Competency is a concept that gives an indication to the employee about the areas and levels of perfor­mance that he would be expected to do. It is like a map that shows the employee the kind of behaviour that would be valued, recognized, and in some organizations, rewarded as well.

Competency is a cluster of related knowledge, skill, and attitude that affects a major part of one’s job (a role or responsibility), and correlates with performance on the job. It can be measured against accepted standards, and can be improved through training and development.

Competency is the behaviour that employees must have or acquire as input for a situation in order to achieve high levels of performance, whereas competence relates to a system of minimum standards of an organization or is demonstrated by its performance and outputs.

Some of the types of competency are as follows:-


1. Threshold competency 2. Differential Competency 3. General Competency 4. Functional Competency 5. Technical Competencies 6. Business Competencies

7. Interpersonal Competencies 8. Intellectual Competencies 9. Job-Based or Workplace Competencies 10. Leadership Competencies 11. Firm Wide Competencies 12. Generic and Specific Competencies.

Types of Competency: Threshold Competency, Differential Competency, General Competency and a Few Other Types

Types of Competency – Top 2 Types: Threshold Competency and Differential Competency

Competency is a concept that gives an indication to the employee about the areas and levels of perfor­mance that he would be expected to do. It is like a map that shows the employee the kind of behaviour that would be valued, recognized, and in some organizations, rewarded as well.

Competency is a cluster of related knowledge, skill, and attitude that affects a major part of one’s job (a role or responsibility), and correlates with performance on the job. It can be measured against accepted standards, and can be improved through training and development.


Types of Competencies:

1. Threshold competency

2. Differential competency.

1. Threshold Competency:


These competencies are common in nature and they don’t bring any greater difference in the performance or in results.

2. Differential Competency:

These competencies are a set of distinct competencies of skills which an individual possesses and which add value to the whole. These competencies are a different competencies which an individual possessing and which adds value to the whole. These competencies may not be exhibited by each and every individual. These are unique in nature and rare. That’s why they are called as differential competencies.

In the organisational context differential competencies plays a vital role in achieving the goals with the efficiency.

Types of Competency – Top 6 Types

Competencies are vital and very important to be identified for the success of any organization. Some companies are seen to conduct competency-based interviews in order to identify them. Different authors have classified competencies differently.


Universal, transferable, and unique competencies are the three types of competencies.

1. Universal competencies emphasize that all the employees of an organization must reflect the company’s values, culture, and business imperatives. Some examples are customer focus, teamwork, communication skills, and cost- effective service delivery.

2. Transferable competencies include skills and abilities needed to perform several roles in varying degrees of importance and mastery. Examples are leadership skills and managerial skills.


3. Unique competencies refer to specialized know-how or abilities required within a specific role or job.

Many academicians have mentioned five types of competency characteristics such as motives, traits, self-concept, knowledge, and skills. Out of these, the characteristics, motives, traits, and self-concept are invisible, whereas knowledge and skills are visible.

Motives – Something that a person constantly thinks about or wants and drives him to take actions

Traits – Physical characteristics and an individual’s consistent responses to situations or information


Self-concept – A person’s attitudes, values, or self-image

Knowledge – Information that a person has in a specific content area

Skills – Ability to perform a certain mental or physical task.

Type # 1. General Competency:

There are some competencies that are essentially required by all human beings irrespective of the type of the organization, position in the organizational hierarchy, nature of products and services, whether it is operating in mild or tough competition, national or multinational, functioning in placid or turbulent environment, and so on. These are generic competencies which are also termed as ‘skeleton competencies’.


Generic competencies include ambition, career aspirations, creativity, originality, compassion, peer relationship, organizing ability, personal learning, interpersonal savvy, self-knowledge, self-development, time management, urge to be a self-starter, etc.

Just as no person can stand without a skeleton, an individual cannot suc­ceed in his/her professional career without having the generic or skeleton competencies.

Research scholars and organizational stalwarts have expressed their views and have defined competency, top competency, core competence, and competency mapping from different angles.

Type # 2. Functional Competency:

Functional competencies are specific to a specific department or a type of job. Today’s business scenario is very demanding and considers competency mapping very important for its survival and growth.

Competency identification skill is, in itself, a competency, which falls under the category of technical competency. The advent of information technology has resulted in the inclusion of computer competen­cies and electronic system skills in the technical competency set as well.

Selecting the facilities required to perform a task and prepare objectives in measurable terms require skills, which also belong to this set. Developing a system of documentation, capacity of coaching, gaining negotiation skills, and managing knowledge have emerged as essential requirements in organizations. These need requisite competencies for the success of any organization.


In the changing scenario, a complete understanding of the business is vital. In the competitive environment, cost benefit analysis is an essential requirement in view of resource crunch, and hence, developing a delegation of junior colleagues is inescapable. Information and its supporting medium is a document that includes specifications, procedure documents, drawings, reports, standards, etc.

Records are special types of documents. Documents and records are required to preserve information legibly and in a properly-indexed format to facilitate easy retrieval. Thus, documents and record management has also emerged as an essential requirement. These kinds of skills belong to the category of business competencies.

