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Human Resource Management
Finance & Accounting
Pages 4 (1004 words)
HUMAN RESOURCE MANAGEMENT <Student Name> <Date> Key Differences between Competency Based Pay and Traditional Job Based Pay Traditional job based pay consist of five steps to ensure internal and external equity. First step is conducting a salary survey so that an industry compatible salary can be identified…
In this method the employers base the wage rate on the job irrespective of the person who is doing it. The HR professionals and employers are now moving towards Competency based pay. According to this approach the employers determine the pay scale or salary range of the employee depending on his depth, types of skills and knowledge. An employee may receive a higher salary than his range if his competency level is equitable for a higher level job. Competency is the demonstrated skill, knowledge and behavior of a person that ensures and enables desired performance. There are three basic differences between the two approaches of pay scale. In the competency based approach the salary is more person oriented. The salary is based on the skills, knowledge and depth of the employee. Here a person gets paid for the knowledge and skills of the things he has the potential to do even if he is not doing it right now. Whereas in traditional method pay is job oriented irrespective of the skills and abilities of the person who is doing it. It ties the pay scale with the worth of the job. In competency based approach an employee builds competency through experience on the same or similar jobs. Whereas in job based pay the aim of the employee is not build competency (knowledge and skills) but the determinants are experience and tenure. ...
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