BUS 681 Week 2 Assignment
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5 Person-Focused Pay
Learning Objectives
When you �inish studying this chapter, you should be able to:
5-1. De�ine person-focused pay. 5-2. Describe the usage of person-focused pay.
5-3. Name and explain the reasons companies adopt person-focused pay programs. 5-4. Summarize the varieties of person-focused pay programs.
5-5. Contrast person-focused pay with job-based pay. 5-6. Explain the advantages and disadvantages of person-focused pay plans.
CHAPTER WARM-UP!
If your professor has assigned this, go to the Assignments section of mymanagementlab.com (http://mymanagementlab.com) to complete the Chapter Warm-Up! and see what you already know. After reading the chapter, you’ll have a chance to take the Chapter Quiz! and see what you’ve learned.
Improved performance, the bottom-line purpose of training and development, is a strategic goal for organizations. Toward this end, many companies strive to become learning organizations. A learning organization is a �irm that recognizes the critical importance of continuous performance-related training and development, and takes appropriate action. Learning organizations view learning and development opportunities in all facets of their business. In a learning organization, employees are rewarded for learning and are provided enriched jobs, promotions, and compensation. Person-focused compensation programs provide the basis for such rewards that are tightly coupled with strategic training and development activities.
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5.1 DEFINING PERSON-FOCUSED PAY: COMPETENCY-BASED, PAY-FOR- KNOWLEDGE, AND SKILL-BASED PAY
5-1 De�ine person-focused pay.
Person-focused pay plans (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/bm01#bm01goss335) reward employees for acquiring job-related, knowledge, skills, or competencies rather than for demonstrating successful job performance. Person-focused pay rewards employees for the promise of performance in the future; merit pay and incentive pay reward employees for promise ful�illed (job performance). This approach to compensating employees often refers to three basic types of person-focused pay programs: pay-for-knowledge, skill-based pay, and competency-based pay. Sometimes, companies combine person- focused pay programs with traditional merit pay programs by awarding pay raises to employees according to how well they demonstrate competencies.
Pay-for-knowledge (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/bm01#bm01goss324) plans reward managerial, service, or professional workers for successfully learning speci�ic curricula. Skill-based pay (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/bm01#bm01goss413) , a term used mostly for employees who do physical work, increases the workers’ pay as they master new skills. For example, both unions and contractors who employ carpenters use skill-based pay plans. Carpenters earn additional pay as they master more advanced woodworking skills (e.g., cabinet making).
Both skill- and knowledge-based pay programs reward employees for the range, depth, and types of skills or knowledge they are capable of applying productively to their jobs. This feature distinguishes pay-for-knowledge plans from merit pay, which rewards employees’ job performance. Said another way, again, pay-for-knowledge programs reward employees for their potential to make meaningful contributions on the job.
Human resource (HR) professionals can design person-focused pay plans to reward employees for acquiring new horizontal skills, vertical skills, or a greater depth of knowledge or skills. Employees can earn rewards for developing skills in one or more of these dimensions based on the kind of skills the company wants to foster. Horizontal skills (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/bm01#bm01goss198) (or horizontal knowledge (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/bm01#bm01goss197) ) refer to similar skills or knowledge. For example, clerical employees of a retail store might be trained to perform several kinds of record-keeping tasks. They may maintain employee attendance records, schedule salespeople’s work shifts, and monitor the use of of�ice supplies (e.g., paper clips and toner cartridges for laser printers) for reordering. Although focused on different aspects of a store’s operations, all three of these tasks are based on employees’ fundamental knowledge of record keeping.
Vertical skills (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/bm01#bm01goss465) (or vertical knowledge (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/bm01#bm01goss464) ) are those skills traditionally considered supervisory (e.g., scheduling, coordinating, training, and leading others).
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These types of supervisory skills are often emphasized in person-focused pay plans designed for self- managed work teams because team members often need to learn how to manage one another.1
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec11#ch05end1) Such work teams, which can be referred to as self-regulating work groups, autonomous work groups, or semiautonomous work groups, typically bring employees together from various functional areas to plan, design, and complete one product or service. For example:
A manager of a food processing plant [who] wanted employees who were “a combination of self- reliant and resourceful.” In this plant, good hiring systems and excellent training systems were critical, including systems for training operators in maintenance skills. Several plants had adopted interesting innovations to promote good training and certi�ication. These innovations included:
Several plants put all training on their intranet, so employees could access it at any time.
One plant used hundreds of “One-Point Lessons” (OPLs—one-page sheets including a digital photograph of the appropriate equipment). Because each OPL focused on only one problem and its solution, OPLs were easy to search and use on the job.
Several plants invested heavily in documentation of training and required practical skills demonstration.2 (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec11#ch05end2)
Depth of skills (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/bm01#bm01goss105) (or depth of knowledge (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/bm01#bm01goss104) ) refer to the level of specialization or expertise an employee brings to a particular job. Some person-focused pay plans reward employees for increasing their depth of skills or knowledge. Human resource professionals may choose to specialize in managing a particular aspect of the HR function (e.g., compensation, bene�its administration, training evaluation, or new employee orientation). To be considered a compensation specialist, HR professionals must develop depth of knowledge perhaps by taking courses offered by WorldatWork on job evaluation, salary survey analysis, principles of person-focused pay system design, merit pay system design, and incentive pay system design, among others. The more compensation topics HR professionals master, the greater will be their depth of knowledge about compensation.
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FIGURE 5-1 U.S. Department of Labor Competency Model Source: U.S. Department of Labor Employment and Training Administration, “Competency Model General Instructions,” CareerOneStop (2014). Online http://www.careeronestop.org/CompetencyModel/CareerPathway/CPWGenInstructions.aspx (http://www.careeronestop.org/CompetencyModel/CareerPathway/CPWGenInstructions.aspx) . Accessed March 1, 2015.
