Creating a Competency Matrix to Evaluate Employees and Candidates: Step-By-Step Guide and Examples

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How to quickly identify a skilled IT specialist? Carry out a recruitment plan? Conduct an assessment and effectively upgrade the company’s specialists? Determine what competencies are missing in the tech team and by whom/how can it be strengthened?

This is where you can use a competency matrix. In this article, we’ll explore employees’ competencies, how a skill matrix can make your life easier by saving time, effort and gaining a competitive advantage as well as how to develop a framework for competencies in your company.

What is a competency matrix and why you might need it

A self-assessment skill matrix is a set of key competencies that employees need to achieve the company’s strategic goals. Competencies can be not only hard skills but also personal characteristics and attitudes.

Nowadays, technology changes every day, and it is impossible to rely on the knowledge gained 10 years ago. Therefore, it is crucial to constantly improve and try your hand at something new, and learn the latest technologies and tools. Last but not least, you also need to be able to achieve your goals both alone and working in a team, communicate effectively, demonstrate professionalism, effectively develop business relationships, and sharpen other soft skills.

For example, a DevOps Engineer needs skills in analyzing logs, building fault tolerance, and configuration management. In addition, the specialist is the link between operations, development, and managers. He has to communicate with different team members constantly.

Among the skills every software developer needs to achieve for career growth, in addition to coding, are creativity, originality and innovation, leadership, and logical reasoning skills. In 2023, more than hard skills are needed to quickly advance in a career and get a job offer in top product companies, startups, and technology corporations.

Why is the competency matrix important and who needs it the most?

• Potential candidates preparing to transition from other IT roles. The matrix will help clarify expectations for a new position, and determine what competencies they lack as well as what to sharpen in order to successfully pass the interview and onboarding.

• Current company’s employees. The matrix helps to understand one’s level relative to other specialists of a similar role, analyze growth prospects, and structure the process of professional/career development.

• Managers and Team Leads. A competency matrix will help you build a system of grades and salary ranges, plan training, and give feedback to the team. The tool should record what an employee can do now, what skills need to be upgraded, and what tasks can be delegated to this employee in the next period.

• The hiring team (recruiters, HR & hiring managers). The tool helps to evaluate candidates and find “gaps” in the team. For example, if the product is scaling and there is a request for a new technology, but the current team doesn’t have relevant experience, this must be taken into account. In this case, you can create a team by selecting people who will bridge each other’s “gaps”, or close the gaps by hiring a new specialist with the appropriate expertise.

Benefits of using a competency matrix

Using a competency matrix you, as a team lead or HR manager, will be able to:

• Increase recruitment efficiency: at the stage of searching for a CV or an interview, you will understand who is worth spending time on and what specific questions you need to ask an IT candidate.
• Control the level of knowledge and competencies in the team.
• Motivate employees and plan their development by creating individual growth plans and planning KPIs.
• Develop grades or validate their objectivity and relevance.

During the downsizing period, you can use the competency matrix to qualify them according to the class principle. Class A means those employees who directly affect the financial result of the company, and class B is supporting business process administrators. Finally, class C means employees whose loss the company won’t lose in finances and final results.

As for the specialists themselves, using the competency matrix you can conduct a self-assessment. For example, the web developer competency matrix is a kind of template that you need to meet if you want to be successful in this position. If there is a knowledge gap, it is worth analyzing how to sharpen it. Otherwise, this will negatively affect career growth.

How to create a competency matrix: 5 important steps

The competency matrix is usually formed by a team of top managers and HR specialists, involving employees in discussion and analysis. However, in some companies, the matrix is created within the department it is intended to be assessed for. Stakeholders from above broadcast their expectations from the role of specialists and the tool itself. In this case, an HR manager or Talent Acquisition specialist can oversee this process (like a PM).

This strategy allows you to create a more accurate assessment tool. In addition, such a matrix is easier to implement, since employees are involved in its creation and are more loyal.

We’ve highlighted the stages of creating a competency matrix.

Stage 1. Determine who needs a competency matrix (and why)

The stage of goal-setting while creating a competency model is often skipped. We strongly recommend determining first:

• Who will use the competency matrices within the company?
• What tasks do they solve? What tools are currently being used for these purposes?
• What can be expected from the new tool and how to understand that it works effectively?

The result of brainstorming should be a set of hypotheses regarding the tasks and problems of potential matrix users.

Step 2: Goal cascading

Describe in detail the expectations and challenges facing a particular position. Indicate the knowledge and skills that allow you to successfully solve work tasks. The following questions will help:

• What tasks are faced by specialist N at each stage of work on the product? What is the result of the work?
• How should these tasks be performed? What steps provide progress toward the goal?
• What knowledge and skills are required to achieve the result?

Discuss these issues with the development team. It is worth dividing the participants into groups according to their roles.

Stage 3. Determine what is most important in the IT department work 

In the third stage, formulate a short list of the most important competencies that distinguish “good” specialists from “mediocre”.

*Competence is the knowledge, skills, and behavior that leads to the desired result. Answer the question “What does a person in a particular position do daily?” This is not just knowledge and skills, but also an approach to solving problems in general: how the employee acts, his attitudes, and motivation.

Step 4: Assemble and visualize the matrix

Put it all together and check if the selected professional competencies do not contradict or repeat each other, and if there is anything you missed.

At the same time, the matrix should describe the key aspects of the company’s IT specialists’ work.

Step 5: Describe each competency

The most painstaking step is the description of indicators and methods for assessing competence. At this stage, it is also necessary to link them to the specialist levels (Junior, Middle, Senior, Team/Tech Lead).

Indicators are signs you can understand that a person has competence. There are several basic ways to assess competencies:

• test case;
• feedback from managers and stakeholders;
• feedback from the team;
• assessment center.

Tip: the competency matrix is a flexible and adaptive tool. You can’t create it once and use it all the time. The matrix should reflect the real state of the company or team, and therefore, it is important to update it promptly if necessary.

Competency matrix examples:

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Ready-made template vs unique competency matrix

There are many ready-made competency matrices on the internet. It is good practice to follow market standards, but it is much more important to take into account the tasks, processes, and characteristics of your company. Organizational structure, functional responsibilities, role expectations, and product lifecycle stages differ from business to business.

The competence matrix should be created to solve specific problems. Using a ready-made model “out of the box” will be inefficient. Therefore, you need to develop your assessment matrix, or at least refine the one found on the internet.

Books and articles on employee competency assessment

Wrong decisions lead to increased turnover, reduced productivity, and additional costs for staff development. These books and articles on competency assessment based on rigorous research will help you to evaluate employees and increase their engagement at work effectively: 

• How Would You Move Mount Fuji?: Microsoft’s Cult of the Puzzle, William Poundstone;
• Understanding Competencies and Competency Modeling;
• Doing Competencies Well. Personnel Psychology. 

Tip: collaborative work on a competency matrix is a cool way of team building and a good mechanism for transferring knowledge from skilled employees to Juniors. It is also an excellent practice of collective reflection on professional experience.