Competency Matrix: When, Why, and How to Use It in Business

When should a business start thinking about competency management and implementing defined standards? In this article, we will explore the role of competency matrices in business, their importance in scaling, and how this is implemented in the CEP.

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Let’s take a closer look at what the Competence Evaluation Platform (CEP) is. Arthur Shevchenko, Director of Engineering at Yalantis, offers the following definition:

The competency matrix is a key element of the CEP, ensuring objective decision-making in recruitment, salary evaluations, and career development planning.

A competency matrix is especially important for fast-growing companies striving to maintain objective evaluations and hiring efficiency. Imagine this scenario: you have ambitious goals, complex projects, and a talented team. However, with each new project, it becomes increasingly difficult to assess employees’ skills, allocate staff to projects, and ensure fairness in salary distribution. Managers get confused with grading, engineers struggle with their roles, and projects risk failure due to a simple lack of clarity.

When Does a Company Need a Competency Matrix?

The problem arises when you need to scale the number of interviewers while maintaining objectivity in evaluations—this is the moment when a unified assessment system through competency matrices becomes essential.

Here are a few red flags indicating the urgent need for a competency matrix:

Project Failure Risk Due to Skill Mismatch
If employees with inadequate skill levels are assigned to projects, this can directly lead to issues with project execution, including incorrect solution architectures, technical failures, or complete application breakdowns.

High Bus Factor in the Team
The bus factor is the risk that a key employee (for example, a team lead) leaves the company, taking with them the knowledge of how to select new candidates. If your team consists of one lead and six juniors or mid-level specialists with no hiring experience, the business can take a serious hit, and recovery might require significant time and resources.

Subjectivity in Candidate Assessment
If interviewers rely solely on their personal impressions or subjective criteria during interviews, this can lead to hiring mistakes or an increased cost per hire, such as:

• Overpaying for incompetence: Offering inflated salaries to specialists who do not meet the required skill level.
• Undervaluing talented professionals: When strong candidates go unnoticed due to a lack of objective criteria.

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How to Start Creating Competency Matrices

Creating a competency matrix is not just about listing skills—it’s a strategic process that requires a clear vision of the company’s growth and its technology stack.

Step 1: Define Core Technologies and Research the Market
First and foremost, it is crucial to understand where the company is headed and which technologies are key to its projects. For example, if all your projects run on AWS, there’s no point in looking for DevOps specialists with Azure or GCP skills. Identifying the primary technology stack helps focus efforts on the necessary skills.

Step 2: Build a Team to Develop the Matrix
There are two approaches to creating a competency matrix:

• Directive approach: The department head independently defines the tech stack, skill set, and tasks for each level—from Junior to Senior.
  • Pros: Fast and clear decision-making.
  • Cons: Risk of subjectivity and potential resistance from the team.
• Democratic approach: Establishing a working group of managers and senior specialists who collaboratively determine which skills are required for each grade.
  • Pros: Ensures transparency and engages the team in the process.
  • Cons: May take more time to reach a consensus.

The optimal approach is to involve not only senior developers but also experienced mid-level specialists who demonstrate maturity and an understanding of processes.

Step 3: Define Soft Skills
Technical skills are only part of the required competencies. Soft skills, such as communication, time management, and teamwork, are equally important. To assess them, managers and HR specialists should collaborate to develop clear criteria for each grade.

Step 4: Establish Metrics and Evaluation Criteria
The foundation of the core matrix should include:

• Key technologies relevant to your projects.
• Client feedback that helps adapt skills to evolving requirements.
• Employee development goals aligned with the company’s needs.

Step 5: Break Down Competencies into Specific Review Topics
General statements like “knowledge of Django” are too vague. Instead, the matrix should contain detailed criteria that allow for an accurate assessment of knowledge levels during reviews and interviews.

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How the Competence Evaluation Platform (CEP) Streamlines and Automates Competency Management

The Competence Evaluation Platform (CEP) not only optimizes but also automates the competency management process.

One of CEP’s key features is its structured sections that cover all critical aspects of competency management—from skill assessment to creating personalized development plans.

