This document discusses designing performance and skill-based pay systems. It outlines several key aspects of effective performance management systems including objective setting, review, and alignment with training. It also discusses types of base pay systems like job-based and skills-based approaches. Performance-related pay schemes aim to link employee contributions to organizational performance through commitment and problem solving. Some challenges of monitoring such systems include selection of tools, differences between managers and employees, and lack of participation. Skill-based pay rewards employees for acquiring certified skills and competencies. While it provides benefits, skill-based programs face obstacles around defining, pricing, and validating skills.

1. Designing performance &
Skill Based Pay System

2. Submitted to, Submitted from
Dr. Anshu Yadav Prabhat Singh
Faculty of IBM Shivani Gaur
CSJMU Somya Srivastava

3. Designing Performance
An effective Performance design ensures good
quality of the employees.
The performance system systematically and
objectively links the ability and contributions of
employees, individually and team ,to the overall
performance of the organization.

4. Selection of Performance objective
Focused on A result not an activity
Consistent
Specific
Measurable
Related to time
Attainable

5. • Various Dimension Of Performance
Output or Result Dimension
Input Dimension
Time Dimension
Focus Dimension
Quality Dimension
Cost Dimension

6. Types of Base Pay Systems
Job-based
Pay the job (not the person)
Skills / knowledge-based
Pay the person (not the job)

7. Performance related pay
PRP schemes are designed and administrated
from a company point of view.
Employee participation is measured in terms of
commitment to team-work and involvement of
the employees in problem solving

8. • Some of the important area, which
deserve attention from the organizations while
implementing PRP, are listed in this section:
Competition and Cost control
Individualization
Mismatch with the strategy
Monitoring and evaluation
Culture

9. Effective PMS
The main features of PMS can be outlined as
follows:
Objective setting
Review of objectives
Personal improvement plans
Alignment with training and development

10. Cont………
Formal appraisal with feedback
Pay review
Competence –based organizational capability

11. Use of PRP
Many Organization use PRP as an instrument of:
management control,
payroll control or
performance control.
PRP system can help in empowering employees.

12. Problems in monitoring PRP
Selection of performance appraisal tools.
Differences between managers and employees.
Lack of employee participation.

13. Skill Based Pay (SBP)
Skill based pay is a compensation system that rewards
employee with additional pay in exchange for formal
certification of the employee’s master of skills,
knowledge and or competencies.
Skill is acquired and expertise in performing tasks.

14. Compensation Design Through Skill
Based Programmes:-
Some of the major obstacles to introduce the
skill-based Pay can be listed as follows :

15. Defining of skill sets
Pricing Skill sets
Validation Skill sets
Skill Recertification test

16. Cont……
Skill Obsolescence
High Cost of training
Increased payroll Costs
Regulatory bottlenecks

17. Individual Skill Based Pay

18. Team Incentives

19. Organizational Plans

20. Benefits of SKP
In addition to staffing benefits, organizations using skill-
based pay systems require fewer job classifications.
The advantage of broad skill-based categories is a reduction
in the administrative burden that comes with maintaining
equity among numerous job classifications.

21. Employees are less concerned with moving to higher
job classifications and more focused on acquiring new
skills and mastering existing skills, which in turn,
benefits the organization.
Organizations utilizing skill-based pay systems often see
lower turnover rates and increased recruitment.
This can be attributed to an environment where
employees are able to develop new skills

22. EFQM MODEL
The EFQM Excellence Model is a non-prescriptive
business excellence framework for organization
management, promoted by European Foundation for
Quality Management(EFQM) and designed for helping
organizations to become more competitive .

23. Shingo Prize Model
The shingo Prize Model lists criteria ,practices, techniques
and processes, which can organization be incorporated by
an organization to achieve world-class level of quality,
cost, delivery and business results.