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Guide: Skill Management as a part of your HR People Management Strategy

Blog / February 24, 2022 / with Christoph Drebes
Skill Management

The last two years have brought a lot of change to the HR environment. Topics like skill and competence management as a part of a good people management strategy are emerging. Employees’ competencies of today no longer match the requirements of the future. To avoid the hassle of recruiting overseas, HR managers are now increasingly turning to strategic skills management.

Here’s a guide on how strategic competence and skills management can succeed.



Skill Management refers to the skillset of employees. The HR department uses this tool to deploy employees in the company in a targeted manner according to their skills. Furthermore, the development and training of these skills also play a significant role.
The goal of skill management is to promote each employee’s individual skills and fully utilize them in the best possible position. Hence, it is beneficial for the company’s success and contributes to the satisfaction of the individual employee.

Definition Skill
The word skill is primarily aimed at employees’ abilities and is often used with the synonym competence.
The distinction is between so-called soft skills and hard skills. Soft skills are social competencies such as the ability to work in a team, communication skills, or personal strengths.
On the other hand, hard skills refer to technical competencies and specialist knowledge and can be measured objectively. In skill management, both of these skill types are important. However, digitization has shifted the focus increasingly toward hard skills over the past year.


Both of these terms sound pretty similar and sometimes describe the same thing. However, the difference lies in the details and is crucial for the strategic planning of human resources.
Competence management means “the systematic handling of the company’s competence in line with the company’s overall objectives”.
In this case, it operates at the strategic level of corporate management and has the following tasks:

  • Identification of the required core competencies
  • Development of competence profiles
  • Linking competency resources with strategic corporate objectives

Skill management, in turn, operates at the level of personnel selection, personnel development, and the deployment of personnel in various positions. Accordingly, the areas of responsibility for Skill Management are:

  • Identify the skills of employees
  • Search for employees with these skills
  • Targeted training measures
  • Gap analysis between existing and required skills

Here is a concrete step-by-step guide to the tasks.


The strategic use of skills can positively impact several areas and initiatives of a company.

  • Supporting D&I initiatives
    Recruiting new employees based on skills promotes diversity in companies. People with different backgrounds and experiences can be hired solely based on their individual skills profiles. There are now numerous AI-based HR software that support this matching purely based on competencies.
  • Team success and productivity
    Assembling a project team, for example, based on their skills can make teams more successful. Team members complement each other better, and tasks can be distributed depending on competencies. Ultimately, this leads not only to greater team success but also to a good mood among colleagues.
  • Employee satisfaction
    It should be in the interest of every company to give its employees the chance to utilize their abilities fully and to further their education. In this way, employers prevent the feeling of treading water and show appreciation on the employer’s part. The advantages of satisfied employees are numerous.
  • Cost savings
    Fluctuation and internal layoffs are among the most significant cost drivers in the HR area. This is closely followed by recruiting and training costs. Skill management can help reduce these costs. Filling positions with existing employees prevents recruiting costs. And increasing employee satisfaction through training reduces the number of terminations.

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As already shown, competence management concerns the strategic level, while skill management is more operational in the HR department. However, to successfully and seamlessly harmonize the two, the first step should always be to act strategically.

Here is a concrete guide on how competence and skills management can succeed:


  1. The strategic corporate objectives result in a specific requirement for the employees’ competencies emerging in the future. These can, for example, concern particular (new) departments or large, strategically relevant projects.
  2. In the next step, the department heads work out the resulting competence profiles. If important projects are pending that are crucial for the company’s success, it is helpful to prioritize these competency profiles accordingly.
  3. The authority profiles are summarized now in an authority catalog and handed over to the personnel department


  • Furthermore, the personnel department compares this authority catalog with the existing coworkers’ profiles. However, it must be presupposed here that there are put on profiles of the personnel and their core authority
  • With the help of this gap analysis, the personnel department can determine whether a needed authority profile already exists or whether the need for further recruiting exists
  • HR managers can now determine whether further training is needed for employees who meet the requirements. Ideally, this is done in discussion with the employee in question
  • The final operational step is to check the success of further training: has the employee developed accordingly, and do they now fit the required skills profile?

Guide to Skill Management. Graphic of a step-by-step approach


The components of successful competence and skill management can look like a lot of work at first glance. Therefore, here are our tips on doing it successfully and which tools can support you.


A prerequisite for a gap analysis is to identify the specific skill profiles of employees. Therefore, the HR department should create such profiles for each employee. In large companies that have not yet used this concept, this may be very time-consuming, but it pays off in the long run.

Creating a skills profile should be an explicit part of the HR department’s procedures during the hiring and onboarding process.


A skill matrix is a tabular overview of the skills and competencies of employees and teams. The HR department can assign a specific value between 0-10 to these competencies in consultation with the department heads or team leaders.

But this is not about evaluating employees! The Skill Matrix is a helpful tool for setting up high-performing and complementary teams and making further training opportunities visible.
A Skill Matrix is, therefore, a beneficial tool to promote strategic skill management and thus also competence development in companies.

Here is a detailed guide with examples for the creation and skill matrix templates.


There is also supporting software as an alternative to manually created competency profiles and skill matrices.

Depending on the provider, this gives HR a good overview of the competencies of each individual and of different teams. In addition, the software allows to set up the employees’ skill profiles in an overview dashboard. In the next step, the tool checks whether existing employees meet the profile requirements or whether recruiting is necessary.

The selection of such software should be based on any HR software already available in companies. Some tools offer the skill management function as an add-on to the existing system. This saves the HR department not only effort but also money.


In conclusion, skill management will become an increasingly prominent topic in the HR environment over the next few years due to the shortage of skilled workers. If this is approached correctly and strategically well-founded, it offers a great opportunity. Besides the support of cost savings, employee satisfaction, and DEI initiatives are important to mention.
Skill Management can also promote the company’s success through increased team productivity. However, if skill management requires a lot of work in the implementation phase, there are helpful tips to facilitate this.

To sum up, it is a topic that no HR department can ignore in the future and definitely an HR trend in 2022 and beyond.

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About the author:

Christoph Drebes

Christoph is an entrepreneur from Munich and co-founded Mystery Minds in 2016. Mystery Minds' mission is to make the world of work more human by creating meaningful, personal connections between colleagues. The remote-only team already works with over 250 international companies, helping them to strengthen internal networks and overcome silo mentalities.

Originally published on February 24, 2022 at 11:00 AM, amended on January 12, 2024 at 3:37 PM


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