Organizations typically provide a range of pay for each job. And what these pay ranges represent is the value an organization places on experience within a grade level. Traditionally, pay ranges are divided into steps or increments awarded on a fixed calendar schedule. When an employee moves up a step, this usually indicates satisfactory performance was achieved. But what often happens is that organizations move staff through the steps simply because another year has passed.
While the general belief is that over time, with experience, the value of work carried out by an employee should increase, we know this isn’t always the case. Organizations can have staff who have been in their roles for ten years but only show minimal progression or improvement in their quality of work. Other times, an employee can be in a job for less than two years, but they learn fast and deliver timely and quality outputs proving an increase in tenure does not always equal an increase in the value of work.
The question managers and supervisors should ask is, “How can we measure experience without relying on time or tenure as a proxy?” “And if we continue to award pay increases each year to staff, how can we determine that the knowledge of our staff also grows at the same pace?”
The lack of an approach to move staff through the pay range continues to be a challenge for many organizations. And while the alternative approach to steps applied by many organizations is to use merit increases as a basis to manage pay movement, we know that this approach is just as flawed.
In our article, Pay for Performance is HR’s Biggest Epic Fail, the problem with using performance as the basis for pay movement is that it rewards an employee’s one-time achievement through a salary increase even if we know that their performance may not be the same the following year. Further, the rubric designed to determine increase differentials among staff is often so minimal that it has no impact and does little for employee retention.
We all know performance management can be tedious and difficult. But we all also know that they are important. So, what’s the alternative? In Birches Group, we have a different approach, and it is simpler than you think!
WHY SHOULD YOU ASSESS YOUR EMPLOYEES’ SKILLS?
We believe that pay movement should be linked to skills growth and knowledge. It is known that as one learns and develops further into their roles, they acquire more experience and skills that allow them to deliver faster, better-quality work. And because skills are accumulated and cannot be unlearned, there is a sustained value to the organization making it a more reliable basis for salary increases.
But beyond pay management, assessing the skills of your staff will also greatly support your organization’s strategies around capacity building and career development. Knowing the skill level of your entire workforce enables managers to identify and create the necessary initiatives that will help close existing skills gaps and facilitate the movement of staff, either deeper into their grade or promotion to the next higher level.
In our next articles, we will go deeper into our approach to measuring skills and how it can support many of your talent management programs from pay movement, learning and development, and recruitment and career planning. Contact us to learn more.
Want to know if your existing compensation practices have the elements of a good compensation program or if there are areas that could use some improvement? Take our quick Compensation Program Assessment Quiz to know your score!
Bianca manages our Marketing Team in Manila. She crafts messaging around Community™ concepts and develops promotional campaigns answering why Community™ should be each organization’s preferred solution, focusing on its simplicity and integrated approach. She has held various roles within Birches Group since 2009, starting as a Compensation Analyst and worked her way to Compensation Team Lead, and Training Program Services Manager. In addition to her current role in marketing and communications, she represents Birches Group in international HR conferences with private sector audiences.
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