Pay rates

Skill-based pay determines the salary given to an employee based on their knowledge, education or experience  Competency-based pay also pays employees based on their skills or experience they apply in their job and not according to the position they hold. Companies argue that this type of pay supports high performance, employees work in a self-motivating way, the process organizes work around teams and allows free rotation around jobs where each has it set skills setting work flexibility,  this kill strict supervision to work as each is aware of their responsibilities. Employees are always enthusiastic about learning and achieving set up goals (Adams). Paying for competences, skills and knowledge is more strategic. This kinds of settings allow workers to acquire and seek desired skills. Companies want to establish and set salaries for each individual. Employees are involved in the job, and supervisors are close to the staff for support. These pay plans to get rid of no-value adding activities since every employee is assigned a task, thus effectively reducing redundancy.

The wage of each employee strictly ties to their skills and not seniority. Employees’ salaries increase since they can perform different tasks. Adopting skill-based compensation allows companies to skill up their workforce other than hiring new skilled labour with desired skills. It is also a way to ensure that the company’s workforce has the expertise required now and into the future. Highly qualified employees are a benefit to the companies since the later can plan on the future skill deficits by utilizing the current skills.

Advantages of person-focused pays are a system whereby workers are rewarded based on performance rather than the average predetermined wage.

Defined Framework can be used by managers to set their institutional goals which result in benefiting and improving individuals to become more productive and acquire more skills. A tangible and encouraging reward goes to an individual due to his outstanding performance which occurs to him that his contribution has been recognized (national library of medicine). Linking pay to performance induces focus and hard work to workers, and they are keen on what they have to do. A proper person-focused pay plan will only reward the performers. Little awards will go to the poor performers an indication that slight improvement translates to low pay. Persons who perform well secure their positions in the institution because of their significant contribution.

This plan encourages employees that they only get the incentive based on the efforts done towards setting up goals and targets. Staffs get more open to changes because through change presents an opportunity for professional growth. Employees are also encouraged to push beyond their comfort zones. Junior staff members can match their salaries with the old if their skills match. Operation cost reduces by reducing the workforce since a single employee can work in different disciplines if they possess many talents.

On the contrary, the plan has some shortcoming whereby teamwork and collaboration are highly discouraged. Much focus on the reward by workers rather than developmental desires can mischievously affect the performance appraisal. The process relies on the judgment of the supervisor, which might be unfair to some workers. Hard goals could be challenging and positively affect workers.  Focusing on specific goals leads to narrow focusing, which is a challenge when the supervisor resets to other purposes. Employees end up expecting additional pay at the end of every year, which is impossible and can result in reduced efforts. High pay rates are incurred in firms as staff value increases as compares to others. A substantial investment requires training the staff for a quick productivity

References

Adams, field. “A Qualitative case study of teachers and school leaders perspectives of Tennessee differentiated pay plans.” (2018).

national library of medicine. “local pay plans set alarm bells ringing.” (2012).