Chapter 6

Question 1

No matter the basis for the structure, a way is needed to:

Answer 1

(1) collect and summarize information about the work,

(2) determine what is of value to the organization,

(3) quantify that value, and then

(4) translate that value into internal structure

Question 2

Skill-based pay plans are usually applied to:

Answer 2

> Skill-based pay plans are usually applied to so-called blue-collar work and competency-based plans to so-called white-collar work.

Question 3

The advantage of a skill-based pay structure is:

Answer 3

> is that people can be deployed in a way that better matches the flow of work, thus avoiding bottlenecks as well as idle hands.

Question 4

Skill-based plans can focus on what two components?

Answer 4

> Skill-based plans can focus on depth (e.g., specialists in corporate law, finance, or welding and hydraulic maintenance)

> and/or breadth (generalists with knowledge in all phases of operations, including marketing, manufacturing, finance, and human resources).

Question 5

Provide an example to display the depth of skill-based plans:

Answer 5

> The pay structures for elementary and high school teachers are usually based on their knowledge, measured by education level.

> A typical teacher’s contract specifies a series of steps, with each step corresponding to a level of education

> The result can be that two teachers may receive different pay rates for doing essentially the same job—teaching English to high school students.

> The pay is based on the knowledge of the individual doing the job (measured by the number of university credits and years of teaching experience) rather than on job content or output (performance of students).

Question 6

Provide an example to display the breadth of skill-based plans:

Answer 6

> As with teachers, employees in a multiskill system earn pay increases by acquiring new knowledge, but the knowledge is specific to a range of related jobs. Pay increases come with certification of new skills, rather than with job assignments. Employees can then be assigned to any of the jobs for which they are certified, based on the flow of work.

Question 7

To evaluate the usefulness of skill-based structures, we shall use the objectives already specified for an internally aligned structure:

Answer 7

> supports the organization’s strategy,

> supports workflow,

> is fair to employees,

> and motivates employees’ behaviour toward organization objectives.

Question 8

The skills on which a structure is based should be directly related to:

Answer 8

> The skills on which a structure is based should be directly related to the organization’s objectives and strategy

Question 9

One of the main advantages of a skill-based plan is that it can:

Answer 9

> One of the main advantages of a skill-based plan is that it can more easily match people to a changing workflow.

Question 10

What is a benefit for employees for skill-based plans?

Answer 10

> Employees like the potential of higher pay that comes with learning. And by encouraging employees to take charge of their own development, skill-based plans may give them more control over their work lives.

Question 11

What is a downside for employees for skill-based plans?

Answer 11

> However, favouritism and bias may play a role in determining who gets first crack at the training necessary to become certified at higher-paying skill levels.

> Employees complain that they are forced to pick up the slack for those who are out for training.

Question 12

Person-based plans have the potential to:

Answer 12

> Person-based plans have the potential to clarify new standards and behavioural expectations.

> The fluid work assignments that skill-based plans permit encourage employees to take responsibility for the complete work process and its results, with less direction from supervisors.

Question 13

What does a skill-based structure begin with?

Answer 13

> It begins withskill analysis, which is similar to the task statements in job analysis.

Question 14

What are the major skill analysis decisions?

Answer 14

(1) What is the objective of the plan?

(2) What information should be collected?

(3) What methods should be used to determine and certify skills?

(4) Who should be involved?

(5) How useful are the results for pay purposes? These are exactly the same decisions managers face in job analysis.

Question 15

Compared to job-based plans, what is there a lot less of in person-based plans?

Answer 15

> There is far less uniformity in the use of terms in person-based plans than in job-based plans.

Question 16

What are foundation skills?

Answer 16

> Foundation skills include a quality seminar, videos on materials handling and hazardous materials, a three-day safety workshop, and a half-day orientation.

> All foundation skills are mandatory and must be certified to reach the Technician I rate.

Question 17

What are core electives?

Answer 17

> Core electives are necessary to the facility’s operations (e.g., fabrication, welding, painting, finishing, assembly, inspection). Each skill is assigned a point value.

Question 18

What are optional electives?

Answer 18

> Optional electives are additional specialized competencies ranging from computer applications to team leadership and consensus building.

