Ch 5: Person Focused Pay Flashcards
Person-focused pay
AKA competency-based pay generally rewards employees for acquiring job-related competencies, knowledge, or skills rather than for demonstrating successful job performance
Pay-for-knowledge plans
reward managerial, service, or professional workers for successfully learning specific curricula
Skill based pay
a term used mostly for employees who do physical work; increases these workers’ pay as they master new skills
Horizontal skills
Similar skills or knowledge. Record keeping- maintain attendance records, and monitor the use of office supplies these all come under record keeping
Vertical Skills
Skills traditionally considered as supervisory- scheduling, coordinating, training
Depth of Skills
level of specialization or expertise a employee brings to a particular job
Competency
Uniquely combined characteristics of person- personality, attitudes, knowledge and skills.
. Competency-based pay programs apply to technical, managerial,
service, or professional employees (like HR managers) for whom it is difficult to define job performance according to observable or concrete behaviors.
How are core competencies defined?
Often derived from overall strategic statements of companies - they are very general
Like in GE- their strategy statement: globalization etc.
Core comp: Edge, Execute (ability to turn vision into results)
Companies usually offer training to help employees develop particular competency sets
who uses person-focused plans
half of companies known to be using this- have 150-2000 employees
skill-based pay plan in a manufacturing setting increased plant productivity by 58 percent.
Why you should adopt person-focused pay plans
Technological innovation- skills can become obselete and combination of jobs, giving more responsibility
Increased Global Competition
- Computing ability
- Trained Up
- Team Skills
What are the types of person-focused pay plans?
Stair step model- so model applies to specific job family- each step represents a higher level of skill and complex jobs- so u have to progress
The skill blocks model- also applies to job within same family. Higher steps = more complex jobs, but skills do not necessarily build o each other(so in program you don’t need to take level 2 before you can do level 3- you can just do level 3 and be paid for it)
- particularly addresses development of knowledge or skills. Also emphasises horizontal and vertical skills
Job-point accrual Model- encourages employees to develop skills and learn to perform
jobs from different job families(but not so much that they become jack of all trades)
Cross-departmental models- training in critical skills person would need to work effectively in another department
eg. . If the shipping department experienced a temporary staffing
shortage, a production department supervisor who has been trained in distribution methods can
be “lent” to the shipping department.
Diff between person-focused pay and job-based pay
Job-based pay compensates employees for jobs they currently perform.
So Personfocused pay focuses on gains in knowledge, skills and competencies,
Job-based: value of job, goals of job, performance(which is done with the skills you already have)
Advantages of person-focused pay
Adv to emp- job enrichment and job security
Job characteristics theory- employee more motivated to perform jobs that contain a high degree of core characteristics: SV, TI, A, Feedback
Adv to emplr- these programs can lead to:
enhanced job performance,
reduced staffing(can employ less and bounce back easily in case of death, leave etc. because workers are highly qualified)
Greater flexibility(linked to being able to meet staffing demands because workers are highly skilled)
4 Disadv of person-focused pay
employers feel that the main drawback of person-focused pay systems is that hourly labor costs, training costs(development, time away from actual work, testing time etc.), and overhead costs can all increase
person-focused pay systems may not mesh well with existing incentive pay systems.
-When both person-focused and incentive pay systems are in operation, employees may
not want to learn new skills when the pay increase associated with learning a new skill is less
than an incentive award employees could earn based on skills they already possess
Third, effective person-focused pay programs depend, in large part, on well-designed
training programs.
Fourth, companies struggle with determining the monetary value of skill and knowledge
set.
