Finding the right person for the right position in companies isn't always easy. A candidate's resume might look perfect, but do they really have the qualities the job requires? This is exactly where competency inventory comes into play.
A competency inventory is a tool that systematically evaluates the knowledge, skills, and abilities employees possess. Simply put, it helps you map out a person's measurable behaviors and capabilities in the workplace.
Competency is a person's ability to successfully apply their knowledge and skills in the workplace.
For example, a salesperson's persuasion ability or a software developer's problem-solving skills are competencies. These aren't just theoretical qualities on paper - they're observable characteristics in real work environments.
A competency test is a structured assessment designed to measure whether an individual possesses the specific skills, behaviors, and abilities required to perform effectively in a given role. Unlike traditional knowledge-based exams, competency tests focus on how a person applies their expertise in real or simulated work situations.
These assessments typically use scenario-based questions, behavioral indicators, and situational judgment exercises to build a comprehensive competency profile. The goal isn't to label answers as right or wrong, but to understand a candidate's natural tendencies and strengths in areas that matter most for the job.
A series of questions or scenarios are presented to the person, and a competency profile is created based on their responses. There are no "right" or "wrong" answers in these tests - what matters is revealing the person's genuine behavioral tendencies.
Competency inventory questions typically include situational scenarios. For instance, "How would you act when an unexpected problem arises in a project?" These types of questions help evaluate competencies like problem-solving and stress management.
Different competency inventories are used for different positions:
Personality tests evaluate an individual's general character and long-term traits. Competency tests are more specific - they predict whether a person can succeed in a particular job.
Here's a simple analogy: A personality test answers the question "What kind of person is this?" Competency assessment tests answer "Can this person do this job?"
Proficiency testing measures a person's current level of knowledge or skill in a specific area. Think of a language proficiency test. It tells you whether someone speaks English at an intermediate or advanced level. It's a snapshot of where they stand right now.
Competency testing, on the other hand, goes deeper. It doesn't just ask "What do you know?" but rather "Can you apply what you know in real work situations?" A person might score high on a proficiency test in project management theory, yet struggle with the actual competencies needed to lead a project - like stakeholder communication, risk assessment, or team coordination under pressure.
In short, proficiency testing checks the "what," while competency testing evaluates the "how." For hiring and development decisions, competency testing gives you a more complete picture because it reflects how someone actually performs, not just what they've learned.
Achievement tests focus on what a person has already learned. They're designed to assess past learning outcomes - how well someone absorbed the material in a training program, a course, or an academic setting. Final exams, certification tests, and standardized academic assessments are all examples of achievement tests.
Competency tests, by contrast, are forward-looking. They don't just ask whether you passed the course - they evaluate whether you can take that knowledge and apply it effectively on the job. A finance professional might ace an achievement test on accounting principles but lack the competency to manage a real budget under tight deadlines with competing priorities.
Competency-based tests have quite a wide range of applications in the business world:
This is the most common area of use. HR departments can objectively assess whether candidates possess the competencies required for the position.
Used to identify current employees' strengths and areas for development. This enables the creation of individual development plans.
An ideal tool for seeing which positions employees are ready to advance to. Also essential for succession planning.
Clearly reveals which employees need training in which areas.
It makes it easier to place the right person in the right position. This increases workforce productivity and reduces employee turnover. By enabling objective assessment, it minimizes biases.
It's also beneficial for employees. It provides an opportunity to discover their own strengths and weaknesses. Helps them define their career goals more clearly.
Although useful, competency inventory shouldn't be the sole decision-making tool. Using it together with interviews, reference checks, and other assessment methods yields healthier results.
Also, it's important that the inventory used fits the organizational culture and position requirements. A standard test may not suit every situation.
TestInvite's competency inventory solutions give you the objective insights you need to build high-performing teams. Whether you're hiring new talent, evaluating current employees, or planning career development paths, our customizable assessment platform adapts to your unique organizational needs.
