You use tools to guide decision making in every part of your business. Financial reports and projections influence your spending and investment decisions. In marketing, client personas and advertising metrics help you decide where and how to communicate with potential customers. But what guides your choices when it comes to training, hiring, and development? For that, you need a competency model. This workforce planning and employee assessment tool helps you choose the right training programs and offer employees opportunities to advance within your organization.
A good competency model considers the responsibilities of the job, the regulatory guidelines that impact the role, and the mission and philosophy of the organization. Fortunately, you usually don’t have to create a competency model from scratch. Regulatory agencies and credentialing bodies have already done some of the work for you. Training partners can help as well. Before we get into the details of how to develop competency models, let’s look at why you’d want to adopt one.
What is a competency model?
Trainers and educators use the term competencies to describe the collection of skills, knowledge, abilities, and characteristics needed to do a job. These can include technical skills like risk management and soft skills like integrity. Competencies look beyond educational credentials to consider the applied skills necessary for a role.
A competency model, sometimes called a competency profile, organizes these elements into a framework. The skills and supporting behaviours are often visualized using a chart or simple graphic to make them easier to understand. Even if you’ve never seen a competency model at work, the concept is probably familiar.
Competency models are standard in schools. The grading rubrics used by teachers are simple competency models designed for a specific grade level or project. Just as teachers use rubrics to assess student performance, competency models make it easier to identify and monitor whether an employee has the right competencies for the job.
Why develop competency models?
Not only can competency models help you assess the skill level and knowledge of your employees, but they can also serve as a guide as you select training and development tools or programs. When you partner with a training vendor, they can create training opportunities based on target competencies. They can also use these models to assess learner progress. Meanwhile, you can see if the training program is helping employees to improve.
Regulatory agencies and credentialing organizations also use competency models in their rulemaking and communication with stakeholder organizations. For example, in August 2020, the Financial Services Regulatory Authority of Ontario (FSRA) proposed new regulations around the use of financial planner and financial advisor titles based on competency standards. If these regulations are approved, industry professionals will need to meet the standard set by this competency model to earn and maintain certification.
In short, competency profiles can make your organization stronger. When you create or adopt a competency framework, you help your employees meet industry standards. They are more likely to be eligible for credentialing and advancement, enhancing the overall stature and reliability of your organization. The functional areas of training, development, recruitment, workforce planning and compliance all benefit.
Four parts of a competency model
As you’ll see, competency models come in many forms. They can be simple or complex depending on the organization and the roles being described. However, they all share four basic elements. These are:
1. A list of competencies
Each element on this list should represent a competency relevant to the industry or the role. Think broad strokes here. Communication, integrity, or risk management are all good examples. If you have more than a handful of skills, and you probably will, you can subdivide this list into categories. Occupational, industry-specific, and foundational competencies might be useful groupings. You can think of these three categories as layers that build upon each other. Start with what makes a good employee (foundational). Then move to what makes an employee effective in your industry (industry-specific). Finally, include what makes an employee successful in a target role or service area (occupational).
2. Definitions of each competency
Words like communication and integrity are vague, leaving them open to interpretation by individual managers or employees. That’s why it’s so important to define each competency on your list clearly. Detailed definitions help ensure consistency across the organization. Try to limit these to a sentence or two. If it takes more than that to describe any given competency, you might need to clarify your thinking.
3. Behavioural descriptions to illustrate each competency
Outline the behaviours that prove an employee has mastered a competency. Behaviour descriptions serve a double purpose. First, they make descriptions clearer. Second, they serve as assessment points for managers evaluating employee performance and trainers assessing learner progress.
The best descriptions are both observable and measurable. If you describe communication as “good at talking to clients” you’ve left too much room for interpretation. What does good mean? A description like “uses documents and visuals to clearly explain investment options to clients” is much more precise. You can easily see whether or not the employee engages in this behaviour.
4. Visual representation
Most competency models also include a visual representation to show how the competencies are related. You can choose any graphic that makes sense to you, but there are three that tend to appear most often.
- A triangle or pyramid emphasizes how competencies build upon each other. You might use this structure to show how employees can progress to higher levels of responsibility. It can also illustrate how workplace competencies build upon academic ones, which are founded on personal skills.
- A wheel-style graphic can help to show the interconnectedness of the competencies, emphasizing how each flows into the other.
- Tables or rubrics can help you represent multiple complex competencies across responsibility levels. You might even combine tables with one or both of the other styles to improve understanding.
