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1-Kindly find case study assignment with the questions in the end (attached)
Important: Please make sure to connect the answers with the course material in chapter 3-5-6(attached)
2-Follow case study standards, starting with critical analysis for one page at least,
3-then answering questions and make sure to indicate for example question 1, then the answers, etc
4-references in the end
importanet:-please follow the instruction above and make this case study with table of content
please make sure to check for plagiarism.
Answering of the questions depends on critical thinking.
Linking between the theoretical knowledge acquired (chapter 3-5-6) with the case study
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EHRMA 604 : Compensation and
Reward Management
Second Semester 2024-25
Chapter 3: Defining Internal
Alignment
3-1
Lecture Outline
▪
▪
▪
Recap Last Week’s topic
Jobs and Compensation
Internal Alignment
➢ Support organization strategy, workflow, and motivation
▪
Structures Vary Among Organization
➢ Number of levels
➢ Differentials
➢ Criteria
▪
What Shapes Internal Structure?
➢ External factors
➢ Organization factors
▪
▪
Strategic Choices in Designing Internal Structure
Consequences of an Internal Aligned Pay Structure
➢ Explaining the consequences using the pay model
▪
▪
Guidance from the Evidence
Case Study Exercise
3-2
Recap Last Week’s Topic
Strategic
Choices
3-3
Recap Last Week’s Topic
Developing a
Total
Compensation
Strategy
3-4
Jobs and Compensation
❑ Why do a high-tech firms pay more for software
engineers than for accountant? And why does an
entry level engineer make less than a lead engineer?
❑ It’s because organizations design their pay
structures around jobs and job levels.
❑ In many organizations an employee’s pay including
(pay growth rate over time) depends on both:
➢ Nature of the job, and
➢ Job level.
3-5
Internal Alignment
❑ Internal alignment (or internal equity) refers to the
pay relationships among different
jobs/skills/competencies within a single organization.
❑ The relationships inside the organization form a pay
structure that should support the (1) organization
strategy, (2) support the workflow, and (3) motivate
behavior toward organization objectives.
❑ Pay structure refers to the array of pay rates for
different work or skills within a single organization. The
number of levels, the differentials in pay between the
levels, and the criteria used to determine those
differences describe the structure.
3-6
Support Organization Strategy,
Workflow and Motivation
❑ An organization’s strategy needs to support
important aspects that go into maintaining its
competitive advantage.
❑ Workflow refers to the process by which goods and
services are delivered to the customer.
❑ Internal pay structures are part of the network of
returns.
➢ The challenge is to design structures that will engage
employees to help achieve organization objectives.
➢ The structure ought to make clear relationship
between each job and the organization’s objectives –
“line-of-sight.”
3-7
Structures Vary Among
Organizations
▪ An internal pay structure can be defined by:
➢ The number of levels of work,
➢ The pay differentials between the levels, and
➢ The criteria or bases used to determine those levels and
differentials.
▪ Consider the example of Career Bands at GE
Healthcare:
3-8
Number of Levels and
Differentials
❑ One feature of any pay structure is its hierarchical
nature: the number of levels and reporting
relationships.
➢ Some are more hierarchical, with multiple levels; others are
compressed, with few levels.
❑ Differentials referred to as the pay differences
among levels.
➢ In most organizations, pay varies among employees
depending on the knowledge, skills, and the nature of the
work.
➢ One intention of differentials is to motivate people to strive
for promotion to a higher-paying level.
3-9
Criteria: Content and Value
❑ Work content and its value are the most common
bases for determining internal structures.
➢ Content refers to the work performed in a job and how it
gets done.
➢ Value refers to the worth of the work.
❑ A structure based on content typically ranks jobs on
skills required, complexity of tasks, problem solving,
and/or responsibility.
❑ In contrast, a structure based on the value of the
work focuses on the relative contribution of these
skills, tasks, and responsibilities to the
organization’s goals.
3-10
What Shapes Internal Structure?
❖ The major factors that shape internal structures
are categorized as:
1. External factors, and
2. Organization factors.
3-11
External Factors: Economic
Pressures
❖ This concerns mainly with the supply and demand.