The term competency has become an increasingly important topic in HR practice because of the changing nature of work. Competencies build upon the use of knowledge, skills, and abilities, which we describe with job analysis. A competency (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/bm01#bm01goss68) refers to an individual’s capability to orchestrate and apply combinations of knowledge and skills consistently over time to perform work successfully in the required work situations. Traditionally, as we have seen, work has been described by many dimensions including knowledge, skills, and abilities. Indeed, although while this is largely still the case, HR and compensation professionals have embraced the ideas of competencies as the �ield has increasingly taken on strategic importance.
A competency model speci�ies and de�ines all the competencies necessary for success in a group of jobs that are set within an industry context. Figure 5-1 (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec1#ch05�ig01) shows the basic framework for the Department of Labor’s competency model structure.
FOUNDATIONAL COMPETENCIES
At the base of the model, Tiers 1 through 3 represent competencies that provide the foundation for success in school and in the world of work. Foundational competencies are essential to a large number of occupations and industries. Employers have identi�ied a link between foundational competencies and job performance and have also discovered that foundational competencies are a prerequisite for workers to learn industry-speci�ic skills.
INDUSTRY-RELATED COMPETENCIES
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The competencies shown on Tiers 4 and 5 are referred to as industry competencies and are speci�ic to an industry or industry sector. Industry-wide technical competencies cut across industry sub-sectors making it possible to create career lattices where a worker can move easily across industry sub-sectors. Rather than narrowly following a single occupational career ladder, this model supports the development of an agile workforce.
OCCUPATION-RELATED COMPETENCIES
The competencies on Tiers 6, 7, 8, and 9 are referred to as occupational competencies. Occupational competency models are frequently developed to de�ine performance in a workplace, to design competency-based curriculum, or to articulate the requirements for an occupational credential such as a license or certi�ication.
FIGURE 5-2 U.S. Department of Labor Competency Model Source: U.S. Department of Labor Employment and Training Administration, “Renewable Energy,” CareerOneStop (2014). Online http://www.careeronestop.org/CompetencyModel/pyramid.aspx?RE=Y (http://www.careeronestop.org/CompetencyModel/pyramid.aspx?RE=Y) . Accessed March 1, 2015.
Figure 5-2 (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec1#ch05�ig02) illustrates an example of a competency model for Solar Photovoltaic Installers who work in the renewable energy industry. The lower tiers, from personal effectiveness competencies through industry- sector technical competencies, apply to most jobs within the renewable energy industry. Hydroelectric
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production managers and wind engineers are examples of jobs within this industry. The top tiers, in this case, management competencies and occupation-speci�ic competencies, apply to one or more, but not all, jobs within this industry. Figure 5-2 (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec1#ch05�ig02) lists sample management competencies and occupation-speci�ic competencies for the solar photovoltaic installer job.
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5.2 USAGE OF PERSON-FOCUSED PAY PROGRAMS
5-2 Describe the usage of person-focused pay.
A wide variety of employers have established person-focused pay programs.3
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec11#ch05end3) Some targeted studies and anecdotal information suggest that companies of various sizes use person-focused pay programs. Many of the companies known to be using this kind of pay system employ between approximately 150 and 2,000 employees, the majority operate in the manufacturing industry, and the average age of the companies is approximately 10 years.4
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec11#ch05end4) This study also conjectures that hundreds of Fortune 1,000 �irms use skill-based pay for its manufacturing or production workers. There is limited published evidence regarding the effectiveness of person-focused pay plans. One study found that a skill-based pay plan in a manufacturing setting increased plant productivity by 58 percent, lowered labor cost per part by 16 percent, and generated favorable quality outcomes (82 percent scrap reduction).5 (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec11#ch05end5) Another study demonstrated that participants in a skill-based pay program increased their skills, and maintained increased skill levels back on the job.6
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec11#ch05end6) A more recent study examined attitudes among participants in a skill-based pay plan. The researchers found that these plans are perceived to produce superior work outcomes.7
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec11#ch05end7)
These programs are most �itting for continuous process settings (e.g., manufacturing companies that use assembly lines where one employee’s job depends on the work of at least one other employee).8
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec11#ch05end8) At Bell Sports, a manufacturer of motorcycle safety helmets and auto racing helmets, the assembly process includes applying enamel and attaching visors to the helmets. Both tasks clearly require different sets of skills. Applying enamel requires the ability to use automated sprayers. This skill speci�ically demands that workers possess strong literacy skills so they can interpret readouts from the sprayers that suggest possible problems. Attaching visors to the helmets requires pro�icient motor skills that involve eye–hand coordination. When employees learn how to perform different jobs, they can cover for absent coworkers. In the event of absenteeism or turnover, Bell Sports bene�its from having cross-trained employees because they are more capable of meeting its production schedules.
Person-focused pay programs that emphasize vertical skills work well at manufacturing companies that organize work �low around high-performance work teams in which employees are expected to learn both functional and managerial tasks (e.g., work scheduling, budgeting, and quality control). This means that groups of employees work together to assemble entire products.
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5.3 REASONS TO ADOPT PERSON-FOCUSED PAY PROGRAMS
5-3 Name and explain the reasons companies adopt person-focused pay programs.
Person-focused pay programs represent important innovations in the compensation �ield. Person- focused pay systems imply that employees must move away from viewing pay as an entitlement. Instead, these systems treat compensation as a reward earned for acquiring and implementing job-relevant knowledge and skills. Advocates of person-focused pay programs offer two key reasons that �irms seeking competitive advantage should adopt this form of compensation: technological innovation and increased global competition.9
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec11#ch05end9)
Technological Innovation
In an age of technological innovation in which robots, telecommunications, arti�icial intelligence, software, and lasers perform routine tasks, some skills have become obsolete.10
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec11#ch05end10) Jobs, therefore, require new and different worker skills. The skills needed by automobile mechanics, for instance, have changed dramatically. Competent automobile mechanics previously were adept at manually assembling and disassembling carburetors. Since then, electronic fuel injection systems, which are regulated by onboard computers, have replaced carburetors, necessitating that auto mechanics possess different kinds of skills. Auto mechanics, speci�ically, must now be able to use computerized diagnostic systems to assess the functioning of fuel injectors.
