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person-focuse pay

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FanFan Chen

on 4 December 2012

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Transcript of person-focuse pay

Goal Overview Horizontal skills(Horizontal knowledge)
Similar skills or knowledge
Fundamental knowledge
Vertical skills(vertical knowledge)
Skills traditionally considered supervisory
Scheduling, coordinating, training, leading
Depth of skills(depth of knowledge)
Level of specialization or expertise Competency is uniquely combined characteristics of the person, including personality, attitudes, knowledge, skills, and behaviors that enable an employee to fulfill job requirements.

Core competencies are often derived from the overall strategic statements of companies. If you can count your money, you don't have a billion dollars.
----- J. Paul Getty Strategic Compensation
HRM 667 Chapter 5: Person-focused Pay Program
By Dec 3, 2012 Wednesday night 7:30 to 8:30 Xinfang Chen
Stephanie Johnson
Lu Zhang 1.Differing opinions on the meaning of competency-based pay
2.Person-focused pay plans: pay-for-knowledge pay and skill-based pay programs
3.Reasons that companies adopt person-focused pay programs
4.Pay-for-knowledge pay and skill-based pay variations
5.Contrasts between person- focused pay systems and job-based pay systems concepts
6.Advantages and disadvantages of using person-focused pay plans Definition
Contrasting with job-based pay
Advantages & Disadvantages Definition
Person-focused pay plans generally reward employees for acquiring job-related competency, knowledge, or skills, rather than for demonstrating successful job performance
Competency-based pay:
two basic types of person-focused pay
programs:pay-for-knowledge and skill-based pay.

This incorporates a combination of both
types, which reward employees for successfully
acquiring new job-related knowledge or skills.

These plans reward managerial, service, or professional workers for successfully learning specific curricula. Skill-based pay
A term is used mostly for employees who do physical work, increases these workers' pay as they master new skills. What is a "competency"? Advantages For employers 1. Provide job enrichment & job security:
Core Characteristics
skill variety
task identity
Creates more intrinsically motivating and interesting work environment
Improve employee satisfaction
2. Create more flexibility workers For employees Disadvantages Can increase hourly labor costs
Can increase training costs
Can increase overhead costs
May not mesh well with existing incentive pay systems Advantages & Disadvantages Summary This chapter provides a discussion for person-focused pay programs, usages of person-focused pay programs, reasons companies should adopt person-focused pay programs, varieties of person-focused pay programs, advantages as well as disadvantages of person-focused pay programs, and fit with competitive strategy.

Companies should seriously consider adopting person-focused pay programs in order to keep up with technological innovation and to compete internationally. Perhaps the greater challenge for companies is to ensure that employees are given the opportunity to apply newly learned skills in productive ways. Discussion & Questions Usage of person-focused pay program Reasons to Adopt Person-Focused
Pay Programs Varieties of Person-Focused Pay Programs More than half:

Companies with 150-2,000 employees
Work teams:
Be able to do different jobs
Both functional and managerial tasks
Professional employees Removes entitlement label
Connect pay to job-related skills and knowledge
Two key reasons:
Technological innovation
Increased Global Competition Source: Chapter 5 pages 103 Stair-Step Model Jobs from same job family (Example in book: Assembly Technician)
Jobs differ in terms of complexity
Higher the step, greater the skills
Compensation Specialists use separate stair-step models for individual job families (e.g., clerks or accountants)
No stair-step model should include clerical and skilled trade workers (e.g., carpenters, electricians, and plumbers) Source: Chapter 5 page 104 Skill-Blocks Model Applies to jobs from within the same job family
Employees progress to increasingly complex jobs
Skills do not necessarily build on each other
Emphasizes horizontal & vertical skills, not development of knowledge or skills dept Source: Chapter 5 page 106 Job-Point Accrual Model Encourages employees to develop skills and learn to perform jobs from different job families
Creates organizational flexibility by assigning points to skills that address key company concerns
The more points accrued, the higher their core compensation level will be Source: Chapter 5 page 108 Cross-Departmental Model Employees develop critical skills usable in other departments
Helps production environments manage sporadic, short-term staffing shortages
Help meet seasonal fluctuations in demand for their products or services Source: Chapter 5 page 108 Contrasting Person-Focused Pay with Job-Based Pay Person-Focused Pay Plan Designs Source: page 111 Non-traditional Traditional Bases for pay 1. Improve job performance: influence both the quantity and the quality of the work
Technological innovation-skill become obsolete
Increase global competition-more productive requires leading-edge skills
2.Reduced staffing: Multi-skilled employees are better to cover for unexpected absenteeism, family or medical leave.
3. Greater flexibility competitiveness: a variety of skill, a wider range of tasks. Thank you Reference
Martocchio, Joseph J. (2013). Strategic Compensation: A Human Resource Management Approach. 7th ed. New Jersery: Prentice Hall. p99-116.
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