Person-Based Structures

McGraw-Hill/Irwin

Copyright 2011 by the McGraw-Hill Companies, Inc. All rights reserved.

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

6-2

Chapter Topics (cont.)

Administering the Plan

Evidence of Usefulness of Results
Bias in Internal Structures
The Perfect Structure

6-3

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

6-4

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
6-5

Purpose of the Skill-Based Structure

Supports the strategy and objectives

Supports work flow
Is fair to employees
Motivates behavior toward
organization objectives

6-6

How To: Skill Analysis

Skill analysis is a systematic process
of identifying and collecting
information about skills required to
perform work in an organization

6-7

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
6-8

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

6-9

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
6-10

6-11

6-12

6-13

6-14

6-15

6-16

6-17

6-18

6-19

6-20

6-21

6-22

6-23

6-24

6-25

6-26

6-27

6-28

6-29

6-30

6-31

6-32

6-33

6-34

6-35

6-36

6-37

6-38

6-39

6-40

6-41

6-42

6-43

6-44

6-45

6-46

6-47

6-48

6-49

6-50

6-51

6-52

6-53

6-54

6-55

6-56

6-57

6-58

6-59

6-60

6-61

6-62

6-63

6-64

6-65

6-66

6-67

6-68

6-69

6-70

6-71

6-72

6-73

6-74

6-75

6-76

6-77

6-78

6-79

6-80

6-81

6-82

6-83

6-84

6-85

6-86

6-87

6-88

6-89

6-90

6-91

6-92

Defining Competencies
Organizations seem to be moving
away from the vagueness of selfconcepts, traits, and motives
Greater emphasis on business-related
descriptions of behaviors that
excellent performers exhibit much
more consistently than average
performers

6-93

Defining Competencies (cont.)

Competencies are becoming a
collection of observable behaviors that
require no inference, assumption or
interpretation

6-94

Purpose of the Competency-Based

Structure
Organization strategy
Work flow

Fair to employees
Motivate behavior toward organization
objectives

6-95

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

6-96

Exhibit 6.11: The Top 20

Competencies

6-97

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

6-98

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

6-99

Exhibit 6.13: Toy Companys

Structure Based on Competencies

6-100

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
6-101

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.
6-102

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
6-103

6-104

6-105

6-106

6-107

6-108

6-109

6-110

6-111

6-112

6-113

6-114

6-115

6-116

6-117

6-118

6-119

6-120

6-121

6-122

6-123

6-124

6-125

6-126

One More Time: Internal Alignment

Reflected in Structures
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
6-127

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

6-128

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
6-129

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

6-130

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

6-131

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

6-132

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
6-133

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

6-134

Exhibit 6.15: Contrasting

Approaches

6-135