Module 6 Flashcards
What are components of skill-based plans?
Link pay to the depth or breadth of the skills, abilities, and knowledge a
person acquires that is relevant to the work.
pay individuals for all the relevant skills for which employees have been
certified regardless of whether the work they are doing requires all or just a
few of those particular skill – the wage attaches to the person.
In contrast, a job-based plan pays employees for the job to which they are
assigned, regardless of the skills they possess.
An advantage is higher flexibility as multi-skilled employees can be better
matched to the work flow.
What are the two types of skill based plans?
Specialist: Depth
Pay is based on knowledge of the
person doing the job, rather than
on job content or output.
Basic responsibilities do not vary
on a day-to-day basis.
Generalist/Multiskill Based: Breadth
Pay increases by acquiring new
knowledge.
Higher pay from certification of new
skills.
Responsibilities can change over a
short time.
Purpose and suit of a Skill-Based Structure:
Supports organization’s strategy
Supports work flow: A main advantage is matching people to changing
workflow
Fair to employees: Skill-based plans may give workers more control over
their work life but favoritism and bias may be a problem.
Motivates behaviours toward organization objectives
> Suited for continuous-flow technologies where employees work in teams.
What is a skills analysis?
> A systematic process to identify and collect information about skills required to perform work in
an organization
> What information to collect?
Defining the skills
Arranging them into a hierarchy
Bundling them into skill blocks
> Establish methods to determine and certify skills
Peer review, on-the-job demonstrations, or tests
Scheduled fixed review points and recertification
> Whom to involve? Employees and managers
> Need to monitor removal of certification when a skill is deemed obsolete
Outcomes of Skill-Based Plans:
Well accepted by employees and provide strong motivation for individuals
to increase their skills.
Become increasingly expensive – when workers top-out
Unless flexibility permits a leaner staff, labor costs will be higher
A plan’s success is determined by how well it aligns with the organization’s
strategy.
Guidance from Research & Experience on skill-based plans:
Research showed 60% of companies starting a skill-based plan continued
using the plan after seven years.
These plans may be a better fit in industries where labor costs are a small
share of total costs.
These plans have an estimated 10-15% higher labor costs.
Are jack-of-all-trades really a master of none?
Greater increments of flexibility achieve fewer improvements.
There may be an optimal number of skills per individua
Purpose of a Competency-Based
Structure:
Supports organization’s strategy
Supports work flow: Competencies may require more tacit knowledge
Fair to employees:
Advocates say they can empower employees.
Critics worry about basing pay on personal characteristics.
Justifying pay differences may create risks that need managed
Motivates behaviours toward achieving organization objectives
What is involved in a competency based structure?
Competencies are underlying, broadly applicable knowledge, skills, and
behaviours that form the foundation for successful work performance
(exhibited by excellent performers more consistently than average
performers)
Core competencies are often linked to the mission statement.
Competency sets translate each core competency into action.
Competency indicators are the observable behaviors that indicate
competency
What is a competency analysis?
A systematic process to identify and collect information about the competencies
required for successful work performance.
Core competencies are not unique for each company.
What differs is how each company applies their competencies.
Competencies derive from leadership’s beliefs about the organization and its
strategic intent.
Not all employees understand the connection.
If people are paid based on competencies, there must be a way to certify their
possession of that competency.
There seems to be no objective way of certifying competency.
Competency-based structures have relatively few levels and wide differentials for
increased flexibility.
Guidance from the Research on
Competencies:
Competencies may identify outstanding performance but there is debate on
whether they can be measurable and objective.
Competencies often morph into compensable factors.
Is it appropriate to pay for what a person is believe capable of doing versus
what they are doing?
Are competency-based systems susceptible to discrimination?
Internal Alignment Reflected in Structures
The purpose of job- and person-based procedures is to design and manage
a pay structure that aids success.
Managers must ensure the structure remains aligned by reassessing
work/skills/competencies as necessary.
