You’ve heard of “pay for performance.” But many organizations are shifting the way they hire and promote from a job-centric point of view to a skills-centric point of view. Perhaps, then, “pay for skills” is a more appropriate way of compensating people to help attract, build and retain critical skills.
In a recent Mercer survey of over 400 companies across the globe, 46% of participants say they do not have programs that link pay to the development of skills.
But, to deliver on the primary aim of attracting and retaining critical skills, employers must increase pay for skills across the employee lifecycle.
Pay for skills can take many forms and should align with your overarching rewards and talent strategy. For some organizations, pay for skills will revolutionize the way workers are paid. For other organizations, paying for skills represents an opportunity to supplement or support existing rewards programs.
When done right, employers can use skills-based market insights previously unavailable to them to inform the way they determine pay levels.
Increasing transparency in the process allows employees to find out which skills are most valued and what skills they will need for future advancement. And both employees and employers reap the gains that come from actively supporting skills development, including more engaged employees, more stimulating careers and employees’ increased ability to thrive within organizations for more extended periods.
Here are five tips for succeeding if you’re interested in creating a “pay for skills” program.
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