As technology leads to the automation of more tasks, employers combine jobs and confer broader responsibilities on workers. For example, the technology of advanced automated manufacturing (e.g., in the automobile industry) has required some employees to begin doing the jobs of other employees, including the laborer, the materials handler, the operator-assembler, and the maintenance person. A single employee now performs all of these tasks in a position called “manufacturing technician.” The expanding range of tasks and responsibilities in this job demands higher levels of reading, writing, and computation skills than did its predecessor, which required strong eye–hand coordination. Most employees must possess better reading skills than before because they must be able to read the operating manuals and, when problems arise, the troubleshooting manuals of automated manufacturing equipment based on computer technology. The design of manufacturing equipment previously was relatively simple and easy to operate, based on such simple mechanical principles as pulleys.
These technological changes have fostered increased autonomy and team-oriented workplaces, which also demand different job-related skills than employees needed previously.11
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec11#ch05end11) The manufacturing technician’s job is generally more autonomous than was his or her predecessor’s. Thus, technicians must be able to manage themselves and their time.
Employers now rely on working teams’ technical and interpersonal skills to drive ef�iciency and improve quality. Today’s consumers often expect customized products and applications, and employees must have
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suf�icient technical skill to tailor products and services to customers’ needs, as well as the interpersonal skills necessary to determine client needs and handle customer service.12
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec11#ch05end12) Telephone service providers such as AT&T and Verizon seek competitive advantage by serving clients’ present needs as well as by anticipating possible changes in customers’ service needs.
Further dramatic advances in robotic technology have created machines that have taken on human-like qualities. For example, Google launched a specially equipped �leet of driverless cars, which safely traveled approximately 700,000 miles on California roads.13
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec11#ch05end13) In addition, there are machines that can read human facial expressions and take initiative in interactions with workers.14
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec11#ch05end14) The goal is not to replace workers, but rather to further enhance their productivity. These advances will undoubtedly demand even more skill and knowledge sets that eclipse current workplace realities. Many experts believe that such technology will create new, yet-to-be imagined work.15
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec11#ch05end15)
Increased Global Competition
Increased global competition has forced companies in the United States to become more productive. Now more than ever, to sustain competitive advantage, companies must provide their employees with leading-edge skills and encourage employees to apply their skills pro�iciently. Evidence clearly shows that foreign workers are better skilled and able to work more productively than U.S. employees in at least two ways.
First, employers in both the European Common Market and some Paci�ic Rim economies emphasize learning. In both cases, employers use classes and instruction as proactive tools for responding to strategic change. In Ireland, the private sector offers graduate employment programs to employees in such skill areas as science, marketing, and technology.16
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec11#ch05end16) An example of a marketing skill is the application of inferential statistics to a market analysis. Marketing professionals use inferential statistics to draw conclusions about whether the level of satisfaction with Brand A athletic shoes among a small sample of Brand A athletic shoe owners represents the level of satisfaction among every person who has purchased Brand A athletic shoes.
Second, both Western European and some Paci�ic Rim cultures provide better academic preparation and continuing workplace instruction for the non-college-bound portions of their workforces. Although the United States is well regarded for the quality of education its colleges and universities provide to such skilled professionals as engineers, the Europeans are much better at educating the “vocational” segment of their workforces. Western European workplaces emphasize applied rather than theoretical instruction for vocational employees. The European apprenticeship structure mixes academic and applied learning both in “high schools” and in continuing education for employees. Success has been attributed to a number of reasons, mainly because of the collaborative efforts between schools and industry. According to Wilfried Porth, who is in charge of HR and labor relations at automobile manufacturer Daimler, “You need a school system which supports it. We have this tradition in Germany of being loyal to the company. We also have a technology focus here in Germany.”17
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec11#ch05end17)
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Companies strive to market the highest quality of products and services in the face of increased global competition and the availability of new technology. To establish and maintain competitive advantage, companies should carefully consider person-focused pay systems. As discussed earlier, many companies already compensate employees on this basis because they have discovered the advantages of such plans. Of course, as companies consider adopting these pay systems, they must tailor compensation programs to the particular kinds of skills they wish to foster. Human resource professionals can guide employee development through a variety of person-focused pay systems.
Training lies at the heart of person-focused pay programs. Indeed, as technological advances occur at a breakneck pace and as competition among companies intensi�ies, companies must make a number of decisions, including whether to develop talent internally or to hire talent away from competitors.
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5.4 VARIETIES OF PERSON-FOCUSED PAY PROGRAMS
5-4 Summarize the varieties of person-focused pay programs.
There are four varieties of common person-focused pay structures. The �irst, a stair–step model (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/bm01#bm01goss424) actually resembles a �light of stairs, much like the arrangement illustrated in Figure 5-3 (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec4#ch05�ig03) , for an assembly technician. The steps represent jobs from a particular job family that differ in terms of complexity. Jobs that require more skills are more complex than jobs with fewer skills. For example, an Assembly Technician 1 job requires employees to possess two skills: line restocking and pallet breakdown. An Assembly Technician 3 job requires employees to possess six skills: line restocking, pallet breakdown, burr removal, line jockey, major assembly, and soldering. In terms of the stairs, higher steps represent jobs that require more skills than lower steps. Compensation specialists develop separate stair–step models for individual job families (e.g., clerks or accountants). Thus, a company may have more than one stair–step model, each corresponding to a particular job family such as accounting, �inance, or clerical. No stair–step model should include both clerical workers and skilled trade workers (e.g., carpenters, electricians, and plumbers).
