SKILL BASED

PAY
SOHAIL HAMEED
WHAT IS SKILL BASED PAY
•Skill-based pay is a model of compensation in which a person's skills and experience determine
their salary.
•Skill-based pay (SBP) is a compensation system that rewards employees with additional pay in
exchange for formal certification of the employee's mastery of skills, knowledge, and/or
competencies.
WHY SKILL BASED PAY IS
IMPORTANT?
Enhance productivity and quality.

Facilitates technological change.

Reduce staff turnover.

 Types
The pay increases are connected to three types of skills: horizontal, vertical and depth skills.

1. HORIZONTAL

2. VERTICAL

3. DEPTH
ADVANTAGE
One major advantage of a Skill-based Pay system is that it decreases the cost of doing business through
a higher employee flexibility. A single employee can be assigned to multiple different jobs, since he or
she is trained in numerous different areas.