Advantage of a skill-based plan is that people can be deployed in a way that better matches the flow of work◦ Avoids bottle necks◦ Avoids idling

Skill-based structures link pay to the depth or breadth of the skills, abilities, and knowledge person acquires that are relevant to the

work.

In contrast, a job-based plan pays employees for the job to which they

are assigned, regardless of the skills they possess.

Skill plans can focus on ◦ Depth based

Specialist◦ Breadth based:

Generalist/ multiskilled based

Supports strategy and objectives

Supports work flow

Fair to employees

Motivates behavior toward organization objectives

Supports strategy and objectives

Supports work flow

Fair to employees

Motivates behavior toward organization objectives

To build a structure, a process is needed to describe, certify, and value the skills

◦ What is the objective of the plan?

◦ What information should be collected?

◦ What methods should be used?

◦ Who should be involved?

◦ How useful are the results for pay purposes?

Systematic process of

identifying and collecting

information about skills required to

perform work in an organization.

What information to collect? ◦ Foundation skills◦ Core electives◦ Optional electives

Whom to involve?◦ Employees and managers

Establish certification methods◦ Peer review, on-the-job demonstrations, or tests,

or formal tests

Guidance from the research on skill-based plans◦ Design of certification process crucial in

perception of fairness◦ Alignment with organization’s strategy◦ May be best for short-term initiatives

Several perspectives on what competencies are and what they are meant to accomplish◦ Skill that can be learned and developed or a trait

that includes attitudes and motives?◦ Focus on the minimum requirements that the

organization needs to stay in business or focus on outstanding performance?

◦ Characteristics of the organization or of the employee?

Core competencies◦ Related to mission statements expressing

organization’s philosophy, values, business strategies, and plans

Competency sets◦ Translate each core competency into action

Competency indicators◦ Observable behaviors that indicate the level of

competency within each set

Exhibit 6.6: TRW Human Resources Competencies

Exhibit 6.7: Sample Behavioral Competency Indicators

Organizations seem to be moving away from the vagueness of self-concepts, traits, and motives

Greater emphasis on business-related descriptions of behaviors “that excellent performers exhibit much more consistently than average performers”

Competencies are becoming “a collection of observable behaviors that require no inference, assumption or interpretation”

Organization strategyOrganization strategy

Exhibit 6.8: Frito-Lay Exhibit 6.8: Frito-Lay Managerial Managerial CompetenciesCompetencies

Work flowWork flow

Fair to employeesFair to employees

Motivates behavior Motivates behavior toward organization toward organization objectivesobjectives

Organization strategyOrganization strategy

Exhibit 6.8: Frito-Lay Exhibit 6.8: Frito-Lay Managerial Managerial CompetenciesCompetencies

Work flowWork flow

Fair to employeesFair to employees

Motivates behavior Motivates behavior toward organization toward organization objectivesobjectives

Objective What information to collect?

◦ One scheme to classify competencies includes Personal characteristics Visionary Organization specific

◦ Examples Refer Exhibit 6.9, Exhibit 6.10, and Exhibit 6.11

Whom to involve?◦ Competencies are derived from executive

leadership’s beliefs about strategic organizational intent

Establish certification methods Resulting structure

◦ Designed with relatively few levels Guidance from the research on competencies

◦ Appropriateness to pay for what is believed to be the capacity of an individual as against what the individual does

Purpose of job- or person-based plan◦ Design and manage an internal pay structure to

help achieve organizational objectives

Reflects internal alignment policy continuously

Supports business operations In practice, during evaluation of higher-value,

nonroutine work, distinction between job- versus person-based approaches blurs

A crucial issue is the fairness of the plans administration

Sufficient information should be available to apply the plan

Communication and employee involvement are crucial for acceptance of resulting pay structures

Reliability of job evaluation techniques◦ Different evaluators produce same results

◦ Can be improved by using evaluators familiar with the work and who are trained in job evaluation

Validity◦ Degree to which evaluation achieves desired results

◦ Validity of job evaluation is measured in two ways

Validity (cont.)◦ Validity of job evaluation is measured in two ways

Degree of agreement between rankings; ranking of benchmarks

‘Hit rates’; pay structure for benchmark jobs as criterion

◦ Definition of validity needs broadening to include impact in pay decisions

Acceptability◦ Formal appeals process

◦ Employee attitude surveys

Gender bias◦ No evidence that job evaluation is susceptible to

gender bias

◦ No evidence that job evaluator's gender affects results

◦ Compensable factors related to job content – contact with others and judgment – does reflect bias

◦ Compensable factors related to employee requirements – education and experience – does not reflect bias

Wages criteria bias◦ Job evaluation results may be biased if jobs held

predominantly by women are incorrectly underpaid

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◦ Ensure job descriptions are bias free◦ Exclude incumbent names from job evaluation

process◦ Train diverse evaluators