How do employees earn increases in hourly pay based on a stair–step model? Using the model in Figure 5-3 (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec4#ch05�ig03) , Howard Jones wants to become an assembly technician. ABC Manufacturing Company hires Howard as an assembly technician trainee at $8 per hour. Howard starts by completing three core workshops designed for Assembly Technician 1: a company orientation, a safety workshop, and a quality workshop. After successfully completing all three courses, based on earning greater than the minimum scores on tests for each subject, he receives a $0.50 per hour pay increase, making his total hourly pay $8.50. In addition, Howard completes the core electives designated for his Assembly Technician 1 job: He learns how to restock lines and break down pallets. Upon successfully completing both courses, he receives a $0.65 per hour pay raise, making his total hourly pay $9.15 and earning him the Assembly Technician 1 title. Howard may continue to learn more skills for an assembly technician by completing the curriculum for the Assembly 2 level. If he chooses so thereafter, Howard can complete the curricula to move to Level 3.
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FIGURE 5-3 A Stair–Step Model at ABC Company
Training courses may be offered in-house by the company, at a local vocational school, or at a local community college or four-year university. Companies usually offer specialized courses in-house for skills that pertain to highly specialized work or to work that bears on a company’s competitive advantage. Federal Express sponsors customer service training internally because the skills and knowledge required to be an effective Federal Express customer service employee distinguish its service from other express mail companies, including United Parcel Service (UPS). For more common skills or skills that do not have an effect on competitive advantage, companies typically arrange to have their employees take training courses offered by such external agents as community colleges.
Careful planning and orchestration of training methods and systems is essential to achieving effective performance outcomes. The Watch It! video describes Wilson Learning’s approach and philosophy. The company offers sales training, leadership training, and workforce development to help drive business results in organizations worldwide.
WATCH IT!
If your professor has assigned this, go to the Assignments section of mymanagementlab.com (http://mymanagementlab.com) to complete the video exercise titled Wilson Learning: Training.
The second variety of person-focused pay plans is the skill blocks model. The skill blocks model (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/bm01#bm01goss414) also applies to jobs from within the same job family. Just as in the stair–step model, employees progress to increasingly complex jobs; however, in a skill blocks program, skills do not necessarily build on each other. Thus, an employee may progress two or more steps, earning the pay that corresponds with each step. Although similar, the stair–step model and the skill blocks model differ in an important way. The stair–step model addresses the development of knowledge or skills depth. In particular, Howard Jones could develop his skills depth as an assembly technician by mastering the �ive separate curricula. With the successful completion of each curriculum, Howard will enhance the depth of his skills as an assembly technician. As we will see shortly, the skill blocks model emphasizes both horizontal and vertical skills.
As shown in Figure 5-4 (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec4#ch05�ig04) , Pro Company hired Bobby Smith as a Clerk 1 because her employment tests demonstrated her pro�iciency in the skills and knowledge that she needs for this level job. These required skills correspond to Clerk 1 core requirements (i.e., �iling, typing, and possessing a working knowledge of one word processing program). Moreover, Bobby knows transcription and shorthand, which are Level 1 core electives. During employee orientation for new clerical hires, an HR representative explained the pay-for-knowledge pay program available to this employee group. In particular, Bobby knows that she can advance to any level in the clerical pay structure by successfully completing the corresponding curriculum. To make her goal of becoming a Clerk 4, Bobby simply needs to complete the Level 4 curriculum. She need not take the curricula for the Clerk 2 and Clerk 3 jobs. Taking the Clerk 2, 3, or 4 curricula will enhance Bobby’s horizontal skills. The Clerk 3 curriculum provides the knowledge required to successfully manage different types of ledgers. Taking the Clerk 5 curriculum will increase Bobby’s vertical skills, including project scheduling and assigning personnel to projects.
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FIGURE 5-4 A Skill Blocks Model at Pro Company
The third variety is the job-point accrual model. A job-point accrual model (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/bm01#bm01goss238) encourages employees to develop skills and learn to perform jobs from different job families. A company would bene�it if its employees were pro�icient in a small subset of jobs. Employees are generally not free to learn as many jobs as they would like. Companies limit the number of jobs employees are allowed to
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learn in order to avoid having them become “jacks of all trades.” Job-point accrual methods create organizational �lexibility and promote company goals by assigning a relatively greater number of points to skills that address key company concerns (e.g., customer relations). The more points that employees accrue, the higher their core compensation level will be.
For example, let’s assume that ZIP-MAIL is a new company that competes in express mail delivery service against established �irms in the business (e.g., Federal Express and UPS). ZIP-MAIL couriers must meet their delivery promise of 7:30 A.M., which is at least a half-hour earlier than some of the competitors. They must also convey a professional image and establish rapport with corporate clients to encourage individuals and representatives from client companies to choose ZIP-MAIL over other competitors. In other words, customer relations skills are essential to ZIP-MAIL’s success. ZIP-MAIL stands to bene�it from a person-focused pay program, particularly one that follows the job-point accrual model. Under this system, employees who successfully complete customer relations training courses would earn more points than they would earn by taking other kinds of training offered by ZIP-MAIL, creating an incentive for employees to learn customer relations skills over other kinds of skills.
The fourth variety of person-focused pay plans is the cross-departmental model. Cross-departmental models (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/bm01#bm01goss90) promote staf�ing �lexibility by training employees in one department with critical skills they would need to perform effectively in other departments. If the shipping department experienced a temporary staf�ing shortage, a production department supervisor who has been trained in distribution methods can be “lent” to the shipping department. The cross-departmental model can help production environments manage sporadic, short-term staf�ing shortages. Such cross-training can also help companies meet seasonal �luctuations in demand for their products or services. The job-point accrual model and the cross-departmental model are similarly arranged, but the intended purposes of these programs differ. The job-point accrual model encourages employees to learn skills and acquire knowledge that bear directly on companies’ attainment of competitive advantage, as in the case of ZIP-MAIL.
