What Is Skill Based Pay?

(adsbygoogle = window.adsbygoogle || []).push({}); Definition Skill‐based pay (SBP) is a compensation system that rewards employees with additional pay in exchange for formal certification of the employee’s mastery of skills, knowledge, ...

Advantages Of Skill-Based Pay

(adsbygoogle = window.adsbygoogle || []).push({}); Among the advantages of skill-based pay are the following: It contributes to job enlargement and enrichment by breaking down narrow job classifications. Flexibility is increased by encouraging ...

Reasons For Skill-Based Pay

More than ever before in industrial relations history a commonality of interests in the skills of employees has developed between employers and employees. Skills provide employees with a measure of protection against unemployment, as well as opportunities ...

How Is SBP Established?

Whatever the form of SBP, establishment of a SBP plan typically involves several general steps: 1. Identify potential SBP jobs; that is, a job in which development of skill depth and/or breadth is possible and desirable. 2. For each job level, identify ...

Skill Based Pay

Skill-based pay refers to a pay system in which pay increases are linked to the number or depth of skills an employee acquires and applies and it is a means of developing broader and deeper skills among the workforce. Such increases are in addition ...

Dos and Don’ts

1. Do carefully craft the design of the plan to the specific needs of the organization. It is almost impossible to borrow any other organization’s design. For the plan to have a solid ROI, it must fit the specific organizational needs and conditions ...

How do we get employee acceptance of the system?

Acceptance of SBP is a basic change management issue. Clearly, employees need to understand how they can make more money under the system, and need a realistic idea of how long it will take to advance. Not all employees will prefer any pay system ...

What are the critical issues in union settings?

Compensation is a collective bargaining issue in union settings, so the union must partner in the design process. There are many SBP examples in union settings, and SBP designs do not look significantly different from those in non‐union settings. ...

What are the most favorable conditions for SBP?

The most basic condition for success is that there is a wide range (in depth and or breadth) of skills, knowledge, or competency for employees to acquire and use in their jobs. SBP pay plans tend to be more effective in settings such as manufacturing, ...

What organizational conditions indicate that skill‐based pay is not for us?

SBP systems usually are ineffective if the work is low‐skill—there is not enough ROI to justify the costs of SBP. Unstable management, organizational structure, or technology is very unfavorable because it is difficult to project the specific ...
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