Competency has two relevant meanings- First, addresses the ability of an individual to perform effectively and Second is a definition of what is required of an individual, for effective performance.
When the competencies can be used?
The use of competencies can include: assement during recruitment, through specific work-based exercises and relevant, validated, psychometric tests; assement during further development; as a profile during assessment to guide future development needs; succession planning and promotion; organisational development analysis etc.
A competency model is a set of success factors, often called competencies that include the key behaviors required for excellent performance in a particular role. Excellent performers on-the-job demonstrates these behaviors much more consistently than average or poor performers.
Competencies include behaviors that demonstrates excellent performance. They do not include knowledge, but they do include "applied" knowledge or the behavioral application of knowledge that produces success. Also, the competencies include the manifestation of skills that produce success. Competencies are not work motives, they include observable behaviors, related to motives.
The competency model is important because it provides a "road map" for the range of behaviors that produce excellent performance. It helps companies to "raise the bar" of performance expectations; teams and individuals align their behavior with key organisational strategies; and each employee understands how to achieve expected performance standards.
Competency model can be developed through a process of clarifying the business strategy and determining how the models would be used ( e.g. recruitment and selection, assessment, performance management, training and development, and career development). Then, data is gathered by structured interviews. Then, data is analyzed and used to develop models of success criteria. THen, validation surveys are administered and models refined based on feedback. Finally, models are finalized and translated into appropriate, end-user tools and applications.