What is skill-based pay, and what are its advantages?

Question

What will be an ideal response?

Answer 1

Skill-based pay systems pay employees based on the skills they acquire and are capable of using. These systems seem to fit well with the increased breadth and depth of skill that changing technology continues to bring. An important potential advantage of skill-based pay is its contribution to increased worker flexibility, which in turn facilitates the decentralization of decision-making to those who are most knowledgeable. It also provides the opportunity for leaner staffing levels because employee turnover or absenteeism can now be covered by current employees who are multiskilled. In addition, multiskilled employees are important in cases where different products require different manufacturing processes or where supply shortages or other problems call for adaptive or flexible responses. Skill-based plans also contribute to a climate of learning and adaptability and give employees a broader view of how the organization functions.