McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

6-1

Person-Based Structures

Chapter

6

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

6-2

Exhibit 6.1: Many Ways to Create Internal Structure

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

6-3

Links pay to the depth or breadth of the skills, abilities, and knowledge a person acquires that is relevant to the work. Structures based on skill pay individuals for all the skills for which they have been certified regardless of whether the work they are doing requires all or just a few of those particular skills.

In contrast, a job-based plan pays employees for the job to which they are assigned, regardless of the skills they possess.

What is a Skill-based Structure?

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

6-4

Purpose of the Skill-Based Structure

Supports strategy and objectives

Supports work flow

Fair to employees

Motivates behavior toward organization objectives

Supports strategy and objectives

Supports work flow

Fair to employees

Motivates behavior toward organization objectives

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

6-5

Internal alignment

Skill analysis Skill blocks Skill certification

Skill-based structure

Exhibit 6.3: Determining theInternal Skill-Based Structure

Basic Decisions • What is the objective of the plan?• What information should be collected?• What methods should be used to determine

and certify skills?• Who should be involved?• How useful are the results for pay purposes?

Basic Decisions • What is the objective of the plan?• What information should be collected?• What methods should be used to determine

and certify skills?• Who should be involved?• How useful are the results for pay purposes?

Work relationships within organization

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

6-6

“How To” – Skill Analysis

What information to collect?

Exhibit 6.4: General Mills’ Skill-Based Structure

Exhibit 6.5: FMC’s Technician Skill-Based Structure

Whom to involve?

Establish certification methods

Research on skill-based plans

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

6-7

How Is SBP Different From aJob-Based Pay System?

Skills or skill units, rather than jobs are compensable

Mastery of skill units is measured and certified

Pay changes do not necessarily accompany job changes

Little emphasis placed on seniority in pay determination

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

6-9

Disadvantages of Skill-Based Pay

Average pay of employees likely higher

High labor costs, if productivity increases do not offset additional costs

SBP systems more complex

SBP systems require a major investment in training

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

6-10Exhibit 6.6: Determining the Internal

Competency-Based Structure

Internal alignment

Core competencies

Competency sets

Behavioral descriptors

Competency – based structure

Basic Decisions • What is the objective of the plan?• What information should be collected?• What methods should be used to determine

and certify competencies?• Who should be involved?• How useful are the results for pay purposes?

Basic Decisions • What is the objective of the plan?• What information should be collected?• What methods should be used to determine

and certify competencies?• Who should be involved?• How useful are the results for pay purposes?

Work relationships within organization

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

6-11

CORE COMPETENCY

COMPETENCY SETS

COMPETENCY INDICATORS

Taken from mission statement; for example, “business awareness.”

Grouping of factors that translate core competency into observable behavior; for example, cost management, business understanding.

Observable behaviors that indicate the level of competency within a competency set. For example, “identifies opportunities for savings.”

Terms in Competency Analysis

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

6-12

Exhibit 6.7: TRW Human Resources Competencies

Exhibit 6.8: Sample Behavioral Competency Description

Examples: Competency-Based Approaches

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

6-13

“How To” – Competency Analysis

What information to collect?Examples

Exhibit 6.10: 3M Leadership CompetenciesExhibit 6.11: Behavioral Anchors for Global-

Perspective CompetencyExhibit 6.12: The Top Twenty Competencies Exhibit 6.13: Product Development

Competency for Marketing Department at a Toy Company

Resulting structureExhibit 6.14: Toy Company’s Structure

Based on Competencies

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

6-14

Exhibit 6.12: The Top Twenty Competencies

•Achievement orientation

•Concern of quality

•Initiative

•Interpersonal understanding

•Customer service orientation

•Influence and impact

•Organization awareness

•Networking

•Directiveness

•Teamwork & cooperation

•Achievement orientation

•Concern of quality

•Initiative

•Interpersonal understanding

•Customer service orientation

•Influence and impact

•Organization awareness

•Networking

•Directiveness

•Teamwork & cooperation

•Developing others

•Team leadership

•Technical expertise

•Information seeking

•Analytical thinking

•Conceptual thinking

•Self-control

•Self-confidence

•Business orientation

•Flexibility

•Developing others

•Team leadership

•Technical expertise

•Information seeking

•Analytical thinking

•Conceptual thinking

•Self-control

•Self-confidence

•Business orientation

•Flexibility

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

6-15

Manual Communication to foster employee

acceptance Appeals process

Administering the plan

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

6-16

Reliability of job evaluation

techniques

Validity

Acceptability

Criteria to Evaluate

Usefulnessof Pay

Structures

Results: How Useful?

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

6-17

Recommendations to Ensure JobEvaluation 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

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

6-18

Job-Based Skill-Based Competency-Based

What is valued Compensable factors Skill blocks Competencies

Quantify the value Factor degree weights Skill levels Competency levels

Mechanisms totranslate into pay

Assign points that reflect criterion pay structure

Certification and price skills in external market

Certification and price competencies in external market

Pay structure Based on job performed/market

Based on skills certified/ market

Based on competency developed / market

Pay increases Promotion Skill acquisition Competency development

Managers’ focus Link employees to workPromotion and placementCost control via pay for job and budget increase

Utilize skills efficientlyProvide trainingControl costs via training, certification, and work assignments

Be sure competencies add valueProvide competency – developing opportunitiesControl costs via certification, and work assignments

Exhibit 6.16: Contrasting Approaches

(1 of 2)

McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.

6-19

Exhibit 6.16: Contrasting Approaches (2 of 2)

Job-Based Skill-Based Competency-Based

Employee focus Seek promotions to earn more pay

Seek skills Seek competencies

Procedures Job analysisJob evaluation

Skill analysisSkill certification

Competency analysisCompetency certification

Advantages Clear expectationsSense of progressPay based on value of work performed

Continuous learningFlexibilityReduced work force

Continuous learningFlexibilityLateral movement

Limitations Potential bureaucracyPotential inflexibility

Potential bureaucracyRequires cost controls

Potential bureaucracyRequires cost controls