Author: Angela de Freitas
As organisations navigate increasing complexity, rapid skills evolution, and growing pressure to demonstrate workforce capability, the focus is no longer on whether competencies should be defined, but on how effectively they are articulated and applied.
Research consistently indicates that well-developed employee competencies are key drivers of both individual and organisational outcomes, with stronger competency levels associated with higher performance (Arshad, Hmaidan, & Afreen, 2025; Wijayanti & Sari, 2023), and clearly defined competencies contributing meaningfully to overall organisational effectiveness (Hayatullah, Triatmanto, & Sumarsono, 2021).
These insights highlight the value of a fit-for-purpose functional competency framework, which helps organisations attract suitable talent and support focused workforce development by clarifying the essential skills, knowledge, and behaviours required to achieve strategic objectives.
What Is a Functional Competency Framework?
Before exploring functional competencies in more detail, it is helpful to begin with a clear definition of competencies. Competencies refer to the underlying attributes required for an individual to perform effectively and confidently in a role. They define what is required for an individual to be successful and:
Provide an inventory of qualities that lead to excellence on the job
Describe performance in behavioural and/or capability terms
Establish well-defined indicators to help recognise when behaviour and/or capability is demonstrated
Identify and set standards across levels
Now you may be wondering, how does this play into functional competency frameworks?
A functional competency framework is a structured set of competencies that describes the knowledge, skills, and observable behaviours required to perform effectively within a specific function or role (e.g. Finance, Human Resources, Operations). Unlike task-based job descriptions, functional competencies focus on how performance is demonstrated, making them particularly valuable for assessment, development, and career pathing or progression.
Functional Competencies Versus Core and Leadership Competencies
Core competencies, first introduced by Hanel and Prahalad in 1990, refer to the collective knowledge, skills, behaviours, and attributes expected of all employees across an organisation, regardless of role. These may include behaviours such as adaptability or collaboration, which apply across different functions—even though they may be demonstrated differently in various contexts.
In addition to core competencies, organisations often establish leadership competency frameworks which define the capabilities required specifically for leadership roles or levels within the organisation (Karachun, 2025). These focus on the behaviours and capabilities needed to effectively lead people, teams, or the broader organisation (Ruben, 2019), such as strategic thinking, leading teams, and driving change, thereby emphasising how leaders make decisions and influence others in complex environments.
By contrast, functional competency frameworks relate to technical, role-specific expertise unique to particular jobs, departments, or industries. Developed through detailed job analysis and input from subject matter experts, these competencies address both current and future role requirements and are typically assessed through skills evaluations, certifications, and relevant experience.
How Functional Competency Frameworks Are Developed
Best-practice functional competency frameworks are built using a structured, evidence-based methodology. The goal is not simply to document what a role does, but to clearly define the job-related competencies that can be consistently measured, assessed, and developed over time. This approach grounds the framework in the reality of the work itself, ensuring it reflects what is genuinely required for success in the role rather than relying solely on generic or theoretical models.
When implemented well, functional competency frameworks provide a powerful foundation for multiple talent management processes, from selection and performance management to learning and rewards. At a high level, the process typically unfolds across five key phases. To see the phases in more detail, click on the link below to access an infographic outlining the process we followed with one of our clients.
When developed and executed thoughtfully, functional competency frameworks move beyond being static documents. Instead, they become living tools that support capability building, consistency, and long-term organisational performance.
Turning Functional Competencies into a Strategic Advantage
Developing a functional competency framework provides organisations with far more than role clarity. It creates a shared, strategic understanding of what good performance truly looks like and how it drives business performance.
By clearly defining the knowledge, skills, and capabilities required to perform effectively within specific functions, organisations are able to select talent more accurately, assess capability more objectively, and develop talent more intentionally by focusing investment where it delivers the greatest return.
Functional frameworks also bring transparency to career pathing, enabling employees to see how roles connect within and across functions, and what is required to move laterally or vertically. This clarity supports higher engagement, more meaningful development conversations, and stronger internal mobility.
