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Is Skill-Based Pay Better Than Standardized Pay?

skilled-based payIs a skill-based pay system better for your organization, or is it a better option to adopt a standardized pay scale based on years of service?

For employers in the skilled trades and manufacturing industries, this can be a determination based on several factors, including time on the job, certifications and training, employee performance, and standard pay systems that are prevalent in the specific market.

While there is a great deal of merit to a skill-based pay system, it can also be a great challenge to implement. It’s difficult to construct an “across-the-board” pay scale for skill-based payments because it’s rare to find two people with the exact same skill level in all areas of the job. There are simply too many variables and subtleties to make this pay scale easy to implement — no matter how simplistic it sounds.

In any job, it takes more than having the skills, talents, and/or certifications. The ability to manage oneself, practical experience in a real-world work environment, and depth of understanding about the position can’t be tested for or taught in books. Skill-based pay is an admirable goal in any business, despite the difficulties business owners may have in implementing it.

To choose between a skills-based pay system or a more standardized pay scale, take time to determine what most organizations in your industry choose. Also, consider that younger workers coming in may have a higher skill level due to job shortages, which may work better for a skills-based pay system than one based on seniority.

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