Summarize the findings of studies and anecdotal information about the characteristics of employers that use person-focused pay programs as well as the effectiveness of these programs

Question

What will be an ideal response?

Answer 1

Answer: A wide variety of employers have established person-focused pay programs. Some targeted studies and anecdotal information suggest that companies of various sizes use person-focused pay programs. Many companies which use this kind of pay system employ between approximately 150 and 2,000 employees, the majority of whom operate in the manufacturing industry. The average company age is approximately 10 years. This study also conjectures that hundreds of Fortune 1000 firms use skill-based pay for manufacturing or production workers. There is limited published evidence regarding the effectiveness of person-focused pay plans. One study found that a skill-based pay plan in a manufacturing setting increased plant productivity by 58 percent, lowered labor cost per part by 16 percent, and showed favorable quality outcomes (82 percent scrap reduction). Another study demonstrated that participants in a skill-based pay program increased their skills, and maintained increased skill levels. A more recent study examined attitudes among participants in a skill-based pay plan. The researchers found that these plans are perceived to produce superior work outcomes.