Question 19

What kind of information that underpins the skill-based plans?

Answer 19

> very specific information on every aspect of the production process.

Question 20

Should employees be involved?

Answer 20

> Employee involvement is almost always built into skill-based plans. Employees and managers are the sources of information for defining the skills, arranging them into a hierarchy, bundling them into skill blocks, and certifying whether a person actually possesses the skills.

Question 21

Practices for certifying that employees possess the skills and can apply them vary widely. Some organizations use:

Answer 21

> peer review, on-the-job demonstrations, or tests for certification, similar to the traditional apprentice/skilled tradesperson/master path

Question 22

Newer skill-based applications appear to be moving away from:

Answer 22

> appear to be moving away from an on-demand review and toward scheduling fixed review points during the year

Question 23

Skill-based plans are generally well accepted by employees, because:

Answer 23

> Skill-based plans are generally well accepted by employees, because it is easy to see the connection between the plan, the work, and the size of the paycheque

> Consequently, the plans provide strong motivation for individuals to increase their skills and this can result in major improvements in productivity and quality.

Question 24

One study connected the ease of communication and understanding of skill-based plans to what?

Answer 24

> to employees’ general perceptions of being treated fairly by the employer.

Question 25

Skill-based plans become increasingly expensive as:

Answer 25

> as the majority of employees become certified at the highest pay levels. As a result, the employer may have an average wage higher than competitors who are using conventional job evaluation.

Question 26

So what kind of workplace seems best suited to a skill-based plan? Early research on skill-based plans found that :

Answer 26

> 60% of the companies in the original sample were still using skill-based plans seven years later. > One of the key factors that determined a plan’s success was how well it was aligned with the organization’s strategy. > Plans were more viable in organizations following a cost-cutter strategy (focusing on operational efficiency—doing more with less). > The reduced number of highly trained, flexible employees that skill-based pay promises fit this strategy very well.

Question 27

On the other hand, it has also been argued that the higher labour costs under skill-based pay (estimated as between 10% and 15%) mean that it may be a better fit to companies in industries where:

Answer 27

> where labour costs are a small share of total costs, such as paper and forest products, chemicals, and food processing. > The question is whether this increase in labour costs is  more than offset by gains in productivity, quality, customer responsiveness, flexibility, or worker retention, etc. 

Question 28

a competency-based approach pays for:

Answer 28

> pays for underlying, broadly applicable knowledge, skills, and behaviours that form the foundation for successful work performance, called competencies.

Question 29

What are core competencies and what are they linked to:

Answer 29

> Core competencies are those that form the foundation for successful performance at all jobs in the organization. > They are often linked to mission statements that express an organization’s philosophy, values, business strategies, and plans.

Question 30

Competency sets begin to translate each core competency into:

Answer 30

> Competency sets begin to translate each core competency into action.

Question 31

Behavioural descriptors are:

Answer 31

> Behavioural descriptors are the observable behaviours that indicate the level of competency within each set > These indicators may be used for staffing and evaluation as well as for pay purposes.

Question 32

Early conceptions of competencies focused on five areas

Answer 32

Skills (demonstration of expertise) Knowledge (accumulated information) Self-concepts (attitudes, values, self-image) Traits (general disposition to behave in a certain way) Motives (recurrent thoughts that drive behaviours)

Question 33

As experience with competencies has grown, organizations seem to be moving away from the vagueness of self-concepts, traits, and motives. Instead, they are putting greater emphasis on:

Answer 33

> Instead, they are putting greater emphasis on business-related descriptions of behaviours that excellent performers exhibit much more consistently than average performers.

Question 34

What are competencies becoming?

Answer 34

> Competencies are becoming “a collection of observable behaviours (not a single behaviour) that require no inference, assumption, or interpretation.”

Question 35

Do competencies help support an internally aligned structure - (aka how do we ask?)

Answer 35

> How well do competencies support the organization’s strategy and workflow, > treat employees fairly, > and direct their behaviour toward organization objectives?

Question 36

The main appeal of competencies is the:

Answer 36

> The main appeal of competencies is the direct link to the organization's strategy.

