Competency refers to having the required skills or knowledge, while capability is the ability to apply those competencies effectively.

TL;DR Competency Vs. Capability

Competency refers to the specific knowledge, skills, and behaviors required for successful performance in a particular role or task. It focuses on individual attributes that contribute to job proficiency.

Capability encompasses an organization’s overall capacity to perform certain activities or achieve specific outcomes. It involves a combination of resources, processes, systems, and strategies that enable an organization to adapt and excel in a competitive business environment.

What is competency?

picture of two competent persons arm wrestling

Competency refers to a specific set of knowledge, skills, and abilities that an individual possesses. It is a combination of expertise, experience, and understanding in a particular area or field.

Competencies are often seen as the building blocks that enable individuals to perform tasks effectively and efficiently.

These competencies can be both technical and behavioral in nature.

Technical competencies

Technical competencies encompass the specialized knowledge required for a specific job or profession. For example, a software developer needs to possess programming languages such as Java or Python.

Behavioral competencies

Behavioral competencies focus on personal attributes and traits necessary for success in any given role. These may include effective communication skills, problem-solving abilities, leadership qualities, adaptability, and teamwork.

What is capability?

picture of a capable person stacking blocks

Capability refers to the ability or potential of an individual, team, or organization to perform certain tasks or achieve specific outcomes. Capability goes beyond just possessing knowledge or skills; it encompasses a deeper level of capacity and adaptability.

Individuals capabilities

In the context of individuals, capability can be seen as a combination of their talents, experiences, and expertise. It involves their aptitude for learning new things and their ability to apply what they have learned effectively in different situations.

Organizational capabilities

For teams and organizations, capability extends to collective abilities such as collaboration, problem-solving, innovation, and strategic thinking. It enables them to respond flexibly to changing circumstances and challenges in order to achieve desired results.

Competency Vs. Capability – Key differences

DefinitionPossession of skills/knowledgeAbility to apply skills effectively
FocusWhat you knowWhat you can do
NaturePassive, theoreticalActive, practical
DevelopmentAcquired through learningDeveloped through practice/experience
AssessmentAssessed through knowledge testsAssessed through performance outcomes
ExamplesLanguage proficiency, expertiseProblem-solving, decision-making

Examples of competency

Examples of competencies can vary depending on the context and industry.

  1. Communication: Effective written and verbal communication skills to convey ideas and information clearly.
  2. Problem Solving: The ability to identify, analyze, and solve complex problems efficiently.
  3. Leadership: Inspiring and guiding a team towards achieving goals and maintaining positive team dynamics.
  4. Time Management: Efficiently organizing and prioritizing tasks to meet deadlines.
  5. Technical Skills: Proficiency in using specific tools, software, or equipment relevant to the job.
  6. Adaptability: Being flexible and quick to adjust to changes in the work environment.
  7. Customer Service: Providing exceptional service to customers and addressing their needs effectively.
  8. Collaboration: Working well with others, fostering teamwork, and building productive relationships.
  9. Critical Thinking: Evaluating information objectively to make informed decisions.
  10. Analytical Skills: Analyzing data and information to draw meaningful insights.

Examples of capability

Examples of capability are skills or abilities that enable an individual or organization to effectively apply their competencies to achieve desired outcomes.

  1. Project Management: The capability to plan, execute, and control projects to deliver desired results within budget and timeline.
  2. Innovation: The ability to generate creative ideas and turn them into practical solutions or products.
  3. Sales and Marketing: The capability to identify target markets, promote products, and close deals effectively.
  4. Data Analysis: Using statistical tools and methods to interpret and draw insights from data.
  5. Negotiation: The ability to reach mutually beneficial agreements in business or interpersonal situations.
  6. Crisis Management: Handling critical situations and making quick decisions to mitigate risks and resolve problems.
  7. Customer Relationship Management: Building and maintaining strong relationships with customers to drive loyalty and satisfaction.
  8. Continuous Improvement: The capability to identify areas for improvement and implement changes to enhance processes and performance.
  9. Cross-Functional Collaboration: Working collaboratively across different departments or functions to achieve common goals.
  10. Strategic Planning: Developing long-term plans and strategies to achieve organizational objectives.

The importance of competencies in the workplace

Competencies are crucial in the workplace as they define the required skills, knowledge, and behaviors for job roles. By ensuring employees possess the necessary capabilities, competencies enhance performance, productivity, and job satisfaction.

They aid in recruitment, talent development, and performance evaluation, aligning individuals with organizational goals.

Competencies foster a culture of continuous learning, adaptability, and career progression, leading to a skilled and engaged workforce, driving organizational success in a dynamic business environment.

The importance of capabilities in business

Capabilities are vital in business as they represent the ability to effectively apply skills and resources to achieve strategic objectives.

Having the right capabilities enables organizations to innovate, adapt to market changes, and maintain a competitive edge. They drive operational efficiency, customer satisfaction, and overall performance.

Capabilities foster collaboration, allowing cross-functional teams to tackle complex challenges.

Developing and leveraging capabilities empowers businesses to seize opportunities, navigate challenges, and sustain growth in a dynamic and competitive marketplace.

The difference between organizational capabilities and competencies

Organizational Capabilities

  • Scope: Organizational capabilities refer to the collective capacity and resources of an entire organization to achieve its strategic objectives and adapt to changes in the external environment.
  • Level: Capabilities are broad and encompass various functions and departments within the organization. They are not limited to individual skills or knowledge.
  • Nature: Capabilities are long-term and enduring, representing the organization’s core strengths and competitive advantages.
  • Examples: Examples of organizational capabilities include effective supply chain management, strong customer relationship management, or a culture of innovation.

Organizational Competencies

  • Scope: Organizational competencies refer to specific skills, knowledge, and expertise possessed by individuals or teams within the organization.
  • Level: Competencies are individual or team-based and are focused on specific roles or functions.
    Nature: Competencies are more tactical and short-term in nature, contributing to the overall capabilities of the organization.
  • Examples: Examples of organizational competencies include technical expertise, project management skills, or effective communication.

Organizational capabilities are broad and encompassing, representing the collective capacity of the entire organization, while competencies are specific skills possessed by individuals or teams that contribute to the overall capabilities of the organization.

Organizational capability vs employee capability

Organizational Capability

  • Definition: Organizational capability refers to the collective capacity and resources of an entire organization to achieve its strategic objectives and competitive advantage.
  • Scope: It involves the integration of various functions, processes, technologies, and resources within the organization to create value for customers and stakeholders.
  • Long-term: Organizational capabilities are developed and sustained over the long term, representing the organization’s core strengths and expertise.
  • Examples: Strong customer service, efficient supply chain management, advanced technology infrastructure are examples of organizational capabilities.

Employee Capability

  • Definition: Employee capability refers to the skills, knowledge, and expertise possessed by individual employees to perform their specific roles and responsibilities.
  • Scope: It is specific to individual employees and relates to their ability to contribute effectively to the organization’s goals.
  • Short-term: Employee capabilities can be developed and improved through training, experience, and personal development initiatives.
  • Examples: Technical expertise, problem-solving skills, effective communication, and leadership abilities are examples of employee capabilities.

Organizational capability encompasses the overall capacity of the entire organization, while employee capability focuses on the skills and expertise of individual employees.


Image Credits

Featured Image By – storyset on Freepik

Image 1 By – katemangostar on Freepik

Image 2 By – master1305 on Freepik

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