Coaching is another aspect that has become really important for the candidates to go through in order to achieve high efficiency from the employees. It helps in facilitating the enhancement of work performance of individuals. The coach can either be a manager or an external consultant. The coach can help anyone who wants to get better at their work. Coaching can be offered through designated coaching sessions.

Feedback is a HRD mechanism that helps a person understand his/her own strengths and weak­nesses. The supervisors need to take the responsibility of observing, identifying and providing feedback to the junior colleagues about their strengths and weaknesses. In specific organizational situations, the feedback system emerges as an indispensable tool.

All of us negotiate in various spheres of our lives. In an organization, everyone negotiates informally at all times without even being aware of it. However, formal negotiation is a skill that can be learnt through experience and practice. A man who has never participated in formal negotiation is unlikely to have the skill.

People who negotiate a lot tend to be much more skilled. Negotiation skills can be induced within junior colleagues. Also, one has knowledge about a process, procedure, or system. Enhancement of presentation skills might help him to disseminate his knowledge. These types of skills form the set of interpersonal competencies.


The scope of knowledge management emphasizes on data, information, knowledge, and wisdom. Acquisition and use of knowledge needs intellectual versatility. Organizational phenomena and their interrelationship require presentation through models, and thus model building skills and observation skills manifest their importance. Knowledge of self is an essential requirement. Additionally, a senior organizational leader must have vision and visionary skills. Intellectual competencies include all these skills.

Therefore, we can summarize the various visible parts of competencies (knowledge and skills) under the categories of competencies discussed so far.

Let us now study other competency sets comprising technical competencies, business competencies, interpersonal competencies, and intellectual competencies.

Type # 3. Technical Competencies:

This category includes the underlying knowledge and skills (the portion of the iceberg that remains above the surface of water), described in observable and measurable terms that are necessary in order to perform a particular task assigned to a person achieving quantitative target and conforming to qualita­tive requirement.

These competencies include the following:

i. Competency identification skill


ii. Computer competencies

iii. Career development theories and techniques understanding

iv. Electronic system skill

v. Facilities selection skill

vi. Objectives preparation skill

vii. Performance observation skill


viii.Training and development theories and techniques skill

ix. Research skill.

Type # 4. Business Competencies:

Business competencies include knowledge and skills essentially required for decision-making and to run a business.

Some business competencies are:

i. Business understanding skill

ii. Cost benefit analysis skill


iii. Delegation skill

iv. Organization behaviour understanding

v. Organization understanding

vi. Project management skill

vii. Marketing skill

viii.Concept selling skill

ix. Documents and records management skill.

Type # 5. Interpersonal Competencies:

The interpersonal competencies comprise knowledge and skills to develop the workforce, maintain relationship, understand others, and to communicate effectively.

i. Coaching skill

ii. Feedback skill

iii. Group process skill

iv. Negotiation skill

v. Presentation skill

vi. Questioning skill

vii. Relationship building skill

viii.Writing skill.

Type # 6. Intellectual Competencies:

These competencies need to be possessed by the organizational leaders for survival, and growth of the business in the complex and turbulent business environment.

i. Data reduction skill

ii. Information search skill

iii. Intellectual versatility

iv. Model building skill

v. Observing skill

vi. Self-knowledge

vii. Visioning skill

viii.Performance management skills.

Types of Competency – Workplace Competencies, Leadership Competencies and Firm Wide Competencies

Though there are various ways of categorizing competencies, the most common way of classifying competencies are as follows:

1. Job-Based or Workplace Competencies:

As the name suggests, these are technical and behavioural competencies required for a job. These competencies are the ones that usually get reflected on a job specification form designed by the HR department of an organization. For e.g., a sales executive must possess excellent communication skills, drive for excellence, advanced numerical abilities, above average intelligence and high ambition.

It is important to note here that a competency can be a behavioural competency for a particular job profile and the same competency can be a technical competency for another job profile in the same (or different) firm. Continuing the example of the sales executive stated above, excellent communication skills are technical skills for the sales executive whereas excellent communication skills are a behavioural skill for an accountant in the Finance department of the same company. This is because the classification of the job-based or workplace competency depends on the job description.

2. Leadership Competencies:

Talking about leadership competencies is not easy. Absolutely anything and everything under the sky that sounds good to the ears, seems like a competency a good leader must possess. We can have a laundry list of dozens of qualities or virtues for effective leadership. Having a never ending list of personality traits as leadership competencies will make it impossible for both employees and employers to make it a practical approach.

The bucket list of attributes makes it very challenging for employees to believe that they too can be leaders. So it seems feasible to have a few competencies that are non-negotiable for the organization’s definition of leadership. For example, a business organization may decide to measure leaders on say five things such as conceptual skills, integrity, impact and influence, communication skills and business acumen.

Whatever competencies a firm decides to measure leadership on, it must develop the definitions of these competencies, behavioural indicators to measure it and a rating scale for numerical representation. The organization can also choose to measure leadership at different levels of the organization on the same set of competencies but the employee required to display higher levels of proficiency on the same, as he moves higher in the corporate ladder.

