COMPETENCY BASED PAY

Name Nisa Singh Prathyusha Kota Sachin Chandra Sagi N L N Sharma Sanga Sushrita Roy Venkata Aditya Roll No 1201064 1201074 1201084 1201094 1201104 1201114

CONTENTS
Competency Based Pay : Introduction How should competency based pay be introduced? How can the right competencies be defined? What is a competency framework? How can a competency framework be designed? How can competencies be assessed? Designing the pay structure Managing the system Advantages Disadvantages

COMPETENCY-BASED PAY : INTRODUCTION

Competencies are the knowledge-skills and the attitude needed by any individual employee to carry out their job effectively. These can be incorporated into a pay system to reward individuals who positively contribute to the overall values and objectives of an organization. This is competency based pay: rewarding the way people work, not just recognizing what they can deliver.

HOW SHOULD COMPETENCY BASED PAY BE INTRODUCED?

An employee appraisal process must already exist Managers must already have been trained to assess competencies Staff should be made aware of the competencies required and how to demonstrate them when it comes to their appraisals All employees must give their full commitment The system must be fair so that all employees are included

HOW CAN THE RIGHT COMPETENCIES BE DEFINED?

Most competency based pay systems are determined by performance indicators. Typically, the competencies needed to drive progression are quantified by senior managers through employee interviews, surveys and job analysis. The following competencies are relevant here: Core competencies that apply to any job within the organization and reflect the organization's core values The technical skills and expertise that are necessary to carry out the job Competencies relating to a specific job category e.g. leadership' for senior managers Competencies that define the contribution an employee makes to their role including:

HOW CAN THE RIGHT COMPETENCIES BE DEFINED?(CONTD..)

Communication Teamwork and Motivation Coaching Knowledge and Experience Service Delivery Liaison and Networking Investigation Analysis Initiative and Problem Solving Planning and Organizing Resources Decision Making Process and Outcomes Teamwork and Motivation Knowledge and Experience Liaison and Networking Initiative and Problem Solving Decision Making Process and Outcomes

WHAT IS A COMPETENCY FRAMEWORK?

A competency framework defines the behavior needed by an employee to achieve effective job performance. The framework should enable employees to be clear about what is expected of them in terms of their behavior and specific job role.

HOW CAN A COMPETENCY FRAMEWORK BE DESIGNED?

Authorities need to consider the following when devising a competency framework: Encourage co-operation, ownership and commitment of employees by involving them throughout the process Ensure the framework is relevant to both individual and organizational performance Include a planned analysis of relevant jobs to combine the imminent changes which will affect the ways employees work

HOW CAN A COMPETENCY FRAMEWORK BE DESIGNED?(CONTD..)

Ensure that the necessary data gathered is as objective as possible and is put into practice with discipline Ensure that the relationship between competencies and job performance is not taken for granted Make sure that the language used within the framework relates to its users and is easy to comprehend. It should also be tried and tested before it is implemented

HOW CAN COMPETENCIES BE ASSESSED?

Competencies are assessed through a regular appraisal process to facilitate pay progression within a grade. The best approach is probably to describe each job in terms of the competencies needed to do it. These can be taken from a set of common or core competencies. More complex individual competencies will need to be added for more complex senior roles.

DESIGNING THE PAY STRUCTURE

There are two established methods of competency based pay structures: broad banding and job families.
COMPETENCIES WITHIN BROAD BANDED PAY STRUCTURES

The band boundaries are defined using job evaluation and market rates. The employees' position in the band is reflective of their competency within their role. Employees' expectations can be problematic in 'open' broad bands. In some systems employers use market rate and job evaluation factors to split the bands into zones. An employees position within the band zone will depend upon their technical competencies.

DESIGNING THE PAY STRUCTURE (CONTD..)

Advantages: Employees can develop their careers horizontally on the basis of their experience and competence. Pay progression and career development can be achieved without the need for individual promotion

Disadvantages: It can be difficult to manage the expectations of employees, particularly new recruits, who may be under the delusion that they can automatically move to a much higher salary simply by doing their job satisfactorily. In fact, they actually need to develop their competencies. In managing the process, effective communication between line managers and staff needs to be put into place

DESIGNING THE PAY STRUCTURE (CONTD..)

COMPETENCIES WITHIN A JOB FAMILY STRUCTURE

Different pay structures can be established for different job families under occupational or functional groupings. As work activities and basic skills are common within these groups it is possible to set out the different levels of responsibility, skill and competence. Advantages: Career progression based on increases in skill or competence can be planned and individuals have the clarity to perceive how far they can develop within the job family

DESIGNING THE PAY STRUCTURE (CONTD..)

Disadvantages: In instances where these job families are segregated by gender it could appear that pay differentials are gender rather than content biased. In order to avoid equal pay claims managers must explain to employees and their representatives how the pay system is structured and work to encourage a better gender mix across jobs

MANAGING THE SYSTEM

To manage a competency based pay system effectively, the framework must be simple and concise so that all employees can fully grasp its meaning.

Introducing the system Initially, employees need to be given a chance to become familiar with the concept itself. To help this along, it is advisable that the framework focuses on a limited number of common basic activities. Once the system is established, the framework can be expanded. Here, it can introduce a more sophisticated structure which includes the competencies that address the specific priorities of the authority and its job families and/or employee groups.

MANAGING THE SYSTEM

Many organizations often fail to manage competency based pay systems because employees have not been sufficiently involved in the process. Before competency systems are introduced, it may be necessary to explain the following to staff: How customer focus and better team working can help change working practices and so help to improve services. Why encouraging individuals to take responsibility for their continual learning and self- development leads to an increased flexibility of the workforce through the acquisition of a wider range of skills Managers who assess their employees' competencies play a pivotal role in the overall success of the process and need to be trained appropriately

ADVANTAGES

Employees can be developed by closely associating service objectives with remuneration Rewarding employees for the acquisition of competencies provides a viable option to incremental progression based on length of service in the grade It has great appeal to local authorities because they are not profit driven and find it difficult to establish measurable achievement targets Focusing on competencies enables an organization to gain a more rounded picture of its employees

ADVANTAGES (CONTD..)

Lateral career moves can be identified in flatter structures via a competency framework If competencies emphasize attributes resulting in higher levels of quality/customer service an authority can differentiate itself from its competitors Competencies are an effective way for an authority to spell out what it expects from its employees Authorities with a series of competency levels can define a clearer progression path

DISADVANTAGES

It may unnecessarily add to the pay-bill if competencies are not constantly monitored to ensure they continue to be required for an authority's effectiveness It can be labor intensive in its introduction and sustainability and incur sizeable training and support costs Competencies are difficult to define in writing and not easy to measure There is the difficulty of making sure that managers do not distort the assessment criteria because this has the real danger of bias being introduced into an authority's pay systems