Defining competence to perform a skills gap analysis

In this short video, I plan to take a practical look at how you can define competent standards for a job role and then to conduct the skills gap analysis. The reason for choosing these two subjects relates directly to the FCA requirements detailed in section 10 of long form A. In particular, the regulator expects firms when submitting an application for a new SMF, to include details of the specific skills and competencies related to the role and how the candidate scores against these, as well as a description or copy of the candidate’s skills gap analysis.

Although this approach isn’t mandated by the FCA for assessing certification functions, we strongly recommend that you follow this approach. Let’s start by looking at what competence means. The regulator under the competent employees rule refers to employees as having the knowledge, skills and expertise to discharge their responsibilities within the T&C sourcebook. It also refers to having an appropriate standard of ethical behaviour.

Let’s look at what that means in practise. Imagine the situation where you have booked a driver to take members of your family. Your wife, husband, partner or kids from home to a destination 500 miles away across the UK. It is midwinter and snow is forecast. The driver has arranged to pick your passengers up early to take full advantage of the daylight hours, but the first and last part of the journey will be completed in darkness. The destination itself is 10 miles from the nearest a road, and the last mile is an off road track. The route will make use of as many motorways as possible, but they do not cover at least 25% of the way.

It is now the day of the journey. It is 5:30 AM. The weather outside is below freezing and it is foggy. The doorbell rings. You answer the door to be greeted by a young man who is complaining that he has only had a few hours sleep. He turns out to be your driver to add to your concerns, the driver divulges that he has only passed his driving test the previous week on his third attempt.

There are two questions to ask at this stage. Do you let your family travel with the driver and what were the points you considered in coming to that decision?

When faced with this scenario, most people will not let the driver take their family on the journey. Their main concerns flow from the drivers, lack of relevant experience to perform the task in hand, and his lack of professionalism in presenting himself to the family. If we think about the root causes of, why these views are prevalent, it is because most people are unhappy with the level of risk posed to the safety and well-being of their family members, and quite simply, the driver is not up to the standards that you expect. At the very minimum, you would have expected the driver to have extensive driving experience in a range of different environments, whether it’s through motorway driving, poor weather, driving off road driving or night time driving to name but a few.

You do not regard the driver as being competent.

Competence is all about performing to agreed standards on a regular and proven basis. In this scenario, either the standards have not been defined or the skills required to perform the task have not been set at the appropriate standard. Let’s turn our attention now to the level at which we should set the competent standard. Based on our example, at the very minimum, we should be satisfied that the driver would be able to transport members of the family safely, despite the inclement conditions. We would also have specific requirements regarding how the driver has prepared to undertake such a journey.

It doesn’t necessarily mean that we require a driver to have passed their advanced driving test or accumulated a minimum of 1000 hours experience without incident. We may or may not have a requirement regarding the number of penalty points we would tolerate on the driver’s licence. And possible reasons why these points were given.

In order to determine the standards, we would require from the driver to be competent, we need to ensure that we have covered off all the required or essential elements. We may also develop a further list of desired elements which would provide greater comfort to us in making our decisions. If they were appropriate to our circumstances. Take a look at this graph and the idea is to decide how you should how high you should set the bar to determine an individual’s competence to undertake a task similar to the one just described. Can you differentiate between those elements which are absolutely essential and those desirable ones which are more closely associated with the highest level of professionalism for drivers, for the role in question?

The point is that there will be a potential gap between competence and professionalism or whatever you call this particular level.

This is OK as a person meeting the competent standard will be able to safely transport people on journeys throughout the UK. Highest level of professionalism might carry aspects such as additional driver qualifications for advanced driving or defensive driving, the ability to drive on the continent and have a high number of incident free hours on various categories of roads, motorways, major and minor roads, off road et cetera. At this stage, the key point to note is that there is a difference between competent standards and those associated with the highest level of professionalism.