The holiday shopping rush represents an excellent context in which a company can bene�it from cross- departmental training systems. Retail business activity varies widely, with enhanced volume during the holiday shopping season during the fall months. Business activity tends to subside dramatically. Let’s consider a company that manufactures and distributes custom-made shoes. For weeks prior to the holidays, employees in the production department are working rapidly to complete all the telephone gift orders that must be shipped before Chanukah and Christmas Day. Within a few days of the holidays, the company is likely to receive fewer orders because purchasers of custom-made shoes recognize that they need to place orders well in advance of the date they expect to receive their shoes. As orders drop off, many workers in both sales and production will be less busy than workers in the distribution department. Under the cross-departmental person-focused pay system, sales and production department workers will be rewarded for learning how to package shoes properly and how to complete express mail invoices so they can assist the shipping department during its peak activity periods.
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5.5 CONTRASTING PERSON-FOCUSED PAY WITH JOB-BASED PAY
5-5 Contrast person-focused pay with job-based pay.
Companies institute job-based pay plans or person-focused pay plans based on very different fundamental principles and goals. Table 5-1 (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec5#ch05tab01) lists the key differences between these two pay programs. Job-based pay (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/bm01#bm01goss230) compensates employees for jobs they currently perform, which include seniority pay, merit pay, and incentive pay. Human resource professionals establish a minimum and maximum acceptable amount of pay for each job. Under seniority plans, employees receive automatic increases over time based on the assumption that they are further developing their capabilities, which translate into higher job performance. In the case of merit pay, managers evaluate employees based on how well they ful�illed their designated roles as speci�ied by their job descriptions and periodic objectives. Managers then award a permanent merit addition to base pay, based on employee performance.
With incentive pay, managers award one-time additions to base pay. Pay raise amounts are based on the attainment of work goals, which managers communicate to employees in advance.
Person-focused pay compensates employees for developing the �lexibility and skills to perform a number of jobs effectively. Moreover, these programs reward employees on their potential to make positive contributions to the workplace based on their successful acquisition of work-related skills or knowledge. Job-based pay plans reward employees for the work they have done as speci�ied in their job descriptions or periodic goals (i.e., how well they have ful�illed their potential to make positive contributions in the workplace).
TABLE 5-1 Person-Focused and Job-Based Pay: A Comparison
Feature Person-Focused Job-Based
Pay level determination
Market basis for skill valuation Market basis for job valuation
Base pay Awarded on how much an employee knows or on skill level
Awarded on the value of compensable factors
Base pay increases
Awarded on an employee’s gain in knowledge or skills
Awarded on attaining a job-de�ined goal
Job promotion Awarded on an employee’s skills base and pro�iciency on past work
Awarded on seniority or exceeding job performance standards
Key advantage to employees
Job variety and enrichment Perform work and receive pay for a de�ined job
Key advantage to employers
Work scheduling �lexibility Easy pay system administration
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TABLE 5-2 Job Description for a Toll Collector
Collects toll charged for use of bridges, highways, or tunnels by motor vehicles, or fare for vehicle and passengers on ferryboats. Collects money and gives customer change. Accepts toll and fare tickets previously purchased. At end of shift balances cash and records money and tickets received. May sell round-trip booklets. May be designated according to place of employment as toll-bridge attendant (government service), or type of fare as vehicle-fare collector (motor trans.; water trans.). May admit passengers through turnstile and be designated turnstile collector (water trans.). Source: Reprinted from Dictionary of Occupational Titles, Vol. 1, 4th ed. (Washington, DC: U.S. Government Printing Of�ice, 1991).
Finally, job-based pay programs apply to an organization-wide context because employees earn base pay rates for the jobs they perform. (We will address how management establishes these pay rates in Chapter 7 (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch07#ch07) .) (Person- focused pay plans apply in more limited contexts because not all jobs require complex skill or knowledge. Table 5-2 (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec5#ch05tab02) describes the duties that toll booth operators perform. This position would clearly not be appropriate in a person- focused pay system because the job is narrowly de�ined and the skills are very basic. Toll booth operators probably master the required skills and knowledge soon after assuming their responsibilities.
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5.6 ADVANTAGES AND DISADVANTAGES OF PERSON-FOCUSED PAY PROGRAMS
5-6 Explain the advantages and disadvantages of person-focused pay plans.
Although no large-scale studies have clearly demonstrated these bene�its, case studies suggest that employees and companies enjoy advantages from person-focused pay programs. Well-designed person- focused pay systems can provide employees and employers with distinct advantages over traditional pay systems. There are potential limitations of person-focused programs.
Advantages
Employees usually like person-focused pay systems for the following two reasons. First, they can provide employees with both job enrichment and job security. Job enrichment refers to a job design approach that creates more intrinsically motivating and interesting work environments. Companies can enrich jobs by combining narrowly designed tasks so an employee is responsible for producing an entire product or service.18 (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec11#ch05end18)
At W.L. Gore, employees are required to demonstrate speci�ic competencies to build a performance record by increasing their depth by becoming an expert in a certain specialized �ield, or by increasing their breadth by assuming broader responsibilities.19
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec11#ch05end19) Employees are given opportunities through internal training, continuous learning, and external education. The company’s learning and development team offers hundreds of workshops on topics including communications, computer skills, leadership, project management, sales training, safety, and technical skills.
