Differences between Skill Based Pay System and Job Based Pay System In the skills based pay system, the reward is attracted by skills that have been accumulated by an individual rather than the job done as is the case in a job based system of employee reward. To do so is simply good succession planning. This is because they have highly skilled workers who can perform a variety of tasks. Employees will feel that they are always evaluated by the employer. In short therefore, the salaries or the wages that are paid to the employee is determined to getting the best aspect of an individual that he or she can offer to the company. Yet comanies fail to realize that having their sales staff on commission based pay will only increase sales and higher profits in the short-term. Reasons For Skill-Based Pay More than ever before in industrial relations history a commonality of interests in the skills of employees has developed between employers and employees.
Pay scales have traditionally been defined by the qualifications, experience and knowledge required to perform job duties at a certain level. A well-designed salary structure allows management to reward performance and skills development while controlling overall base salary cost by providing a cap on the range paid for particular jobs or locations. Increased employee satisfaction will encourage increased commitment in discharging its duties and responsibilities. Consequentially, the staff that is heavily equipped with the right knowledge ends up being with the right brains to perfectly or optimally produce at work Boyett, pg. As a matter of fact, this is the main reason for the popularity of skill based system than is competency based system. Individual training goals may be based on specific skills and knowledge needed to perform work duties.
It promotes consistency in pay rates for similar positions throughout an organization which can be seen as a benefit to both employer and employee. To do so, the company adopts a pay structure that best supports the compensation philosophy and job valuation method used. Advantages Person-Based-Pay According Dierdroff and Surface 2008 , organizations or companies that adopt this method can encourage and promote a work environment that is more flexible. As a way of bettering this, training of the employees ought to be done more effectively so that the right attitude and right objective is built in every employee. An employer may also consider the employee's work experience and seniority as part of the job evaluation. Job-based Vs Person-based Pay Structures Job Based Pay Structures A job based pay structure is a structure of salary payments that is built on compensable factors determined by the job.
The above, will all be related to the above statement as to whether the success of. Companies can control costs more effectively compensated. Through Job-based-pay, workers will be protected from potential discrimination in the matter of payment of wages or salary. It may make you a lot of money one time, and sometimes once is all that you need to hit whatever your comp target is. These programs reward employees on their potential to make positive contributions to the organization. Employees will feel obliged to perform a variety of tasks.
Since that time, the wage gap between men and women in the United States has narrowed by just 15 cents, now being 74 cents, as reported by the U. Equal Pay Act In 1963, President Kennedy signed the Equal Pay Act into law, making it unlawful to discriminate against a worker on the basis of sex. Typically, employers prefer certain advantages, such as gender. The person focused pay plan allows employees to grow and motivates them to learn. Finally, competency indicators are brought into the picture. Is a defensemen in hockey who can score as valuable as a forward or more so? A job-based compensation structure typically contrasts a skill-based structure in that you are paid based on the responsibilities of a position rather than your personal skills.
The second reason they are good to adopt is due to increased global competition and the fact that it has forced companies to become more competitive. Consumers usually rely on information and advice provided by representatives of a seller when purchasing unfamiliar products. This is because this position is distinguished by educational qualifications and work experience by an employee. Nineteen percent of participants with formal salary range structures reported that they do not use formal salary structures with executives. As long as there is a fair and effective performance review system that is accurately aligned with local salary levels, employees will strive to work hard. It is therefore very realistic that an individual with more expertise and knowledge base that has been certified is paid heavily while on the other hand, an individual that is bearing more jobs is paid more under the job based system of payment.
It is more likely that any pay changes that are experienced by an individual under the skill based pay system are not necessarily accompanied by changes in the job. Clear Steps to Higher Pay The process of earning more money are generally clear in a job-based structure. This is especially true if most companies in an industry use a job-pay structure. Survey dates: August 26 through October 25, 2010. Therefore, having a knowledgable and ethical sales force is key to having a high customer service company that will lead to customers being satisfied. In order to come up with the skills that are need to specifically carry out a certain job, the following procedure is followed in an organization. Frequency Salary Range Structures Are Reviewed Salary range structures should be reviewed regularly to maintain a competitive edge in attracting and retaining top talent.
While a minority of companies compensate strictly based on the job basing where an external applicant or existing employee should fall in the pay range based strictly on job content most companies pay in some part based on what an 2. Custom Person-Based Pay Structures Essay Writing Service Person-Based Pay Structures Essay samples, help. The jobs differ in complexity and a person can climb the stairwell by obtaining the necessary skills and knowledge. Training and Growth Employers that use a skill-based pay structure must provide continuing opportunities for employees to gain more skills and training. More senior workers who are employed mainly in managerial level will enjoy a better salary or higher than workers who are employed at the lower levels.
It also reduces the need for supervision. Employees will be more willing to accept risk in their compensation practices if they feel secure that their organization will provide them the necessary tools for development and success in the incentive criteria. Training is no longer only for current competence, but is also to prepare for the next stage of skills. This is simply because the individual may have added more skills under his knowledge base hence demanding more pay. The rate at which an individual develops the competency level is therefore used to effectively equate the pay increases that the individual gets from the employer.
The observable behaviors may for instance be the management of cost and understanding of business. Skill Analysis This is a very systematic procedure that is used in identifying and collecting information that regard the main skills that are needed in performing certain work in an organization. Typically, organizations or companies that adopt this method as bound by financial factors. Salary of a civil servant who served is determined by the scheme of service. For example, as more emphasis is placed on working as a team, companies are basing salaries of the efforts workers make as a member of a team. Positive impact to the organization if it can reduce the number of positions in the same or different.