❖ For example, data scientists are in high demand, but the
supply of qualified data scientists is low. That imbalance
defines a tight labor market, and it puts upward pressure on
wages.
❖ Another example is clerical and administrative workers. There
is an oversupply of them, but limited demand for their skills.
That imbalance defines a loose labor market, and it puts
downward pressures on wages.
❖ The labor market is said to be tight if vacant jobs are plentiful
and available workers are scarce. It is said to be loose if the
opposite holds true.
3-12
External Factors: Government
Policies, laws, and Regulations
❖ An internal structure may contain any number of
levels, with differentials of any size, as long as the
criteria for setting them are not gender, race,
religion, or national origin.
❖ Much pay-related legislation attempts to regulate
economic forces to achieve social welfare objectives.
❖ The most obvious place to affect an internal
structure is at the minimums and maximums. In
Saudi Arabia, for example, the pay minimum rate
for engineer is between SR7K- SR8.4K according to
HRSD.
3-13
External Factors: Culture and
Customs
❖ Cultural factors play a role in shaping pay
structures.
❖ Culture is defined as the mental programming for
processing information that people share in
common.
❖ Shared mind-sets may judge what size pay
differential is fair.
❖ Many traditional Japanese employers, for example,
place heavy emphasis on experience in their internal
pay structures.
3-14
Organization Factors: Strategy
and Technology
❖ The belief is that pay structures that are not aligned with the
organization strategy may become obstacles to the
organization’s success. However, aligned structures today may
become an obstacle tomorrow. So aligned, yet adaptable, may
be required.
❖ Technology used in producing goods and services influences:
▪ The organizational design,
▪ The work to be performed, and
▪ The skills/knowledge required to perform the work.
❖ Multiple structures often exist within the same organization for
different types of work.
3-15
Organization Factors: Human
Capital and HR Policies
❖ Human capital (the education, experience,
knowledge, abilities, and skills required to perform
the work) is a major influence on internal structures.
The greater the value added by the skills and
experience, the more pay those skills will command
❖ The organization’s other HR policies influence
internal pay structures. For example:
▪ Most organizations tie money to promotions to induce employees to apply
for higher-level positions.
▪ If an organization has more levels, it can offer more promotions, but there
may be smaller pay differences between levels.
▪ The belief is that more frequent promotions (even without significant pay
increases) offer a sense of “career progress” to employees.
3-16
Organization Factors:
Employee Acceptance
❖ An important factor influencing the internal pay
structure is its acceptability to the employees
involved.
❖ Employees make multiple pay comparisons to assess
the fairness of an internal pay structure:
❖
Procedural justice: Procedures for determining the pay structure.
❖
Distributive justice: Results of those procedures (the pay
structure itself).
❖ When applied to internal structures:
▪ Procedural justice addresses how design and administration decisions
are made and whether procedures are applied in a consistent
manner.
▪ Distributive justice addresses whether the actual pay differences
among employees are acceptable.
3-17
Strategic Choices in Designing
Internal Structure
❖ Aligned pay structures (1) support the way the
work gets done, (2) fit the organization’s business
strategy, and (3)are fair to employees.
❖ Two strategic choices are involved in internally
aligning pay structures:
1. How to specifically tailor the organization design and
workflow to make the structure.
2. How to distribute pay throughout the levels in the
structure.
3-18
Tailored Vs Loosely Coupled
Tailored
Loosely
A low-cost, customer-focused
business strategy may be
supported by a closely tailored
structure.
• Innovation and short productdesign-to-market cycle times
may be supported by a loosely
structure.
• Competitive environment is
turbulent and unpredictable.
Jobs are well defined with
detailed tasks or steps to follow.
No steps at all are laid out and
employees may work on several
teams developing several
products at the same time.
Their pay structures are similar,
so differences in pay among jobs
are very small.
Pay structures are more loosely
linked to the organization in order
to provide flexibility
McDonald’s or Walmart are good
examples.
3M is a good example.
3-19
Hierarchical Vs Egalitarian
➢ Egalitarian structures have fewer levels and/or smaller differentials
between adjacent levels and between the highest- and lowest-paid
workers.
3-20
Hierarchical Vs Egalitarian
▪
Hierarchical structures send the message that the
differences in work content, individual skills, and
contributions to the organization are valued.