So far, evidence does suggest that person-focused pay plans lead to increased employee commitment, enhanced work motivation, and improved employee satisfaction.20
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec11#ch05end20) These results are probably due to the fact that well-designed, person-focused pay plans promote skill variety and autonomy. Some experts attribute these positive outcomes of person-focused pay programs to the fact that employees can increase their skills and be paid for it.21
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec11#ch05end21)
The second advantage for employees is that, because person-focused pay programs create more �lexible workers, these programs can actually represent better job security for employees. Rather than being laid off during periods of low product demand, employees can perform a variety of jobs that draw on the skills they have attained through person-focused pay programs. During periods of slow sales, many companies conduct inventories of their products. Customer service employees who have learned inventory accounting techniques are less likely to be laid off during periods of low sales than those who have not. Furthermore, employees who update their skills will also be more attractive applicants to other employers. Clerical employees who become pro�icient in the use of Windows-based computer software will de�initely have more employment opportunities available to them than clerical employees who have
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resisted learning these programs. Likewise, HR professionals who become familiar with important employment laws, such as the Fair Labor Standards Act, will probably have more employment opportunities available to them than will HR professionals who choose not to become familiar with these pertinent laws.
Employers like person-focused pay systems because, when properly designed and implemented, these programs can lead to enhanced job performance, reduced staf�ing, and greater �lexibility. First, person- focused pay programs can in�luence both the quantity and the quality of an employee’s work. Employees who participate in a person-focused pay program often exhibit higher productivity levels because employees who know more about an entire process may also be able to identify production shortcuts that result in increased productivity. For example, electrical wiring in an automobile runs along the vehicle’s interior beneath the seats and carpeting. Members of auto assembly teams familiar with all aspects of the automobile manufacturing process could potentially identify and �ix problems with the wiring before the seats and carpeting are installed. If such problems were identi�ied after the seats and carpeting were installed, completion of the vehicle would be delayed, and fewer automobiles could be counted as �inished.
Second, companies that use person-focused pay systems can usually rely on leaner staf�ing because multiskilled employees are better able to cover for unexpected absenteeism, family or medical leave, and training sessions that take individual employees away from their work. The successful operation of a restaurant depends on coordinated efforts from busper-sons, waitstaff, chefs, and other food preparers. When one or two buspeople are absent, the restaurant will not be able to serve its reservations customers on time. If employees are cross-trained in a number of jobs, fewer employees will have to be on hand to provide backup for absent buspeople.
Third, person-focused pay systems provide companies with greater �lexibility in meeting staf�ing demands at any particular time. Quite simply, because participants in person-focused pay plans have acquired a variety of skills, they can perform a wider range of tasks. This kind of staf�ing �lexibility helps companies when unexpected changes in demand occur. After a tornado devastated a densely populated area in Illinois, the municipal water supply was not �it for drinking because areawide power outages disabled the pumps that purify the water. As a result, residents living in the affected areas rushed to grocery stores to purchase bottled water. Because this sudden demand exceeded the normal inventories of bottled water in grocery stores, such wholesale distributors as SuperValu had to respond quickly by moving bottled water inventories from their warehouses to the retail grocery stores.
Disadvantages
Although person-focused pay programs present many advantages, they have four possible limitations. First, employers feel that the main drawback of person-focused pay systems is that hourly labor costs, training costs, and overhead costs can all increase. Hourly labor costs often increase because greater skills should translate into higher pay levels for the majority of workers. Because training is an integral component of person-focused pay systems, training costs are generally higher than they are at companies with job-based pay programs. These costs can be especially high during initial start-up periods as HR professionals attempt to standardize employee backgrounds. This process begins with assessing the skill levels of employees. Federal Express tests its employees twice per year.22
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec11#ch05end22) The company pays for 4 hours of study time and 2 hours of actual test time, which are bound to be quite expensive.
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Second, person-focused pay systems may not mesh well with existing incentive pay systems.23
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec11#ch05end23) When both person- focused and incentive pay systems are in operation, employees may not want to learn new skills when the pay increase associated with learning a new skill is less than an incentive award employees could earn based on skills they already possess. Employees often place greater emphasis on maximizing rewards in the short term rather than preparing themselves to maximize the level of rewards over time, which can be facilitated through person-focused pay programs.
An assembly-line worker chooses to focus on his or her work because he or she receives monetary incentives for meeting weekly production goals set by management rather than taking skills training in inventory control for which he or she will earn additional pay upon successful completion of the training. In the short term, this worker is earning a relatively large sum of money; in the long term, however, he or she may be jeopardizing earnings potential and job security. In the future, the company may experience reduced demand for its product, which would eliminate the incentive program. During such times, the company may also place production workers in other jobs (e.g., in the warehouse) until the demand for the product returns to normal. Without the skills required to work in the warehouse, this employee may be targeted for a layoff or a reduced work schedule, clearly leading to lower personal earnings.
Third, effective person-focused pay programs depend, in large part, on well-designed training programs. There is a lot at stake: Person-focused pay systems include costly training programs, and these systems award pay raises to employees who successfully complete training. These programs also require that employers bear the price of base pay and bene�its while employees attend training during regular work hours. Companies must wait patiently before realizing a return on investment for training. Several months may pass before employees apply newly learned knowledge and skills to their jobs. After all, practice makes perfect, and training programs cannot anticipate all the circumstances employees face when performing their jobs.
Fourth, companies struggle with determining the monetary value of skill and knowledge sets. As we will discuss in Chapter 7 (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch07#ch07) , compensation surveys report the monetary value of entire jobs rather than individual skill sets. This fact is not surprising because most companies subscribe to job-based pay approaches that we described in Chapters 3 (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch03#ch03) and 4 (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch04#ch04) , so it makes sense that surveys will focus on whole job value. In addition, knowledge and skill sets are usually company speci�ic, which would make comparability dif�icult if surveys were common.
COMPENSATION IN ACTION
Whether your company is considering the transition into a person-focused pay program or already has such a program in place, as a line manager or HR professional, you will have responsibilities to guide the process and keep critical features at the forefront. By clearly outlining the expectations and metrics of the program, you will be able to provide a program that equips the company with tools to deliver its strategy and employees who possess valuable skills that will help them internally as they perform and externally should they choose to test their marketability in other companies or organizations.