In practice, when evaluating higher-value, nonroutine work, the distinction
between job- and person-based approaches blurs.
Administering and Evaluating the Plan
Essential criteria:
Fairness in the plan’s administration.
Availability of sufficient information to apply the plan.
Adequate communication and employee involvement are critical for
acceptance.
Reliability & Validity:
A reliable evaluation is one where different evaluators produce the same
results.
Improve reliability by using evaluators familiar with the work and trained
in job evaluation.
Some organizations use group consensus.
Validity refers to the degree the evaluation assesses relative job worth.
needs to be broadened to include the impact on pay decisions.
Acceptability
> Methods to assess and improve employee acceptability:
formal appeals process allows a request for reanalysis and/or skills
reevaluation.
employee attitude surveys assess perceptions of how useful evaluation
is as a management tool.
Bias in Internal Structures:
Job evaluation may be susceptible to gender bias.
Recommendations to ensure bias-free evaluation plans:
Define the compensable factors and scales to include the content of
jobs held predominantly by women.
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?
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
(these also apply. to skill and competency based structures)
The Perfect Structure…
> The best approach to pay structures depends on the situation.
Provide sufficient ambiguity to afford flexibility.
Internally aligned pay structures can be designed to:
Help determine pay for the wide variety of work and ensure that pay
influences attitudes and behaviors and directs toward objectives.
What do skill-based plans link?
> Skill-Based Pay Plans link a pay plan to the skills, abilities and knowledge a person acquired that is relevant to the work. Skill-based plans can be for both Specialist and Generalist positions.
What are the skill-based plans for specialist and generalist positons?
Skill-Based Pay Plans for a Specialist position are based on general knowledge often associated with degrees, accreditations, or certifications that are required for a specific job. These are called Depth Pay Plans.
Skill-Based Pay Plans for a Generalist position are based on generalist knowledge specific to a number of jobs; responsibilities can change drastically daily, so knowledge has to increase rapidly compared to longer term for specialists. These are called Multi-Skill Based Breadth Plans.
What is the purpose of a skill-based structure?
1) Support the organization strategy. The skills need to be directly related to the organization’s objectives and strategy.
2) Support workflow. A skill-based structure makes it easy to match people to a changing workflow
3) Are fair to employees. Employees like the potential of higher pay that comes with skill-based plans.
4) Motivate employee behaviour toward organizational objectives. These plans potentially clarify new standards and behavioural expectations by encouraging employees to see their responsibilities more broadly.
How To Perform Skills Analysis
- What information should be collected?
Determine blocks of required skills. Similar to choosing compensable factors in job evaluation; degrees or levels of skills within each block are then created; skills are derived from the work; and must be accepted by those involved. - Whom to involve?
Employees are always involved in the process of a)-defining the skills; b)-arranging the hierarchy; c) -bundling them into skill blocks and certifying whether a person actually possesses the skills. - Establish certification methods
Companies need to determine an appropriate method to determine if someone has met the relevant knowledge and skill level. Although taking an approved course, for example, doesn’t prove someone has actually acquired the skills/knowledge necessary, most companies still rely on course completion for proof. - Potential Outcomes of Skill-Based Plans Based on Research and Experience
Generally accepted by employees, due to the size of their pay cheque and motivation to increase skills
The skill-based plan may be aligned with the organizational strategy but may be just too expensive. This is a key problem for this method as employees aren’t paid for what they do but for what they know. For example: An Oil Industry employee has been trained with the skill and knowledge to that of an Operator 3 level earning (for example) $45.00 per hour. However there is only one Operator 3 needed on shift; the other two workers are performing Operator 1 and 2 tasks with rates of $30.00 and $35.00 respectively. Operator 1 and 2 jobs require less skill for the job but the employer still has to pay all of the workers at the Operator 3 level.
What are competencies?
> Competencies are underlying, broadly applicable, knowledge, skills and behaviours that form the foundation for successful work performance.