It is possible for companies to decide that their competent standards and highest levels of professionalism are the same. There are consequences for making this decision. In light of the consequences, many companies reevaluate their decision as to where they set the confidence bar. Let’s take a closer look and relate it to the role of a financial advisor. Choosing the same approach, where should we set the bar for a competent financial advisor? We could take an idealistic view and expect all our advisors to demonstrate the highest levels of professional standards to be regarded as competent in simple terms.

This might require the financial advisor to hold a minimum of chartered status. Deal with the most complex cases, act as a mentor to new financial advisors. Carry the lowest risk rating. Have no errors in the advice they give, or the documentation they complete. In addition, the key performance indicators used to monitor their ongoing performance carry no upheld complaints. They meet or exceed all their performance objectives and complete a minimum of 100 hours CPD a year. From a customer’s point of view, this might sound ideal. Having access to the calibre of this financial advisor must be attractive.

There is, of course the possibility that having such a qualified individual in front of you, the fee that you’re charged to address your relatively straightforward situation would be excessive. It could feel like a sledgehammer to crack a nut. From the company’s point of view, this could provide a great marketing position. However, I mentioned that there were consequences. If this is where you choose to set the competence bar, anyone who falls short of these standards must be more closely supervised than someone who has achieved them. This will put a greater strain on company resource as more supervisors will be needed to cover off this requirement.

Aspects such as span of control will be much tighter. It is interesting to note that when TNC regulations first came into being, many companies were talking about setting the benchmark qualification as part of their competent standards to be the advanced financial planning certificate, which was level 4. When it was made apparent the impact upon their supervisory resource, many companies chose to revert to the benchmark qualification required at the time, which was a Level 3 qualification. Things have obviously moved on since then, but the benchmark is now a level 4 and the aspirational standards are much higher.

So, faced with the impact upon supervisory resource, companies started to look at lowering the bar to minimise the supervisory resource needed. As you would expect, there are certain forces that come into play to ensure that the level of the bar is set at the appropriate height to ensure customers are protected and their outcomes are met. We then need to look at the factors that companies must consider when setting the height of the competence bar. The first factor to consider within the standards for competent financial advisors is that they need to obtain a Level 4 qualification.

As we know, qualifications are not evidence of a person’s competence. They’re just part of the standards and evidence. We need to think of other aspects that contribute to the height of the bar and the standards expected. These could include aspects such as treating customers fairly. The consumer outcomes achieved are the regulatory and legislative requirements. Behaviours commensurate with company values operating with the FC as own code of conduct and producing outputs to the appropriate quality. Competent employees need to be able to demonstrate that they can routinely complete tasks expected of them.

They can make mistakes with intolerances, and most companies allow for this by allowing some errors to be made, for example. Companies will expect 100% accuracy on advice being given to a customer, but may tolerate some errors, particularly minor ones made by the advisor in the documentation of the advice being given. There may also be tolerances for uphill complaints and customer cancellation. Until a financial advisor achieves the required standard of competence, the regulator expects the level of supervision that is undertaken to be far more involved than the level once competence has been awarded typically.

This would involve more accompanied calls or checking a greater volume of the advisors work. The frequency of 1 to one interactions might also be a factor. Having set out the groundwork for describing competence, let’s look at how we might set the standards for a financial advisor and how we might determine their competence. This has been done in such a way to keep it relatively straightforward, but produce a meaningful result. Before moving into the gap analysis itself. We need to start with the job description. We can’t assume that the job description as it stands is robust enough to be able to perform a consistent approach.

The sorts of things that we need to think about is how we’ve actually determined a consistent approach and we look at benchmarking the relevance of the content within the job description. How we get consistency through the operation of competency frameworks and how our approach ensures that we have a reliable, standardised approach for assessment. One of the best ways to ensure consistency in your firm is to look at the process by which a job description is produced. The best way to approach it is considering developing a template that everybody has to follow in producing a job description.

