Competency-based pay

Competency-based pay– The knowledge-skills and the attitude required by any individual employee to effectively carry out their job are known as competency. It is possible to incorporate these into a payment system to reward individuals who positively contribute to the overall values and objectives of an organization. This is known as competency-based pay; that does not simply recognize what people can deliver but rewards the way they work. A company must integrate several factors fully within the organization before competency-based pay can 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.

Competency-based pay systems are usually determined by performance indicators. Typically, the senior managers quantify competencies needed to drive progression 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 are necessary to carry out the job.
• Competency relating to a specific job category such as ‘leadership quality’ for senior managers
• Competencies that define the contribution an employee makes to their role including
• 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

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