Skill-based Pay as an Alternative for Job Grades, Job Levels etc.
Sybille Kleuskens
Global Director Total Rewards I Head of Human Resources I HR Consultant I Certified Coach I Member of Board of Directors
Many companies base their compensation on a system of the job’s value for the company and call them job groups, job grades, job levels, tiers etc. Very often, one of the leading global job evaluation systems is the background. Jobs get ‘labelled’ and pay follows these labels. It’s a very structured approach and seems fair and comparable. And since many companies act in this way there is a lot of benchmark data out there.
But world and work are evolving rapidly. Jobs change, new - often unique - jobs emerge (while old ones disappear). This would theoretically require more and more evaluations. In addition, over time, people learn how to navigate the system and know what to write into the job profile to ensure a desired outcome. Also, trust into the system fades away with the years if exceptions to the system become frequent.
Wouldn’t all the above be a good reason to rethink the system? What could it be?
In a world of constant and rapid changes, traditional ‘stiff’ jobs become less relevant though might not go away completely. On the other side, new technology, new ways of working together, new products and new workforce behaviors require different skills and capabilities. Why not thinking about Skill-based Pay? It allows for much more flexibility and alignment demanded heavily by moving business needs.
The attached article by Brian Reidy, Tom McMullen and Tom Hellier, published by WorldatWork, is very inspirational should you consider Skill Based Pay.