6-1

Chapter

6
PersonPerson-Based Structures

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Learning Objectives
After studying Chapter 6, students should be able to:

Discuss the differences and similarities between jobjob-based plans, skill-based plans, and skillcompetencycompetency-based plans. 2. Discuss the advantages and disadvantages of employee involvement in the evaluation of work. 3. Explain the procedures necessary in order to administer a job-based or skill/competency-based jobskill/competencyplan. 4. Discuss the criteria used to evaluate the usefulness of the job-based or skill/competency based plan. job1.
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Many Ways to Create Internal Structure

Business and Work-Related WorkInternal Structure Person-based Job-based PURPOSE Collect, summarize work information Determine what to value Job analysis (Chapter 4) Job descriptions Job evaluation: (Chapter 5) classes or compensable factors Factor degrees and weighting (Chapter 5) Job-based structure
(Chapter 5)

Skill
(Chapter 6)

Competencies
(Chapter 6)

Skill analysis

Core competencies Competency sets

Skill blocks

Assess value

Certification process PersonPerson-based structure

Behavioral descriptors PersonPerson-based structure

Translate into structure

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SkillSkill-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 jobwhich they are assigned, regardless of the skills they possess.

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Types of Skill Plans

 Specialist: In  Generalist /

Depth

Multiskill-Based: Multiskill-

Breadth

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Purpose of the Skill-Based Structure Skill Support Work Flow  Fair to

Employees

 Directs Behavior Toward

Organization Objectives

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Determining the Internal SkillSkill-Based Structure

Internal alignment

Skill analysis

Skill blocks

Skill certification

Skill-based structure

Work relationships within the organization

Basic Decisions What is the objective of the plan? What information should be collected? What methods should be used to determine and certify skills? Who should be involved? How useful are the results for pay purposes?

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How is SBP Different From a JobJob-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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Disadvantages of Skill-Based Pay Skill Average

pay of employees likely higher

 Excessive

labor costs, if productivity increases dont offset additional costs systems more complex systems require a major investment in training

 SBP  SBP

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Determining the Internal CompetencyCompetency-Based Structure

Internal alignment

Core competencies

Competency sets

Behavioral descriptors

Competency based structure

Work relationships within the organization

Basic Decisions What is the objective of the plan? What information should be collected? What methods should be used to determine and certify competencies? Who should be involved? How useful are the results for pay purposes?

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Purpose of the CompetencyCompetency-Based Structure

 Support Work Flow  Fair to

Employees

 Directs Behavior Toward

Organization Objectives

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So, Whats a Competency?

 Demonstrable

characteristics of the person, including knowledge, skills, and behaviors, that enable performance. are independent of a job or

 Competencies

position.
 An

employee can transport them from one job to another.

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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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Iceberg Model
1.

Acquired through training and development

1. 2.

11.

Inferred only for developmental purposes

11. 12. 13.

Skills Knowledge

SelfSelf-concepts Traits Motives

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Example of competencies
 Personal

characteristics  Organization specific - whats needed in the organization?  Visionary

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Levels of competency
 Basic

or fundamental  Proficient  <asteru

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How well do they achieve their objectives

Criteria for Evaluating the Usefulness of Pay Structures

Reliability of Job Evaluation Techniques

Acceptability

Validity / Usefulness

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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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Contrasting Approaches (1 of 2)
JobJob-Based
What is valued Quantify the value Mechanisms to translate into pay Pay structure Pay increases Managers focus Compensable factors Factor degree weights Assign points that reflect criterion pay structure Based on job performed/market Promotion Link employees to work Promotion and placement Cost control via pay for job and budget increase

SkillSkill-Based
Skill blocks Skill levels Certification and price skills in external market Based on skills certified/ market Skill acquisition Utilize skills efficiently Provide training Control costs via training, certification, and work assignments

Competency-Based CompetencyCompetencies Competency levels Certification and price competencies in external market Based on competency developed / market Competency development Be sure competencies add value Provide competency developing opportunities Control costs via certification, and work assignments

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Contrasting Approaches (2 of 2)
JobJob-Based Employee focus Procedures Seek promotions to earn more pay Job analysis Job evaluation Clear expectations Sense of progress Pay based on value of work performed Potential bureaucracy Potential inflexibility SkillSkill-Based Seek skills Skill analysis Skill certification Continuous learning Flexibility Reduced work force Potential bureaucracy Requires cost controls Competency-Based CompetencySeek competencies Competency analysis Competency certification Continuous learning Flexibility Lateral movement Potential bureaucracy Requires cost controls

Advantages

Limitations

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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 organizations 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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Summary (continued)
The techniques for establishing internally aligned structures include job analysis, job evaluation, and person-based personapproaches for skill/competency-based plans. skill/competency 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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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? jobpersonMcGraw-Hill/Irwin
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Review Questions (continued)

4.

5.

6.

Based on the research on job evaluation, what are the sources of possible gender bias in skill/competencyskill/competencybased plans? How can a manager ensure that job-based or jobskill/competency-based plans support a customerskill/competencycustomercentered strategy? How would you decide to use job-based or personjobpersonbased structures?

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