Question 37

The process of identifying competencies starts with:

Answer 37

> starts with the company leadership deciding what will contribute to success for the company.

Question 38

Competencies are chosen to ensure that:

Answer 38

> Competencies are chosen to ensure that all the critical needs of the organization are met.

Question 39

Where skill-based plans are tightly connected to today’s work, competencies apply more loosely to work requiring what?

Answer 39

> requiring more tacit (implicit or not stated) knowledge and behaviours such as in managerial and professional work.

Question 40

Advocates of competencies say what? How about critics?

Answer 40

> Advocates of competencies say they can empower employees to take charge of their own development. > However, critics of competencies worry that the field is going back to the middle of the last century, when basing pay on personal characteristics was standard practice.

Question 41

Competencies provide:

Answer 41

> Competencies provide guidelines for behaviours and keep people focused. They can also provide a common basis for communicating and working together.

Question 42

What is the first part of creating a competency based plan?

Answer 42

> The first decision, and by far the most important, is to clarify the objective of the plan.

Question 43

A number of schemes for classifying competencies have been proposed.23 One of them uses three groups:

Answer 43

1) Personal Characteristics 2) Visionary 3) Organization specific:

Question 44

What are personal characteristic competencies?

Answer 44

> Personal characteristics: These have the aura of the Scouts about them: trustworthy, loyal, courteous. In business settings, the relevant characteristics might be personal integrity, maturity of judgment, flexibility, and respect for others. Employees are expected to come in the door with these characteristics and then develop and demonstrate them in increasingly complex and ambiguous job situations.

Question 45

What are visionary competencies?

Answer 45

> Personal characteristics: These have the aura of the Scouts about them: trustworthy, loyal, courteous. In business settings, the relevant characteristics might be personal integrity, maturity of judgment, flexibility, and respect for others. > Employees are expected to come in the door with these characteristics and then develop and demonstrate them in increasingly complex and ambiguous job situations.

Question 46

What are organization specific competencies?

Answer 46

> Organization specific: Between these two groups are those competencies tied specifically to the particular organization and to the particular function where they are being applied. These generally include leadership, customer orientation, functional expertise (e.g., able to leap tall buildings and explain the difference between competencies and compensable factors), and developing others—whatever reflects the company values, culture, and strategic intent.

Question 47

Where do competencies stem from?

Answer 47

> competencies stem from each organization’s mission statement or its strategy to achieve a competitive advantage

Question 48

What is the source of competitive advantage for competencies?

Answer 48

It is the actions that are the source of competitive advantage.

Question 49

The heart of the person-based plan is that:

Answer 49

> The heart of the person-based plan is that employees get paid for the relevant skills or competencies they possess, whether or not those are being used.

Question 50

Like compensable factors, competencies are derived from the:

Answer 50

> the executive leadership’s beliefs about the organization and its strategic intent.

Question 51

Recall that internal pay structures are described in terms of the number of levels, pay differentials, and criteria on which the job structure is based. In practice, competency-based structures are generally designed with:

Answer 51

> with relatively few levels—four to six—and relatively wide differentials for increased flexibility.

Question 52

As with the job-based evaluation, the final result of the person-based plan is:

Answer 52

> As with the job-based evaluation, the final result of the person-based plan is an internal structure of work in the organization

Question 53

Yet caution is advised: much of the work required in contemporary manufacturing requires:

Answer 53

> requires tacit, non-routine knowledge (problem solving, interacting, negotiating, etc.).

Question 54

Whatever plan is designed, whether it is job-based or person-based, a crucial issue is the fairness of its administration. Details of the plan should therefore be:

Answer 54

> should be described in a manual that includes all the information necessary to apply the plan, such as definitions of compensable factors and degrees, or details of skill blocks, competencies, and certification methods.

Question 55

A reliable evaluation would be one in which:

Answer 55

> A reliable evaluation would be one in which different evaluators produce the same results.

Question 56

As part of efforts to reduce costs, job evaluation committees are disappearing; instead, what happens?

Answer 56

> As part of efforts to reduce costs, job evaluation committees are disappearing; instead, managers do the evaluations online as part of the organization’s “HR Toolkit” or “shared services.” The reliability of the results obtained this way have not been studied.

