Knowledge-based pay is a compensation system rewarding employees based on their skills and education rather than solely on job analysis. This approach encourages employees to pursue skill development and education, potentially enhancing overall performance but may also lead to rivalry among colleagues. While it offers motivation for career advancement, it requires a commitment to continuous learning and can foster feelings of inequality among employees in similar roles.

1. Knowledge worker compensation
Compensation Management

2. Prepared By
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Manu Melwin Joy
Assistant Professor
Ilahia School of Management Studies
Kerala, India.
Phone – 9744551114
Mail – manu_melwinjoy@yahoo.com

3. Knowledge worker compensation
• Knowledge based pay is a
system of payment where
employees are
compensated based on their
individual skill level and
education attainment.

4. Knowledge worker compensation
• Under this system,
employees are rewarded for
reaching certain goals in
education, training and skill
development. Knowledge-
based pay systems provide
incentive for employees to
improve their skill set and
education.

5. Knowledge worker compensation
• With job-based pay,
employee salaries are
established based on job
analysis and the
requirements of a given
position. With knowledge-
based pay, more emphasis is
placed on the ability of the
employee to do the job.

6. Knowledge worker compensation
• Knowledge-based pay
rewards employees who set
goals to learn new skills and
acquire new knowledge.
Ambitious, self-motivated
employees typically prefer
this approach because it
gives them a reason to focus
on career development.

7. Knowledge worker compensation
• It also provides a
mechanism to reward
employees who want to
perform at a higher level.
When companies pay for
knowledge and skill
development, they
contribute to a systemic
raising of the bar for
performance across all jobs.

8. Knowledge worker compensation
• Because knowledge-based
pay is inherently more
competitive within job
ranks, it may cause conflict
among colleagues and co-
workers. Colleagues may
feel slighted or bitter
toward you if you make
more money performing
similar tasks.

9. Knowledge worker compensation
• You may also feel underpaid
and undervalued if you
aren't paid the same as
someone doing the same
job at a competing
company. Plus, with a
knowledge based pay
system, you have to spend
time to take classes or
training and continue to
develop skills if you want to
make more money.