Teams and Skill-based Pay (SBP)

Teams are made up of individuals who provide some degree of mutual support in the achievement of a set of shared goals. In many cases, the work functions performed within the team are broken down and assigned to individual members. This leads to a specialization of work within the team. This can be efficient in some respects, but counterproductive in others.

If the nature of the work done by individual members is not highly specialized, it is possible to have multiple members learn to do the same tasks. In other words, they learn each other's jobs. This is most common in production environments or in administrative departments of office environments. It is less practical in teams of college-trained professionals where an in-depth technical background may be required (e.g., a team of various engineers will not train electrical engineers to be mechanical engineers).

To the extent that team members can learn each other's jobs and rotate through the different positions within the team, the individual members gain a better appreciation of what is required of fellow team members. It also helps members understand what is going on before and after their part of the operation and the consequences of poor performance on others. Cross-trained team members are also better equipped to cover for absences and vacations within the team.

By paying team members for learning the various tasks performed throughout the team unit, you create a skill-based pay framework. As members learn and apply new skills on a consistent basis, they qualify for pay increases. There are practical limits to how many diverse skills a single member can learn and remain proficient on, so paying for skills beyond a certain point is not cost effective. Generally speaking, the work performed before and after a team member's position would be the primary areas for him to learn.

A rigorous program of training and evaluating members is required for a skill-based pay program to work. It is important to note that this is not pay for education -- learning alone is not sufficient -- the skills must be used proficiently on an on-going basis. This is supported by a job rotation program within the team. Another caveat is that skills cannot be learned and paid for on a 'progress at will' basis. Minimum time limits for learning and practicing a skill are required to prevent team members from simply chasing after pay raises without regard to proficiency. Time limits also make administration more manageable and ensure fairness in access to learning instead of having it be contingent on opportunity. Don't rush the system because unanticipated outside forces will intervene to slow progress from what would be assumed as normal.

For teams where cross-training and job rotation are not practical, skill-based pay may be used to give team members an incentive to gain more in-depth knowledge. This is particularly true in production operations for maintenance technicians. The journey from apprentice to journeyperson represents this type of progression. By linking pay to successful apprenticeship completion (in stages), you can create a skill-based pay program. A similiar approach might be applied to some professional jobs (e.g., progression from Enginer I, to Engr. II, to Sr. Engr.). In fact, "career ladders" represent a form of professional level SBP.

The two best environments for the use of skill-based pay are in new organization startups and in organizations undergoing significant change in job responsibilities. In both cases, intensive learning by broadening and deepening skills is part of the change. By tying learning to pay through SBP, employees have an incentive to participate actively in the change. New plants that overlook skill-based pay miss a once-in-a-lifetime opportunity to create a strongly skilled workforce that not only gains from excellent training, but also buys into a very effective pay system. Properly designed, SBP systems will generally gather fewer complaints about fairness and administration than other "time in grade" or "supervisor rating" approaches.

For more information on skill based pay, visit www.bizcenter.com and click on the books link and then select "Skill-Based Pay: Design and Implementation."