The slide details the various sections off the template itself, but the key ones to focus on are the area detailing the key responsibilities of the individual. Effectively the watts what has to be done by the job holder as part of their job. And the second area are the house, the education and qualification skills and competencies, which are very important to ensure that the job holder performs the responsibilities in the manner which is expected. Looking at the way your job descriptions are written. You should ask yourself whether or not you have taken steps to ensure that you have covered everything that should be included.

You may want to consider benchmarking the approach from external sources. For instance, you may wish to consider looking at external job descriptions readily available through recruitment agencies on the Internet, to ensure that you’ve covered off the appropriate sections and responsibilities that there’s a certain compatibility. Across the. The other source you could consider is looking at the national apprenticeship standards. The apprenticeship standards can be found on the website Institute for Apprenticeships Org. There are many different apprenticeship standards listed, including financial advisors, mortgage advisors, power planners overseas.

A whole array of standards that you might find incredibly useful in ensuring that your job descriptions cover off the key elements associated with the role. One of the key aspects you need to consider if you’re using the job description as the basis for determining the skills gap analysis is the accuracy of its content. You need to make sure that every element covered off in the key responsibilities is a true reflection of what’s expected of the job holder. You need to challenge whether or not all the responsibilities need to be included, and if you discover that one of the responsibilities shouldn’t be there, you should actually remove it, even if it means that the job role needs to be re evaluated as a result of that.

The key reason for doing this is that every key responsibility detailed in the job description must be evidenced as part of the fit and proper assessment. It’s not just a question of looking at the regulated activities that might be included. The content of the job description and the requirement to be competent is covered by two distinct aspects, whether they’re performing an activity listed in Appendix one of the T&C sourcebook. If they are performing other activities, they will be subject to the competent employees rule. Either way, the employee is captured and you must gather evidence to prove competence.

One of the elements detailed in the template was the reference to competency frameworks. Essentially, the competency framework is a means by which firms communicate which behaviours are most important. The ones that are required, valued and recognised. For the specific organisation. There are many different methods to identify the different core competencies. Affirm wishes to support, but many firms look at the. Most straightforward way of achieving this because of the resources and time taken to develop such an approach. Whatever approach is taken, it’s important that firms choose the relevant competencies they wish to encourage to develop within their workforce, but provide a clear indication to those people that are governed by.

What good looks like to help develop a good understanding, a consistent understanding which will help underpin the assessments that will be used based upon them. Just as an example, here is a list of some of the most common competencies that are used by firms. This doesn’t mean that you have to use all the ones that listed all 12 that are listed on the slide. Many firms will choose to use a number of them, but tailor them to the specific job roles. For instance, they might have 8:00. Core competencies and tailor six of them to a given job role. The benefits of this particular approach really support a consistent method of assessment when it comes to assessing a person’s competence as part of the fit and proper arrangements, having clear standards is a fundamental element that needs to be covered.

Having clear standards of both assessors and the people being assessed will understand what’s expected of them, and this approach satisfies two of the three main rules of assessment. Assessment transparency relating to the clarity of the standards that are being used to ensure that they are understood and they also need to be accepted by both parties and reliability, so it shouldn’t matter which assessor is performing the task because they will apply the standards in a consistent manner. Having completed the review of the job description and being satisfied that it is a true representation of the expectation of the job holder, we can move on to the role analysis.

This is just one approach that can be taken. And is a suggested approach of how you might approach the task. You will see from the slide that we have a number of green boxes across the top which are there to identify the key outputs or outcomes of the job holder and then breaking the job down. To requirements relating to knowledge, skills, competencies, values and the code of conduct. Let us walk through how we use this form. Take a look at this first part of a job description lifted from the Internet. This is just a typical job description in respect of a mortgage advisor.

At this stage, you need to ask yourself what are the key outputs or outcomes that this particular mortgage advisor. Is involved in which need to be transferred to the gap analysis. Just take a few moments to look at the list before we move on to the next slide, which shows us populating the gap analysis. Here you can see the outcomes having been transferred to the gap analysis sheet. Very straightforwardly, you can see the various elements from generating meetings, conducting fact finds, providing advice. But at this stage the content of the green boxes should provide a real feel for the nature of the.