▪
Egalitarian structures send the message that all
employees are valued equally. HOWEVER:
➢
Equal treatment can mean that the more knowledgeable
and high-performing employees feel underpaid.
➢
They may quit or refuse to do anything that is not
specifically required of them.
➢
Their change in behavior, if any, will lower overall
performance.
3-21
Consequences of an Internally
Aligned Pay Structure
❑ Undertake Training.
❑ Increase experience.
❑ Reduce turnover.
❑ Facilitate career progression.
❑ Facilitate performance.
❑ Reduce pay-related grievances.
❑ Reduce pay-related work stoppages.
3-22
Explaining the Consequences
Using the Pay Model- Efficiency
❑ Research shows that an aligned structure can lead
to better organization performance.
❑ Internal pay structures imply future returns. The
size of the differentials between the entry level in
the structure and the highest level can encourage
employees to
1. Remain with the organization,
2. Increase their experience and training,
3. Cooperate with co-workers, and
4. Seek greater responsibility.
3-23
Explaining the Consequences
Using the Pay Model- Fairness
❑ Writers have long agreed that departures from an
acceptable wage structure will occasion turnover,
grievances, and diminished motivation.
❑ Some argue that without fair differentials,
workers:
➢
Harbor ill will toward the employer,
➢
Resist change,
➢
Change employment, and
➢
Become depressed, resulting in low efficiency.
❑ Others, including labor unions, believe that more
egalitarian structures support cooperation and
commitment and improve performance.
3-24
Explaining the Consequences Using
the Pay Model- Compliance
❑ As with any pay decision, internal pay structures
must comply with the regulations of the countries in
which the organization operates.
❑ In case laws, policies and regulations change,
internal pay structure should change too.
3-25
Guidance from the Evidence
❖ The impact of internal structures depends on the
context in which they operate.
➢ More hierarchical structures are related to greater
performance when the workflow depends on individual
contributors.
➢ High performers quit less under more hierarchical systems
when pay is based on performance rather than seniority and
when people have knowledge of the structure.
➢ More egalitarian structures are related to greater
performance when close collaboration and sharing of
knowledge are required.
➢ The impact of any internal structure on organization
performance is affected by the other dimensions of pay
model; pay levels, employee performance, and employee
knowledge of the pay structure.
3-26
EHRMA 604 : Compensation and
Reward Management
Second Semester 2024-25
Chapter 5: Job Evaluation
3-1
Lecture Outline
Recap Last Week’s topic
Job Evaluation: Definition
Job Evaluation: Importance
Content, Value, and External Market
Determining an Internally Aligned Job Structure
➢ Establish the purpose
➢ Single VS multiple plans
➢ Choose among job evaluation method.
➢ Who should be involved
▪ The Final Result: Structure
▪
▪
▪
▪
▪
3-2
Recap Last Week’s Topic
Determining the internal job structure
3-3
Job Evaluation: Definition
➢ The process of systematically determining the relative
worth of jobs to create a job structure for the
organization. The evaluation is based on a combination of
job content, skills required, value to the organization,
organizational culture, and the external market.
➢ This potential to blend organizational forces and external
market forces is both a strength and a challenge of job
evaluation.
3-4
Job Evaluation: Importance
▪ Job evaluation serves three major purposes:
➢ To help set pay for jobs where market pay survey data are
unavailable.
➢ To match a job in a particular company to a comparable job
of similar value in a market pay survey.
➢ To pay jobs in a particular company in part based on which
jobs are most important to the company’s strategy, not just
on the basis of what other companies pay those jobs.
3-5
Content, Value, and External
Market
▪ Content (as we discussed in Lecture 3) refers to
what work is performed and how it gets done.
➢ Perspectives differ on whether job evaluation is based on job
content or job value.
➢ Internal alignment based on content orders jobs based on the
skills required, duties, and responsibilities associated with the
jobs.
➢ A structure based on job value orders jobs based on the relative
contribution of the skills, duties, and responsibilities of each job to
the organization’s goals.
▪ But can this structure translate directly into pay
rates, without regard to (1) the external market, (2)
government regulations, or (3) any individual
negotiation process?
