Capabilities and Competences

 

Capability vs. Competency

“Competency” and “capability” are two terms that pertain to human ability. They are often mentioned in many Human Resources related materials, as well as in career and job communications.

“Capability” is the term that describes the quality of being capable. It is the condition that permits an individual to acquire the power and ability to learn and do something within their capacity. “Capability” is also known as implied abilities, or abilities that are not yet developed.

A person with a capability has the potential to acquire a specific ability or skill that will be helpful in a task. The learned skill or ability adds to a person’s knowledge bank or skillset. Capabilities also improve the functions of a person, which can lead to more productivity. New skills and abilities make a person more capable to complete a certain task, which in turn makes them a more suitable candidate for certain job positions.

With time and practice, capabilities can develop into competence. Capabilities serve as the starting point of being able to do something and gradually becoming more adept in performing the task.

“Capability” is derived from the Middle French word “capabilité” and Late Latin word “capābili”. The word was first used in 1587; however, its meaning in today’s usage (underdeveloped skill or faculty) only evolved and was used starting in 1778.

On the other hand, “competence” is the state or quality of an individual’s work. A person and their work can be evaluated as competent if the performance is considered “satisfactory” but not “outstanding.” Competence can also be applied to the improvement or development of one’s abilities and skills for the benefit of the person and the group or institution they represent. The improved skills and abilities are applied to tasks or jobs.

Competence can also result in an increased quality of work or performance. In return, the work and performance will produce more satisfying and favorable results from other parties like clients, bosses, and other relevant individuals.

Competence starts as a person’s capabilities. In a sense, competence is the proven abilities and improved capabilities. Competence can include a combination of knowledge, basic requirements (capabilities), skills, abilities, behavior, and attitude.

“Competence” as a word has its origins in 1632 in the French word “competence” (meaning of sufficient living in ease) and further in the Latin “competentia” (which means agreement or symmetry). However, the modern meaning of the word (sufficiency to deal with a situation or  task) didn’t come into existence until 1790.

Summary:

1. “Capability” and “competence” are two manifestations of human abilities and skills. Both words are often met in job advertisements or personnel assessments.
2. “Capability” is the condition of having the capacity to do something. Within this condition there is a potential for improvement of skills. On the other hand, “competence” is the improved version of “capability,” and means the degree of skill in the task’s performance.
3. Capabilities lead to competence. An individual with capabilities can acquire a new skillset or knowledge by learning and practicing. Competence serves as a result of the application of capabilities.
4. Capabilities are seen as “generic,” while competence is more in the field of “specialist.”
5. Both “capability” and “competence” are derived from French and Latin roots. Another interesting similarity is that both words have earlier meanings distinct from  their current, modern meanings; competence’s modern meaning only evolved in 1790, but the word was already in usage since 1632. “Capability” has been used since 1587, but it took almost 197 years to come to its new and modern meaning.

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Capability-based strategies are based on the notion that internal resources and core competencies derived from distinctive capabilities provide the strategy platform that underlies a firm's long-term profitability. Evaluation of these capabilities begins with a company capability profile, which examines a company's strengths and weaknesses in four key areas:

• managerial
• marketing
• financial
• technical

Then a SWOT analysis is carried out to determine whether the company has the strengths necessary to deal with the specific forces in the external environment. This analysis enables managers to identify:

1. external threats and opportunities, and
2. distinct competencies that can ward off the threats and compensate for weaknesses.

The picture identified by the SWOT analysis helps to suggest which type of strategy, or strategic thrust the firm should use to gain competitive advantage.

Stalk, Evans and Schulman (1992) have identified four principles that serve as guidelines to achieving capability-based competition:

1. Corporate strategy does not depend on products or markets but on business processes.
2. Key strategic processes are needed to consistently provide superior value to the customer.
3. Investment is made in capability, not functions or SBUs.
4. The CEO must champion the capability-based strategy.

Capability-based strategies, sometimes referred to as the resource-based view of the firm, are determined by (a) those internal resources and capabilities that provide the platform for the firm's strategy and (b) those resources and capabilities that are the primary source of profit for the firm. A key management function is to identify what resource gaps need to be filled in order to maintain a competitive edge where these capabilities are required.

Several levels can be established in defining the firm's overall strategy platform (see figure).

 At the bottom of the pyramid are the basic resources a firm has compiled over time. They can be categorised as technical factors, competitive factors, managerial factors, and financial factors.

 Core competencies can be defined as the unique combination of the resources and experiences of a particular firm. It takes time to build these core competencies and they are difficult to imitate. Critical to sustaining these core competencies are their:

Durability - their life span is longer than individual product or technology life-cycles, as are the life spans of resources used to generate them, including people.

Intransparency - it is difficult for competitors to imitate these competencies quickly.

Immobility - these capabilities and resources are difficult to transfer.

References

Rowe, Mason, Dickel, Mann, Mockler; "Strategic Management: a methodological approach". 4th Edition, 1994. Addison-Wesley. Reading Mass.

Stalk, G Jnr., Evans, P. and Schulman, LE. 1992. "Competing on capabilities: the new rules of corporate strategy". Harvard Business Review, Vol.70, No. 2, March-April, pp. 57-70.

Prahalad, CK. and Hamel, G. 1990. "The Core Competence of the Corporation". Harvard Business Review, May-June, pp. 79-91.

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