
Advantage of a skill-based plan is that people
can be deployed in a way that better matches
the flow of work
◦ Avoids bottle necks
◦ Avoids idling
Skill-based structures link pay to the
depth or breadth of the skills, abilities,
and knowledge person acquires that
are relevant to the work.
In contrast, a job-based plan pays
employees for the job to which they are
assigned, regardless of the skills they
possess.

Skill plans can focus on
◦ Depth based
 Specialist
◦ Breadth based:
 Generalist/ multiskilled based

Supports strategy and objectives

Supports work flow

Fair to employees

Motivates behavior toward
organization objectives

To build a structure, a process is needed to
describe, certify, and value the skills
◦ What is the objective of the plan?
◦ What information should be collected?
◦ What methods should be used?
◦ Who should be involved?
◦ How useful are the results for pay purposes?
Systematic process
of identifying and
collecting
information about
skills required to
perform work in an
organization.

What information to collect?

Whom to involve?

Establish certification methods
◦ Foundation skills
◦ Core electives
◦ Optional electives
◦ Employees and managers
◦ Peer review, on-the-job demonstrations, or tests,
or formal tests

Guidance from the research on skill-based
plans
◦ Design of certification process crucial in perception
of fairness
◦ Alignment with organization’s strategy
◦ May be best for short-term initiatives

Several perspectives on what competencies
are and what they are meant to accomplish
◦ Skill that can be learned and developed or a trait
that includes attitudes and motives?
◦ Focus on the minimum requirements that the
organization needs to stay in business or focus on
outstanding performance?
◦ Characteristics of the organization or of the
employee?

Core competencies
◦ Related to mission statements expressing
organization’s philosophy, values, business
strategies, and plans

Competency sets
◦ Translate each core competency into action

Competency indicators
◦ Observable behaviors that indicate the level of
competency within each set


Exhibit 6.6: TRW Human Resources
Competencies
Exhibit 6.7: Sample Behavioral Competency
Indicators



Organizations seem to be moving away from
the vagueness of self-concepts, traits, and
motives
Greater emphasis on business-related
descriptions of behaviors “that excellent
performers exhibit much more consistently
than average performers”
Competencies are becoming “a collection of
observable behaviors that require no
inference, assumption or interpretation”

Organization strategy
 Exhibit 6.8:
Frito-Lay
Managerial
Competencies

Work flow

Fair to employees

Motivates behavior
toward organization
objectives


Objective
What information to collect?
◦ One scheme to classify competencies includes
 Personal characteristics
 Visionary
 Organization specific
◦ Examples
 Refer Exhibit 6.9, Exhibit 6.10, and Exhibit 6.11

Whom to involve?
◦ Competencies are derived from executive
leadership’s beliefs about strategic organizational
intent


Establish certification methods
Resulting structure
◦ Designed with relatively few levels

Guidance from the research on competencies
◦ Appropriateness to pay for what is believed to be the
capacity of an individual as against what the
individual does

Purpose of job- or person-based plan
◦ Design and manage an internal pay structure to help
achieve organizational objectives
 Reflects internal alignment policy
continuously
 Supports business operations

In practice, during evaluation of higher-value,
nonroutine work, distinction between jobversus person-based approaches blurs



A crucial issue is the fairness of the plans
administration
Sufficient information should be available to
apply the plan
Communication and employee involvement
are crucial for acceptance of resulting pay
structures

Reliability of job evaluation techniques
◦ Different evaluators produce same results
◦ Can be improved by using evaluators familiar with the
work and who are trained in job evaluation

Validity
◦ Degree to which evaluation achieves desired results
◦ Validity of job evaluation is measured in two ways

Validity (cont.)
◦ Validity of job evaluation is measured in two ways
 Degree of agreement between rankings; ranking of
benchmarks
 ‘Hit rates’; pay structure for benchmark jobs as
criterion
◦ Definition of validity needs broadening to include
impact in pay decisions

Acceptability
◦ Formal appeals process
◦ Employee attitude surveys

Gender bias
◦ No evidence that job evaluation is susceptible to
gender bias
◦ No evidence that job evaluator's gender affects results
◦ Compensable factors related to job content – contact
with others and judgment – does reflect bias
◦ Compensable factors related to employee
requirements – education and experience – does not
reflect bias

Wages criteria bias
◦ Job evaluation results may be biased if jobs held
predominantly by women are incorrectly underpaid
Define compensable factors and scales to
include content of jobs held predominantly by
women
 Ensure factor weights are not consistently
biased against jobs held predominantly by
women
 Apply plan in as bias free a manner as feasible

◦ Ensure job descriptions are bias free
◦ Exclude incumbent names from job evaluation
process
◦ Train diverse evaluators