3-6
Content, Value, and External
Market
▪ Job content matters, but it is not the only basis for
pay. Job value may also include the job’s value in
the external market.
➢ The value added by the same work may be more (or less) in one
organization than in another.
➢ Therefore, there is not necessarily a one-to-one correspondence
between internal job value and pay rates.
3-7
Determining an Internally
Aligned Job Structure
Determining an Internally Aligned Job Structure
3-8
Establish The Purpose
➢ Supports organization strategy:
Job evaluation aligns with the organization’s strategy by
including what it is about work that adds value, that contributes
to pursuing the organization’s strategy and achieving its
objectives. Job evaluation helps answer, How does this job add
value?
➢ Supports workflow:
Job evaluation supports workflow in two ways. It integrates each
job’s pay with its relative contributions to the organization, and it
helps set pay for new, unique, or changing jobs.
3-9
Establish The Purpose
➢ Is fair to employees:
Job evaluation can reduce disputes and grievances overpay
differences among jobs by establishing a workable, agreed-upon
structure that reduces the role of chance, favoritism, and bias in
setting pay.
➢ Motivates behavior toward organization
objectives:
Job evaluation calls out to employees what it is about their work
that the organization values, what supports the organization’s
strategy and its success. It can also help employees adapt to
organization changes by improving their understanding of what is
valued in their new assignments and why that value may have
changed. Thus, job evaluation helps create the network of
rewards (promotions, challenging work) that motivates
employees.
3-10
Single VS Multiple Plans
▪ Employers rarely evaluate all jobs in the
organization at one time.
➢ Many employers design different evaluation plans for
different types of work. This is because work content is
too diverse to be usefully evaluated by one plan.
3-11
Benchmark Jobs- A Sample
▪ To be sure that all relevant aspects of work are
included in the evaluation, an organization may
start with a sample of benchmark (key) jobs.
Benchmark
Jobs
Note: More heavily shaded jobs have been selected as benchmarks.
3-12
Benchmark Jobs
▪ A benchmark job has the following characteristics:
1. Its contents are well known and relatively stable over
time,
2. The job is common across a number of different
employers, so it is not unique to a particular employer,
and
3. A reasonable proportion of the workforce is employed in
this job.
3-13
Benchmark Jobs
▪ The number of job evaluation plans used depends
on how detailed an evaluation is required to make
pay decisions and how much it will cost.
➢ There is no accurate answer about one plan vs many,
however current practice is to use separate plans for major
domains of work: top executive/leadership jobs,
managerial/professional jobs, operational/technical jobs,
and office/administrative jobs.
▪ The costs associated with all these plans (including
time) give impetus to the push to simplify job
structures (reduce titles and levels).
3-14
Choose Among Job Evaluation
Methods
▪ Ranking , classification , and point (factor) method
are the most common job evaluation methods,
though uncounted variations exist.
▪ Research over 40 years consistently finds that different job
evaluation plans generate different pay structures. So, the
method you choose matters.
Comparison of
Job Evaluation
Methods
3-15
Ranking
▪ Ranking simply orders the job descriptions from
highest to lowest based on a global definition of
relative value to the organization’s success.
➢
➢
▪
Ranking is simple, fast, and easy to understand and explain to
employees. It is also the least expensive method, at least
initially.
However, it can create problems that require difficult and
potentially expensive solutions. Because it doesn’t tell
employees and managers what it is about their jobs that is
important.
Two ways of ranking are common.
1.
2.
Alternation ranking.
Paired comparison.
3-16
Ranking
▪ Alternation ranking orders job descriptions
alternately at each extreme.
➢ Agreement is reached among evaluators on which jobs
are the most and least valuable (i.e., which is a 10,
which is a 1), then the next until all the jobs have been
ordered.
▪ The paired comparison method uses a matrix
to compare all possible pairs of jobs.
➢ The figure in the next slide shows that the higherranked job is entered in the cell of the matrix. When all
comparisons have been completed, the job most
frequently judged “more valuable” becomes the highestranked job, and so on.
3-17
Ranking
Paired Comparison Ranking
3-18
Ranking
▪ Some issue with ranking:
➢ The criteria on which the jobs are ranked are usually poorly
defined.
