1 / 7

Alternatives to Traditional Pay Structures

Alternatives to Traditional Pay Structures. Skill-based Pay Broadbanding Alternative Structures are more flexible than traditional pay structures and encourage employees to assume different roles without triggering compensation increases or decreases. Skill-based Pay.

niveditha
Download Presentation

Alternatives to Traditional Pay Structures

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Alternatives to Traditional Pay Structures • Skill-based Pay • Broadbanding • Alternative Structures are more flexible than traditional pay structures and encourage employees to assume different roles without triggering compensation increases or decreases MGMT 4030 - Managing Employee Reward Systems

  2. Skill-based Pay Definition: Pay is based on the mastery of a series of skill-blocks or competencies that makes the person more valuable to the employer. Features of Skill-based Pay • Different skill levels can be identified • Vertical skills or horizontal skills • Monetary pay differential associated with each skill level above base rate. • Certification of skill must be demonstrated by employee. MGMT 4030 - Managing Employee Reward Systems

  3. Skill-based Pay Features of Skill-based Pay (continued) • Fits well with self-managed team culture and organizations that emphasize learning skills. • Also fits with high employee involvement concept because pay rates are fully disclosed and can be influenced by employees’ willingness to learn new skills. Challenges to using Skill-based Pay • Over time many employees reach the top of the pay scale. May be expensive. • Employee skills must be fully utilized - not always possible. MGMT 4030 - Managing Employee Reward Systems

  4. Skill-based Pay $$ IV III II I Basic Advanced Skill level MGMT 4030 - Managing Employee Reward Systems

  5. Broadbanding Definition: Collapse several pay grades into wide pay bands to give managers greater flexibility to move employees horizontally in their careers so as to broaden their skills and competencies. • Collapse narrow salary grades into wide bands. • 20 grades reduced to 4 to 5 bands. • 40-60% ranges increased to 100-250% • Facilitate Lateral career moves • Enhanced flexibility for transfers • Cross-functional teams with fluid duties • Increased emphasis on market pricing jobs. MGMT 4030 - Managing Employee Reward Systems

  6. Broadbanding (continued) • Decreased emphasis on job evaluation • Eliminates excessive job titles • More flexible pay decisions • Few control points such as midpoints or salary caps. • More pay opportunities based on skills MGMT 4030 - Managing Employee Reward Systems

  7. Technical Band Broadbanding 160% $85K IV 40% III 40% Salary grades for Engineers 40% II 40% I $35K MGMT 4030 - Managing Employee Reward Systems

More Related