Ask anyone which is worse, an unskilled person or an incompetent person and I’d bet money most will answer incompetent. Why? The difference in meaning is subtle, but profound. An unskilled person can be trained. The word incompetent implies that the individual at hand does not have the aptitude to succeed or grow – they lack the basic competencies to get the job done.

I mention this because one of the most common mistakes made in Human Capital Management is confusing skills with competencies. Skills can be learned, certificates can be earned, etc. Competencies take much longer to develop. For example, a skill might be profient in C++ (a programming language), but a competency might be high capacity for problem solving. Problem solving is important for programming in any language, and can be applied to many other challenges in the workplace.

SuccessFactors Research conducted a study of competency management of our own customers, and was able to identify what some winners do in various industries. The implication was pretty clear, companies that effectively manage the competencies of their people have greater potential to do better. But competencies aren’t just about overall company performance – they are highly relevant to individuals. If you can figure out which competencies are the most important for a given position, you can better place and develop people to succeed in that position. Competencies aren’t just leading indicators of success for your company, but also for your people.