5 Benefits of Competency Management System

competency based performance management system

Competency management is a process that tests, measures, evaluates, and develops employees’ performance at the individual and organizational levels. Effective competency management can make a company exceptional. Although this competency management process may be under the umbrella of Human Resources, buy-in of and participation from every employee is critical to its success.

Picture a real-life example of competency management the Canadian government assessing driver competency. Each province and territory measures driver competency through a written and practical driving exam, which is standardized and require a minimum age. Those who pass the exams receive a driver licence, and expiry dates allow the government to check competency levels throughout the person’s life.

The main benefit of managing driver competency? Safer roadways for everyone in Canada.

In high-risk work environments, competency management is of upmost importance for the safety of all. It is not just enough to know about a piece of equipment; the company must have a system in place to test, measure, evaluate, and develop each core competency.

An employee may have knowledge about a forklift, but he or she needs to demonstrate how to operate the forklift before given permission to use it. Furthermore, how well can the employee maneuver a forklift safely?


A company will experience many benefits when it implements effective competency management programs, including the following:

  1. Improved Worker Safety and Morale
  2. By validating competency before allowing employees to undertake high-risk activities or activities that have the potential to place people and property at risk, workplace accidents are reduced and people feel more comfortable and safer in the work environment, improving overall morale.

  3. Reduced Overall Company Risk

  4. A competent workforce creates a safer workplace, minimizing the chances for injury, property damage, fines, and/or lawsuits.

  5. Improved Decision Making

  6. When the competencies of all members of a workforce are evaluated, leaders can see the overall strengths and weaknesses of its workforce in terms of skills and capabilities, providing information that can be invaluable for making strategic organizational decisions and influencing the company’s priorities and direction.

  7. Easier Recruitment and Retention

  8. When companies earn a reputation for setting high standards of excellence via disciplined implementation and validation of worker competency, it becomes easier to recruit and retain employees who value and enforce safety.

  9. Improved Service Quality

  10. Employees who are competent work more efficiently and effectively, producing better results. Consequently, quality improves, and so does customer satisfaction.


First, determine which competencies are critical for success in the company, especially as it relates to workplace safety.

Next, evaluate each competency.

  • Is this done best with written or oral exams?
  • Is a hands-on test necessary?
  • What score is considered a passing grade?

Many times, competency measures already exist. Time can be saved by searching for those before seeking to start from scratch.

Finally, have plans in place for all levels of competency.

  • If an employee is found competent in a skill, does he or she then have permission to be unsupervised?
  • If an employee does not pass a competency exam, is there a training program in place to build the missing skills or knowledge? Would mentorship be helpful?

As time goes on, an effective competency management program can become an integral part of a company’s overall operations.


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