What do competencies link?
> They link pay to work related competencies.
What competencies are required in an organization?
> Core Competencies are required for successful work performance in any job in the organization.
What are competency sets?
> Competency sets are specific components of a competency.
What are behavioural descriptors?
> Behavioural Descriptors are observable behaviours that indicate the level of competency within each competency set.
Defining Competencies: Five Areas
1) Skills (demonstration of expertise)
2) Knowledge (accumulated information)
3) Self-Concepts (attitudes, values, self-concepts)
4) Traits (general disposition to behave in a certain way)
5) Motives (current thoughts that drive behaviours
In Areas 1 and 2, skills and knowledge are considered essential characteristics that everyone needs to be effective on the job
Area 3,4,5 are not directly measurable but inferred from actions; these are differentiating competencies. Differentiating competencies distinguish superior performance from adequate performance.
What do competency based structures support?
> Competency-Based Pay Structures support an organization’s strategy, workflow, treat employees fairly, and direct behaviour toward organizational objectives.
What are the four components that should be considered for competency based structures?
> Organizational Strategy: Competencies assist in leading for results, building workforce effectiveness, leveraging technical and business systems and modelling, teaching and coaching company values.
Workflow: Workflow competencies are identified so that all critical needs of the organization are met
Fair for Employees: Employees are empowered to take charge of their own development. Keep in mind that 3 of the measures (3, 4, 5) can’t be documented so pay differences are hard to justify. This can be a huge problem in an organization trying to be transparent or dealing with Pay Equity issues.
Motivate Behaviour Toward Objectives: There is a direct link from Competency-Based Pay Structures to alignment with Organizational Objectives through refocusing and redirecting toward core issues.
How To Perform Competency Analysis:
There is value for personal development and communicating organizational direction, BUT Competency-based pay structures can be too vague and risky as a foundation for a pay system. Do an analysis to determine the actual purpose of the competency system in the organization.
The information to collect for classifying competencies can vary but one example uses three groups:
1) Personal characteristics such as trustworthiness, loyalty, courteousness;
2) Visionary competencies are high-level and might include a global perspective, leading the organization in new directions and the ability to express trends in the marketplace, world events and the local community;
3) Organization specific competencies might include leadership, customer orientation and functional expertise.
These competencies reflect the company values, culture and strategic
Establish Certification Method - for competencies - what is involved?
> The heart of person-based plans is focused on employees being compensated for the relevant skills or competencies that they possess, but not necessarily ones that they use to perform their jobs.
> Do competency-based plans assume all competencies are used all of the time?
> This is not clear BUT if people are to be paid on their competencies then there must be some way to certify they possess a minimum level of performance.
Whom to involve and the resulting pay structure of a competency model:
Whom to Involve? Competency-Based
Participation of stakeholders on committees is likely to increase trust in the structure so representative managers and employees should be involved in this process.
Resulting Pay Structure: Competency-Based
Internal Pay Structures should include 4 to 6 levels with wide pay differentials and criteria linked to organizational strategy are common.
What are four components related to the Administration and Evaluation of Internal Pay Structures?
Reliability: consistency of results is demonstrated when different evaluators produce the same results. Reliability increases when results are produced by evaluators who are familiar with the work. Group consensus also increases reliability.
Validity: usefulness is the degree to which the rankings fit an agreed upon set of ranked benchmarks; or by hit rates which is the degree by which the job evaluation plan matches the agreed upon ranking or pay structure for benchmark jobs.
Person-based pay structures must be viewed as acceptable to employees and managers; through attitude surveys around perceived fairness.
Eliminating bias based on male vs female jobs from the rating system will assist in pay equity solutions.
What needs to be documented in respect of the Administration and Evaluation of Internal Pay Structures?
> Details should be described in a User’s Manual which includes a definition of compensable factors, degrees, or skill blocks, competencies and certification methods.
