The SBP plans may have many names, and they tend to be applied to different groups
of employees. However, they share the key characteristic of paying for the employee’s
repertoire of skills, knowledge and competences rather than for the job the employee is
currently performing. The term “skill-based” is frequently used to refer to plans for
lower-level salaried employees, whereas competency-based pay is used for professional
and managerial employees. This type of system is most common in manufacturing, but
is also used in some other types of organizations that require high employee skill and
involvement (such as call centres, specialized retail, help desks, back-office processing
operations in insurance and financial services). The goal is to reward employee
flexibility through skill breadth (the ability to do different jobs in the organization), skill
depth and self-management skills that are critical in systems with few supervisors
(Ledford and Heneman, 2011). SBP is not a single system, but rather a family of loosely
related pay systems. In some cases, the remuneration depends directly on the number of
skills acquired. In others cases, SBP can also be a combination of job-based pay and
person-based pay
The SBP plans may have many names, and they tend to be applied to different groupsof employees. However, they share the key characteristic of paying for the employee’srepertoire of skills, knowledge and competences rather than for the job the employee iscurrently performing. The term “skill-based” is frequently used to refer to plans forlower-level salaried employees, whereas competency-based pay is used for professionaland managerial employees. This type of system is most common in manufacturing, butis also used in some other types of organizations that require high employee skill andinvolvement (such as call centres, specialized retail, help desks, back-office processingoperations in insurance and financial services). The goal is to reward employeeflexibility through skill breadth (the ability to do different jobs in the organization), skilldepth and self-management skills that are critical in systems with few supervisors(Ledford and Heneman, 2011). SBP is not a single system, but rather a family of looselyrelated pay systems. In some cases, the remuneration depends directly on the number ofskills acquired. In others cases, SBP can also be a combination of job-based pay andperson-based pay
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