6-1
Chapter
6
Person-Based Structures
McGraw-Hill/Irwin
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6-2
Learning Objectives
After studying Chapter 6, students should be able to:
1.
2.
3.
4.
Discuss the differences and similarities between
job-based plans, skill-based plans, and
competency-based plans.
Discuss the advantages and disadvantages of
employee involvement in the evaluation of work.
Explain the procedures necessary in order to
administer a job-based or skill/competency-based
plan.
Discuss the criteria used to evaluate the usefulness
of the job-based or skill/competency – based plan.
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6-3
Many Ways to Create Internal Structure
Business and WorkRelated Internal Structure
Person-based
Skill
Job-based
(Chapter 6)
Competencies
(Chapter 6)
PURPOSE
Collect, summarize
work information
Job analysis
(Chapter 4)
Job descriptions
Skill analysis
Core
competencies
Determine what to
value
Job evaluation:
(Chapter 5)
classes or
compensable factors
Skill blocks
Competency
sets
Assess value
Factor degrees and
weighting (Chapter 5)
Certification
process
Behavioral
descriptors
Translate into
structure
Job-based structure
Person-based
structure
Person-based
structure
McGraw-Hill/Irwin
(Chapter 5)
© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
6-4
Skill-based structures link pay to the depth or breadth of
the skills, abilities, and knowledge a person acquires that is
relevant to the work. Structures based on skill, pay
individuals for all the skills for which they have been certified
regardless of whether the work they are doing requires all or
just a few of those particular skills.
In contrast, a job-based plan pays employees for the job to
which they are assigned, regardless of the skills they
possess.
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6-5
Types of Skill Plans
! Specialist: In Depth
! Generalist / Multiskill
-Based:
Multiskill-Based:
Breadth
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6-6
Purpose of the Skill-Based Structure
! Support Work Flow
! Fair to Employees
! Directs Behavior Toward
Organization Objectives
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6-7
Skill analysis is a
systematic process to
identify and collect
information about skills
required to perform work
in an organization.
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6-8
Determining the Internal
Skill-Based Structure
Internal
alignment
Skill analysis
Work relationships
within the
organization
McGraw-Hill/Irwin
Skill blocks
Skill
certification
Skill-based
structure
Basic
Basic Decisions
Decisions
•• What
What is
is the
the objective
objective of
of the
the plan?
plan?
•• What
What information
information should
should be
be collected?
collected?
•• What
What methods
methods should
should be
be used
used to
to determine
determine
and
and certify
certify skills?
skills?
•• Who
Who should
should be
be involved?
involved?
•• How
How useful
useful are
are the
the results
results for
for pay
pay purposes?
purposes?
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6-9
SKILL CATEGORY
Grouping of related skill blocks of varying skill levels that
represent all activities of a single job family or steps in a
process; for example, production technician.
SKILL BLOCK
Grouping of skills, activities, or behaviors; for
example, bearing housing assembly.
SKILL
Smallest unit of analysis, a
specific statement of what
a person does; for
example, inspect oil levels
and all filters.
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6 - 10
How is SBP Different From a
Job-Based Pay System?
! Skill or skill units, rather than jobs are
compensable.
! Mastery of skill units is measured and certified.
! Pay changes do not necessarily accompany job
changes.
! There is little emphasis on seniority in pay
determination.
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6 - 11
Why Use a Skill-Based Pay System?
From the firm’s perspective, SBP can:
! Encourage employee flexibility
! Reinforce a high-involvement organization
design
! Support the compensation strategy in ways that
hold down costs
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6 - 12
Effects of a Skill-Based System
! higher productivity
! lower costs
! higher quality
! lower staffing levels
! lower absenteeism
! lower turnover
! improved relations with
labor union
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6 - 13
Disadvantages of Skill-Based Pay
! Average pay of employees likely higher
! Excessive labor costs, if productivity increases don’t
offset additional costs
! SBP systems more complex
! SBP systems require a major investment in training
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6 - 14
Determining the Internal
Competency-Based Structure
Internal
alignment
Core
competencies
Work relationships
within the
organization
McGraw-Hill/Irwin
Competency
sets
Behavioral
descriptors
Competency –
based structure
Basic
Basic Decisions
Decisions
•• What
What is
is the
the objective
objective of
of the
the plan?
plan?
•• What
What information
information should
should be
be collected?
collected?
•• What
What methods
methods should
should be
be used
used to
to determine
determine
and
and certify
certify competencies?
competencies?
•• Who
Who should
should be
be involved?
involved?
•• How
How useful
useful are
are the
the results
results for
for pay
pay purposes?
purposes?
© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
6 - 15
Purpose of the
Competency-Based Structure
! Support Work Flow
! Fair to Employees
! Directs Behavior Toward
Organization Objectives
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6 - 16
So, What’s a Competency?
! Demonstrable characteristics of the person,
including knowledge, skills, and behaviors, that
enable performance.
! Competencies are independent of a job or
position.
! An employee can transport them from one job to
another.
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6 - 17
CORE COMPETENCY
Taken from mission statement; for example, “business
awareness.”
COMPETENCY SETS
Grouping of factors that translate core competency
into observable behavior; for example, cost
management, business understanding.
COMPETENCY
INDICATORS
Observable behaviors that indicate the
level of competency within a
competency set. For example,
“identifies opportunities for savings.”
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6 - 18
The Top Twenty Competencies
1.
1.
