Knowledge Review #5
What are the disadvantages of implementing a Person-Focused Pay Plan?
Employers feel that the main drawback of person0focused pay systems is that hourly labor costs, training costs, and overhead costs can all increase. 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.
Describe the advantages of a Person-Focused Pay Plan from the employer's perspective.
Employers like person-focused pay systems because, when properly designed and implemented, these programs can lead to enhanced job performance, reduced staffing, and greater flexibility. Person-Focused pay programs can influence both the quantity and the quality of an employees work. Employees who participate in a person focused pay program often exhibit higher productivity levels because employees who know more about an entire process may also be able to identify production shortcuts that result in increased productivity. Usually rely on learner staffing because multi skilled employees are better able to cover for unexpected absenteeism, family, or medical leave, and training sessions that take individual employees away from their work. Provide companies with greater flexibility in meeting staffing demands at any particular time.
What is the difference between a Job-Based Pay Plan and a Person-Focused Pay Plan?
Job-Based Pay Compensates employees for jobs they currently perform. Human resource professionals establish a minimum and maximum acceptable amount of pay for each job. Person-Focused Pay Plans generally reward employees for acquiring job-related competencies, knowledge, or skills rather than for demonstrating successful job performances.
What is a Competency?
Many HR professionals typically refer to competencies as uniquely combined characteristics of the person, including the personality, attitudes, attitudes, knowledge, skills, and behaviors that enable an employee to fulfill job requirements well. Others simply use the terms knowledge and skills as synonyms for competencies.
Describe the two basic types of Person-Focused Pay Plans.
Pay forKnowledge 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.
What options do employers have in designing a Person-Focused Pay Plan? Describe each option.
Stair-Step Model: resembles a stair step, the steps represent jobs from a particular job family that differ in terms of complexity. Jobs that require more skills are more complex than jobs with fewer skills. Skill blocks model: applies to jobs from within the same job family. Employees must progress to increasingly complex jobs; however, in a skill blocks program, skills do not necessarily build on each other. Job-point accrual model: encourages employees to develop skills and learn to perform jobs from different family. A company would benefit if its employees were proficient in a small subset of jobs.
Describe the advantages of a Person-Focused Pay Plan from the employee's perspective.
They can provide employees with both job enrichment and job security. Job enrichment refers to a job design approach that creates more intrinsically motivating and interesting work environments. Because Person-Focused Pay Programs create more flexible workers, these programs can actually represent better job security for employees
Why might an employer use a Person-Focused Pay Plan?
This approach to compensating employees often refers to two basic types of person-focused pay programs: Pay-for-knowledge and skill-based pay. These competency-based pay programs incorporate a combination of both types of person-focused pay systems, which reward employees for successfully acquiring new job-related knowledge or skills.There are other times when companies combine competency-based programs with traditional based pay programs with traditional merit pay programs by awarding pay raises to employees according to how well they demonstrate competencies.