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