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Human resource management - Payment systems and appraisal

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Question: First select one of the following categories of payment system:

1. Skills or competency based.
2. Individual performance related pay
3. Team-based pay or Gain-sharing.
4. Piecework

Describe how your chosen payment system operates in theory, using illustrative examples, either from your own experience or from published literature.
Then indicate what other personnel/human resource managemnt procedures are needed to support the system and analyse any problems that the payment system can generate.

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As more employers recognize the economic value of multi-skilled employees who can work as a team, they are rethinking traditional, job-based pay programs that don't fully support skill development or achievement of results. Compensation strategies and programs are changing dramatically, and the competency-based approach to pay is quickly gaining adherents, according to a recent Towers Perrin survey of more than 150 HR and compensation professionals in three regions of the United States.

This surge in interest, indicated by three-fourths of the TP survey respondents, has occurred because companies view competency-based pay plans as a way to develop the critical behaviors and abilities employees need to achieve specific business results. By linking compensation directly to individual contributions that make a difference to the organization, a company also can maintain the highest caliber of workers, regardless of their particular specialty or role. Equally important, competency-based pay plans provide a mechanism for cross training employees to ensure that people in different functional areas have the needed behavioral attributes or technical skills to take on new responsibilities or tasks as needed.

Evaluation of Competency Based System

Mission Centered

The competency-based system focuses on the knowledge, skills and abilities needed to achieve the mission. Thus, it could help to focus employees on accomplishing the mission by having the competencies needed to do the work. It could facilitate assuring that the competency base needed to achieve the mission is enhanced as new dangers develop and the techniques needed to combat them must evolve. The variable pay sub-option would be tied to cascaded goals from Departmental planning documents (e.g., GPRA strategic goals and annual performance plans) and focus employees on
attaining those goals that support the agency's mission.

Performance Focused

The competency-based system focuses on the knowledge, skills and abilities needed to achieve the mission and how employees use them. It will support mission ccomplishment by focusing on identifying needed competencies, developing staff so they have needed competencies, and recognizing those who utilize these competencies at a higher level of proficiency. In addition, individual/team/organization goals could be identified and communicated, and accomplishment of these goals can be rewarded if the sub-option is used.

Contemporary and Excellent

The competency-based system is contemporary, as evidenced by the recent adoption of such systems by an increasing number of federal and non-federal organizations. While the excellence of the system can only be determined after its full implementation, it is intended to enable the Department to attract and retain employees by offering competitive salaries and developmental opportunities. It also is intended to be responsive to agency needs, demographics, and labor market changes. This approach will readily incorporate system automation.

Generates Trust and Respect

Because the competency-based systems can be transparent and give employees the ability to better manage their own careers, it should generate ...

Solution Summary

The expert examines payment systems and appraisals for Human resource management.