How do you adapt pay for skills to different job roles and levels?

In my opinion, paying for skills is a good strategy if combined with a performance evaluation. Skills evaluation is a good way to check professional's potential, but potential doesn't mean results. Depending on the position, we need to assume some assumptions and make an aligned plan with the professional during a period without measuring him/her result. But keeping this strategy for a long period could bring on some risk of leaving this person in a comfort zone.

In my experience pay for skills is a real benefit for IT service companies as they are fully concentrated on hiring people with the right hard skills, not only soft, and have appropriate job catalogs that make it easier to find the right people based on their main hard skills and then sub. For employees it is also beneficial as market constantly change and some skills are rare but demanded that is why hype about some particular skills is created. This also influences pay strategy as companies must build a competitive pay range to compete in the market for high-demand skills.

I agree with this. Pay for skills allows employers to reward individuals who bring specialized skills, which exceed the requirements for their role, than those who only bring what the job requires. This provides opportunity to differentiate talent across the organization and motivate individuals to seek opportunities to develop their skillsets in order to set themselves apart from their peers and continue to build their brand.

Adapting pay to skills requires a flexible strategy. Different roles demand different skills. Imagine a data analyst versus a marketing manager. Their skillsets are unique. To value them fairly, you might assess skills differently. For complex skills used frequently, like data analysis, in-depth testing might be appropriate. For broader marketing skills, a portfolio review could suffice. The key is to tailor your approach to each role and level, ensuring you accurately value the specific skills needed for success. This flexibility ensures a pay system that's fair, motivating, and attracts top talent with the right skillsets for each position.

Develop competency Framework Update job roles and descriptions precisely Assign competency depth and width to job roles Develop competency based point job evaluation with weights Formulation and charters of Job Evaluation committee Conduct job evaluation sessions Develop right job grades or broadbands Bench Mark for external equity and draw compensation curve Reflect on your compensation policy and salary structure Determine red circles and make settlements plans

Adapting pay for skills to different roles and levels involves setting clear milestones for skill acquisition at entry levels, focusing on complex skills at mid-levels, and emphasizing strategic and leadership skills at senior levels. The framework should ensure transparency, offer continuous learning opportunities, and regularly adjust to industry standards and organizational goals.

To pay for the skills that impact your business, you have to know what impacts your business. Coming out of Step 1 with actionable information should be a collaborative effort between SMEs, leaders, HRBPs, Compensation, and talent acquisition. There are invaluable checks and balances in this approach. I've seen Step 2 overlooked, as well. You lose your existing team by "building the floor" above them. If your new skills requirements are higher than their skill levels, then one of two things may be true: either your entire team is underperforming or you're inflating the skills you need to get the work done. Existing skillsets, combined with performance indicators, can shed light on the skills and knowledge you should be paying more for.

Skills should always follow a job architecture rubric whereby the skills roll into the job level and thus into pay. We recommend describing each skill at 4 levels: Novice, Intermediate, Advanced, and Expert. Ask the hiring manager "How is this skill demonstrated at X level?" and summarize that into the rubric. Doing so allows employees and candidates to be measured objectively against standard, consistent criteria. The individual's average rating against all of the listed skills in the job rubric determines their overall Skills Mastery level, which directs their associated job level (e.g., title) and comp band.

Skill-based pay: One size doesn't fit all! Adapting pay to skills requires flexibility. Consider the unique needs of each role and level. Imagine a graphic designer position. Assessing basic design skills might differ from evaluating an advanced role requiring animation expertise. You might use different methods or criteria for each. For common, frequently used skills, a quick test might suffice. But for complex, specialized skills, a more in-depth assessment might be needed. This tailored approach ensures you accurately value the specific skillset required for each position and level within your organization. It's about rewarding the right skills at the right level, fostering a culture of continuous learning and development.

Adapting pay for skills to different job roles and levels involves first identifying the specific skills and competencies relevant to each role through job analysis and competency assessments. Establish clear criteria and frameworks for assessing skill levels, considering factors such as complexity, impact, and market demand. Align pay adjustments with the value added by acquiring and applying these skills, ensuring fairness and consistency across the organization. Regularly review and update skill-based pay structures to reflect evolving job requirements and market trends, fostering continuous skill development and equitable compensation practices.