➢ Evaluators must be knowledgeable about every single job
under study.
➢ Even though ranking is simple, fast, and inexpensive, in
the long run the results are difficult to defend.
➢ And costly solutions may be required to overcome
problems created by the plan.
3-19
Classification
▪ Classification method is a series of classes covers
the range of jobs.
➢ Class descriptions describe the kinds of jobs in that class.
➢ A job description is compared to the class descriptions to decide
which class is the best fit for that job.
➢ Determining the number of classes and writing class
descriptions to define the boundaries between each class can
be a challenge, so one way to begin is to find the natural
breaks or changes in the work content.
3-20
Classification
▪ In practice, with a classification method, the job
descriptions not only are compared to the class
descriptions:
➢ But also, can be compared to each other to be sure that
jobs within each class are more similar to each other than
to jobs in adjacent classes.
▪ The end result is a job structure made up of a
series of classes with a number of jobs in each.
➢ All these comparisons help ensure the structure is based
on the organization strategy and workflow, is fair, and
focuses behaviors on desired results.
➢ The jobs within each class are considered to be equal
(similar) work and will be paid equally.
➢ Jobs in different classes should be dissimilar and may have
different pay rates.
3-21
Point Method
▪ Point methods have three common
characteristics:
1. Compensable factors, with
2. Factor degrees numerically scaled, and
3. Weights reflect the relative importance of each factor.
▪
Each job’s relative value is determined by the total
points assigned to it.
▪ Compensable factors are based on the strategic
direction of the business and how the work
contributes to these objectives and strategy.
3-22
Point Method
▪ There are eight steps in the design of a point plan:
1.
2.
3.
4.
5.
6.
7.
8.
Conduct job analysis.
Determine compensable factors.
Scale the factors.
Weight the factors according to importance.
Select criterion pay structure.
Communicate the plan and train users.
Apply to nonbenchmark jobs.
Develop online software support.
3-23
Step 1 and Step 2
▪ Point plans begin with a job analysis:
➢ Typically, benchmark jobs are drawn for analysis.
➢ The content of these jobs is the basis for defining, scaling,
and weighting the compensable factors.
▪
Compensable factors reflect how work adds value to
the organization.
➢ Compensable factors are those characteristics in the work
that the organization values, that help it pursue its strategy
and achieve its objectives.
▪
To be useful, compensable factors should be based
on (1) the strategy and values of the organization; (2)
based on the work performed; and (3) acceptable to
the stakeholders affected by the resulting pay
structure.
3-24
Based on the Strategy and Values of
the Organization
▪ If the business strategy is “providing goods and
services to delight customers at the lowest cost and
greatest convenience possible.”, cost
containment, and customer relations are the
compensable factors.
▪ If the direction changes, then the compensable
factors may also change.
➢ Factors may also be eliminated if they no longer support
the business strategy.
3-25
Based on the Work Itself and
Acceptable to Stakeholders
▪ Employees and supervisors are experts in the work
actually done in any organization. Hence,
➢ it is important to seek their answers to what should be
valued in the work itself. Some form of documentation
(i.e., job descriptions, job analysis, employee and/or
supervisory focus groups) must support the choice of
factors.
▪ So the question is, acceptable to whom? The
answer ought to be the stakeholders.
3-26
Step 3 and Step 4
▪ Once the factors are determined, scales reflecting
the different degrees within each factor are
developed.
➢ Most factor scales consist of four to eight degrees.
➢ The difference between the first and second degrees
should approximate the difference between the fourth and
fifth degrees.
▪ Factor weights reflect the relative importance of
each factor to the overall value of the job and to
the organization.
➢ Weights are often determined through an advisory
committee that allocates 100% of the value among the
factors.
3-27
Example !
Job Evaluation
Form
3-28
Step 5 and Step 6
▪ Committee members may recommend a criterion
pay structure, that is, a pay structure they wish
to duplicate with the point plan.
➢ The criterion structure may be the current rates paid for
benchmark jobs, or market rates for benchmark jobs.
➢ Selecting the appropriate pay rates to use as the criteria
is critical.
▪ Once the job evaluation is designed, a manual is
prepared so others can apply the plan.
