What is Competency? — Complete Guide with Ready-to-Use Dictionary

Origin of the Concept

The competency concept was first introduced by David McClelland, a psychologist at Harvard, in 1973 in his paper "Testing for Competence Rather Than Intelligence". He argued that IQ and academic credentials are weak predictors of job success, compared to measuring "behaviors that lead to superior performance." The framework was further developed by Spencer & Spencer (1993) in their book Competence at Work, which became the foundation for competency models used by organizations worldwide today.

Why Organizations Need a Competency Model

Imagine an organization without a competency model — at review time, every manager uses their own criteria. One gives a high score because "the employee is articulate," another gives a low score because "they don't speak much," even when both employees produce the same results. This is exactly the problem competency models were designed to solve.

Problem When There Is No Competency Model	Impact
Each manager uses different evaluation standards	Employees feel evaluations are unfair, morale drops
Job descriptions list "duties" but not "expected proficiency"	Wrong hires, wrong promotions
No clear promotion criteria	Top performers leave (they see no clear progression)
Training plans are not targeted	Training budgets wasted on irrelevant programs
Reviews based on KPI alone	You get people who hit numbers but behave poorly — teams fall apart

3 Types of Competency

Most organizations classify competencies into 3 main types, based on scope and target audience.

Type	Applies to	Examples
1. Core Competency (Organizational core)	Everyone — from CEO to support staff	Service Mind, Teamwork, Integrity, Customer Focus
2. Functional / Technical Competency (Job-specific skills)	Specific roles or job families: accounting, IT, sales	Financial Closing, SQL Writing, Market Analysis
3. Managerial / Leadership Competency (Management capabilities)	Supervisors, managers, executives	Strategic Thinking, Coaching, Decision Making

Some organizations add a fourth type — Behavioral Competency (e.g., Resilience, Adaptability) — but in practice these are usually folded into Core Competency.

Anatomy of a Single Competency

Each competency has 4 building blocks that make it actually measurable, not just a fancy slogan.

1. Name — e.g., "Service Mind"
2. Definition — what it means in the context of your organization
3. Proficiency Level — typically a 1-5 scale (Basic → Expert)
4. Behavioral Indicators — observable behaviors at each level (the most important piece — this is what raters use to assign scores)

Competency Dictionary — 15 Items Ready to Use

Below is a competency dictionary suitable for general organizations, broken down into 5 Core + 5 Functional + 5 Managerial — 15 in total. You can customize each item based on your industry and culture.

A. Core Competency (5 items — apply to everyone)

Competency	Definition	Behavioral Indicator (Level 3 — Proficient)
1. Service Mind	Genuine intent to understand and respond to the needs of customers (both internal and external)	Picks up on unstated needs; resolves ad-hoc issues without waiting for instructions
2. Teamwork	Ability to coordinate with colleagues to achieve shared goals	Helps teammates without being asked; adapts to the team's working style
3. Integrity	Operates with honesty, transparency, and adherence to ethics	Owns mistakes openly; reports data accurately; does not conceal work-impacting information
4. Creativity	Ability to generate new approaches that improve work or add value	Proposes new solutions to long-standing problems; evaluates results and iterates
5. Organization Support	Understanding organizational goals and aligning personal work to them	Adapts working methods when direction shifts; helps the team understand strategic intent

Note: The first four (Service Mind, Creativity, Teamwork, Organization Support) match the core competencies used in the Saeree ERP performance evaluation module, which weights Competency at 30% alongside KPI at 70%.

B. Functional Competency (5 items — sample for Back Office / IT)

Competency	Definition	Behavioral Indicator (Level 3 — Proficient)
6. Financial Reporting	Ability to prepare financial statements per accounting standards and close on time	Closes monthly books within 5 working days; prepares notes without needing rework by supervisor
7. Data Analysis	Ability to gather, analyze, and synthesize data to support decisions	Fluent in tools (Excel/Power BI); turns numbers into actionable recommendations
8. Process Management	Ability to design, improve, and control work processes for efficiency	Maps process flows; identifies bottlenecks; proposes time/cost-reduction improvements
9. IT Literacy	Ability to use the organization's core information systems effectively	Uses ERP/CRM fluently; troubleshoots basic issues; leverages shortcuts and report templates
10. Compliance Awareness	Ability to perform work in line with applicable laws, regulations, and standards	Knows job-relevant regulations (e.g., PDPA, tax); verifies documents before submission

Functional competencies vary widely by job family. Sales might have "Negotiation" and "Customer Insight"; manufacturing might have "Quality Control" and "Lean Manufacturing"; HR might have "Recruitment" and "Compensation Design".

C. Managerial Competency (5 items — for supervisors and above)

Competency	Definition	Behavioral Indicator (Level 3 — Proficient)
11. Strategic Thinking	Ability to see the big picture, anticipate the future, and plan long-term	Connects departmental work to organizational goals; weighs decisions against 1-3 year impact
12. People Development	Ability to coach, give feedback, and grow team members	Holds regular 1:1s; identifies strengths and growth areas; builds IDPs for direct reports
13. Decision Making	Ability to decide on incomplete data under time pressure	Makes timely decisions with imperfect information; owns outcomes; reviews to improve
14. Change Management	Ability to lead the team through change, reduce resistance, and increase adoption	Communicates the "why" clearly; listens to concerns; plans transition step-by-step
15. Resource Management	Ability to allocate people, time, and budget for maximum impact	Builds department budgets aligned to goals; prioritizes urgent work without burning out the team

Managerial competencies tie directly to Change Management and ERP Implementation — leaders need every item above to guide their teams through these projects.

KPI vs. Competency — What's the Difference?

