Skill/Knowledge Based PayCompetency Modeling

MANA 5322

Dr. Jeanne Michalski

michalski@uta.edu

Skill Based Pay

Rewards employees for the sets of skills they acquire rather than for the job they are performing at a point in time.

A job-based plan pays employees for the job to which they are assigned, regardless of the skills they possess.

Skill Based Pay

Skill breadth – learning all the different positions in a team

Skill depth – increasing expertise as in an apprenticeship ladder

Vertical skills – management skills and knowledge of the business

Common Applications

Base-pay systems Non-exempt employees Manufacturing sector Enhances employee involvement (such as self-

managed teams)

Results Skill Based Pay Plans (SBP)

Study of 97 skill based pay plans found 66% were successful

Increased workforce flexibility Reduced staffing requirements Increased productivity (58% improvement in

productivity in one plant) Longitudinal study 61% firms continued using SBP Impressive results when using SBP but other factors

play a part: extensive training engagement of employees in business high level of communication

Critical Factors for long-term Success of Skill Based Pay Sound customization of the SBP design to address

the organization’s specific business conditions, technologies and work systems

Solid hiring, training, job rotation and certification systems

Skill recertification processes Renewal processes that adapt to changing

conditions Leadership that supports the plan Competitive wage assessment

Biggest Downside to Skill Based Pay?

Competency Models

Competency models identify the knowledge, skills, and abilities necessary to successfully perform critical work functions across an organization, industry, or occupation.

Competency Definition/Example

A competency is a personal characteristic (skill, knowledge, trait, motive) that drives behavior leading to outstanding performance. An example of a competency is "conceptual thinking", defined as: finding effective solutions by taking a holistic, abstract or theoretical perspective. A person demonstrating this competency would probably be able to: Notice similarities between different and apparently unrelated

situations Quickly identify the central or underlying issues in a complex

situation Create a graphic diagram showing a systems view of a situation Develop analogies or metaphors to explain a situation Apply a theoretical framework to understand a specific situation

Competency Models

“Core Competencies” for sustainable competitive advantage.

More general descriptions that cut across many categories of jobs.

Integrated with selection, training, and performance management.

Competencies Behavioral indicators Validation

Elements of Competency Model

Depends on Purpose – no agreement, but generally include: Significance of meeting organization’s strategies

(sometimes implied in the development of core competencies)

Expected outputs or results of performance Competencies for fully successful performance Competencies that distinguish exemplary

performance (if identified) Behavioral indicators that describe when competence

is being used appropriately

Steps in Developing Competency Models Gather Background Information

Catalog and review existing resources Decide for each job family how to gather

data Comprehensive job analyses Expert panel Structured interview

Identify set of generic competencies, if possible

Steps in Developing Competency Models Collect and Analyze Data

Identify themes Develop draft model

Competencies Clusters Indicators or levels

Steps in Developing Competency Models Review with sponsors/key leaders

Discuss each competency Names and definition Specific behaviors used to describe

competency Elimination of any competency Additional competencies

Revise model Communicate Model and Uses

Anheuser-Busch Competencies

1. Task force (HR staff and facilitator) identified key business imperatives.

HR Staff and consultants Company strategy and business objectives Mission and values

2. Focus groups of managers reviewed competencies Narrowed and prioritized list Confirm or edit 4-5 specific employee behaviors for each

competency

Anheuser-Busch Competencies

3. Questionnaires sent to supervisors who were asked to rate the frequency that each behavior was exhibited by:

Top performers – “role models” Satisfactory or competent employees Employees who need improvement

4. Completed competencies integrated with selection and performance management system.

I. Achieving Competitiveness

Customer Focus: Aggressively monitors and anticipates customer requirements and responds to them in an appropriate manner.

Business Focus: Strategically monitors business performance and environment to enhance competitive position.

Innovation and Change: Actively seeks out new ideas and displays creativity in adapting to changing conditions.

