engine optimization (SEO) and digital content management skills.

A skill matrix will help you identify these gaps and help the company focus its training and development on what’s required for future adaptability and growth.

Scenario 2: Updating career progression framework

If you’re updating your career progression framework to help retain and grow top talent, use a competency matrix. This will outline the competencies required for each role in your organization and show your people what they need for progression.

A competency matrix will give your people a good understanding of what’s required for success. It will help support planning and discussions during performance reviews.

Giving your people clarity like this can improve their engagement, retention, and overall satisfaction.

Scenario 3: Establishing a new L&D program

If you’re starting a new L&D program, use a skill matrix to identify the current gaps within your workforce while considering future skill requirements (as in scenario 1).

Consider the example of a manufacturing company that wants to establish a new L&D program to improve productivity and output quality. A skill matrix can be instrumental for a gap analysis and to identify where critical skills are missing.

For instance, the skill gap analysis may reveal that training in lean manufacturing and quality control is required. Use this insight when designing your new L&D program.

Scenario 4: Improving performance management

To improve performance management, use a competency-based performance management system.

The competency matrix is the first step in enabling this process. It will be useful for creating clear role descriptions and setting performance expectations.

Suppose a financial services company is having issues with vague role descriptions and unclear performance expectations. In that case, a competency matrix will help clarify what’s required for each role.

A competency matrix provides a coherent framework for performance management so that the company’s people are evaluated against the specific competencies associated with their roles. This will facilitate more objective and transparent performance management frameworks, enhancing employee satisfaction and performance.

Scenario 5: Running competency-based performance reviews

To enable competency-based performance reviews at your organization, use a competency matrix.

There’s a clear connection here—competency-based reviews evaluate people based on competencies, and a competency matrix articulates the competencies required for each role.

For example, consider a healthcare company that moves towards competency-based reviews to provide a more holistic evaluation of its staff.

A competency matrix defines the expectations for each role, not only on technical skills but also critical behavioral competencies, such as teamwork and patient care.

Competency matrices enable a more comprehensive understanding of your people’s performance and targeted competency development plans.

Tip: Use our competency-based performance review template as a shortcut for your next review cycle.

Scenario 6: Merging two teams

If you’re in the process of merging two teams at your organization, use a skills matrix. This will help you understand each team’s competencies and where the gaps are.

Consider a tech company that acquires a smaller startup.

In this scenario, a skills matrix can identify areas of overlap and gaps between the teams at the two companies. This helps inform how the teams are integrated and how well they’re balanced across the core competencies required for the merged entity.

Scenario 7: Launching a new product line

If you’re launching a new product line and want to equip your sales teams with skills relevant to the latest products, use a skill matrix.

For example, if a retail company is launching a new product, a skill matrix can assess the team’s current skills and identify what’s missing in relation to the new product. The matrix may reveal a need for targeted training on the product’s technical features, unique benefits, and specific sales techniques that will work best for the new product.

How to combine a competency matrix and a skill matrix for more effective talent management

As we’ve seen, competency matrices and skill matrices have their specific uses and benefits, and either may be a good choice, depending on your particular context.

But what if we can use both? Would this lead to better talent management?

There are many situations where using both matrix types enhances organizational talent management. By leveraging the strengths of both tools, you can apply a more comprehensive and complete approach to talent management.

Here are a few examples.

Deel Engage: Your one-stop-shop for developing your people

In talent management, competency and skills matrices are essential tools to help align your people’s capabilities with your business objectives. When working in tandem, these tools offer a more powerful and comprehensive framework for your people’s performance, training, and development.

Deel Engage is an integrated system enhancing the value both types of matrices bring to managing talent and career paths at your organization:

1. Define competency matrices across departments, roles, and levels and compile them in structured career frameworks
2. Conduct competency-based performance reviews using the competency matrices as guidelines for your evaluators
3. Scrutinize skill and competency profiles at individual, team, department, and company levels
4. Bridge skill gaps with an extensive learning library with thousands of learning resources tagged by skills and competencies

Deel HR, our truly global HRIS solution, is always included for free.

Book a demo to see how our solutions will help you build a high-performance workforce.