Skills, Knowledge, and Competency (SKC)

The Skills, Knowledge, and Competence (SKC) compensation structure

The Skills, Knowledge, and Competence (SKC) compensation structure rewards employees based on their success at work. Job-based pay, on the other hand, is a pay structure that pays employees based on their education and performance in the firm (Ledford et al., 2008). Following the reading of the chapter, I believe the SKC structure is excellent for motivating and enhancing performance for the following reasons:

1. SKC Functions as a Motivator

For starters, SKC functions as a motivator for employees. This is due to the fact that under the structure, one is compensated based on their contribution and performance in the organization. Employees are motivated to work hard in order to obtain more pay, hence this structure functions as a motivator. Additionally, it also promotes a self-improvement culture because all employees who are dedicated to improving themselves through growing their skills receive a reward. When employees are more dedicated, they will not only contribute to the company's success but also be inspired by the payment they get for being dedicated (Liebegott, 2015; (Ledford et al., 2008).

2. SKC Improves Retention of Staff

Another advantage of SKC is that it may improve retention of staff. Pay structure should not be ignored when one wants to retain employees because workers are most likely to stay in a company that pays them according to their skills and also for self-improvement as opposed to where they are paid according to their position in the company or experience. This will, therefore, make the company reduce the costs associated with employee turnover, for example recruitment costs, lower productivity, and many others (Liebegott, 2015).

3. SKC Boosts Corporate Transparency

Lastly, SKC boosts corporate transparency. Transparency helps in creating trust between employees, hence leading to improved engagement of employees which is a major factor that contributes to retention of employees in a company. SKC is straightforward in the core of transparency because all employees are aware of what they are supposed to do to get a promotion or a pay rise (Ledford et al., 2008).

In conclusion, SKC is the best pay structure to use for my company and current position because it is simple to implement and information relating to it is readily accessible. It should also be noted that despite being a good pay structure, it has its drawbacks, for example, it may be hard to adjust in case there is an economic downturn that leads to a wage reduction.

Question 3

The positions that one holds in a company determines the salary and wages that the person will receive. For instance, those who hold senior positions in the company usually receive more salary as compared to those who hold lower positions. For example, a manager will be paid more compared to the clerks or security guards. Furthermore, it will also affect SKC because senior employees tend to have more skills and knowledge as compared to the subordinate staff, and this will make them do more work and hence get paid more (Compensation Compass, n.d.)

The company itself has an impact on the amount of salary that employees receive. Different companies get different amount of revenues. Companies that get a lot of profits will pay their employees a lot of money while companies that receive low profits will pay its employees less money in form of salaries and wages. Additionally, a company usually decides what pay structure it is going to use. The company will do a lot of research to determine which structure is appropriate to implement. This also applies to various industries (Compensation Compass, n.d.)

Conclusively, the type of position, company or industry has an effect on the type of pay structure to use because each party has their needs hence they will use a method that think is suitable for their operations.

References

Compensation Compass. (n.d.). Factors affecting wage and salary structure. Retrieved on April 1st, 2017 from http://compensationcompass.weebly.com/factors-affecting-wage-and-salary-structure.html

Ledford, G. E., Heneman, R.L., & Max, M. (2008). 'Skills, knowledge and competency-based pay.' In The compensation handbook. USA (attached)

Liebegott, K. (August 18th, 2015). 4 advantages of competency-based pay structures. Retrieved on April 1st, 2017 from http://www.knowledgewave.com/blog/competency-based-pay-structure-advantages