People often confuse KPI with Competency, but they are two different tools that work in tandem during performance reviews.

Dimension	KPI	Competency
What it measures	Outcomes (What)	Methods / behaviors (How)
Unit	Quantitative (%, count, baht)	Levels 1-5 with behavioral indicators
Example	Monthly sales of 10 million baht (105% of target)	Service Mind: Level 4 (exceeds expectations)
Changes annually?	Yes — driven by yearly business goals	Mostly stable — reflects organizational values
Used for	Performance evaluation	Potential, development, promotion
Risk if used alone	Numbers-driven employees with toxic behavior — teams break	Well-behaved employees who miss targets

Weighting KPI vs. Competency

There is no fixed formula, but three patterns are common across both Thai and global organizations.

KPI : Competency	Best for	Why
80 : 20	Sales, Production — number-driven roles	Outputs are clear and directly measurable
70 : 30 ⭐	General Back Office staff — most common pattern	Balances results with behavior
60 : 40 or 50 : 50	Senior leaders, HR/CSR roles	Behavior and role-modeling weigh as heavily as results

Saeree ERP defaults to KPI 70% + Competency 30% and can be customized to any ratio. The system also supports Bubble Rating 1-5 from multiple raters (Multi-Rater) to reduce single-manager bias.

Multi-Rater (360 Degree) Assessment

A single manager's score is prone to bias — especially for soft skills like Teamwork or Service Mind, which a manager may not observe in every situation. Multi-Rater or 360 Degree Feedback is the popular remedy, combining inputs from multiple sources.

• Self-Assessment — the employee rates themselves (reveals gaps between self-perception and others' views)
• Manager — direct supervisor (highest weight; closest to the work)
• Peer — teammates (real visibility into collaboration)
• Subordinate — direct reports (when evaluating a manager — reveals leadership)
• Customer — clients (for service roles — reveals Service Mind)

Concrete Scoring & Calculation Example

To make this concrete, here is an evaluation walkthrough for Somsri — a Senior Accountant at an organization that uses KPI 70% + Competency 30% with Multi-Rater weighting (Self 10% + Manager 60% + Peer 30%).

Step 1 — Collect Competency scores from multiple raters

Each rater scores 1-5 against the published Behavioral Indicators. The system then computes a weighted average per competency.

Competency	Self (10%)	Manager (60%)	Peer (30%)	Calculation	Score (out of 5)
Service Mind	4	3	3	(4×0.10) + (3×0.60) + (3×0.30)	3.10
Teamwork	4	4	4	(4×0.10) + (4×0.60) + (4×0.30)	4.00
Integrity	5	5	5	(5×0.10) + (5×0.60) + (5×0.30)	5.00
Financial Reporting (Functional)	4	4	—	(4×0.143) + (4×0.857)*	4.00
Compliance Awareness (Functional)	3	3	—	(3×0.143) + (3×0.857)*	3.00

* Functional competencies are typically rated by Self+Manager only (peers may not see technical work), so weights are renormalized: Self 10% → 10/(10+60) = 14.3%, Manager 60% → 60/(10+60) = 85.7%

Step 2 — Compute the overall Competency score

Note: some organizations assign different weights to each competency (e.g., Service Mind at 30% while others split the remaining 70% equally). This example uses equal weighting for simplicity.

Step 3 — Compute the KPI score

KPI	Weight	Target	Actual	% Achievement	Weighted Score
Close monthly books on schedule	40%	Day 5	Day 6 (avg)	95%	38.0
Error rate ≤ 2 entries / month	30%	≤ 2	1.5	100%	30.0
Management Report within 5 working days	30%	5 days	6.5 days	80%	24.0
Total KPI Score					92.0%

Step 4 — Combine using the 70 : 30 ratio

Step 5 — Map to a grade

Score Range	Grade	Meaning	Salary Adjustment (example)
90-100%	A	Outstanding	+8% to +10%
80-89%	B ⭐	Exceeds Expectations — Somsri 87.32%	+5% to +7%
70-79%	C	Meets Expectations	+3% to +4%
60-69%	D	Needs Improvement	+0% to +2%
< 60%	E	Unsatisfactory	0% or PIP

5 Steps to Design a Competency Model

1. Define vision and core values — Core Competencies must reflect what the organization aspires to
2. Interview top performers — pick 3-5 of the best performers per role and analyze the behaviors they have in common
3. Write the Competency Dictionary — name, definition, levels 1-5 with behavioral indicators
4. Map roles to required competencies — which competencies and minimum levels each role requires
5. Embed into the performance system — yearly reviews, recruitment, promotion, and Individual Development Plans (IDP)

This is not a one-and-done exercise — revisit every 2-3 years because organizational values and business strategy evolve.

Common Pitfalls When Adopting Competency

1. Too many competencies per role — over 15 means raters lack time to evaluate properly. Aim for 8-12 (Core 4-5 + Functional 3-5 + Managerial 3-5 if applicable)
2. Vague behavioral indicators — phrases like "works well" or "is professional" lead to inconsistent scoring. Indicators must describe observable behaviors
3. Untrained raters — many managers have never used a competency model. Run workshops before the first cycle goes live
4. Using Competency to replace KPI — Competency does not substitute for KPI. They must be used together
5. Disconnected from IDP — if assessment results sit in a folder, they are wasted. Tie them to development plans

References

• McClelland, D. C. (1973). Testing for Competence Rather Than for Intelligence. American Psychologist, 28(1), 1–14.
• Spencer, L. M., & Spencer, S. M. (1993). Competence at Work: Models for Superior Performance. John Wiley & Sons.
• SHRM — Developing an Organizational Competency Model
• Office of the Civil Service Commission (Thailand) — Competency Framework