Conducted by the job holder. The next stage of the process is to consider the company values that the job holder is asked to follow. In addition, we also need to think about the code of conduct as well, but we can see from the wording provided that this particular company has four core values worthy of trust, customer focused. Respect and winning with integrity. Let’s transfer those into the grid. Here are the four values transferred into the grid, as well as the various elements of the conduct rules and also the three cross cutting rules that apply.

In essence, the behaviours exhibited by the individual in performing their role should produce evidence to cover off these various criteria listed in the grid. We’re still looking at the job description and in this section of the job description it lists the knowledge, skills and behaviours that the job holder should possess or exhibit. This is very much an abridged version. There could well be additional knowledge requirements listed. This is just for the sake of example, but you can see the different elements that we will need to transfer into the grid.

Before we move on to transfer the skills and competencies into the grid, one of the questions that regularly crops up is what exactly is the difference between skills and competencies. In this slide I’ve tried to provide a straightforward explanation of the difference. Skills themselves. Mainly relate to what we call a single proficiency that they’re gained through training and experience and effectively. They can be covered both hard skills and soft skills, soft skills and a non-technical can be applied to a broad range such as your interpersonal skills, how you get on with people, hard skills, things like coding.

On keyboard skills, marketing analytics, these are specific skills related to a job, so they tend to be a single focus, where competencies embrace not only elements of skill, but the behaviours. Your knowledge, your attitude, your attributes. And so therefore there are more rounded approach in terms of what goes on. Skills themselves often tend to be trained in and can be established through training and work experience. So here we are. At this stage we have transferred all the information from the job description into the role analysis grid. You can see that we’ve put in the skills and competencies alongside the knowledge requirements that we will be looking for as part of the assessment of the individuals competence.

On this slide, you will see why we’ve set the grid out with vertical columns for knowledge, skills, competencies and values. When you look at the slide, if we take something like the communication competence, there will be ample opportunity for the mortgage advisor to demonstrate communication skills, competencies. Through the generation of meetings, you know, making appointments, conducting fact finds or providing advice, writing client reports, all these will provide ample evidence. So one particular competence can be featured many times. Through the individual performing their day to.

Having completed the grid, it’s now time to transfer the information. Into the standards grid. Here’s an example of the first four elements off that mortgage advisor’s job. So the grid itself shows you the competent standards that will be used. The evidence of where we’re going to get it from. The opportunity where we might be able to gather the skills and behavioural evidence that we’re looking for and how some of the evidence we gather relates to the company values behind the scenes we would have done a piece of work that shows how living the company values supports the regulators.

The other important point to bear in mind is this only shows the competent standards at this stage because the fit and proper assessment itself is based on competent standards, not excellent standards, which is a good idea to develop. Especially when you’re planning to work with individuals to help them progress, but at this stage we only need to think about the competent standards. The intention is that as you look at the required performance standards expected, you can measure exactly where the job holder is in relation to the competent standards expected.

Mentioned earlier in the presentation, the need to define what good looks like when it comes to the behavioural competencies. This is to ensure consistency of understanding and application of assessment standards. And here is just an example of what you might produce. This is a list of the indicators an assessor might look for to demonstrate that the employee is demonstrating good communication skills. This does not require you to evidence every single element that’s listed. But sufficient to satisfy yourself that the individual job holder is capable of doing what’s required in a majority of cases.

Having completed the gap analysis grid and measured the performance of the individual against the standards, you can identify whether or not there are any gaps that need to be closed. Before the individual can be confirmed as fit and proper in their role. If there are no gaps, then it would be OK to say that the portfolio of evidence was complete and it was now time to submit the evidence for consideration under a fit and proper assessment. Don’t forget, of course, that the elements that are covered in the gap analysis. You might also want to add elements of financial soundness to ensure you do the complete assessment.

Any gaps in the performance would need to be documented. In an appropriate development plan. Hopefully that gives you an insight into how you might use this approach.