Person centered pay

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Person centered pay

  1. 1. Person Centered Pay Nancy Brown Johnson © 2005
  2. 2. Person Centered Pay <ul><li>Pay-for-Knowledge </li></ul><ul><ul><li>Competency Based Pay </li></ul></ul><ul><ul><li>Skill Based Pay </li></ul></ul>search been wide enough to ensure I've found all the relevant material? +
  3. 3. Person Versus Job Based Pay <ul><li>Fredrick Taylor Scientific Management focused on the basic elements of the job </li></ul><ul><li>Lead to job focused way of organizing work </li></ul><ul><li>Criticisms of job based structure </li></ul><ul><ul><li>Reduces flexibility </li></ul></ul><ul><ul><li>“ Not my job” </li></ul></ul><ul><ul><li>Little reason to acquire information & skills outside of narrow job </li></ul></ul><ul><ul><li>Doesn’t help people understand what other people do </li></ul></ul>
  4. 4. Skill Based Pay <ul><li>Pay is tied to skills, abilities, & knowledge that a worker possesses </li></ul><ul><li>Manufacturing jobs </li></ul><ul><li>Flexibility to reassign people to where work is needed </li></ul><ul><li>Depth : pay for having a deep level of knowledge within a job </li></ul><ul><ul><li>e.g. teachers pay increases with amount of education: bachelors, masters, doctorate and increase pay more hours </li></ul></ul><ul><ul><li>Breadth: Pay for generalist knowledge </li></ul></ul>
  5. 5. Breadth <ul><li>Increased pay for more knowledge </li></ul><ul><li>Pay increases come with certification of new skill </li></ul><ul><ul><li>(e.g., Microsoft certification ; SHRM Certification ) </li></ul></ul><ul><ul><li>Skill certification can come from internal assessment </li></ul></ul><ul><li>Employees then can be assigned to new jobs based upon certification </li></ul><ul><li>Pay increases with the more certifications held </li></ul><ul><li>For example: 7.50 base pay + 1.00/hr for each machine </li></ul>
  6. 6. Why Skill Based Pay? <ul><li>Ensures workers have needed skills </li></ul><ul><ul><li>Assumes good tests </li></ul></ul><ul><li>Supports the organizational work flow </li></ul><ul><ul><li>Workers trained & ready to move to assignments as needed </li></ul></ul><ul><li>Fairness??? </li></ul><ul><ul><li>Depends on how training allocated </li></ul></ul><ul><ul><li>Who pays for training </li></ul></ul><ul><ul><li>Means two people doing same task at different pays </li></ul></ul><ul><li>Motivation </li></ul><ul><ul><li>Motivation is to get training, not necessarily to perform task well </li></ul></ul>
  7. 7. Research <ul><li>Employees accept skill based pay (clear how to make more money) </li></ul><ul><ul><li>Certification procedures must be viewed as fair </li></ul></ul><ul><li>Easy to communicate </li></ul><ul><li>Productivity </li></ul><ul><ul><li>Mixed results </li></ul></ul><ul><li>61% of those implementing sbp were using it 7 years later </li></ul><ul><li>Depends on strategy more compatible with innovation not low cost </li></ul><ul><li>Usefulness varies based upon setting </li></ul>
  8. 8. Competencies <ul><li>Question: what are competencies? </li></ul><ul><ul><li>Skill (demonstration of expertise) that can be learned & developed? </li></ul></ul><ul><ul><li>Knowledge (accumulated information) </li></ul></ul><ul><ul><li>Self concept (attitudes, values, self image) </li></ul></ul><ul><ul><li>Traits (general disposition to behave a certain way) </li></ul></ul><ul><ul><li>Motives (thoughts that drive behavior) </li></ul></ul><ul><li>Text: competencies as characteristics of the person – personality, attitudes, knowledge, skills & behaviors </li></ul><ul><li>“… competencies can be a number of things; consequently they stand in danger of becoming nothing” Milkovich & Newman </li></ul>
  9. 9. Competencies: Fuzziness in Defining Them <ul><li>Knowledge & Skills: Essential characteristics for the job </li></ul><ul><ul><li>Can be tested: Observable and Measurable </li></ul></ul><ul><li>Self concepts, traits, & motives </li></ul><ul><ul><li>Not Directly Measurable must be inferred from actions </li></ul></ul><ul><ul><li>Self concept (identifies with the team) </li></ul></ul><ul><ul><li>Trait (flexibility) </li></ul></ul><ul><ul><li>Motive (drive to produce results) </li></ul></ul><ul><li>Much more subjectively assessed </li></ul>
  10. 10. Core Competencies <ul><li>Derived from mission statement: values & attitudes </li></ul><ul><li>JetBlue embraces five values that represent the company and create our unique culture: </li></ul><ul><ul><li>Safety Caring Integrity Fun Passion </li></ul></ul><ul><ul><li>Exercise: Devise metrics to measure these traits </li></ul></ul>
  11. 11. Competency Effectiveness <ul><li>Organization Strategy </li></ul><ul><ul><li>Competencies are probably more likely to fit with the organization’s strategy </li></ul></ul><ul><li>Work Flow </li></ul><ul><ul><li>Competencies are designed to convey values and enhance work flow </li></ul></ul><ul><ul><li>Effectiveness likely to depend upon culture </li></ul></ul><ul><li>Fair to Employees </li></ul><ul><ul><li>Empower employees to take charge of own development </li></ul></ul><ul><ul><li>Subjective </li></ul></ul><ul><li>Motivation towards organization’s objectives </li></ul>
  12. 12. Key is the Assessment <ul><li>How do you certify that someone has these competencies </li></ul><ul><li>& then how to tie to pay </li></ul><ul><li>Justify in a court of law </li></ul>Level Phase Title 4 Expert Visionary 3 Advanced Coach 2 Resource Contributor 1 Proficient Associate
  13. 13. Pay for Knowledge <ul><li>Employee Advantages </li></ul><ul><ul><li>Skill Variety </li></ul></ul><ul><ul><li>Task Variety </li></ul></ul><ul><ul><li>Autonomy </li></ul></ul><ul><ul><li>Feedback </li></ul></ul><ul><li>Employer Advantages </li></ul><ul><ul><li>Communicates Culture </li></ul></ul><ul><ul><li>Product or Service qualities </li></ul></ul><ul><ul><li>Leaner Staffing cross usage </li></ul></ul><ul><ul><li>Flexibility </li></ul></ul>
  14. 14. Disadvantage <ul><li>Increases training, hourly labor & overhead costs can rise </li></ul><ul><li>May not fit with other incentive programs </li></ul>
  15. 15. Summary <ul><li>Pay for Knowledge programs have the potential to help employers compete in global environment </li></ul><ul><li>Must give employees the opportunity to learn </li></ul>

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