Dr. G C Mohanta, BE(Mech), MSc(Engg), MBA, PhD(Mgt)

Professor

Pay-for-Knowledge◦ Competency Based Pay◦ Skill Based Pay

Fredrick Taylor in Scientific Management focused on the basic elements of the job

Lead to job focused way of organizing work

Criticisms of job based structure◦ Reduces flexibility◦ “Not my job”◦ Little reason to acquire information & skills

outside of narrow job◦ Doesn’t help people understand what other

people do

Pay is tied to skills, abilities & knowledge that a worker possesses

Manufacturing jobs Flexibility to reassign people to where work

is needed Depth: pay for having a deep level of

knowledge within a job e.g. teachers pay increases with amount of

education: bachelors, masters, doctorate degree

Breadth: Pay for generalist knowledge

Increased pay for more knowledge Pay increases come with certification of

new skill◦ (e.g., Microsoft certification; SHRM Certification)◦ Skill certification can come from internal assessment

Employees then can be assigned to new jobs based upon certification

Pay increases with the more certifications held For example: 7.50 base pay + 1.00/hr for each

machine

Ensures workers have needed skills◦ Assumes good tests

Supports the organizational work flow◦ Workers trained & ready to move to assignments as

needed Fairness

◦ Depends on how training conducted◦ Who pays for training◦ Means two people doing same task at different pays

Motivation◦ Motivation is to get training, not necessarily to perform

task well

Employees accept skill based pay◦ Certification procedures must be viewed as fair

Easy to communicate Productivity

◦ Mixed results 61% of those implementing SBP were using

it 7 years later Depends on strategy more compatible with

innovation not low cost Usefulness varies based upon setting

What are competencies?◦ Skill /expertise that can be learned & developed◦ Knowledge (accumulated information)◦ Self concept (attitudes, values, self image)◦ Traits (general disposition to behave in a certain

way)◦ Motives (thoughts that drive behavior)

Competencies - characteristics of the person: personality, attitudes, knowledge, skills & behaviours

Knowledge & Skills: Essential characteristics for the job◦ Can be tested: Observable and Measurable

Self concepts, traits, & motivesNot Directly Measurable must be inferred from

actions◦ Self concept (identifies with the team)◦ Trait (flexibility)◦ Motive (drive to produce results)

Much more parameters subjectively assessed

Derived from mission statement: values & attitudes

JetBlue embraces five values that represent the company and create its unique culture:◦Safety, Caring, Integrity, Fun and Passion

Organization Strategy◦ Competencies are likely to fit with organization’s

strategy Work Flow

◦ Competencies are designed to convey values and enhance work flow

◦ Effectiveness likely to depend upon culture Fair to Employees

◦ Empower employees to take charge of own development

◦ Subjective Motivation towards organization’s objectives

How do you certify that someone has these competencies

How to tie to pay How to justify in a

court of law

Level Phase Title

4 Expert Visionary

3 Advanced Coach

2 Resource Contributor

1 Proficient Associate

Employee Advantages◦ Skill Variety◦ Task Variety◦ Autonomy◦ Feedback

Employer Advantages◦ Communicates Culture◦ Product or Service qualities◦ Leaner Staffing cross usage◦ Flexibility

Increases training, hourly labour & overhead costs can rise

May not fit with other incentive programs

Pay for Knowledge programs have the potential to help employers compete in global environment

Must give employees the opportunity to learn