Chapter 5: Person-Focused Pay

Competency-Based Pay Programs:

- Pay-for-knowledge - Skills-based

Person-Focused Pay Benefits:

- Rewards employees for potential contributions based on skills and knowledge - Apply in limited context and are used for jobs not easily assessed - Provides employees with job enrichment and job security

Person-Focused Pay Program Models:

- Stair-step model - Job-point accrual model - Skill-block model - Cross-departmental model

Job-point accrual model characteristics:

- applies to jobs from different job families - creates organizational flexibility - points are assigned to various skills - the higher the number of points, the higher the core compensation level

Employer disadvantages of person focused pay:

- can increase hourly labor costs - can increase training costs - can increase overhead costs - may not mesh well with existing incentive pay systems

Employee advantages of person focused pay:

- can provide job enrichment - can provide job security - can make jobs more intrinsically motivating - can make jobs more interesting - increases employees flexibility

Examples of employee core competencies:

- communication - teamwork - planning and organizing - accountability - client organization - creativity - technological awareness

Job-based pay model characteristics:

- compensates employees for current jobs - pay limits set for each job - evaluations based on job descriptions and objectives - 2 main types: merit pay and incentive pay

Cross-departmental model characteristics:

- employees develop skills usable in other departments - helps manage sporadic, short-term staffing shortages - helps meet seasonal fluctuations

Core values:

- integrity - professionalism - respect for diversity

Stair-step model characteristics:

- jobs from same job family - jobs differ in complexity - higher the step, greater the skills - companies use separate models - models designated to match jobs

Examples of managerial core competencies:

- leadership - vision - empowering others - building trust - managing performance - judgement/decision-making

Employer advantages of person focused pay:

- leads to enhances job performance - leads to reduced staffing - leads to greater flexibility - improves quality - increased productivity levels

Autonomy:

Allows employees to choose in determining how to do the job

Skill-block model:

Applies to job within the same job family but skills do not necessarily build on each other

Job promotion (person-based vs. job-based)

Awarded on an employee's skill base and proficiency on past work vs. awarded on exceeding job performance standards

Base pay increases (person-based vs. job-based)

Awarded on employee's gain in knowledge or skills vs. awarded in attaining job-defined goal

Base pay (person-based vs. job-based)

Awarded on how much employee knows or on skill level vs. awarded on value if compensable factors

What are core competencies?

Derived from company's strategic statements: - personality - attitudes - knowledge - skills - behaviors

Job Characteristic Theory:

Employees are motivated to perform jobs that have a high degree of core characteristics: skill variety, task identity, autonomy, feedback

Task Identity:

Enables employees to do the entire job

Job-point accrual model:

Encourages employees to develop skills and learn to perform jobs from different jobs

Key advantages to employees (person-based vs. job-based)

Job variety and enrichment vs. perform work and receive pay

Depth of skills:

Level of expertise or specialization an employee possesses EX: HR professional specializes in compensation

Pay level determination (person-based vs. job-based)

Market basis for skill valuation vs. market basis for job valuation

Cross-departmental model:

Promote staffing flexibility by training employees to perform effectively in other departments

Feedback:

Provides clear communication

Skill Variety:

Requires using different abilities

Pay for knowledge:

Reward managerial, service, or professional workers for successfully learning specific curricula

Person-Focused Plans:

Rewards employees for acquiring skill based pay for knowledge: competencies, knowledge, skills

Horizontal skills:

Skills at the same level of responsibility or difficulty EX: clerical employees of a retail store trained to perform record-keeping tasks

Vertical skills:

Skills that are traditionally considered supervisory EX: scheduling, coordinating, training, leading others

Stair-step model:

The steps represent jobs from a particular job family that differ in terms of complexity

What are competencies?

Uniquely combined characteristics that enables employees to fulfill job requirements well

Skills-based pay program:

Used mostly for employees who do physical work, increases these workers' pay as they master new skills

Key advantages to employers (person-based vs. job-based)

Work scheduling flexibility vs. easy pay system administration