Asked by Iesha Tyler on Apr 29, 2024
Verified
What is skill-based pay? What are its advantages and disadvantages?
Skill-Based Pay
A compensation system that bases employee wages on their skills or knowledge, rather than their job title or position.
Advantages
The conditions or factors that put someone or something in a favorable or superior position compared to others.
Disadvantages
Refers to the negative aspects, drawbacks, or cons that are associated with a decision, situation, or policy.
- Identify the function of compensable factors within the context of job assessment and remuneration decisions.
- Gain insight into multiple salary structure configurations and their influence on the dynamics of an organization and the progression of employee careers.
Verified Answer
Skill-based pay has its advantages. It helps organizations become more flexible and innovative. It encourages a climate of learning and adaptability. It helps employees use their knowledge and ideas more productively. It gives employees a broader view of how the organization functions.
Skill-based pay also has its disadvantages. It rewards employees for acquiring skills, but does not provide a way to ensure that employees use their new skills, resulting in the organization paying employees for learning skills that the employer is not benefiting from. Additionally, it does not necessarily provide an alternative to the bureaucracy and paperwork of traditional pay structures. Finally, gathering market data about skill-based pay is difficult because most wage and salary surveys are job-based.
Learning Objectives
- Identify the function of compensable factors within the context of job assessment and remuneration decisions.
- Gain insight into multiple salary structure configurations and their influence on the dynamics of an organization and the progression of employee careers.
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