Results Orientation: Demonstrates the drive and persistence to meet and exceed job goals for self or other.

Analysis and Planning: Uses critical thinking to solve problems and develop effective work plans.

Systems Thinking: Improves and integrates business process to meet organizational strategic goals.

Technical / Functional Expertise: Demonstrates, enhances, and shares job-related knowledge and skills.

II. Succeeding Through People

Valuing people: Demonstrates respect for others regardless of personal background.

Commitment to Development: Develop own and others’ capabilities to better meet organizational needs.

Professionalism: Demonstrates candor, composure, and commitment to obligations in work relationships.

Empowerment: Delegates or accepts responsibility to expand own capabilities to take appropriate risks and make decisions.

Influence: Uses appropriate methods to motivate others.

Team orientation: Accepts the team approach and takes necessary action to support its processes and goals.

Uses for Competency Models

Selection Training Performance Management Developmental Planning Career Pathing Compensation

Common Barriers to Success of Competency Models Lack of expertise in building models Complexity of some models seems confusing Limited support by top management Competing priorities Lack of resources Lack of linkage with organizational strategy Lack of ongoing evaluation Not integrated with all HR processes

Sample Competency

ELEMENTS OF COMPETENCY

PERFORMANCE CRITERIA

EXAMPLES OF EVIDENCE

Motivating PeopleMotivate people towards achieving quality results.

A work environment is created which encourages individuals to seek challenges and strive to reach their full potential. Individuals' needs and wants are recognized and where possible incorporated into work assignments consistent with their personal strengths.

Achievements are promoted and rewarded in a way which openly acknowledges the contribution of individuals.

All staff are involved in the development of business plans which demonstrates structured reward and recognition system.

Example of structured feedback on performance.

Class Exercise

Break into groups of no more than 6 Review Working together as a team competency

and identify performance criteria and examples of evidence

Turn in results with names of all in the group

ELEMENTS OF COMPETENCY

PERFORMANCE CRITERIA

EXAMPLES OF EVIDENCE

Working Together as a Team: Actively participates as a member of the teamtoward the completion of team goals.

Advantages of competency models

Disadvantages of competency models

Advantages of competency models Flexibility Integration Cultural fit

Disadvantages of competency models Vague Less defensible Harder to justify paying someone for what

they are capable of doing vs. what they do

Purpose of Job- Person- Based Pay Structures Design and manage internal pay structure that helps

the organization to succeed Reflect internal alignment Support business operations

More research on job evaluation Reliability – high agreement on job ranking (.85-.90) Validity – usually compares structure to benchmark

jobs (studies show similar job ranking but different pay rates)

Homework

Review any available sources i.e. Bureau of Labor Statistics, Chamber or Commerce, Business and Professional Organization Data to compile pay information for multiple level of Accountant positions (Accountant, Sr. Accountant) and Systems Developer positions (programmer, systems analyst, senior systems analyst).

Be sure to get rates from 3 different sources for at least 3 levels of a position (e.g. if you pick Accountant get 3 levels of Accountant data) and include a description of the position from each source to show how the position is similar across the 3 sources.

Include survey date or effective date if available Include mean and median or percentile data if available

Example of one Level of Job

Survey Position Salary

Local Fort Worth community information 9/30/2008

Mail Clerk: Under immediate supervision , assist with the sorting of ordinary and registered incoming mail and processing of outgoing mail. Makes scheduled internal deliveries and pickups of routings among departments. This is an entry-level position.

$24,400

Bureau of Labor Statistics –Regional1/31/2009

Mail Clerk: Prepares incoming mail for distribution, and processes outgoing mail. Distributes and collects mail, determines and affixes postage, and maintains records on postage, registered mail and packages.

$22,500

Local Dallas community information3/31/2009

Mail Messenger: Pick up and deliver incoming and outgoing mail according to prescribed schedule. Picks up and delivers mail and small packages to various locations within the company. Weighs letters and packages and affixes appropriate postage. Entry-level position

$26,800