➢ Users will require training on how to apply the plan and
information on how the plan fits into the organization’s
total pay system.
➢ An appeals process may also be included.
➢ Employee acceptance of the process is crucial.
3-29
Step7 and Step 8
▪ The compensable factors and weights were derived
using a sample of benchmark jobs.
➢ The final step is to apply the plan to the remaining jobs.
➢ Once the plan is developed and accepted, it becomes a
tool for managers and HR specialists.
▪ The final step is to develop online software support.
➢ Online job evaluation is widely used in larger
organizations.
➢ It becomes part of a Total Compensation Service Center
for managers and HR generalists to use.
3-30
Who Should be Involved
▪ Managers and employees with a stake in the
results should be involved in the process of
designing the internal structure.
➢ A common approach is to use committees, task forces, or
teams that include representatives from key operating
functions.
▪ No matter what the technique, no job evaluation
plan anticipates all situations , there should be
appeals procedures and review processes.
3-31
The Final Result: Structure
▪ The final result of the job analysis, job description,
job evaluation process is a structure.
▪ Organizations commonly have multiple structures
derived through multiple approaches that apply to
different functional groups or units.
▪ The underlying premise is that internal alignment is
most influenced by fair and equitable treatment of
employees doing similar work in the same
skill/knowledge group.
3-32
EHRM 604
Compensation and Reward
Management
LECTURE 6
PERSON- BASED STRUCTURES
6-1
Chapter Topics
▪ Recap Last Week’s topic
▪ Person-Based Structures:
Skills Plans
o Types of skills plans
▪ Skill Analysis
o Objectives or purpose
o What information should
be collected and whom to
involve
o Skill-based structure
example
o Establish certification
method
▪ Person-Based Structures:
Competencies
▪ Determining the Internal
Competency-Based Structure
▪ Defining Competencies
o Purpose
o Objective
o What information to collect
o Whom to involve and
certification methods
o Resulting Structure
▪ The Perfect Structure
6-2
Recap Last Week’s Topic
Determining an Internally Aligned Job Structure
6-3
Many Ways to Create Internal Structure
This figure orients
us to the process
used to build a
person-based
internal structure.
6-4
Person-Based Structures: Skill Plans
•
Skill-based structures link pay to the depth or
breadth of skills, abilities, and knowledge a person
acquires that are relevant to the work
o Structures based on skill pay individuals for all the skills
for which they have been certified, regardless of whether
the work they are doing requires all or just a few of
those particular skills.
o The wage attaches to the person.
o In contrast, a job-based plan pays employees for the job
to which they are assigned, regardless of the skills they
possess.
6-5
Types of Skill Plans
Specialist: Depth.
Generalist: Breadth.
• Pay is based on the
knowledge of the
individual doing the job
rather than on job content
or output.
• Employees in a multi-skill
system earn pay increases
by acquiring new
knowledge.
o Two teachers may receive
different pay rates for doing
the same job.
o The pay is based on the
knowledge of the individual
doing the job.
o The presumption is that more
knowledge will translate into
higher teaching effectiveness.
o Pay increases come with
certification of new skills,
rather than with job
assignments.
o Employees can be assigned
any job for which they are
certified, based on the flow of
work.
o Employee responsibilities can
change drastically over a
short period of time.
6-6
Determining the Internal Skill-Based
Structure
Skill analysis is a systematic process of identifying and
collecting information about skills required to perform work in
an organization.
6-7
Skill Analysis: Objectives or
Purpose of the Skill-Based Structure
▪ The skills on which to base a structure need to be
directly related to the organization’s objectives and
strategies.
▪ One of the main advantages of skill-based plans is
that they facilitate matching people to a changing
workflow.
▪ Employees like the potential of higher pay that
comes with learning, but favoritism and bias may
crop up.
▪ Person-based plans have the potential to clarify new
standards and behavioral expectations.
6-8
Skill Analysis: What Info Should
be Collected and Whom to Involve
• There is far less uniformity in the use of terms in personbased plans than there is in job-based plans.
✓ Skill-based plans have very specific information on every
aspect of the production process.
