How to Assess Employee Skills and Competencies: Methods, and Best Practices

Employee skills development is the defining factor in any company wanting to compete on a global scale. Within the organization, it gives HR personnel and business leaders a way of improving their talent management strategies.

Business leaders understand the adage, "Knowledge is power," However, having a direct understanding of the team's skills means gaining a competitive advantage. Employee skills assessment, or the ability to accurately gauge the capabilities and proficiency levels of the workforce, is more essential than ever.

High performance companies rely on data driven insights into employee competencies to stay ahead. Yet several companies struggle with declining productivity, employee disengagement and inefficiencies, symptoms of an unaddressed skills gap.

Market Insights

In a recent McKinsey report, researchers traced lost productivity to three essential factors, skills deficiencies (the skill gap), low engagement (the will gap) and time mismanagement (the time gap). At startling costs to the business, if left unaddressed, these factors can lead to high attrition, extended vacancies and weakened overall performance.

For example, a median size company maintained by Standard and Poor's (S&P) index, could lose approximately $480 million annually because of the above mentioned gaps. A staggering figure emphasizing the need for adequate employee skills assessment and talent management.

However, in a similar vein, the shift towards skills-based hiring is increasing. According to the State of Skills-Based Hiring 2024 Report, 81% of employers are incorporating skills-based methods in their recruitment processes, a noteworthy increase from 73% in 2023 and 56% in 2022. Even more compelling, 95% of employers believe that skills-based hiring is reshaping recruitment.

Competency-based assessment, on the other hand, evaluates an employee's ability to perform specific tasks or demonstrate required behaviors. It measures soft skills, like communication, problem-solving and leadership.

How to Conduct Employee Skills Assessments

With the younger, technologically advanced workforce entering the job market, Human resource personnel need more than stellar resumes, interviews or relying on gut feelings to select top talent. HR can include effective employee skills assessments as a strategic tool for evaluating employee capabilities objectively. They can assist in identifying top talent, uncover hidden skill gaps and create development plans aligning with the business goals.

The following section breaks down step by step the framework for conducting an effective skills assessment.

1. Define each role's Critical skills

HR managers must have a clear plan identifying which skills, technical, cognitive or behavioral are essential for the organization's success. Breaking down each skill into categories will make the task easier, for example:

·         Technical (e.g., Microsoft Office, CRM tools)

·         Cognitive (e.g., analytical thinking, decision-making)

·         Behavioral (e.g., teamwork, communication)

How to conduct:

·         Collaborate with team leaders, department heads and HR.

·         Review job descriptions, performance expectations, and KPIs.

·         Identify what top performers do differently, this reveals essential success factors.

2. Selecting the Correct Assessment Method

There's no one size fits all when it comes to skills assessments. Different competencies require specific approaches to correctly measure a candidate's competencies.

The most popular and effective methods are described below:

Practical Tests

Hands-on exercises like testing a candidate's skill at Excel spreadsheet tasks, coding assignments, or document creation are ideal for assessing their technical skills.

Situational Judgment Tests (SJTs)

HR can include real-life workplace scenarios to assess skills like decision making, problem-solving and how they perform under pressure.

Behavioral Assessments

Companies that fail to notice potential candidate's soft skills are lengthening the gap. HR should assess employee's soft skills, like teamwork, communication, leadership potential or adaptability.

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3. Customize Tests for the Role

Generic assessments fall short of achieving the businesses goals. Customizing skills assessments ensures that skills assessments are a reflection of the true competencies each role needs.

It is important HR adjusts the assessment to suit the seniority level, entry-level vs. managerial, ensuring that fair evaluation is carried out across all levels.

For example, when interviewing for administrative assistants, HR will prioritize skills like attention to detail, task organization, time management and written communication.

Or, if looking for sales professionals, HR will assess negotiation skills, CRM tool proficiency, customer service and emotional intelligence.

4. Ensure Fair and Secure Testing

Working remotely or conducting online assessments opened a whole new world. However, HR managers must offer a level of security to candidates and to protect the organization, against fraud, bias and technical weaknesses.

A safe and secure testing environment ensures employee trust and validity and accuracy of the test.

HR can utilize the following methods of securing the assessments:

Browser Lockdown

Prevents test takers from switching tabs or searching for answers.

Randomized Questions

Presenting different questions to each candidate minimizes repetition and sharing.

Time Limit Tests

To ensure candidates conduct assessments independently, HR should set time limits.

AI Detection

Install AI monitoring tools that detect suspicious behavior, like rapid eye movement or external assistance.

5. Test Analysis and Action

Data collection is one part of any skills assessment. The value of the tests comes from action, how to proceed.

HR managers can use the data collected to:

·         Address skill gaps before they cause major damage to the organization.

·         By employing techniques like problem solving, communication skills, or emotional intelligence, businesses can identify employees with high potential for promotion.

·         Guiding candidates to paths building on their strengths boosts employee engagement and ensures retention.

·         Without periodic assessments, HR will not have an accurate view of the employee skills assessments worth or its effectiveness. It is important to track employee growth, refine planning strategies and ROI on training investments.

Best Practices for Assessments

Maintaining a positive candidate experience is essential to any skills assessment program. Conducting the assessment correctly ensures the organization receives truthful, actionable results.

To maximize the skills assessments:

1. Clear Communication

Before involving employees in any skills assessment, always explain its purpose and objectives to them. Transparent communication builds trust amongst employees and encourages them to participate willingly and answer honestly.

2. Blend Hard and Soft Skill Assessments

It is essential to incorporate assessments that measure both soft skills, such as teamwork, time management, and communication and hard skills, like software proficiency.

A balanced assessment ensures a holistic view of the candidate's abilities.

3. Keep Assessments Short

Lengthy assessments lead to boredom and candidates losing focus. HR should design assessments that are concise and set a 30-minute time limit.

Short assessments maintain focus, improves completion rates and ensures data collected is accurate.

4. Offer Feedback

Assessments are pointless without providing candidates with constructive feedback. It reinforces the organization's growth culture and skills development.

Sharing the results that highlights the candidate's strengths and areas of improvement serves as a learning opportunity.    

5. Combine Assessments with Performance Reviews

Integrating assessments with the candidate's performance reviews provides a total view of the employee's capabilities.

The combined approach offers a better understanding of the employee's strengths, growth areas and highlights potential career paths in the organization.

Conclusion

An organization's future is dependent on them continuously developing, growing and retaining top talent. Consistent employee skills assessments are vital to this transformation. They give businesses the advantage over their competitors and ensure they can compete on the global scale.

Skill assessments ensure employees remain motivated, identify growth pathways and recognize unseen strengths.

Zenithr simplifies every stage of skills assessments, from creation to evaluation. They allow business to effectively and efficiently assess skills fairly, without prejudice and bias.