How can you create a clear skill-level system within a team?
A well-designed skill-level system within a team makes it possible to define employees’ competency levels for specific tasks and processes. A clearly defined competency scale ensures that every employee understands the expectations for a given skill and knows exactly what they need to do to advance to the next level. How can you create a practical competency assessment system that is useful for the day-to-day management of production staff?
What is the skill level system?
A competency level system is a set of clearly defined competency levels assigned to the tasks performed by an employee. It is important not to confuse the competency level system with an employee evaluation. An employee’s overall evaluation pertains to the entirety of their work within the organization. The purpose of this system, however, is to show at what level an employee performs specific tasks and what requirements they must meet to advance to the next, higher skill level. This information can, of course, serve as the basis for issuing an appropriate quarterly or annual performance evaluation for the employee.
The system is designed by assigning a skill level to a specific task. The evaluation focuses on how a particular task is performed, such as:
- operating a production machine,
- setting up a workstation,
- conducting quality control on products.
A single employee may have different competency levels in different areas at the same time for example, they may be able to operate a CNC milling machine independently but are still gaining experience with a hydraulic press. The competency assessment system allows you to:
- create a clear competency matrix,
- reduce subjective assessments,
- standardize the method of assessing competencies across the entire organization,
- and identify competency gaps more quickly.
Why are clear skill levels important for a team?
A clear system of skill levels influences how the entire team including both front-line employees and management organizes its work.
Employees gain access to specific information about their skills. Instead of general evaluations, they receive clear criteria regarding their level of autonomy, the tasks they perform, and the requirements they must meet to reach the next level of competence. Common criteria for everyone being evaluated within a given competency also enhance the sense of fairness. Employees understand what determines their competency level and can be confident that the same requirements apply to everyone who performs the same task or is developing the same skill.
For managers, a well-defined competency framework allows them to:
- standardize the evaluation process across the entire organization,
- reduce discrepancies in evaluations among managers,
- onboard new employees more quickly,
- plan training based on actual needs,
- easily identify individuals ready to take on new responsibilities,
- support planning for replacements and succession.
A clear skill-level system also helps identify skill gaps more quickly. This is becoming increasingly important for organizations. According to the Future of Jobs Report 2025, as many as 63% of employers cite skill gaps as the biggest barrier to business transformation. A transparent competency matrix and clearly defined skill levels make it possible to detect such gaps more quickly and effectively plan development initiatives.
Interestingly, the McKinsey report *Building the Vital Skills for the Future of Work in Operations* shows that 80% of the leaders surveyed believe that at least half of new roles should be filled by developing the skills of current employees, rather than solely through external recruitment. For this to be possible, an organization must know what skills its employees possess, which competencies require development, and who is ready to take on new tasks.
What characteristics should a good skill-level system have?
A good skill-level system should be simple to use, specific, unambiguous, and understandable to both managers and employees. How do you create a competency scale correctly?
How many skill levels should we use?
The number of skill levels depends on the nature and complexity of the processes carried out within the organization. The most commonly used scales are 3-, 4-, and 5-level scales.
A 3-level scale works best in organizations where tasks are relatively simple and the onboarding process for new employees does not involve many stages.
The most common solutions used in manufacturing companies are the 4-level and 5-level scales. They allow for a precise description of competency development without unnecessary complexity.
A greater number of levels allows for a more precise description of progress, but requires more detailed criteria. At the same time, if it is difficult to distinguish between two adjacent levels, it means the system is too complicated.
How should we name and describe skill levels?
The names and descriptions of the levels should clearly reflect the required skills. Both the employee and the supervisor must understand what behaviors and actions are associated with a given level. How should competency levels be described?
An example of a 5-point scale for employee competency levels used at noSilo is as follows:
- Level 0. The employee requires training.
- Level 1. The employee performs simple tasks under supervision.
- Level 2. The employee performs tasks under partial supervision.
- Level 3. The employee performs tasks independently.
- Level 4. The employee is an expert and can train others.
The same employee may, for example, have:
- Level 4 in hydraulic press operation,
- Level 3 in quality control,
- Level 1 in process execution in another area.
Appropriate terminology eliminates the need to interpret general terms on one’s own. Additionally, when creating level descriptions, it is advisable to use a single framework for all competencies. This framework may include:
- level of independence,
- scope of responsibility,
- ability to respond to problems,
- need for supervision,
- opportunity to train others.