Examples of competency models in financial industries
Strongly regulated industries, such as the accounting, securities, financial planning and insurance industries typically have well-defined, public competency standards. Before you start creating a competency model for your organization, you should review ones developed by your industry’s governing and credentialing bodies. They offer valuable insight into the skills, abilities, and knowledge necessary to thrive in different roles. Mapping your firm’s competency model to your regulator’s not only makes your model more relevant, it can reduce your legal liability.
Example 1: Competency Profiles for Audit Professionals
The Office of the Auditor General of Canada publishes competency profiles for employees at all levels of the organization. It lists competency standards on a simple chart organized by skill area, employment level, and job title. These skills include “technical subject matter expertise” and “personal effectiveness and project management skills.” These somewhat lengthy titles are coupled with a one-sentence description of each skill and a bulleted list of behaviors for each level and title.
If your organization finds these competencies overly broad, breaking them down into component parts might help. For example, you might divide personal effectiveness and project management skills into distinct competencies, each with its own definition and behaviors.
Example 2: Financial Planner Competency Profile
The FP Canada Standards Council regularly updates competency standards relevant to financial planning professionals. It surveyed the CFP professional community to shape these standards. The result is a framework that includes financial planning functions, professional skills, and technical knowledge, all centering around fundamental financial planning practices. This framework may be more complex and detailed than most firms need for their day-to-day talent management and development, but it can serve as a valuable starting point for any organization that employs financial planners.
Example 3: Controller Competence Model
The International Group of Controlling outlines a controller competence model in a gargantuan 238-page document that also explores factors influencing this industry. For an overview of the competency profile, readers can skip to page 38. It includes a list of competencies as well as competence and function profiles for selected functions. Under this model, competencies are divided into four categories: personal, activity and implementation, socio-communicative, and professional and methodological. For detailed descriptions of each competency, you can skip to part two of the report, which starts on page 49.
The examples above attempt to create standards for an entire industry. As a result, they’re probably more complicated and more generalized than the ones you would make for your own organization. Even so, you can use these existing models as a template.
Developing or customizing a competency model
It can be tempting to just adopt an existing competency model as written, but this strategy probably won’t deliver the best results. Every organization has a unique blend of talent, clients, and needs. When you develop your own competency model (or modify an existing one) you end up with a document that makes sense to your employees and matches your organizational philosophy.
Follow these five steps to develop a competency model:
1. Gather information – The examples above can be a starting point for your research, but you can dig deeper. Look at the certification and training standards published by your province, territory, state, or federal government. Your goal is to match competencies to those standards. They should also take into account the level and job requirements of the role within your distinct organization. Finally, consider the mission and philosophies that guide your organization.
2. Develop a draft – Tools like the Skills and Competencies Taxonomy released by the Government of Canada can help you draft clear definitions for foundational and technical skills. To draft behaviors, look to the daily tasks performed within the role. What actions or tasks apply to each competency? Job descriptions can be helpful here.
3. Gather feedback from Subject Matter Experts – After you’ve assembled a first draft you can ask SMEs in both compliance and training to review the model and provide feedback. If you have a training partner, they can be invaluable here. They’ve probably seen competency models from all kinds of organizations and may have insight your organization doesn’t. Ask your SMEs if you missed any competencies. Check that all listed competencies are relevant to the job.
4. Refine your model – With feedback, you can improve and hopefully simplify your model to make it as clear and comprehensive as possible. At this stage you may need to split what seemed like a single competency into two, or delete some competencies altogether. Think carefully about how the competencies relate to each other and how you can illustrate those relationships.
5. Validate Your Competency Model – Finally, you’re ready to share your model with the employees and managers who will use it. Ask them whether the competencies make sense and the definitions are clear. Check that the selected behaviours match the job level.
Repeat these five steps for each role or level of the organization that needs a competency model. When you’re done, share the final documents with employees, managers, and training partners. Remember to return to your document anytime compliance or training standards change. You might need to make adjustments.
Support for competency modeling
Developing effective competency models is a labor intensive process. Getting it right involves deep research and iterative development. But the payoff is a document that can help make your employees and your whole organization more effective.
Ultimately, competency modeling is a strategic tool. It helps you avoid training for the sake of training, and helps you keep clear goals in mind. If the process seems overwhelming, you might need the support of a training partner experienced in the compliance industry.
At Oliver, competency models are the foundation of our programs. We use them to identify relevant skills, knowledge, and attitudes for career success and accountability. They guide our content development and shape our exams. If your current competency profiles look more like a mess than a model, we can help. Contact an Oliver training expert for details.