Additionally, companies implementing SHERP products gain access to a set of pre-built competence matrices for popular technologies such as React, Python, QA, and more. This significantly reduces the time required to launch the system and enables businesses to start using the Competence Matrix effectively right away.

It is worth noting that creating competence matrices from scratch is a complex process involving multiple stages: initial design in Confluence, conversion into the required format, and subsequent upload to CEP. Thanks to automated integration, this process is significantly streamlined in SHERP, allowing companies to implement the system faster and customize it to their specific needs.

Key Sections of CEP:

• Review: This section stores all employee review results, including scores, comments, and feedback. It enables tracking an employee’s progress throughout their tenure at the company and provides quick access to essential information even years later.
• Interview: Automates the interview process. The platform records all interview histories, evaluation results, and candidates’ answers to technical questions. This helps avoid interview duplication and ensures quick access to data.
• Individual Development Plan (IDP): Allows the creation of personalized development plans for each employee. With an IDP, specialists receive a clear list of skills they need to improve and understand exactly what is required to advance to the next grade.
  

Competency Assessment Levels in CEP:
CEP uses a detailed competency matrix to evaluate employees across three primary levels:

• Qualified: Basic knowledge and understanding of the technology.
• Competent: Confident use of tools and the ability to perform tasks independently.
• Expert: Deep expertise with the ability to make strategic decisions and mentor the team.

Visualization through radar charts displays skill levels as percentages, providing an objective view of competencies.

Automated Review Assignment and Objective Evaluation
The platform automatically assigns reviews to employees, giving reviewers a specific checklist to follow:

• Clear Evaluation Criteria: With well-defined benchmarks (Qualified, Competent, Expert) to avoid subjectivity in assessments.
• Targeted Development Plans: Specialists receive a list of skills that need improvement, which forms the basis for a personalized development plan.

Seamless Integration with ERP and HRM Systems
The Competence Matrix, integrated into CEP, operates within a unified ecosystem alongside ERP (Enterprise Resource Planning) and HRM (Human Resource Management) systems from SHERP. This integration ensures smooth data exchange between systems and significantly simplifies business processes.

Through this integration, the company benefits from:

• Faster Staffing: Efficiently matching the right people to the right projects.
• Objective Task Allocation: Ensuring fair and skill-based distribution of tasks.
• Improved Process Efficiency: Streamlining workflows and enhancing productivity.

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Tips for Companies Planning to Implement a Competency Matrix

1. Start with a Pilot Project
Instead of immediately implementing a competency matrix across the entire company, it’s better to test the system with a small group:

• Select a test department or team for the experiment.
• Engage top management and key stakeholders to align on the development direction and primary goals.

2. Define Clear Evaluation Criteria
Create a specific competency matrix for the selected department:

• Identify the required skills for each level (Junior, Mid-Level, Senior).
• Develop clear and transparent evaluation criteria to avoid subjectivity during reviews.

3. Implement Iteratively
Apply an Agile approach to change management:

• Divide the project into manageable phases.
• Analyze the results after each phase, and gather feedback from employees and managers.
• Make adjustments as needed based on the insights received.

4. Listen to Feedback
Feedback from employees and managers is a critical tool for process improvement:

• Evaluate how easily teams adapt to the new system.
• Assess whether the competency matrix helps objectively evaluate skills.
• Ensure employees clearly understand the criteria for promotion and career growth.

5. Adapt Business Processes to the New System
After testing the pilot project, you may need to optimize processes:

• Consider introducing new roles or eliminating unnecessary functions.
• Ensure all business processes are aligned and operate as a unified ecosystem.

6. Develop a Strategy Based on Results
When the pilot project is completed:

• Analyze the outcomes, focusing on successes and problem areas.
• Evaluate whether expected goals were achieved, such as reduced staffing time and improved transparency in skill assessments.
• Create a strategy for further expansion of the competency matrix to other departments or the entire company.

A Long-Term Approach to Competency Matrix Implementation

Implementing a competency matrix is not a one-time task but a long-term strategy. A gradual approach, continuous monitoring of results, and readiness to adjust processes will help make this transition as effective and beneficial for the business as possible.

_{Learn more about CEP and the metrics optimized by the system in the Yalantis case study.}