Skill Analysis

The process for determining a skill-based structure begins with an analysis of skills. Related skills can be grouped into a skill block; skill blocks can be arranged by levels into a skill structure. To build the structure, a process is needed to describe, certify, and value the skills. Related skills can be grouped into a skill block; skill blocks can be arranged by levels into a skill structure. To build the structure, a process is needed to describe, certify, and value the skills. Employee involvement is almost built into skill-based plans. Employees and managers are the source of information on defining the skills, arranging them into a hierarchy, and bundling them into skill blocks. Organizations may use peer review, tests, or demonstrations to certify that employees possess skills and are able to apply them. Many plans require that employees be recertified, since the skills may get rusty if they are not used frequently. Skill-based plans are generally well accepted by employees because it is easy to see the connection between the plan, the work, and the size of the paycheck. Skill-based plans become increasingly expensive as the majority of employees become certified at the highest pay levels. As a result, the employer may have an average wage higher than competitors who are not using skill-based plans. Some employers are combating this by requiring that employees stay at a rate a certain amount of time before they can take the training to move to a higher rate. The question then is whether this increase in labor costs is more than offset by gains in productivity, quality, customer responsiveness, flexibility, or worker retention, for example. The bottom line is that skill-based approaches may be only short-term initiatives for specific settings.