In noSilo, once skill levels have been assigned, all the information is visible in the competency matrix, allowing managers to quickly assess employees’ readiness, identify competency gaps, and plan training or cover for absences. A standardized method of describing levels also helps ensure consistency in evaluations across teams and makes the skill-level system clear to both supervisors and employees themselves.
How can you align the levels with different types of competencies?
Not all competencies can be assessed using the same criteria. Assessing machine operation is different from assessing process knowledge, which is different again from assessing the ability to work with a team. A well-designed skill-level system should use a common scale while taking into account the specific nature of individual competencies. How should an employee’s skill level be assessed for different types of competencies?
How to implement a skill-level system step by step?
Effective implementation of a skill-level system requires properly mapping levels to competencies and regularly updating the data. How can this be done?
- Step 1. Identify competencies. Start by defining all the competencies required for each position.
- Step 2. Create a competency scale. Decide whether the organization will use a 3-, 4-, or 5-point scale, and prepare clear descriptions of each level.
- Step 3. Establish the levels of the competency matrix. For each competency, specify the required level and evaluation criteria.
- Step 4. Configure the matrix in noSilo. In noSilo, you can easily create competencies, assign skill levels, and define job requirements. In subsequent stages, the system also allows you to monitor progress, verify the validity of certifications and training, and analyze competency gaps.
- Step 5. Conduct the first assessment. The assessment should be based on observing work performed in practice and verifying compliance with applicable standards.
Regularly updating data is also an important step. Competency levels may change as production processes evolve. As indicated in the Future of Jobs Report 2025 published by the World Economic Forum, by 2030, 39% of employees’ current skills will need to be updated or will become obsolete. This means that organizations should regularly review the required competencies and adjust their assessment system. noSilo allows you to quickly update competencies, skill levels, and job requirements without having to rebuild the entire matrix.
What mistakes should you avoid when creating competency levels?
Problems in developing competency levels stem from imprecise descriptions and a lack of consistent evaluation criteria. The most common mistakes include:
- evaluating the employee instead of a specific competency,
- using general terms without describing specific behaviors,
- too many levels,
- a lack of common criteria for all managers,
- failing to account for changes in competencies over time,
- equating certifications with actual skills,failing to regularly update data in the competency matrix.
A specific and clearly described level system makes it easier to maintain objectivity in evaluations. This solution serves as a useful tool to support the day-to-day work of production teams.
FAQ
The best indicator is the consistency of evaluations. If different managers evaluate the same competencies in a similar way, and employees understand the criteria and know what they need to do to reach the next level, it means the system has been designed correctly.
In manufacturing companies, a 4- or 5-point scale generally works best, as it allows for a more precise description of competencies.
Level numbers make it easier to manage data; however, each level should have a clear description specifying the scope of autonomy, responsibility, and required skills.
The most reliable evaluation is one conducted by a direct supervisor or an experienced on-the-job trainer. It is advisable to base it on workplace observations, practical skill assessments, and clearly defined criteria.
The best approach is to describe the levels using specific actions that can be observed on the job. This way, the evaluation will be based on facts rather than the evaluator’s personal impressions.
Bibliography:
https://www.mckinsey.com/~/media/McKinsey/Business%20Functions/Operations/Our%20Insights/Building%20the%20vital%20skills%20for%20the%20future%20of%20work%20in%20operations/Building-the-vital-skills-for-the-future-of-work-in-operations.pdf;
https://reports.weforum.org/docs/WEF_Future_of_Jobs_Report_2025.pdf;
https://image.marketing.deloitte.de/lib/fe31117075640474771d75/m/1/96cf5d94-ee17-40a7-beca-f4e5e8f8ae72.pdf.
For years, he has been exploring how technology can tangibly support people at work - especially in manufacturing environments. He develops technologies and content that help companies reduce the time it takes to onboard new employees, better manage team competencies, and transfer knowledge more effectively.
In his writing, he combines practical language with an accessible style, demonstrating that digitalization in factories is not just a trend but delivers tangible benefits: lower turnover, higher quality, and greater efficiency. He draws inspiration from daily conversations with clients and observations from production facilities, ensuring that every article is grounded in the real needs and challenges of the industry.
