In the era that Human resources become the decisive factor in competitiveness, businesses cannot manage people only by experience or emotion.
Along with the trend of globalization and digital transformation, the concept of “Competency Framework” is becoming a core tool to help businesses Measure, develop, and optimize human resource performance scientifically
Around the world, organizations such as SHRM, CIPD has built a competency framework to synchronize strategy and organizational behavior. In Vietnam, competency frameworks are increasingly widely applied in recruitment, training, evaluation and 3P salary policy, especially in the SME and FDI business sector – where the need for team development linked to financial efficiency is increasingly evident.
This article synthesizes international perspectives, combined with practical experience to help businesses understand:
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What is a competency framework?
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What is the structure and construction?
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How to turn competency framework into a tool for development?
1. What is a competency framework?
Competency framework is a system that describes the necessary capacity so that an individual can perform work effectively in a specific location.
Each "capacity" is a combination of knowledge, skills, attitudes and behaviors, is shown in the work process.
In the world, this concept comes from the research of David McClelland (Harvard, 1973) – who proposed that "capacity" are the predictors of job performance, not just education or experience.
From there, organizations like SHRM (Society for Human Resource Management) , and CIPD (Chartered Institute of Personnel and Development) standardized competency framework to serve as the foundation for strategic HR activities.
In Vietnam, competency frameworks are increasingly mentioned in training programs. Digital transformation of human resources, performance management and 3P salary policy, especially in the FDI and SME sectors.
2. The meaning of the competency framework
Competency frameworks deliver value at both organizational level , and personal level:
With the organization:
- Standardize capacity requirements for each position, helping the human resource system operate synchronously.
- Link business strategy with human resource strategy.
- Provide a basis for human resource planning, training and performance evaluation.
For individuals:
- Help employees understand job requirements, self-assess and develop themselves.
- Determine career progression based on actual performance.
- Increase engagement when transparent growth opportunities are clearly seen.
3. Structure of the competency framework
A complete competency framework typically includes three main layers:
| construction | Write comment here... | Example |
|---|---|---|
| Core competencies | Applicable to all employees, reflecting organizational values and culture. |
Teamwork – Service mindset – Integrity – Responsibility – Continuous learning. |
| Professional competence | Relating to the professional expertise of each department or profession. | Accounting, marketing, engineering, operations, etc. |
| Management capacity | For management level, demonstrating the ability to direct, make decisions, and develop teams. |
Strategic thinking – Decision making – Delegation – Employee training – Performance management. |
| Complementary competencies |
Skills to perform tasks in a specific context | Adaptability, situation handling, special value |
Each competency is often described in terms of proficiency levels, usually from 1–5, helps to make an objective assessment.
4. Competency framework development process
The standard process consists of 5 steps:
1. Strategic analysis and organizational structure
→ Identify business goals linked to human resource goals and key position groups.
2. Standardize the system of functions and titles
→ Standardize organizational structure, title system and functions and tasks of each title
3. Building a competency dictionary for businesses
→ This is the step of determining the necessary competencies for the identified job title system.
Competency dictionaries need to be fully developed for competency groups like those of competency framework thinking, including:
(1) Core competency groups: Applicable to all positions in the business
(2) Management/Leadership Competency Group: Applicable for management positions
(3) Professional competency group: Applicable to specific professional positions
(4) Complementary competency/skill group: Apply according to the specific task and role context of each position
There are two ways to do this: build your own competency framework or refer to an existing framework and adjust it.
4. Determine the competency framework for each position
→ Identify the competency set and required levels for each position in the business.
How to do it for SMEs: The right way for SMEs is to conduct a survey or internal discussion about the competency set and how the competency is involved in creating performance.
5. Assessment – Implementation – Periodic Update
→ Conduct testing, evaluate effectiveness and make adjustments based on reality.
5. Application of competency framework
Competency framework is platform system for the entire HR cycle. Here are the main applications:
5.1. Application in recruitment
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Determine criteria for selecting candidates that match the position's competency requirements.
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Design interview form.
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Reduce hiring bias and increase employee “fit” rates.
5.2. Application in training and development
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Analysis capacity gap (The gap between the position competency framework and the actual competency of the employee) to build a suitable training plan.
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Build career path linked to core competencies (Progress according to proficiency levels of the competency framework).
5.3. Application in salary system
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As the basis for 3P salary policy (Position – Person – Performance):
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Position: based on position value.
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Person: based on individual ability
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Performance: based on work results.
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Guaranteed fair and transparent pay and development incentives.
6. Difficulties and solutions when building a competency framework
Although competency frameworks offer many benefits, there are certain challenges in developing and implementing competency frameworks. Understanding these challenges will help make the implementation process more effective.
Challenge 1 – Lack of leadership commitment
If senior leaders do not truly appreciate and commit to investing resources (time, budget, personnel) in building a competency framework, the project is likely to stall or fail.
→ Solution:
Competency framework must be considered as operating tools, is not just an HR document. When leaders use the competency framework in assessing, planning, and making HR decisions, it becomes common language of the organization, promote the effectiveness of the competency framework.
Challenge 2 – Lack of consensus on “what is a capability?”
The definition of competencies is unclear, not linked to the specific job, and does not reflect the behavior that produces actual results. As a result, the competency framework becomes a list of disjointed skills that are difficult to apply in practice.
→ Solution:
Capacity analysis should based on real performance data (KPI, OKR, work behavior), combined with interviewing talented people in each position. From there, businesses can identify “the ability to produce results” instead of listing general competencies.
Challenge 3 – Employee and middle management resistance
One of the most common obstacles when implementing a competency framework is defensive reactions from within the organization.
Many employees fear that the competency framework will become a tool for “assessment – scoring – comparison”, while middle managers fear that their leadership capacity or working style will be “transparent”.
As a result, the system, although correct, is still not actually operated, because of the lack of acceptance from people – the factor that the competency framework itself is intended to develop.
→ Solution:
- Communication is development-oriented, not controlled. Explain that the competency framework is a tool to help improve capacity and career opportunities, not to find fault or cut corners.
- Test on a small scale. Start with a key set of positions, demonstrating value with real results (e.g., increased productivity, reduced errors, improved retention).
- Empower middle management. When they understand and use the competency framework as a management tool, diffusion will be natural rather than imposed.
Conclusion
Competency framework is not just an HR tool, but strategic thinking system help businesses:
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Build a team that aligns with business goals.
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Link all HR activities to a unified measurement standard.
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Ensure successful implementation of 3P salary.
Building a competency framework is not technically difficult, but difficult in systems thinking and operational discipline.
An effective competency framework for businesses a common administrative language, helping every people decision – from hiring, training to compensation – be consistent, transparent and linked to financial performance.
