Person-Based Pay: Skill Plans

1. Person-Based Pay: Skill Plans • Skill-based structures link pay to the depth(specialists) or breadth(generalists) of skills, abilities, and knowledge a person acquires that are relevant to the work • Individuals are paid for all their certified skills regardless of whether the work requires all or just a few of those skills • The wage attaches to the person • Offer flexibility to align talent with continuously redesigned workplaces

2. Purpose of the Skill-Based Pay • Supports the strategy and objectives • Supports work flow • Is fair to employees • Motivates behavior toward organizational objectives

3. Developing Skill-based Pay • Skill analysis • A systematic process of identifying and collecting information about skills required to perform work in an organization • Skill blocks • Bundles of skills arranged along a hierarchy • Skill certification • Peer review, on-the-job demonstrations, tests, etc. • Scheduling fixed review points and recertification

4. Outcomes of Skill-based Pay • Exhibit 6.4 • Well accepted by employees due to a clear link between input and outcome • Becomes increasingly expensive because the majority become certified at the highest pay levels • May be best for short-term initiatives • Matching which strategy? • Labor cost-cutting or capital intensive? 인적자원관리이슈 - 직무분석

5. Person-Based Pay: Competencies • Competencies • “A collection of observable behaviors that require no inference, assumption or interpretation” • Measurability as a basis of pay? • Core competencies • The underlying, broadly applicable knowledge, skills, and behaviors that form the foundation for success at any level or job in the organization • Competency sets • Translate each core competency into action • Competency indicators • Observable behaviors that indicate the level of competency within each set • Pay structure • Proficient, Resource, Advanced, and Expert

6. Exhibit 6.11: The Top 20 Competencies

7. Evidence of Usefulness of Job- or Person-based Pay I • Purpose of job- or person-based procedures: • Internal alignment(equity) • In practice, the focus is on bothjob and person factors that create value for the organization • Reliability • Can be improved by using evaluators familiar with the work and who are trained in job evaluation

8. Evidence of Usefulness of Job- or Person-based Pay II • Validity • Degree to which the evaluation assesses what it is supposed to • Measured in two ways: • Degree of agreement between rankings from job evaluation with an agreed-upon ranking of benchmarks • “Hit rates”—degree to which the job evaluation plan matches an agreed-upon pay structure for benchmark jobs • Acceptability • Formal appeals process, employee attitude surveys

9. Bias in Internal Structures • No evidence of gender bias in job evaluation • Wages criteria bias • When mirroring bias in the current pay rates • Recommendations for bias-free job evaluation • Define compensable factors and scales to include content of jobs held predominantly by women • Ensure factor weights are not consistently biased against jobs held predominantly by women • Apply plan in as bias-free a manner as feasible

10. The Perfect Structure • The best approach may be to provide sufficient ambiguity to afford flexibility to adapt to changing conditions • Too generic an approach may not provide sufficient detail to make a clear link between pay, work, and results • Too detailed an approach may become rigid

11. Exhibit 6.15: Contrasting Approaches