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Action checklist for line managers and HR—keeping the focus in person-focused pay
HR takes the lead
Work with line managers to ensure that the bene�it of the program is measurable and can be easily explained to employees and members of senior management.
Communicate with employees and line managers so they understand the long-term bene�its of the approach and how it will allow both parties to achieve individual and shared objectives.
Explore potential partnerships with local community colleges or universities that could provide the necessary training to enhance the identi�ied competencies at a fraction of the cost, but with added bene�it to the employees (e.g., college credit and degree completion).
Line managers take the lead
Educate HR on the competencies that are critical to company strategy.
Inform HR of jobs that have obvious potential for cross-training. Some jobs will lend themselves to cross-training, while others may require too much training with relatively little return.
END OF CHAPTER REVIEW
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Summary
Learning Objective 1: Person-focused pay plans reward employees for acquiring job-related knowledge, skills, or competencies rather than for demonstrating successful job performance. Person-focused pay rewards employees for the promise of performance in the future; merit pay and incentive pay reward employees for promise ful�illed (job performance).
Learning Objective 2: Some targeted studies and anecdotal information suggest that companies of various sizes use person-focused pay programs. Many of the companies known to be using this kind of pay system employ between approximately 150 and 2,000 employees, the majority operate in the manufacturing industry, and the average age of the companies is approximately 10 years. There is grounded speculation that hundreds of Fortune 1000 �irms use skill-based pay for its manufacturing or production workers.
Learning Objective 3: Advocates of person-focused pay programs offer two key reasons that �irms seeking competitive advantage should adopt this form of compensation: technological innovation and increased global competition.
Learning Objective 4: There are four varieties of common person-focused pay structures: stair-step model, skill blocks model, job-point accrual model, and cross-departmental model.
Learning Objective 5: Person-focused pay rewards employees for acquiring job-relevant knowledge, skills, and competencies. Job-based pay rewards employees for the work they actually perform. Seniority, merit, and incentive pay programs are forms of job-based pay.
Learning Objective 6: Person-focused pay offers several advantages, including job enrichment, higher commitment, enhanced job performance, staf�ing �lexibility, and leaner staf�ing. Disadvantages include higher labor costs and possible incompatibility with other types of compensation plans in use.
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Key Terms person-focused pay plans 100 (ch05.xhtml#page_100) pay-for-knowledge 101
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec1#page_101) skill-based pay 101
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec1#page_101) horizontal skills 101
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec1#page_101) horizontal knowledge 101
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec1#page_101) vertical skills 101
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec1#page_101) vertical knowledge 101
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec1#page_101) depth of skills 101
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec1#page_101) depth of knowledge 101
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec1#page_101) competency 102
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec1#page_102) stair–step model 106
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec3#page_106) skill blocks model 108
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec4#page_108) job-point accrual model 109
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec4#page_109) cross-departmental models 110
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec4#page_110) job-based pay 110
(http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec4#page_110)
MyManagementLab CHAPTER QUIZ! If your professor has assigned this, go to the Assignments section of mymanagementlab.com (http://mymanagementlab.com) to complete the Chapter Quiz! and see what you’ve learned.
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Discussion Questions 5-1. “Person-focused pay plans are least preferable compared with individual incentive pay
programs.” Indicate whether you agree or disagree with this statement. Detail your arguments to support your position.
5-2. Person-focused pay is becoming more prevalent in companies; however, person-focused pay programs are not always an appropriate basis for compensation. Discuss the conditions under which incentive pay is more appropriate than person-focused pay programs. Be sure to include your justi�ication.
5-3. The use of drones has been proposed by retailers like Amazon.com (http://Amazon.com) as a method for package delivery. If drones eventually become a widely adopted technology for this purpose, some workers who are employed by delivery services or warehouses might become displaced. If the displaced workers were to become drone operators, explain some of the key knowledge and skill sets they could ascertain in a person-focused pay program.
5-4. Discuss your reaction to the following statement: “Companies should not provide training to employees because it is the responsibility of individuals to possess the necessary knowledge and skills prior to becoming employed.”
5-5. As discussed in the chapter, person-focused pay programs are not suitable for all kinds of jobs. Based on your understanding of person-focused pay concepts, identify at least one job for which this basis for pay is inappropriate. Be sure to provide your rationale.
CASE Person-Focused Pay at Mitron Computers
An additional Supplemental Case can be found on MyManagementLab.
The technicians at Mitron Computers are integral to the company’s success. Mitron builds custom personal computers for several of�ice supply chains. The company’s ability to build a quality product to speci�ications in an ef�icient manner allows Mitron to hold an advantage over competitors. However, recently the company has experienced some delays in shipments, and the plant manager is growing concerned.
Mitron works directly with the retail locations of the of�ice supply chains to meet the needs of customers ordering computers with speci�ic capabilities. A customer at a retail store orders a computer with certain components, and the order is sent to Mitron to be ful�illed within a speci�ied time frame. The technicians work in teams to build the computers to the desired speci�ications. It is a complex process, and the technician’s ability to build the computers ef�iciently has helped build Mitron’s reputation as a quality producer of personal computers.
Depending on the speci�ications, building each computer can involve between 10 and 18 different steps. Most technicians have the knowledge and skills to complete one or two of the steps, but some
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technicians can complete multiple steps. The technicians that can complete multiple steps provide the company greater �lexibility in scheduling and ensuring the computers are built on time. Each step in the building process involves intricate procedures, and a technician must take the initiative to attend training to learn each new step. However, there is little incentive for the technicians to attend the training.