For e.g., at a Product Head level, a manager may be expected to exhibit a minimum of 6 (on a scale of 1 to 10, one being the lowest and ten being the highest) level of conceptual skills as a competency, whereas a regional manager (whom the product head reports to) might be expected to display a minimum of 8 on the same scale for the same competency.

Leadership competencies can be understood as three fold.

Each of these along with their behavioural indicators have been explained below:

i. Building Relationships and Fostering Partnerships

ii. Inspirational Leadership

iii. Strategic Planning and Future Orientation

i. Building Relationships and Fostering Partnerships entails the following:

a. Focusses on the community, learners and employers, seeking partnerships to enable effective delivery in a proactive manner

b. Identifies the potential stakeholder contribution through networking and utilizes it for the benefit of the firm and its customers

c. Creates a positive and enabling working environment

d. Garners respect and builds trust through honesty, integrity, transparency and stout professionalism

e. Works effectively and productively with the Board of Directors

f. Builds rapport and productive symbiotic working relationships within the business verticals

g. Creates a positive impression of the firm in dealings with external customers and partners

ii. Inspirational Leadership includes the following:

a. Evaluates the long-term impact on various stakeholders before reaching a decision

b. Takes hard decisions and is consistent in the approach

c. Anticipates problems and puts preventative action in place

d. Is fully aware of the firm’s commercial situation and accurately predicts the impact of external factors and plans appropriately

e. Actively focuses on, and is committed to firm’s ultimate goals

f. Constantly identifies and wholeheartedly pursues opportunities

g. Sets, delivers and expects high standards of performance in all aspects of delivery

h. Is open to others’ alternate views or opinions

i. Sets challenging strategic business imperatives and goals ensuring that these contribute directly to the achievement of the strategic plan.

iii. Strategic Planning and Future Orientation includes the following:

a. Conducts comprehensive external and internal audits to get insights and understanding of the marketplace, the competitive environment, and organization’s internal competencies/capabilities

b. Evaluates and communicates the long-term impact before reaching a decision/conclusion

c. Communicates positively, confidently and clearly the future plans minimizing ambiguity

d. Sets a clear direction of the enterprise over the long term and clearly articulates and aligns the mission and vision

e. Determines and associates accountabilities at each level and position in the organization

f. Constantly identifies and pursues opportunities, constantly monitoring compliance

g. Ensures the plans are performed as designed, holds regularly scheduled formal reviews of the process and makes refinements as necessary

3. Firm Wide Competencies:

Competencies required by all employees of an organization irrespective of their job roles, level in the organizational hierarchy and location are firm wide competencies. These are also called as core competencies. For example, a BPO recently announced that all employees of that company must possess xyz defined level of proficiency in English language regardless of what job they do.

Types of Competency – Popular Contrasting Competency Types

Competencies often get organized under various groups.

Some of the popular contrasting competency types are as follows:

1. Generic and Specific Competencies:

Generic competencies are applicable to a wide range of positions, for example, for all managers across different organizations and industries, whereas specific compe­tencies in contrast are applicable only for a particular position in a given industry, for example, general manager (materials) for a com­pany belonging to the FMCG industry.

Specific competencies would vary from industry to industry. The general manager (materials) from an FMCG company will not fit into a similar role in the steel industry. The specific competencies are different for different positions, so the general manager (materials) will not be able to fit into die role of general manager (sales) in the same company.

2. Differentiating and Threshold Competencies:

Competencies that differentiate superior performers from effective or adequate perform­ers are called differentiating competencies. In contrast, threshold competencies are the ones that are possessed by both superior and effective performers and therefore do not differentiate between the two groups. All employees in a specific job role should have the threshold competencies specified for the role.

3. Behavioural and Functional Competencies:

Competencies which are deeply connected with behaviour are termed as behavioural com­petencies, whereas competencies connected to technical, functional or domain expertise, which are essentially cognitive in nature, are termed as functional competencies.

Five Underlying Human Characteristics that Constitute Competencies:

According to Spencer and Spencer (1993), competencies are underlying charac­teristics of a person which are five in number.

These are as follows:

1. Motives:

These refer to personal cravings that stir people to action. As per McClelland (1961), core motives in the job context are essentially three, namely achievement, affiliation and power. Persons with strong power motive may look forward to widening their area of influence, whereas persons having pronounced achievement orientation would find meeting a challenging goal highly satisfying. Affiliation motive is a drive to relate with people.

2. Traits:

Traits are enduring characteristics that describe an individual’s behaviour. It is defined as -‘an aspect of personality that is reasonably a characteristic of a person, is relatively consistent over time and distin­guishes that person in some way from other people’. Traits include an individual’s physical characteristics as well.

3. Self-Concept:

This is a collection of beliefs about oneself. According to Carl Rogers, more positive the self-concept is, greater would be the traction on performance.

4. Knowledge:

This refers to the information that the incumbent has acquired in certain content areas either through education or through experience. For example, market knowledge for a salesperson.

5. Skill:

In simple terms, skill is the ability to perform certain physical or mental tasks really well. For example, negotiation skill for a pur­chase manager. The difference between knowledge and skill would be analogous to the difference between theory and practice.