COMPENSATION MANAGEMENT
HRM3705
Study unit 6
Internally consistent pay systems
Prepared by Magda Bezuidenhout,
, Learning outcomes of study unit 6
Once you have completed study unit 6, you should be able to:
• Discuss the different views on the meaning of competency-based pay
• Contrast between person-focused pay plans, pay-for-knowledge pay; and
skill-based pay programmes
• Critically discuss the limitations of internally consistent pay systems
• Critically discuss the relationship between job analysis, job evaluation,
internal structure and internal consistency
• Discuss the importance of job evaluation as well as job analysis in the
compensation management context
• Discuss the process of job evaluation and the reasons for its
implementation
• Critically discuss the alternatives to job evaluation
• Explain the importance of job analysis and job evaluation and its
relationship to internal consistency
Prepared by Magda Bezuidenhout,
, Definitions
Job-based Rely on work content – tasks behaviour and responsibilities
structures
Job-based systems Compensates employees for jobs they currently perform and focus on jobs
as the basic unit of analysis to determine the pay structure; hence job
analysis is required. This type of plan pays employees for the job to which
they are assigned, regardless of the skills they possess
Person-focused pay These type of plans generally reward employees for acquiring job-related
plans competencies, knowledge, or skills rather than for demonstrating successful
job performance
Job based pay Compensates employees for jobs they currently perform
Competency-based Recognises what people accomplish at work rather than rewarding the
reward system acquisition of additional knowledge or skills. Here two types are identified:
pay for knowledge and skill-based pay.
Pay for knowledge Reward managerial, service or professional employees for successfully
plans learning specific curricula. Thus paying employees for the amount of
knowledge they possess
Skill-based pay This term is mostly used for employees who do physical work (manual
labour) and increases these workers’ pay as they master new skills.
Prepared by Magda Bezuidenhout
HRM3705
Study unit 6
Internally consistent pay systems
Prepared by Magda Bezuidenhout,
, Learning outcomes of study unit 6
Once you have completed study unit 6, you should be able to:
• Discuss the different views on the meaning of competency-based pay
• Contrast between person-focused pay plans, pay-for-knowledge pay; and
skill-based pay programmes
• Critically discuss the limitations of internally consistent pay systems
• Critically discuss the relationship between job analysis, job evaluation,
internal structure and internal consistency
• Discuss the importance of job evaluation as well as job analysis in the
compensation management context
• Discuss the process of job evaluation and the reasons for its
implementation
• Critically discuss the alternatives to job evaluation
• Explain the importance of job analysis and job evaluation and its
relationship to internal consistency
Prepared by Magda Bezuidenhout,
, Definitions
Job-based Rely on work content – tasks behaviour and responsibilities
structures
Job-based systems Compensates employees for jobs they currently perform and focus on jobs
as the basic unit of analysis to determine the pay structure; hence job
analysis is required. This type of plan pays employees for the job to which
they are assigned, regardless of the skills they possess
Person-focused pay These type of plans generally reward employees for acquiring job-related
plans competencies, knowledge, or skills rather than for demonstrating successful
job performance
Job based pay Compensates employees for jobs they currently perform
Competency-based Recognises what people accomplish at work rather than rewarding the
reward system acquisition of additional knowledge or skills. Here two types are identified:
pay for knowledge and skill-based pay.
Pay for knowledge Reward managerial, service or professional employees for successfully
plans learning specific curricula. Thus paying employees for the amount of
knowledge they possess
Skill-based pay This term is mostly used for employees who do physical work (manual
labour) and increases these workers’ pay as they master new skills.
Prepared by Magda Bezuidenhout
