Person-Based Structures Chapter 6

Exhibit 6.1: Many Ways to Create Internal Structure See Exhibit 6.1, text page 155

Person-Based Structures: Skill Plans Advantage of a skill-based plan is that people can be deployed in a way that better matches the flow of work

What is a Skill-Based Structure? Skill-based structures link pay to the depth or breadth of the skills, abilities, and knowledge persons acquire that are relevant to the work. In contrast, a job-based plan pays employees for the job to which they are assigned, regardless of the skills they possess.

Types of Skill Plans Skill plans can focus on Depth based Specialist Breadth based: Generalist/ multiskilled based

Purpose of the Skill-Based Structure Supports strategy and objectives Supports work flow Fair to employees Motivates behavior toward organization objectives

Exhibit 6.3: Determining the Internal Skill-Based Structure

“How To” – Skill Analysis To build a structure, a process is needed to describe, certify, and value the skills What information to collect? (Exhibit 6.4: FMC’s Technician Skill-Based Structure) Foundation skills Core electives Optional electives Whom to involve? Employees and managers Establish certification methods Peer review, on-the-job demonstrations, or tests, or formal tests

Exhibit 6.4: FMC’s Technician Skill-Based Structure

“How To” – Skill Analysis (cont.) Guidance from the research on skill-based plans Design of certification process crucial in perception of fairness Alignment with organization’s strategy May be best for short-term initiatives

How is SBP Different From Job-Based? Skills or skill units are compensable, rather than jobs (although note that job-based pay does typically involve skill as compensable factor) Mastery of skill blocks measured and certified Pay changes don’t necessarily accompany job changes Little emphasis placed on seniority in pay determination

Potential Effects of Skill-Based System Higher productivity Lower costs (???) Higher quality Lower staffing levels Lower absenteeism Lower turnover Improved relations with labor union

Disadvantages of Skill-Based Pay Average pay of Ees likely higher High labor costs, IF productivity increases do not offset additional costs SBP systems more complex SBP systems require major investment in training

Person-Based Structures: Competencies Several perspectives on what competencies are and what they are meant to accomplish Skill that can be learned and developed or a trait that includes attitudes and motives? Focus on the minimum requirements that the organization needs to stay in business or focus on outstanding performance?

Exhibit 6.5: Determining the Internal Competency-Based Structure See Exhibit 6.6, page 166

Terms in Competency Analysis Core competencies Related to mission statements expressing organization’s philosophy, values, business strategies, and plans Competency sets Translate each core competency into action Competency indicators Observable behaviors that indicate the level of competency within each set

Competency-Based Approaches Exhibit 6.6: TRW Human Resources Competencies Exhibit 6.7: Sample Behavioral Competency Indicators

Exhibit 6.6: TRW Human Resources Competencies

Defining Competencies Organizations seem to be moving away from the vagueness of self-concepts, traits, and motives Greater emphasis on business-related descriptions of behaviors “that excellent performers exhibit much more consistently than average performers” Competencies are becoming “a collection of observable behaviors that require no inference, assumption or interpretation”

Exhibit 6.7: Sample Behavioral Competency Indicators

Exhibit 6.8: Frito-Lay Managerial Competencies

“How To” – Competency Analysis What information to collect? Examples Refer Exhibit 6.9, Exhibit 6.10, and Exhibit 6.11

Exhibit 6. 9: 3M Leadership Competencies

Exhibit 6.10: Behavioral Anchors for Global-Perspective Competency

Exhibit 6.11: The Top 20 Competencies

Exhibit 6.12: Product Development Competency for Marketing Department at a Toy Company

Exhibit 6.13: Toy Company’s Structure Based on Competencies

“How To” – Competency Analysis (cont.) Whom to involve? Competencies are derived from executive leadership’s beliefs about strategic organizational intent Establish certification methods Resulting structure Designed with relatively few levels Guidance from the research on competencies Appropriateness to pay for what is believed to be the capacity of an individual as against what the individual does

One More Time: Internal Alignment Reflected in Structures Purpose of job- or person-based plan Design and manage an internal pay structure to help achieve organizational objectives Reflects internal alignment policy Supports business operations In practice, during evaluation of higher-value, nonroutine work, distinction between job- versus person-based approaches blurs

Administering the Plan A crucial issue is the fairness of the plan’s administration Sufficient information should be available to apply the plan (i.e., ‘manual’) Communication and employee involvement are crucial for acceptance of resulting pay structures Appeals process

Evidence on 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 evaluation achieves desired results Acceptability Formal appeals process Employee attitude surveys

Bias in Internal Structures Gender bias No evidence that job evaluation is susceptible to gender bias No evidence that job evaluator's gender affects results Compensable factors related to job content – contact with others and judgment – does reflect bias against work done predominantly by women Compensable factors related to employee requirements – education and experience – does not reflect bias

Bias in Internal Structures (cont.) Wages criteria bias Job evaluation results may be biased if jobs held predominantly by women are incorrectly underpaid

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 Ensure job descriptions are bias free Exclude incumbent names from job evaluation process Train diverse evaluators See text pages 182-183

Exhibit 6.14: Contrasting Approaches