Companies are started because they can offer their customers a needed product or service. Companies grow and thrive when that ability sets them apart from the competition. These skills or abilities are a company’s core competencies. A company focuses on building these competencies within its employees and leadership to help it stay a step ahead of the competition.

What are Core Competencies?

Core competencies are the abilities and advantages of a company that separates it from the competition. According to Balance Small Business, your company’s core competencies are what make it difficult for a competitor to copy your products or services. The initial theory has only been around for a handful of decades; it was introduced in 1990 in an article in the Harvard Business Review by authors C.K. Prahalad and Gary Hamel called “The Core Competence of the Corporation.” Today is has involved into a common practice used by many success companies.

SHRM notes three tests can be applied to determine if a skill or ability is a core competency.

  1. A core competency can lead to the development of new products and services and must provide potential access to a wide variety of markets.
  2. It must make a significant contribution to the perceived benefits of the end product.
  3. It should be difficult for competitors to imitate. In many industries, such competencies are likely to be unique.


Why are Core Competencies Important?

Developing and nurturing core competencies helps your company be successful. Your core competencies are what allow you to serve your customers and stand out from the competition. Without them, you could easily get lost in the marketplace and overlooked by potential clients and even future employees. Delivering a specific product, service or experience differentiates your company and is essential when starting a new company or introducing a new product.

Skill Areas That Make Up Core Competencies

There are several different types of competencies that can be used to work together towards a common skillset; think about all of the different behavioral, technical and leadership skills your employees staff need to have in order to do their jobs. Group some of these together and you can develop your core competencies.

  • Behavioral Competencies. These competencies relate to your employees’ behaviors when they work with both customers and coworkers and on projects. Behavioral abilities include communication, both to fellow staff and those outside of the company, and cultivating and maintaining those relationships. As an employee, this might look like supporting your coworkers and their projects, i.e., pitching in to help finish a task, taking other tasks off their plate and giving constructive feedback. As an employee, how do you talk to your coworkers and managers? Is it clear? Is it direct? Strong communication skills, both verbal and written, improve essential feedback by keeping coworkers and managers in the loop. Having a personality that works with your company’s culture is an important behavioral core competency to add to your resume along with others like time management, flexibility, adaptability and focus.
  • Technical Competencies. Technical competencies are those abilities related to a specific task. While they may include, for employees, knowing certain software or techniques, they can also mean the ability to think strategically about a task, staying up-to-date on any of the tools they use to get their work done, data management and being able to create policies and plans. As a company, having a technical core competency might mean you focus on making sure your employees have in-depth knowledge and experience in skills that help you meet company-wide productivity goals.
  • Leadership Competencies. Leadership plays a huge role in competencies as it is typically the driving force behind developing those competencies in employees. Managers and other leaders should make motivating employees, developing their skills and empowering them to be the best in their field a priority. Effective leadership, and a manager’s relationship with their employees, has a direct connection to engagement, productivity and engagement.

Are Core Competencies and Skills the Same?

Yes and no. Skills are specific to a task. For example, writing job descriptions is a skill as is using software to post those descriptions to job boards. But those skills, and knowing them through practice and experience, are what contribute to core competencies. Elaborating on the same example, being able to write and post job descriptions effectively attributes to the core competency of recruiting a productive and loyal workforce.

What are Some Core Competencies Examples?

To glean more information about core competencies, it’s helpful to look at how other successful companies designate them.

  • Apple. Apple develops computers, mobile devices and technology, a field with more than enough competition. It stands out due to its reputation for innovative product design curated under the late Steve Jobs. Apple’s core competencies include this ability to be imaginative, brand awareness and customer loyalty.
  • Netflix. Although when Netflix started as a mail-order DVD service, it didn’t face as much competition. Now as a streaming powerhouse, the marketplace is much more crowded. Although, as Entrepreneur pointed out, even after pivoting its services to online services it still deals in its core competency. It still delivers visual content directly into customers’ homes in a convenient way.
  • Walmart. Walmart is the largest retail department store chain in the world, with more than 5,300 locations in the United States alone. While other chains have dwindled, like K-mart, Walmart holds strong due to its core competencies of having massive buying power and excelling at supply chain management.

How Many Core Competencies does an Organization Need?

The number of core competencies to have depends on your industry. It could be one, two, three or more as long as the competencies offer a superior benefit, are rare and hard to replicate or imitate. For example, a hospital may focus on a specialization, a manufacturer on quality control or a chain restaurant with standardization of taste.

Once you develop your company’s core competencies, use a learning management system (LMS) to help motivate your employees who understand them and engage and develop those who don’t. Allowing employees to expand their knowledge on your company’s objectives and goals makes a more productive workforce. A LMS helps track the development of your employees so that you can watch their performance grow. Using an LMS, like the one offered by BirdDogHR, gives your managers the power to train and develop employees based on your company’s specific goals. Schedule a demo to see how it can work with your workforce.