From a strategic perspective, these frameworks enable structured and fair career progression, underpinned by clearly defined proficiency levels and performance expectations that distinguish role mastery from readiness for advancement.
When embedded across talent processes, functional competency frameworks become a powerful enabler of sustainable competitive advantage, ensuring critical capability is built in line with evolving business priorities. For organisations seeking to move beyond generic frameworks and build role-relevant capability with measurable impact, partnering with experienced practitioners can accelerate both design and adoption.
Core and leadership competency frameworks provide a valuable foundation for many organisations, but when the conversation turns to role-specific excellence, functional competencies add the next layer of clarity and impact.
Why Functional Competencies Pay for Themselves
Beyond strategic alignment, functional competency frameworks deliver measurable return on investment by directly improving productivity and reducing people-related costs. Research shows that organisations with clearly defined role-specific capabilities are up to 53% more efficient and 27% more productive than those without structured capability models, largely due to better role clarity (Pijnacker, 2019).
From a cost perspective, poor role fit remains one of the most expensive people risks. The Society for Human Resource Management (2025) estimates that replacing an employee cost about 50% of their annual salary, rising to 200% for highly specialised or senior roles. Functional competency frameworks reduce this risk by enabling more accurate selection, targeted development, and objective promotion decisions.
Organisations that align learning and development to role-specific competencies report 34% faster proficiency attainment and up to 40% higher training ROI, as development spend is focused only on capabilities that drive performance (Bersin by Deloitte, 2020). In practice, this means less wasted training investment, stronger bench strength for critical functions, and greater confidence that capability is being built where it has the greatest commercial impact.
For business leaders, investing in a functional competency framework is therefore not a “nice-to-have” HR initiative, but a mechanism for protecting revenue, improving execution, and ensuring that people capability keeps pace with business strategy.
Connect with us
At JVR Consulting, we work alongside organisations to both build on what already exists or design functional competency frameworks from the ground up. Frameworks that are practical, role-relevant, and future-focused.
If you are considering how functional competencies could strengthen or modernise your current approach, we would welcome the opportunity to explore that conversation with you.
REFERENCES
Arshad, M. A., Hmaidan, R. A., & Afreen, A. (2025). The effect of core competency on employee performance with moderating role of employee engagement: A case study in Jordanian commercial banks. International Review of Management and Marketing, 15(4), 213–221. https://doi.org/10.32479/irmm.18663.
Hayatullah, E., Triatmanto, B., & Sumarsono, T. G. (2021). The effect of competence and job satisfaction on employee performance and its implications on organizational effectiveness. Journal of Research in Business and Management, 9(8), 17–23.
Karachun, M. (2025, February 25). Types of job competencies (with examples). Remote. https://remote.com/blog/jobs-talent/types-of-competencies
Pijnacker, L. (2019, September 25). HR analytics: Role clarity impacts performance. Effectory. https://www.effectory.com/knowledge/hr-analytics-role-clarity-impacts-performance/?utm_source=chatgpt.com
Prahalad C.K., and Hamel, Gary (1990). The Core Competence of the Corporation, Harvard Business Review, 68(3), 79-91.
Ruben, B. D. (2019). An overview of the leadership competency framework. In R. A. Gigliotti (Ed.), Competencies for effective leadership: A framework for assessment, education, and research (pp. 19–28). Emerald Publishing. https://doi.org/10.1108/978‑1‑78973‑255‑92019100.
Society for Human Resource Management. (2025). Measuring the ROI of your training initiatives: Approach 2 — Calculate the dollar value of reducing turnover. SHRM. https://www.shrm.org/in/labs/resources/measuring-the-roi-of-your-training-initiatives.
Wijayanti, F., & Sari, R. T. (2023). The influence of competency on employee performance: A literature review. International Journal of Accounting Management Economics and Social Sciences, 1(6), 920–931. https://doi.org/10.61990/ijamesc.v1i6.118.
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