Payroll Manager Tutorial | Using Pay for Learning Systems

Using Pay for Learning Systems

As stated before, pay for learning plans can focus on depth or breadth. In fact, there are two basic forms of skill-based pay systems, increased-knowledge-based systems and multi-skill-based systems.
Increased-knowledge or depth deals with specialists, such as: specialists in corporate law, finance, or welding and hydraulic maintenance. These are a few examples to help understand that specialists are likely paid based on their knowledge as measured by education level. Increased knowledge-based systems pay employees based upon the range of skills they possess in a single specialty or job classification. These are probably the most common skill-based pay systems and at their simplest are nothing more than technical skill ladders.
For example, skilled trades often have a pay scale that increases as employees acquire additional skills and move from an entry to a journeyman level. Similar pay progressions based upon skill level can be found in universities, law offices, and research and development labs. Increased knowledge based systems are sometimes called “Vertical” systems because pay is tied to the depth of knowledge or skill in a defined job.
Multi-skill based systems or breadth deals with generalists with knowledge in all phases of operations including marketing, manufacturing, finance, and human resource. Employees in a multi-skill system earn pay increases by acquiring new knowledge, but the knowledge is specific to a range of related jobs. This means that pay increases come with certification of new skills, rather than with job assignments. Multi-skilled based systems are a newer, less common, and more revolutionary form of skill-based pay. In this case, pay progression is tied to the number of different jobs an employee can perform throughout the entire organization. For example, in a manufacturing environment, employees might be paid higher rates based upon their ability to perform jobs upstream and downstream from their normal assignment in the production process. Maximum pay rates would be paid to employees who can perform most or all jobs within the plant.
Because they tie pay to the number of different jobs a person can perform, Multi-skilled-based systems are sometimes called horizontal systems. These will enhance the benefits of greater labor flexibility and job mobility for employees.