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Skill Based Incentives From Theory to Action

Skill Based Incentives From Theory to Action. Presented by: James C. Fox, Ph.D. Chairman Fox Lawson & Associates LLC 3101 Old Highway 8, Suite 304 Roseville, MN 55113-1069 Phone: (651) 635-0976 x102 Fax: (651) 635-0980 April 3, 2001. Skill Based Pay.

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Skill Based Incentives From Theory to Action

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  1. Skill Based IncentivesFrom Theory to Action Presented by: James C. Fox, Ph.D. Chairman Fox Lawson & Associates LLC 3101 Old Highway 8, Suite 304 Roseville, MN 55113-1069 Phone: (651) 635-0976 x102 Fax: (651) 635-0980 April 3, 2001

  2. Skill Based Pay • In use in 19% of surveyed organizations • Competency based pay is in use by 11% of surveyed organizations • Combined, these systems have increased in use by 10.4% since 1996 • 41% of those surveyed examined these pay systems in the last year • We expect that more will be in use in the future

  3. Skill Based Pay • Characteristics of skill-based pay • Individually based pay vs. job based pay • Focus is on skill development and skill utilization • Encourages cross training • Permits flexibility in staffing

  4. Advantages • Encourages skill development and career development • Creates staffing flexibility • Improves employee satisfaction • Reinforces teamwork and employee involvement • Lowers staff requirements for the same amount of work • Higher output and quality over the long term

  5. Disadvantages • Can be difficult to conduct external competitive analysis by job title benchmarking • Skill blocks can be difficult to define and price • Works best for trades and production based jobs • May result in paying for skills not used • Certification/re-certification process must be established • Time and money is needed for training • More employees can “top out” • Administrative complexities

  6. When Will It Work • When you want a pay system that supports a new culture • The organization strongly supports career development and cross-training • Pay for skills is encouraged • The change is supported by supervisors and managers • When training money is readily available • The organization supports total quality initiatives

  7. When Is It Likely To Fail • There is a lack of supervisor and management support • Unwillingness to endure implementation problems • Cultural desire for equity at the expense of individual differences (pay the job - not the person) • Skill blocks are not well defined • Failure to install certification process

  8. Works Well For • Public Safety • Maintenance and Trades • Customer Service • Health Care • Manufacturing and Production

  9. How to Get Started • Define occupational group or job category • Get employees in affected occupational groups involved • Form design teams • Educate teams about skill based pay systems • Clarify the job in detail • For each set of duties, map the skills and knowledges that are needed • Rate each skill and knowledge as entry, journey, specialist or mentor

  10. Steps to Develop • Verify the skills needed for each duty or task with employees in the job • Define minimum and maximum salary for jobs within the group or category • Determine the dollar value of each incremental skill block • Determine whether the blocks are independent or dependent of each other (pay for one or more blocks or pay for blocks only in a sequence)

  11. Customer Service Blocks • Parking Lot Attendant • Cashier • Taxi Starter • Bus Driver(Dallas/Ft. Worth International Airport)

  12. Fire Fighter Skill Blocks • Fire Fighter I • Fire Fighter II • Fire Fighter III • Fire Fighter IV • Emergency Medical Technician • Paramedic • Driver/Operator(Parker Fire Protection District, Parker, CO)

  13. Health Care - Nursing • Nursing Assistant • Certified Nursing Assistant • Licensed Vocational/Practical Nurse • Registered Nurse (AA program) • Registered Nurse (three year program) • Registered Nurse (BA/BS degree program) • Clinical specialty certification(s)

  14. Equipment Operator • Two axle vehicles under 8,000 lbs. without trailers (pick-up trucks) • Two axle vehicles under 8,000 lbs. with trailers • Dump trucks and refuse trucks • Sewer vacuum trucks • Tractors and back-hoes • Cranes • Heavy graders and dozers • 18 wheel tractor/trailer combinations

  15. Mechanics • Small engines (two cycle) • SAE certified brake specialist • SAE certified transmission specialist • SAE certified gasoline engine mechanic • SAE certified diesel/heavy equipment mechanic • SAE certified Master Mechanic

  16. State of New York DOT • Highway maintenance worker • Objective was to get more capable workers on the highways, increase coverage and staffing flexibility • 4 levels • Trainee 1 • Trainee 2 • Worker 1 • Worker 2 • Hired in as a Trainee 1, usually • To remain in program, must meet specific training requirements

  17. Trainee 1: Grade 6 • Goal: to obtain Class B commercial drivers license and Heavy Dump Truck certificate training • Operate Category 1 equipment • tractor mower • patch roller • fork lift, etc • Perform heavy physical labor

  18. Trainee 2: Grade 7 • Goal: OJT • Physical maintenance work • Operate Category 1 equipment on regular basis and less complex Category 2 equipment • Obtain certification on Category 2 equipment, such as: • aerial lift device • backhoe • sweeper

  19. Worker 1: Grade 8 • Routinely operate Category 1 & 2 equipment on which certified • Operate some Category 3 equipment, such as: • hydraulic excavator • bull dozer • grader • Basic knowledge of vehicle and traffic law, safety manual, operational guidelines, etc. • Obtain certification in Category 2 and 3 equipment

  20. Worker 2: Grade 10 • Master equipment operator • Operate any Category 2 or 3 equipment • Provide on the job training to other workers

  21. Results • Reduced overall staffing needed • Saved $4 million per year in costs • Improved service

  22. Fox Lawson & Associates Compensation and Human Resources Specialists www.foxlawson.com

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