Tag: Skills measurement

Establishing fairness in pay involves careful and thoughtful decision-making that is not as straightforward as simply assigning the same salary to all employees in the same position. Staff development is never uniform. Employees develop at different paces, with some gaining skills and experience around specific areas of the job faster than others. To ensure fairness and equity through pay, employers need to carefully assess the unique skills and knowledge of each employee, while providing clarity in approach.

Clarity in Pay Through Transparency

Historically, disclosing one’s salary has always been considered private and taboo. Salaries have always been an emotional and sensitive subject, as it is typically associated with one’s value to the company.  According to this LinkedIn article, one of the reasons for keeping wages and salary ranges private is that companies want to keep the status quo. They are afraid to upset employees which can inevitably happen when pay gaps in the organization are exposed. But the reality is that every organization will have pay gaps, and a major step in eliminating those gaps is through transparency.

In recent years, both lawmakers and leading companies have been addressing gender and race-related pay gaps through laws and compensation policies. In 2006, Denmark introduced legislation that required companies to disclose wage statistics between men and women with the same job if the company has more than 10 men and women working in the same position. In this study done by Professor Morten Bennedsen from the Economic Institute at the University of Copenhagen and INSEAD Business School in France, the law appears to have decreased the pay gap between men and women by 13%. In Canada, public sector employers are required to disclose salaries and benefits of employees that are paid $100,000 or more in a year which led to a 30% drop in the gender pay gap according to a study by the National Bureau of Economic Research .

In Birches Group, we too, believe and practice transparency in pay which is demonstrated through a couple of ways. First, the company’s salary scale is published to all staff. All employees are allowed to see the salary ranges not only for their grade level, but also others. Simply making our salary scale public allows everyone in the organization to see predictable movement within each grade level, the difference between one grade level to the next, and possible career progression for each role.

Second, our compensation policies on setting pay, variable pay movement, and milestones to determine promotion readiness are made clear as part of the company’s onboarding process and refresher trainings are regularly provided to all staff. When organizations make it clear how employees are paid and how they can chart their careers, staff feel more empowered to take equal ownership of the level and pace of their development, positively contributing to employee retention, while holding the organization accountable to provide clarity to their employees on how they are assessed and recognized.

Fairness and Equity in Pay by Measuring Staff’s Skills & Knowledge

Managing pay increases has always been a complicated process. People want to be paid according on their level of experience, but traditional approaches have never allowed managers to clearly measure experience apart from time (through time-based “steps” in the salary scale) or performance (through merit pay).

Using time-based steps or increments was never effective in recognizing one’s experience. As long as an employee completes another year with their employer, they get one or two steps in their pay regardless of whether they do their job or not. Merit pay, on the other hand, allows for variable pay movement based on the employee’s performance ratings from the preceding year. While this approach was designed to award pay increases to employees with good outputs and results, using performance ratings is not reliable because it doesn’t guarantee the same results the following year. When performance is used to drive pay increases, the organization is essentially rewarding an employee’s one-time achievement with a salary increase forever.

To truly establish equity in the workplace, we at Birches Group, believe pay movement should be based on the level of skills and knowledge the employee brings to the company. Over time, as an employee acquires and demonstrates new levels of skills and knowledge, their capacity to perform their job becomes better, making it a more effective and objective way to drive pay increases.

A big challenge to employers has always been how to measure one’s experience – “How do I know, what you know?” Birches Group has come up with a framework and an assessment tool that can explicitly measure your employees’ skills and knowledge. Using our Community™ Jobs approach as the underlying foundation, Community™ Skills consists of a progression of five skills stages across six indicators which is used to measure the continuous growth of an employee within their job.

Through Community™ Skills, pay management policies can be developed and aligned to use skills and knowledge growth to drive variable pay movement. Community™ Skills can also be used to demonstrate equity and fairness through deliberate developmental assignments for staff, as well as providing an objective criterion for succession planning and promotion decisions.

Pay equity and transparency in the workplace doesn’t happen overnight. Companies must take active steps to ensure clarity around pay management policies, as well as standards on how employees are assessed and developed. Birches Group has extensive experience developing compensation policies for organizations across different sectors and markets. Our Community™ Skills tool can help organizations assess the capacities in their workforce, facilitate pay movement, as well as guide learning and development assignments. Contact us to learn how we can improve your talent management programs today.

Kai works in our Marketing Team in Manila. She creates online content around Community™ concepts and assists in developing promotional campaigns answering why Community™ should be each organization’s preferred solution, focusing on its simplicity and integrated approach. She has had years of experience in social media content creation handling different brands over the years.

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Birches Group’s Community™ Skills is a groundbreaking solution that radically changes the way organizations manage human resources. Like the well-known Swiss Army knife, Community™ Skills is so versatile that it can support different human resources activities using one simple and integrated approach.

In a previous overview of our Community™ Skills solution, we described how our methodology, with its five Skills stages and six indicators, can easily be adapted to an organization’s pay ranges and facilitate pay movement based on actual skills growth of staff, measure the capacity of its entire workforce, and help managers tailor learning and development assignments to enable movement of staff deeper into their grade or to the next skills stage.

Because Community™ Skills links the pay movement of staff with their growth in skills and experience, this approach can also be readily incorporated into other areas of HR from recruitment to succession planning. Here are other ways where Community™ Skills can support your HR program:

  • Establishing Fair and Equitable Hiring Practices

During recruitment, Community™ Skills makes it possible for managers to target the right candidate they need by allowing them to define the appropriate skill level required for a role. From the five Skills stages, managers can select from the first three skill levels, Basic, Proficient, or Skilled, depending on the level of skill they need. And because assessments are purely based on the candidate’s skill level, setting starting salaries during the recruitment process becomes simpler, more objective, and easily justifiable.

  • Aligning Skills to Pay

With the five stages of knowledge mapped across the different points in the salary range, Community™ Skills makes it possible for organizations to fully utilize their salary ranges and manage pay clearly and objectively. As staff build skills, they move across the stages driving movement in pay within their salary grade. Personal biases such as gender, race, etc. will have no impact on the increase that an employee receives.

The illustration above can be applied to most grade levels.

Staff development can be tailored at every job level to be able to push out more of the work that is essential to the organization’s success.

  • Tailoring Learning and Development Assignments for Employee Growth

Through Community™ Skills, tailoring learning and development plans become a collaborative effort between the manager and staff. Because each skill stage is explicitly defined, employees can equally take ownership of their progress by providing feedback or suggestions that will tailor their initiatives to advance their skills growth.

  • Prepare for Career Pathing

Skills ratings inform managers about promotion readiness, providing objective criteria for succession and promotion decisions.

Never has there been any other solution that can address so many HR needs with just one approach. Community™ Skills not only seamlessly connects what used to be separate HR functions, but also links each of them in a way that any organization can adapt and design their respective strategies around. Contact us to learn how Community™ Skills can work for your organization.

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

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.

Follow us on our LinkedIn for more content on pay management and HR solutions.