Skill vs Capability.
Navigating the Difference

In recent years, the labour market has undergone rapid transformations due to technological advancements, economic disruption, and increasing social and environmental pressures. The magnitude and pace of change is profound, requiring a recalibration of skills and capabilities that are crucial for individuals and organisations to navigate these complexities and ensure sustainability. These shifts are also fuelling the skills-based movement, as organisations explore more effective ways to determine people's potential to learn, adapt, and progress amid ongoing change and a persistent shortage of talent.

Before an organisation can determine what skills and capabilities are needed now and into the future, however, they must first get clear on the foundational difference between skills and capabilities. Although many organisations use the terms skill and capability interchangeably, these two words mean very different things. Understanding the distinction is essential for ensuring clarity among employees on what success looks like within an organisation. It also enables the establishment of a clear, straightforward framework to direct leaders and employees toward the requisite skills, capabilities, behaviours and attitudes necessary to effectively accomplish role, team and organisational objectives.

Here we set out to demystify these terms and outline how each one contributes to an organisation’s success.

What is a Skill?

A skill is a learned ability that enables an individual to accomplish a specific task effectively. Skills are learned or developed through life experiences, formal education, on-the-job training, mentoring, new experiences, changing roles, and through immersive learning experiences such as VR. Skills typically fall into one of two categories:

1. Soft ‘behavioural’ skills, like emotional intelligence and listening.
2. Hard or ‘technical’ skills specific to a role, for example data analysis and programming.

What is a Capability?

A capability represents a blend of soft and technical skills, knowledge, attitudes and behaviours that allow an individual or an organisation to perform effectively.

1. Skill – having the ability to do something
2. Knowledge – knowing how to do a given task
3. Attitude – having the willingness to act
4. Behaviour – adopting a manner of acting i.e. our observable actions, responses, and patterns of acting.

For individuals, it’s about the potential to apply skills, knowledge, attitudes and behaviours in different scenarios to achieve an outcome. For instance, the capability of ‘Coaching and Developing Others’ requires a leader to have knowledge of the theory of coaching and why coaching is important, alongside knowledge of different coaching frameworks, for example the GROW model. There are also distinct skills required to effectively coach someone, including active listening, asking effective questions and building rapport. Attitudes and beliefs will influence how and why someone applies their knowledge and skills in certain contexts. For instance, a leader may have the knowledge and skill to coach effectively, however, if they do not believe that everyone in their team has the potential to grow and develop, then they will apply their coaching knowledge and skill differently than they would if they believed everyone has potential to grow.  Finally, a leader’s demonstrated behaviour accompanies the application and delivery of their knowledge and skills and is underpinned by their attitudes and beliefs. For example, a leader may have the skill to effectively listen and ask questions, however, if they do not believe the person they are coaching has the potential for growth, they may appear distracted, less invested in the conversation, and they may be less effective in the application of their knowledge and skills than otherwise.

In an organisational context, capabilities often refer to the collective abilities of the organisation, which include the combined capabilities of its employees and systemic abilities like efficient processes, effective communication channels, and organisational culture. They are the intangible, strategic assets that an organisation draws from to get work done, execute its business strategy, and satisfy its customers. Organisational Capabilities can include specialised knowledge, proprietary technology, or a unique approach to serving customers. By leveraging these capabilities, organisations can create value for customers and differentiate themselves from their competitors. Each organisation develops and integrates these attributes into its culture over time, so they are challenging for others to pinpoint and replicate. For instance, Tip Top could sell its’ ice cream formula to another business, but that business would not be able to emulate the same emotional connection customers have with a Trumpet (think back to the VW Beetle Trumpet ad starring Rachel Hunter in the 1980s).

In summary, skill is about having the ability – skills form the backbone of task completion. Capabilities on the other hand are about making sure an individual has the right skills, knowledge, attitudes and behaviours to be successful in their jobs. Both are critical to effective talent management, each serving a different but interconnected purpose in helping individual’s teams and organisations achieve business goals.