Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, April 7, 1994 TAG: 9404080002
SECTION: EDITORIAL PAGE: A-11 EDITION: METRO
SOURCE: By REGINALD SHAREEF
DATELINE: LENGTH: Long
Her analysis concludes that skill-based pay will provide incentives and rewards for high-performing government employees and enhance the marketability of public-sector workers, because of skill acquisition, if government jobs disappear.
In an upcoming article in the journal Review of Public Personnel Administration, I also advocate implementing skill-based pay as a means of empowering and motivating public-sector employees. Traditional pay systems reward workers for the jobs they do rather than the skills they possess. Conversely, skill-based pay plans compensate employees for the range, depth and types of skills they possess. Workers are paid for the skills they are capable of using and not for the jobs they are performing at a particular time.
Skill-based pay systems motivate and reward employees to learn needed organizational skills. Multi-skilled employees are especially valuable in high-involvement and -performing work cultures where organizational effectiveness depends on individuals with a variety of skills, some of which may be horizontal to the work they are doing. Clearly, skill-based pay represents a paradigmatic shift in thinking from traditional job-based pay systems.
Based on the experience in private-sector organizations that have implemented skill-based pay, several guiding principles will be useful for public organizations interested in using the concept.
First, skill-based pay is more congruent with high-involvement work cultures than with traditional, top-down bureaucratic structures. This is true since employees usually feel more committed to pay systems they help design, administer and monitor. Additionally, skill-based pay is a reinforcer of the participative culture because it separates pay levels in the hierarchy by developing new career tracks that do not depend on upward mobility. At this point, skill-based pay may not be appropriate for Virginia's public agencies unless Gov. George Allen commits to a systemwide, strategic cultural-change process.
Second, skill-based pay provides the high-involvement enterprise with personnel flexibility since it allows the organization to move employees from assignment to assignment according to workload demands, with the understanding the employee can perform a variety of tasks. This flexibility is crucial in turbulent, rapidly changing environments.
An example from an ammunition-assembly plant proves illustrative. The plant consisted of three production lines with strict classification rules. Employees lacked the skills to work on other production lines when their production lines shut down. This caused production slowdowns and adversely affected contract-performance terms. A skill-based pay plan was introduced to provide incentives for workers to learn the skills required on the other production lines. The result was greater employee flexibility, which made for improved productivity, enhanced organization adaptation to unexpected changes, and higher levels of self-management for employees.
Skill-based pay (i.e., pay-for-knowledge) often is confused with other new pay systems like gainsharing, variable pay and all-salaried work forces (pay-for-performance). There is a major distinction. Skill-based pay rewards individuals for skill acquisition while pay-for-performance systems reward groups for performance outcomes. Skill-based pay plans, however, often are linked to pay-for-performance systems, especially gainsharing and merit pay. For example, Northern Telecom implemented a modified skill-based pay plan that rewarded technical workers for increased skill acquisition and a merit-pay plan for increased productivity.
The implementation of a skill-based pay system can be costly. Employees have to be paid for learning new skills and the administrative costs for keeping track of skill development is significant. Skill assessment and certification are also expensive, since workers are evaluated on multiple skills rather than on a single-task skill. These costs notwithstanding, research in private-sector organizations using skill-based pay, when combined with a pay-for-performance system, has consistently shown that employees believe the plan enhances pay equity and leads to improved organizational effectiveness.
In the article for Review of Public Personnel Administration, I write that skill-based pay can successfully be used in public school systems and municipal police departments that are moving toward high-involvement cultures (site-based management and community policing, respectively). There is no reason to think such a system would not be attuned with other public agencies making the transition from autocratic to participative cultures.
Gov. Allen and his advisers should consider skill-based pay as a tool in the reinventing government process. As Roberts noted, "governments are labor-intensive, their biggest asset and potential is human capital." Skill-based pay, a major component of the humanistic management concepts that are a hallmark of contemporary organizational life, represents a powerful vehicle for developing this human potential. While satisfying the intrinsic and extrinsic needs of government employees, this innovative pay system will help improve the performance of Virginia's public institutions. Skill-based pay is an idea whose time has come.
Reginald Shareef is an associate professor of political science at Radford University.
by CNB