2.
2.
3.
3.
4.
4.
5.
5.
6.
6.
7.
7.
8.
8.
9.
9.
10.
10.
Achievement orientation
Concern of quality
Initiative
Interpersonal understanding
Customer
-service
Customer-service
orientation
Influence and impact
Organization awareness
Networking
Directiveness
Teamwork & cooperation
McGraw-Hill/Irwin
11.
11.
Developing others
12.
12.
Team leadership
13.
13.
Technical expertise
14.
14.
Information seeking
15.
15.
Analytical thinking
16.
16.
Conceptual thinking
17.
17.
Self
-control
Self-control
18.
18.
Self
-confidence
Self-confidence
19.
19.
Business orientation
20.
20.
Flexibility
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6 - 19
How well do they
achieve their
objectives
Reliability of Job
Evaluation
Techniques
Criteria for Evaluating
the Usefulness of
Pay Structures
Acceptability
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Validity /
Usefulness
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6 - 20
Illustrations of Audit Indexes
A.
Overall indicators.
1.
Ratio of number of current descriptions to numbers
of employees.
2.
Number of job descriptions evaluated last year and
previous year.
3.
Number of jobs evaluated per unit.
a) Newly created jobs
b) Re-evaluation of existing jobs
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6 - 21
Illustrations of Audit Indexes (continued)
B.
Timeliness of job descriptions and
evaluations.
1.
Percent of total jobs with current descriptions.
2.
Percentage of evaluation requests returned within 7
working days, within 14 working days.
3.
Percentage of re-evaluation requests returned with
changed (unchanged) evaluations.
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6 - 22
Illustrations of Audit Indexes (continued)
C.
Workability and acceptability of job evaluation.
1.
Percentage of employees (managers) surveyed who
know the purposes of job evaluation.
2.
The number of employees who appeal their job’s
evaluation rating.
3.
The number of employees who receive explanations
of the results of their re-evaluation requests.
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6 - 23
Recommendations to Ensure that Job
Evaluation Plans are Bias Free
1.
2.
3.
Define the compensable factors and scales to include
the content of jobs held predominantly by women.
Ensure that factor weights are not consistently biased
against jobs held predominantly by women. Are factors
usually associated with these jobs always given less
weight?
Apply the plan in as bias free a manner as feasible.
Ensure that the job descriptions are bias free, exclude
incumbent names from the job evaluation process, and
train diverse evaluators.
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6 - 24
Contrasting Approaches (1 of 2)
Job-Based
Skill-Based
Competency-Based
What is valued
Compensable factors
Skill blocks
Competencies
Quantify the value
Factor degree weights
Skill levels
Competency levels
Mechanisms to
translate into pay
Assign points that reflect
criterion pay structure
Certification and price
skills in external market
Certification and price
competencies in external
market
Pay structure
Based on job
performed/market
Based on skills certified/
market
Based on competency
developed / market
Pay increases
Promotion
Skill acquisition
Competency
development
Managers’ focus
Link employees to work
Promotion and
placement
Cost control via pay for
job and budget increase
Utilize skills efficiently
Provide training
Control costs via
training, certification, and
work assignments
Be sure competencies
add value
Provide competency –
developing opportunities
Control costs via
certification, and work
assignments
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6 - 25
Contrasting Approaches (2 of 2)
Job-Based
Skill-Based
Competency-Based
Employee focus
Seek promotions to
earn more pay
Seek skills
Seek competencies
Procedures
Job analysis
Job evaluation
Skill analysis
Skill certification
Competency analysis
Competency
certification
Advantages
Clear expectations
Sense of progress
Pay based on value of
work performed
Continuous learning
Flexibility
Reduced work force
Continuous learning
Flexibility
Lateral movement
Limitations
Potential bureaucracy
Potential inflexibility
Potential bureaucracy
Requires cost controls
Potential bureaucracy
Requires cost controls
McGraw-Hill/Irwin
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6 - 26
Summary
! The importance placed on internal alignment in the pay
structures is a basic strategic issue.
! The premise underlying internal alignment is that internal
pay structures need to be aligned with the organization’s
business strategy and values, the design of the work flow,
and a concern for the treatment of employees.
! The work relationships within a single organization are an
important part of internal alignment. Structures that are
acceptable to the stakeholders affect satisfaction with pay, the
willingness to seek and accept promotions to more
responsible jobs, and the effort to keep learning and
undertake additional training.
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6 - 27
Summary (continued)
! The techniques for establishing internally aligned structures
include job analysis, job evaluation, and person-based
approaches for skill/competency-based plans.
! These techniques can aid in achieving the objectives of the
pay system when they are properly designed and managed.
! Without them, the pay objectives of improving
competitiveness and fairness are more difficult to achieve.
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6 - 28
Review Questions
1.
2.
3.
What are the pros and cons of having employees
involved in compensation decisions? What forms can
employee involvement take?
Why does the process used in the design of the internal
pay structure matter? Distinguish between the process
used to design and administer the structure and the
techniques or mechanics used.
If you were managing employee compensation, how
would you recommend that your company evaluate the
usefulness of its job-based or person-based plans?
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6 - 29
Review Questions (continued)
4.
5.
6.
Based on the research on job evaluation, what are the
sources of possible gender bias in skill/competencybased plans?
How can a manager ensure that job-based or
skill/competency-based plans support a customercentered strategy?
How would you decide to use job-based or personbased structures?
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