Chapter 6 Flashcards
No matter the basis for the structure, a way is needed to:
(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
Skill-based pay plans are usually applied to:
> Skill-based pay plans are usually applied to so-called blue-collar work and competency-based plans to so-called white-collar work.
The advantage of a skill-based pay structure is:
> is that people can be deployed in a way that better matches the flow of work, thus avoiding bottlenecks as well as idle hands.
Skill-based plans can focus on what two components?
> 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).
Provide an example to display the depth of skill-based plans:
> 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).
Provide an example to display the breadth of skill-based plans:
> 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.
To evaluate the usefulness of skill-based structures, we shall use the objectives already specified for an internally aligned structure:
> supports the organization’s strategy,
> supports workflow,
> is fair to employees,
> and motivates employees’ behaviour toward organization objectives.
The skills on which a structure is based should be directly related to:
> The skills on which a structure is based should be directly related to the organization’s objectives and strategy
One of the main advantages of a skill-based plan is that it can:
> One of the main advantages of a skill-based plan is that it can more easily match people to a changing workflow.
What is a benefit for employees for skill-based plans?
> 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.
What is a downside for employees for skill-based plans?
> 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.
Person-based plans have the potential to:
> 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.
What does a skill-based structure begin with?
> It begins withskill analysis, which is similar to the task statements in job analysis.
What are the major skill analysis decisions?
(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.
Compared to job-based plans, what is there a lot less of in person-based plans?
> There is far less uniformity in the use of terms in person-based plans than in job-based plans.
What are foundation skills?
> 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.
What are core electives?
> Core electives are necessary to the facility’s operations (e.g., fabrication, welding, painting, finishing, assembly, inspection). Each skill is assigned a point value.
What are optional electives?
> Optional electives are additional specialized competencies ranging from computer applications to team leadership and consensus building.
What kind of information that underpins the skill-based plans?
> very specific information on every aspect of the production process.
Should employees be involved?
> 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.
Practices for certifying that employees possess the skills and can apply them vary widely. Some organizations use:
> peer review, on-the-job demonstrations, or tests for certification, similar to the traditional apprentice/skilled tradesperson/master path
Newer skill-based applications appear to be moving away from:
> appear to be moving away from an on-demand review and toward scheduling fixed review points during the year
Skill-based plans are generally well accepted by employees, because:
> 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.
One study connected the ease of communication and understanding of skill-based plans to what?
> to employees’ general perceptions of being treated fairly by the employer.
Skill-based plans become increasingly expensive as:
> 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.
So what kind of workplace seems best suited to a skill-based plan? Early research on skill-based plans found that :
> 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.
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:
> 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.
a competency-based approach pays for:
> pays for underlying, broadly applicable knowledge, skills, and behaviours that form the foundation for successful work performance, called competencies.
What are core competencies and what are they linked to:
> 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.
Competency sets begin to translate each core competency into:
> Competency sets begin to translate each core competency into action.
Behavioural descriptors are:
> 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.
Early conceptions of competencies focused on five areas
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)
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:
> Instead, they are putting greater emphasis on business-related descriptions of behaviours that excellent performers exhibit much more consistently than average performers.
What are competencies becoming?
> Competencies are becoming “a collection of observable behaviours (not a single behaviour) that require no inference, assumption, or interpretation.”
Do competencies help support an internally aligned structure - (aka how do we ask?)
> How well do competencies support the organization’s strategy and workflow,
> treat employees fairly,
> and direct their behaviour toward organization objectives?
The main appeal of competencies is the:
> The main appeal of competencies is the direct link to the organization’s strategy.
The process of identifying competencies starts with:
> starts with the company leadership deciding what will contribute to success for the company.
Competencies are chosen to ensure that:
> Competencies are chosen to ensure that all the critical needs of the organization are met.
Where skill-based plans are tightly connected to today’s work, competencies apply more loosely to work requiring what?
> requiring more tacit (implicit or not stated) knowledge and behaviours such as in managerial and professional work.
Advocates of competencies say what? How about critics?
> 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.
Competencies provide:
> Competencies provide guidelines for behaviours and keep people focused. They can also provide a common basis for communicating and working together.
What is the first part of creating a competency based plan?
> The first decision, and by far the most important, is to clarify the objective of the plan.
A number of schemes for classifying competencies have been proposed.23 One of them uses three groups:
1) Personal Characteristics
2) Visionary
3) Organization specific:
What are personal characteristic competencies?
> 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.
What are visionary competencies?
> 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.
What are organization specific competencies?
> 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.
Where do competencies stem from?
> competencies stem from each organization’s mission statement or its strategy to achieve a competitive advantage
What is the source of competitive advantage for competencies?
It is the actions that are the source of competitive advantage.
The heart of the person-based plan is that:
> 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.
Like compensable factors, competencies are derived from the:
> the executive leadership’s beliefs about the organization and its strategic intent.
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:
> with relatively few levels—four to six—and relatively wide differentials for increased flexibility.
As with the job-based evaluation, the final result of the person-based plan is:
> As with the job-based evaluation, the final result of the person-based plan is an internal structure of work in the organization
Yet caution is advised: much of the work required in contemporary manufacturing requires:
> requires tacit, non-routine knowledge (problem solving, interacting, negotiating, etc.).
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:
> 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.
A reliable evaluation would be one in which:
> A reliable evaluation would be one in which different evaluators produce the same results.
As part of efforts to reduce costs, job evaluation committees are disappearing; instead, what happens?
> 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.
Validity refers to the degree to which what and how is it measured?
> 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.
For managing compensation, the correct standard is :
> is the pay structure—what jobholders get paid—rather than simply the jobs’ rank order.
Is reliability a condition of validity?
> Reliability, therefore, is a necessary but not sufficient condition for validity.
What are two ways to increase employee acceptability?
> 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.
What are potential sources of bias in pay structures?
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.
Several recommendations seek to ensure that job evaluation plans are bias-free, including the following:
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.
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:
> 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.
Managers under job-based plans focus on:
> Managers under job-based plans focus on placing the right people in the right jobs
Under skill/competency-based plans, managers must :
must assign the right work to the right people, that is, those with the right skills and competencies.
A job-based approach controls costs by:
> 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.
In contrast, skill- or competency-based plans pay employees for:
> 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.
In addition to potentially higher rates and higher training costs, skill- or competency-based plans may have :
> the additional disadvantage of becoming as complex and burdensome as job-based plans.
