The word competency is derived from Latin word "Competere" which means 'to be suitable'. The competency concept was originally developed in Psychology denoting individuals' ability to respond to demand placed on them by their environment.

A practicing HR professional can understand competency, as the minimum requirement an employee must comply with in order to deliver specific outcomes at a predefined standard. The competencies consist of four components called knowledge, skill, attitude and capability.

When we talk of competency it is imperative to know the levels of competency such as practical competency (An employee's demonstrated ability to perform a set of tasks) Foundational competence (An employee's demonstrated understanding of what and why he / she is doing) Reflexive competence (An employee's ability to integrate actions with the understanding of the action so that he / she learns from those actions and adapts to the changes as and when they are required) and Applied competence (An employee's demonstrated ability to perform a set of tasks with understanding and reflexivity)