 Advantage of a skill-based plan is that people can be deployed in a way that better matches the flow of work ◦ Avoids bottle necks ◦ Avoids idling

Skill-based structures link pay to the depth or breadth of the skills, abilities, and knowledge person acquires that are relevant to the work. In contrast, a job-based plan pays employees for the job to which they are assigned, regardless of the skills they possess.

 Skill plans can focus on ◦ Depth based  Specialist ◦ Breadth based:  Generalist/ multiskilled based

 Supports strategy and objectives  Supports work flow  Fair to employees  Motivates behavior toward organization objectives  Supports strategy and objectives  Supports work flow  Fair to employees  Motivates behavior toward organization objectives

 To build a structure, a process is needed to describe, certify, and value the skills ◦ What is the objective of the plan? ◦ What information should be collected? ◦ What methods should be used? ◦ Who should be involved? ◦ How useful are the results for pay purposes?

Systematic process of identifying and collecting information about skills required to perform work in an organization.

 What information to collect? ◦ Foundation skills ◦ Core electives ◦ Optional electives  Whom to involve? ◦ Employees and managers  Establish certification methods ◦ Peer review, on-the-job demonstrations, or tests, or formal tests

 Guidance from the research on skill-based plans ◦ Design of certification process crucial in perception of fairness ◦ Alignment with organization’s strategy ◦ May be best for short-term initiatives

 Several perspectives on what competencies are and what they are meant to accomplish ◦ Skill that can be learned and developed or a trait that includes attitudes and motives? ◦ Focus on the minimum requirements that the organization needs to stay in business or focus on outstanding performance? ◦ Characteristics of the organization or of the employee?

 Core competencies ◦ Related to mission statements expressing organization’s philosophy, values, business strategies, and plans  Competency sets ◦ Translate each core competency into action  Competency indicators ◦ Observable behaviors that indicate the level of competency within each set

 Exhibit 6.6: TRW Human Resources Competencies  Exhibit 6.7: Sample Behavioral Competency Indicators

 Organizations seem to be moving away from the vagueness of self-concepts, traits, and motives  Greater emphasis on business-related descriptions of behaviors “that excellent performers exhibit much more consistently than average performers”  Competencies are becoming “a collection of observable behaviors that require no inference, assumption or interpretation”

Organization strategy Organization strategy Exhibit 6.8: Frito-Lay Managerial Competencies Exhibit 6.8: Frito-Lay Managerial Competencies Work flow Work flow Fair to employees Fair to employees Motivates behavior toward organization objectives Motivates behavior toward organization objectives Organization strategy Organization strategy Exhibit 6.8: Frito-Lay Managerial Competencies Exhibit 6.8: Frito-Lay Managerial Competencies Work flow Work flow Fair to employees Fair to employees Motivates behavior toward organization objectives Motivates behavior toward organization objectives

 Objective  What information to collect? ◦ One scheme to classify competencies includes  Personal characteristics  Visionary  Organization specific ◦ Examples  Refer Exhibit 6.9, Exhibit 6.10, and Exhibit 6.11

 Whom to involve? ◦ Competencies are derived from executive leadership’s beliefs about strategic organizational intent  Establish certification methods  Resulting structure ◦ Designed with relatively few levels  Guidance from the research on competencies ◦ Appropriateness to pay for what is believed to be the capacity of an individual as against what the individual does

 Purpose of job- or person-based plan ◦ Design and manage an internal pay structure to help achieve organizational objectives  Reflects internal alignment policy continuously  Supports business operations  In practice, during evaluation of higher-value, nonroutine work, distinction between job- versus person-based approaches blurs

 A crucial issue is the fairness of the plans administration  Sufficient information should be available to apply the plan  Communication and employee involvement are crucial for acceptance of resulting pay structures

 Reliability of job evaluation techniques ◦ Different evaluators produce same results ◦ Can be improved by using evaluators familiar with the work and who are trained in job evaluation  Validity ◦ Degree to which evaluation achieves desired results ◦ Validity of job evaluation is measured in two ways

 Validity (cont.) ◦ Validity of job evaluation is measured in two ways  Degree of agreement between rankings; ranking of benchmarks  ‘Hit rates’; pay structure for benchmark jobs as criterion ◦ Definition of validity needs broadening to include impact in pay decisions  Acceptability ◦ Formal appeals process ◦ Employee attitude surveys

 Gender bias ◦ No evidence that job evaluation is susceptible to gender bias ◦ No evidence that job evaluator's gender affects results ◦ Compensable factors related to job content – contact with others and judgment – does reflect bias ◦ Compensable factors related to employee requirements – education and experience – does not reflect bias

 Wages criteria bias ◦ Job evaluation results may be biased if jobs held predominantly by women are incorrectly underpaid

 Define compensable factors and scales to include content of jobs held predominantly by women  Ensure factor weights are not consistently biased against jobs held predominantly by women  Apply plan in as bias free a manner as feasible ◦ Ensure job descriptions are bias free ◦ Exclude incumbent names from job evaluation process ◦ Train diverse evaluators