• Employee involvement is almost built into skill-based
plans with employees and managers as the source of
information on:
✓
✓
✓
✓
Defining the skills,
Arranging them into a hierarchy,
Bundling them into skill blocks.
And certifying whether a person actually possesses the
skills.
6-9
Skill Analysis: Outcomes
• Outcomes of skill-based pay plans: Guidance from
research and experience
o Design of certification process is crucial in perception of
fairness
o Alignment with organization’s strategy
o May be best for short-term initiatives
6-10
Skill-Based Structure Example
6-11
Skill Analysis
Establish Certification Method
• Organizations may use peer review, on-the-job
demonstrations, or tests to certify that employees
possess skills and are able to apply them.
• Ongoing recertification, which replaces the
traditional one-time certification process and helps
ensure skills are kept fresh.
6-12
Person-Based Structures:
Competencies
•
There are several perspectives on what
competencies are and what they are supposed to
accomplish.
o
•
They try to abstract the underlying core competencies
(applicable knowledge, skills, and behaviors that form the
foundation for success at any level or job in the
organization).
Competency sets translate each core competency
into action.
o
For example, for the core competency of business
awareness, competency sets might be related to:
✓
✓
✓
✓
Organizational understanding,
Cost management,
Third-party relations,
And ability to identify business opportunities.
6-13
Person-Based Structures:
Competencies
▪ Competency indicators are the observable behaviors that
indicate the level of competency within each set.
o These indicators may be used for staffing and evaluation as well as
for pay purposes.
▪ Let’s consider the example in the next slide. TRW’s competency
model for its HRM department, includes the four core
competencies considered critical to success.
o All HR employees are expected to demonstrate varying degrees
of these competencies.
o
However, not all individuals would be expected to reach the
highest level in all competencies.
o Rather, the HR function should possess all levels of mastery of
all the core competencies within the HRM group.
6-14
Person-Based Structures:
Competencies
An example
of TRW
Human
Resources
Competencies
6-15
Determining the Internal
Competency-Based Structure
All approaches to creating a structure begin by looking at the
work performed in the organization.
6-16
Defining Competencies
•
•
•
•
Organizations seem to be moving away from the
vagueness of self-concepts, traits, and motives
Greater emphasis on business-related descriptions of
behaviors “that excellent performers exhibit much more
consistently than average performers”
Competencies are becoming “a collection of observable
behaviors that require no inference, assumption or
interpretation”.
Early conceptions of competencies focused on five
areas:
➢ Skills (demonstration of expertise).
➢ Knowledge (accumulated information).
➢ Self-concepts (attitudes, values, self-image).
➢ Traits (general disposition to behave in a certain way).
➢ Motives (recurrent thoughts that drive behaviors).
6-17
Purpose of the Competency-Based
Structure
•
The main appeal of competencies is the direct link
to the organization’s strategy.
•
Competencies are chosen to serve the
organization’s needs.
•
Encourage employee to improve and manage their
own career development.
•
Competencies in effect provide guidelines for
behavior and keep people focused.
6-18
Competency Analysis:
What Info to Collect
•
•
Objective: Vagueness and subjectivity make competencies a
“risky foundation for a pay system”
What information to collect?
o Classification of competencies:
✓Personal characteristics (In business settings, the relevant
characteristics might be personal integrity, maturity of
judgment, flexibility, and respect for others)
✓Visionary These are the highest-level competencies. taking the
initiative in moving the organization in new directions.
✓Organization specific – Between the above two groups are the
competencies that are tied specifically to the particular
organization and to the particular function where they are being
applied.
• Whom to involve?
o
o
Competencies are derived from executive leadership’s beliefs
about strategic organizational intent
Not all employees understand the connection
6-19
Competency Analysis: What Info to
Collect
The Top 20
Competencies
6-20
Competency Analysis: Whom to
Involve and Certification Methods
▪ Competencies are derived from the executive
leadership’s beliefs about the organization and its
strategic intent.
▪ The heart of the person-based plan is that
employees get paid for relevant skills or
competencies they possess, whether or not those
skills are used.
o If people are to be paid based on their competencies, then
there must be some way to demonstrate or certify to all
concerned that a person possesses that level of
competency.
6-21
Competency Analysis:
Resulting Structure
▪