The technicians work in teams to build the computers, and they are paid an hourly pay rate plus a team- based bonus payment for each computer that is built on time with no defects. The teams are composed of technicians that have complementary skills, but the company has had some delays when a team member with the skills to complete a certain step is absent or already working on another computer. This problem occurs often as few technicians have the skills to complete the higher-level steps in the building process. Most technicians do not want to take time away from their work to attend the training as they will likely lose some of their team-based bonuses.
Holly Turner, Mitron’s human resource director, has been asked by the plant manager to examine the technician’s pay structure to determine if a change in the structure could affect the technician’s ef�iciency. Holly is con�ident that the more steps each technician can complete, the more ef�icient Mitron will be in building computers. Therefore, Holly is considering implementing a person-focused program that would tie the technician’s pay to the steps in the building process that he or she is trained to complete. By doing so, Holly believes the technicians will be more likely to attend training and learn the new skills. With more technicians trained to complete the higher-level steps in the building process, the teams will be better prepared to meet shipping deadlines.
Questions:
5-6. What are some advantages of a person-focused pay system at Mitron?
5-7. What are some disadvantages?
5-8. What approach would you recommend for Holly to take in designing a person-focused pay system?
Crunch the Numbers! Training Budget Costs
An additional Crunch the Numbers! exercise can be found on mymanagementlab.com (http://mymanagementlab.com) .
Training programs are at the heart of person-focused pay programs. The following is a sample training budget:24 (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch05lev1sec11#ch05end24)
A. Development costs (e.g., salaries and bene�its of personnel, equipment): $30,000 B. Direct implementation costs (e.g., training materials, technology costs, facilities, travel, equipment,
instructor’s salary and bene�its): $12,500 C. Indirect implementation costs (e.g., overhead, general and administrative): $95,000 D. Compensation for employees while in training: $240,000 E. Lost productivity or costs of “back�illing” positions during training: $200,000
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Questions:
5-9. What is the total cost of training based on the current budget?
5-10. Let’s assume that 100 employees will participate in this training program. What is the average training cost per employee?
5-11. Employee salaries are based on an hourly rate of $20 and 100 employees receive training. Based on total compensation for employees while in training (line D), how many hours does each employee spend in training?
MyManagementLab Go to mymanagementlab.com (http://mymanagementlab.com) for Auto-graded writing questions as well as the following Assisted-graded writing questions:
5-12. As manufacturing companies continue to use even more advanced robotics that have human- like traits, what are some of the skills that employees will have to learn?
5-13. Compare and contrast person-focused pay and job-based pay. Discuss the advantages of person-focused pay to employers.
5-14. MyManagementLab Only – comprehensive writing assignment for this chapter.
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Endnotes 1. Bureau of National Affairs. (2002). Skill-based pay. BNA’s Library on Compensation & Bene�its CD [CD-
ROM]. Washington, DC: Author. 2. Ledford, G. E. (2008). Factors affecting the long-term success of skill-based pay. WorldatWork Journal,
First Quarter, pp. 6–17. 3. Jenkins, G. D., Jr., Ledford, G. E., Jr., Gupta, N., & Doty, D. H. (1992). Skill-Based Pay: Practices, Payoffs,
Pitfalls, and Prescriptions. Scottsdale, AZ: American Compensation Association. 4. Mitra, A., Gupta, N., & Shaw, J. D. (2011). A comparative examination of traditional and skill-based pay
plans. Journal of Managerial Psychology, 4, pp. 278–296. 5. Murray, B., & Gerhart, B. (1998). An empirical analysis of a skill-based pay program and plant
performance outcomes. Academy of Management Journal, 41, pp. 68–78. 6. Dierdorff, E., C., & Surface, E. A. (2008). If you pay for skills, will they learn? Skill change and
maintenance under a skill-based pay system. Journal of Management, 34, pp. 721–743. 7. Mitra, A., Gupta, N., & Shaw, J. D. (2011). A comparative examination of traditional and skill-based pay
plans. Journal of Managerial Psychology, 4, pp. 278–296. 8. Canavan, J. (2008). Overcoming the challenge of aligning skill-based pay levels to the external market.
WorldatWork Journal, First Quarter, pp. 18–25. 9. Schuster, J. R., & Zingheim, P. K. (1992). The New Pay: Linking Employee and Organizational
Performance. New York: Lexington Books. 10. American Society for Training and Development. (1989). Training America: Learning to Work for the
21st Century. Alexandria, VA: Author. 11. Doeringer, P. B. (1991). Turbulence in the American Workplace. New York: Oxford University Press. 12. Manz, C. C., & Sims H. P., Jr. (1993). Business without Bosses: How Self-Managing Work Teams Are
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III DESIGNING COMPENSATION SYSTEMS
Where We Are Now: PART II (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/part02#part02) , BASES FOR PAY, explained the concepts and practices available to compensation professionals for setting base pay as well as for determining pay increases over time. After gaining an understanding of these basics, compensation professionals turn to using tools to determine the relative worth of jobs, set base pay, and award pay increases according to the chosen basis for pay. We therefore turn to methods for building internally consistent job structures, establishing market-competitive pay rates, and creating pay structures that recognize employee contributions according to the bases for pay concepts.
In PART III (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/part03#part03) , WE WILL COVER
Chapter 6 BUILDING INTERNALLY CONSISTENT COMPENSATION SYSTEMS (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch06#ch06)
Chapter 7 BUILDING MARKET-COMPETITIVE COMPENSATION SYSTEMS (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch07#ch07)
Chapter 8 BUILDING PAY STRUCTURES THAT RECOGNIZE EMPLOYEE CONTRIBUTIONS (http://content.thuzelearning.com/books/Martocchio.7916.16.1/sections/ch08#ch08)
MyManagementLab®
You can access the CompAnalysis Software to complete the online Building Strategic Compensation Systems Project by logging into www.mymanagementlab.com (http://www.mymanagementlab.com)
