bus2perfSkills based pay may be an effective way for encouraging multi-skilling. However, if your main objective is to improve individual and team performance for roles that are relatively fixed, performance based pay may be a more effective alternative. Paying on skills also has other challenges, which I will get to in a moment.
To construct a skills matrix, the following steps may be appropriate:
Assemble a cross section of frontline employees and supervisors for a focus group session. Use the session to brainstorm the critical skills required for each role. Include technical skills, interpersonal skills and leadership skills. Depending on time and resources available, segment each skill into four or five competency levels, each behaviorally specified.
Compile a draft matrix using a spreadsheet or off the shelf software program and submit to employees for input and to managers for sign off. Then compile a mirror matrix that shows actual skills held by each employee.
This is where your real challenge begins – selling it to the employees as a fair and worthwhile system. How will you measure competency levels for each employee? Doing it by using an independent and qualified workplace assessor will lead to less charges of bias, however, doing this on an ongoing basis will prove very expensive for the company. Using supervisors to assess competencies has its own drawbacks – namely favoritism and lack of familiarity with the competencies they are assessing.
If not handled well, skill based pay, as with performance based pay, can lead to a *lowering* of morale and productivity, rather than an increase. I wish you well in your endeavor.
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