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Chap006 CKSC
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Person-Based Structures
McGraw-Hill/Irwin Copyright 2011 by the McGraw-Hill Companies, Inc. All rights reserved.
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Chapter Topics
Person-Based Structures: Skill Plans
How to: Skill Analysis
Person-Based Structures: Competencies
How to: Competency Analysis
One More Time: Internal Alignment Reflected in Structures
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Chapter Topics (cont.)
Administering the Plan
Evidence of Usefulness of Results
Bias in Internal Structures
The Perfect Structure
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Person-Based Structures: Skill Plans
Skill-based structures link pay to the depth or breadth of skills, abilities, and knowledge a person acquires that are relevant to the work
Individuals are paid for all their certified skills regardless of whether the work requires all or just a few of those skills
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Types of Skill Plans
Specialist: Depth Pay is based on the knowledge of the
individual doing the job rather than on job content or output
Generalist/multiskill based: Breadth Pay increases are earned by acquiring
new knowledge specific to a range of related jobs
Pay increases come with certification of new skills, rather than with job assignments
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Purpose of the Skill-Based Structure
Supports the strategy and objectives
Supports work flow
Is fair to employees
Motivates behavior toward organization objectives
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How To: Skill Analysis
Skill analysis is a systematic process of identifying and collecting information about skills required to perform work in an organization
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How To: Skill Analysis (cont.)
What information to collect?
Specific information on every aspect of the production process
Whom to involve?
Employees and managers
Establish certification methods
Peer review, on-the-job demonstrations, tests, or formal courses
Scheduled fixed review points and recertification
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How To: Skill Analysis (cont.)
Outcomes of skill-based pay plans: Guidance from research and experience
Design of certification process is crucial in perception of fairness
Alignment with organizations strategy
May be best for short-term initiatives
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Person-Based Structures: Competencies
Core competencies abstract the underlying, broadly applicable knowledge, skills, and behaviors that form the foundation for success at any level or job in the organization
Competency sets translate each core competency into action
Competency indicators are observable behaviors that indicate the level of competency within each set
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Defining Competencies
Organizations seem to be moving away from the vagueness of self-concepts, traits, and motives
Greater emphasis on business-related descriptions of behaviors that excellent performers exhibit much more consistently than average performers
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Defining Competencies (cont.)
Competencies are becoming a collection of observable behaviors that require no inference, assumption or interpretation
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Purpose of the Competency-Based Structure
Organization strategy
Work flow
Fair to employees
Motivate behavior toward organization objectives
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How To: Competency Analysis
Objective
Vagueness and subjectivity make competencies a risky foundation for a pay system
What information to collect?
Classification of competencies:
Personal characteristics
Visionary
Organization specific
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Exhibit 6.11: The Top 20 Competencies
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How To: Competency Analysis (cont.)
Whom to involve?
Competencies are derived from executive leaderships beliefs about strategic organizational intent
Not all employees understand the connection
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How To: Competency Analysis (cont.)
Establish certification methods
Consultants are silent on objectively certifying whether a person possesses a competency
Resulting structure
Designed with relatively few levels and wide differentials for increased flexibility
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Exhibit 6.13: Toy Companys Structure Based on Competencies
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How To: Competency Analysis (cont.)
Competencies and employee selection and training/development
Competencies relate to individual characteristics of personality, motivation, and ability
Failure to adequately screen employees:
Puts more pressure on training and development
De-motivates employees seeking to acquire and demonstrate these competencies
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Exhibit 6.14: Titles and High-Level Definitions of the Great Eight Competencies
Source: Dave Bartram, SHL Group, The Great Eight Competencies: a Criterion-Centric Approach to Validation, Journal of Applied Psychology 2005. Vol. 90, No. 6, pp. 11851203.
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How To: Competency Analysis (cont.)
Guidance from the research on competencies
Managers competencies are related to performance ratings No relationship to unit-level performance
Some competencies deliver greater returns than others
Appropriateness to pay for what is believed to be the capacity of an individual as against what the individual does
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Purpose of job- or person-based procedures:
Design and manage an internal pay structure to help the organization succeed
Reflects internal alignment policy
Supports business operations
In practice, the focus is on both job and person factors that create value for the organization
One More Time: Internal Alignment Reflected in Structures
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Administering the Plan
A crucial issue is the fairness of the plans administration
Sufficient information should be available to apply the plan
Communication and employee involvement are crucial for acceptance of resulting pay structures
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Evidence of Usefulness of Results
Reliability of job evaluation techniques
Can be improved by using evaluators familiar with the work and who are trained in job evaluation
Validity
Degree to which the evaluation assesses what it is supposed to
Measured in two ways: Degree of agreement between rankings from
job evaluation with an agreed-upon ranking of benchmarks
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Evidence on Usefulness of Results (cont.)
Hit ratesdegree to which the job evaluation plan matches an agreed-upon pay structure for benchmark jobs
Definition of validity needs to be broadened to include impact on pay decisions
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Evidence on Usefulness of Results (cont.)
Acceptability
Formal appeals process allows employees to request reanalysis and/or skills reevaluation
Employee attitude surveys can assess perceptions of how useful evaluation is as a management tool
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Bias in Internal Structures
No evidence that job evaluation is susceptible to gender bias
Wages criteria bias
Job evaluation results simply mirror bias in the current pay rates if:
It is based on the current wages paid
The jobs held predominantly by women are underpaid
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Bias in Internal Structures (cont.)
Recommendations to ensure job evaluation plans are bias free:
Define compensable factors and scales to include content of jobs held predominantly by women
Ensure factor weights are not consistently biased against jobs held predominantly by women
Apply plan in as bias-free a manner as feasible
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The Perfect Structure
The best approach may be to provide sufficient ambiguity to afford flexibility to adapt to changing conditions
Too generic an approach may not provide sufficient detail to make a clear link between pay, work, and results
Too detailed an approach may become rigid
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Exhibit 6.15: Contrasting Approaches