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 of the adopting organization.

2. Don’t forget implementation—it is more important than design.
Good implementation (communication, training, renewal systems, etc.) can save a mediocre design, but a perfect design will have a poor ROI if implementation is inadequate.

3. Do think carefully about how to price the system to the labor market.
Appropriate pricing is important for ROI because it is the key to labor costs, employee attraction and retention.

4. Don’t expect the plan to last forever.
Research indicates that even successful plans must be revised every few years to adjust to the evolving needs of the organization.

5. Do leave enough time to do it right.
Skill‐based pay is a major change because it involves compensation—which all employees care about deeply—and because it affects so many other organizational systems. Plan on a cycle of six to 12 months for design and implementation.

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