COMPENSATION

The Theory:

Another component of sound job design is a fair and equitable compensation system. Klein (1998) identified a pay-for-knowledge program that compensates employees for adding value to the enterprise.

Under this system, employees receive compensation based on the number and kinds of tasks they can master. This was the application in manufacturing environments but it has been developed for service and other industries.

This theory aligns with practice in that employees receive additional compensation for task mastery or a skill block of knowledge, skills and productivity.

In addition there is no upper limit automatically imposed on staff and this aligns with one policy of remunerating regardless of age or in part qualifications, provided the skill base is present, the volume level is high and the quality level is high.

The data source for much of this information is again the time records of jobs performed and also the performance based software which is used to assess staff to minimize subjectivity.

We have found that it is crucial under this system to have an adequate period of apprenticeship before evaluation occurs and in fact the first adjustments to salary often take place before this apprenticeship period had expired, in order to maintain motivation.

Lynn (1998) also draws on performance based pay and in particular in legal firms. She claims that in performance based organizations measurable objectives for all employees are negotiated, agreed on, monitored then rewarded based on performance.

She also cites 72% of lawyers believing that their profession is more of a business than a profession and firms will increasingly be moving away from seniority, credentials and contacts to performance as a measure of compensation.

Again this approach is mirrored in business where not only is the hierarchy often flat in small business, but seniority must be matched by performance and output.

People use performance thresholds not unlike those outlined by Johnson (1998) and usually these are based on output generated and the amount of time and money written off uncharged on jobs.

Copyright 2001 Winn Stone, All Rights Reserved.