People often think pay bands, competencies, and job descriptions are interchangeable. In fact, after wrestling with them for years, they eventually discover that while they have some things in common, they are actually a great deal different.

All personal definitions aside, a job competency refers to an ability, not a "product" or a "result". When a company defines its competency as "micro-electronics" or "systems analysis", it is actually using a "big-picture" classification. These classifications are the same as calling junipers "shrubbery" or chairs "furniture". They are abstract concepts that describe a classification of objects – not a specific thing.

When competencies define a job, we want to use them to describe "how" the job should be accomplished, such as continual learning, organization, deep analysis, effective communication skills, and so forth. This is not the same as defining a job in terms of results.

As you can imagine, to some degree, competencies get deeper and broader as the job becomes more complex. Individual contributors with simple jobs need less mental "horse power" than top-level managers who chart the direction of the company. They may both need analytical skills, but the role of job competencies is defining "which ones, how deep, and how wide."

Setting pay grades and compensation bands is a strategy for establishing what a job is worth to the organization. It involves the scope of the job, consequences of decisions, range of responsibility, number of subordinates, local market conditions, and so forth. On a broad scale, pay banding or "job evaluation" as it is technically called, also classifies jobs – but there are serious differences when compared to job competencies.

For example, a VP of HR and a VP of Law may both have similar titles, but the lawyer might be paid more because of compensation factors; the head of R&D might have a rare technical specialty that commands considerable financial rewards; or a clerk with seven years of longevity might do the same work as one with two years. Competencies may be the same or different. Sometimes they align and sometimes they do not.

Job descriptions are usually artificial documents created for some long-forgotten purpose. As jobs change, job descriptions quickly go out of date. Content-wise, the job description usually covers the number of people supervised, the global responsibilities, and a host of other big-picture factors that justify why the job was created and what it is supposed to do.

The job description is usually dusted off when an HR representative needs something to define job requirements. Job descriptions supplement, but usually do not clearly define, the competencies necessary to perform the job.

Remember “management by objective” or MBO? MBO was “invented” when some smart folks decided it would actually be a good idea to clearly communicate goals to subordinates (duh!). Where is MBO now? Well, it seems these folks did not think through the ramifications of not defining how goals should be accomplished. As a result, rape, pillage and plunder became acceptable mechanisms to achieve objectives. MBO quietly died along with quality circles and self-directed semi-autonomous teams because it failed to account for human competencies.

Pay Bands, competencies and job descriptions have just enough overlap to be confusing and just enough differences to be problematic. Be careful. Organizations need to understand and use all three before human resources can be effectively managed.