Question 57

Validity refers to the degree to which what and how is it measured?

Answer 57

> Validity refers to the degree to which the evaluation assesses what it is supposed to—the relative worth of jobs to the organization. > Validity of job evaluation has been measured in two ways: (1) by agreement, that is, the degree of agreement between rankings that resulted from the job evaluation compared to an agreed-upon ranking of benchmarks used as the criterion, and (2) by “hit rates,” that is, the degree to which the job evaluation plan matches (hits) an agreed-upon ranking or pay structure for benchmark jobs.

Question 58

For managing compensation, the correct standard is :

Answer 58

> is the pay structure—what jobholders get paid—rather than simply the jobs’ rank order.

Question 59

Is reliability a condition of validity?

Answer 59

> Reliability, therefore, is a necessary but not sufficient condition for validity.

Question 60

What are two ways to increase employee acceptability?

Answer 60

> Several methods are used to assess and improve employee acceptability. An obvious one is to include a formal appeals process. > Another approach is to use employee attitude surveys to assess the perceptions of how useful evaluation is as a management tool and employees'  perceptions of its acceptability.

Question 61

What are potential sources of bias in pay structures?

Answer 61

1) One study found that compensable factors related to job content (such as contact with others and judgment) did reflect bias against work done predominantly by women, but factors pertaining to employee requirements (such as education and experience) did not. 2) The second potential source of bias affects job evaluation indirectly, through the current wages paid for jobs. In this case, job evaluation results may be biased if the jobs held predominantly by women are underpaid. If this is the case, and if the job evaluation is based on the current wages paid, then the job evaluation results simply mirror any bias in the current pay rates.

Question 62

Several recommendations seek to ensure that job evaluation plans are bias-free, including the following:

Answer 62

1) Define the compensable factors and scales to include the content of jobs held predominantly by women. For example, working conditions should include the noise and stress of office machines and the repetitive movements associated with the use of computers. 2) Ensure that factor weights are not consistently biased against jobs held predominantly by women. Are factors usually associated with these jobs always given less weight? 3) Apply the plan in as bias-free a manner as feasible. Ensure that the job descriptions are bias-free, exclude incumbent names from the job evaluation process, and train diverse evaluators.

Question 63

At the risk of pointing out the obvious, all issues concerning job evaluation also apply to both skill-based and competency-based plans - provide some examples:

Answer 63

> At the risk of pointing out the obvious, all issues concerning job evaluation also apply to both skill-based and competency-based plans. > For example, the acceptability of the results of skill-based plans can be studied from the perspective of measurement (e.g., reliability, validity) and administration (e.g., costs, simplicity). > The various points in skill certification at which errors and biases may enter into judgment (e.g., different views of skill-block definitions, potential favouritism toward team members, defining and assessing skill obsolescence) and whether skill-block points and evaluators make a difference all need to be studied. > In addition to bureaucracy to manage costs, the whole approach to certification may be fraught with potential legal vulnerabilities if employees who fail to be certified challenge the process.

Question 64

Managers under job-based plans focus on:

Answer 64

> Managers under job-based plans focus on placing the right people in the right jobs

Question 65

Under skill/competency-based plans, managers must :

Answer 65

must assign the right work to the right people, that is, those with the right skills and competencies.

Question 66

A job-based approach controls costs by:

Answer 66

> A job-based approach controls costs by paying only as much as the work performed is worth, regardless of any greater skills the employee may possess.

Question 67

In contrast, skill- or competency-based plans pay employees for:

Answer 67

> In contrast, skill- or competency-based plans pay employees for the highest level of skill/competency they have achieved, regardless of the work they perform. This maximizes flexibility. But it also encourages all employees to become certified at top rates. > Unless an employer can either control the rate at which employees can certify skill/competency mastery or employ fewer people, the organization may experience higher labour costs than competitors using job-based approaches. The key is to offset the higher rates with greater productivity.

Question 68

In addition to potentially higher rates and higher training costs, skill- or competency-based plans may have :

Answer 68

> the additional disadvantage of becoming as complex and burdensome as job-based plans.