How to Create a Competency Matrix for Your Team

This guide walks through how to build a competency matrix from scratch - from defining the right competencies through to creating level-by-level behavioral descriptors and using the matrix in practice.

What Is a Competency Matrix?

A competency matrix is a grid that maps competencies (skills, knowledge areas, behaviors) against proficiency levels (typically 4-5 levels from entry to expert), with behavioral descriptions at each intersection. It shows what someone at level 2 of a skill looks like compared to level 4, in terms of observable behavior rather than abstract description.

Competency matrices serve multiple purposes. In hiring, they define exactly what you are looking for in a candidate and drive your interview scorecard design. In performance management, they create a shared language between managers and employees about where someone currently is and what growth looks like. In compensation, they provide the foundation for leveling and pay bands. In career development, they give employees a visible roadmap for their own growth.

Types of Competencies to Include

A well-designed competency matrix typically includes three types of competencies:

Technical or Functional Competencies

Role-specific skills that define the core work. For a software engineer: programming language proficiency, system design, code review, debugging. For a product manager: market research, roadmap planning, data analysis, stakeholder communication. For a salesperson: prospecting, needs discovery, proposal writing, negotiation.

Behavioral Competencies

Cross-role behaviors that reflect how someone works rather than what they technically know. Common examples: communication, collaboration, problem-solving, initiative, adaptability, feedback-giving, and decision-making. These competencies often have the biggest impact on team dynamics and culture, even though they are harder to assess in hiring.

Leadership Competencies (for management tracks)

Specific to roles with people management responsibility: team development, performance management, strategic thinking, organizational navigation, coaching and mentoring. These competencies typically only appear at senior individual contributor levels and above.

Step 1: Identify the Roles and Levels

Decide which roles your matrix will cover. You can build one master matrix for the entire organization, or separate matrices by function (engineering, sales, operations, etc.). Function-specific matrices tend to be more useful because the technical competencies vary so widely.

For each role, define the levels. A five-level scale is common:

• Level 1: Entry / Associate - requires close guidance, building foundational skills
• Level 2: Intermediate - independent on routine work, still developing in complex areas
• Level 3: Senior - fully independent, experienced across complex scenarios, starting to mentor others
• Level 4: Staff / Lead - influence beyond their immediate team, driving standards and practices
• Level 5: Principal / Expert - organizational authority, shapes direction of the function

Not every role needs five levels. A small function might have three. What matters is that the levels map to real differences in scope, complexity, and organizational impact - not just years of experience.

Step 2: Select the Right Competencies

The temptation when building a competency matrix is to include everything - every skill you can think of, every behavior you value. Resist this. A matrix with 25 competencies is too complex to use consistently in hiring or performance reviews. Aim for 8-12 competencies per function, covering the skills and behaviors most critical to success in that function.

Involve team members and managers in this selection. Ask: "What are the 3-4 things that the best people on this team do differently from the average performers?" The answers to this question reveal the competencies that actually predict success in your specific context.

Step 3: Write Behavioral Descriptors

This is the hardest and most important step. For each competency at each level, write a brief description of what that level of proficiency looks like in observable behavior. Good behavioral descriptors are:

• Observable: Describes things you can actually see or hear, not internal states or traits
• Specific: Describes the behavior concretely enough that two different managers would agree on whether they are seeing it
• Differentiated: The description at Level 3 should be meaningfully different from Level 2 and Level 4
• Positive: Describes what someone does at that level, not what they fail to do at the level above

Example for the competency "Feedback and Communication" in an engineering context:

• Level 1: Asks for help when blocked. Responds to feedback on code reviews within 24 hours. Communicates progress to direct manager.
• Level 2: Gives constructive code review feedback on technical correctness. Proactively communicates blockers. Asks clarifying questions before starting complex work.
• Level 3: Provides thoughtful feedback on both technical and design choices. Facilitates technical discussions. Communicates complex technical tradeoffs clearly to non-technical stakeholders.
• Level 4: Establishes team standards for communication and code review. Coaches others on giving effective feedback. Influences organization-wide technical discussions.

Step 4: Validate with Your Team

Before publishing the matrix, share it with a representative sample of team members at different levels and ask: "Does this accurately reflect what success looks like at each level? Are there important competencies missing? Are the level descriptions differentiated enough?"

Common feedback at this stage: the descriptors at the top levels are too aspirational and do not match the reality of what your current Level 4s actually do; the behavioral descriptors are too abstract; some competencies are effectively the same thing described differently.

Revise based on this feedback. A matrix that team members do not recognize as accurate will not be used.

Using the Matrix in Hiring

The competency matrix directly informs your interview process. For each role you are hiring, select the 5-7 competencies that are most important for that specific position and level. Build your interview scorecard around those competencies. Design behavioral interview questions that probe for each competency. Define what a Level 3 response (hire) vs. a Level 2 response (not yet) looks like before you start interviewing.

This approach - using the same matrix for hiring and performance evaluation - creates continuity. New hires are assessed against the same standard they will be evaluated against in their first performance review, which reduces surprise and builds trust.

Using the Matrix in Performance Reviews

In performance reviews, the matrix provides a shared reference point. Rather than "your communication could be better," a manager can say "You are consistently at Level 2 on Communication - here is specifically what that looks like, and here is what Level 3 looks like with some examples from the past quarter."

This specificity makes feedback actionable. Employees know exactly what they need to do to advance. Managers can measure progress against the same observable behaviors over time. Calibration between managers (ensuring a Level 3 at one manager means the same as Level 3 at another) becomes possible in a way it never is with purely subjective ratings.

Maintaining the Matrix

Competency matrices require regular maintenance. The skills and behaviors that predict success in a role evolve as the role evolves. Review your matrix annually: have any competencies become irrelevant? Have new ones emerged? Have the level descriptors drifted from what the team actually observes?

Assign ownership of the matrix to a specific role - typically the engineering manager for a technical matrix, HR for cross-functional behavioral competencies. Without ownership, maintenance gets neglected and the matrix becomes outdated.

Conclusion

A competency matrix is one of the highest-leverage talent management investments a growing team can make. It requires significant upfront work to build well, but the payoff is consistent across hiring, performance management, career development, and compensation. Start with one function, build it thoughtfully with team input, and extend it from there. The clarity it creates - for managers, employees, and candidates - is genuinely transformative.