The Compensation Handbook, Sixth Edition: A State-of-the-Art Guide to Compensation Strategy and Design, 6th Edition

13

Paying for Skills, Knowledge, and Competencies

GERALD E. LEDFORD, JR.

Center for Effective Organizations

Implementation of skills, knowledge, and competency pay has become commonplace, and use gradually has increased in the last three decades. WorldatWork’s 2012 “Compensation Programs and Practices Survey”¹ reported that 70 percent of private-sector firms (although fewer government or not-for-profit organizations) use skill acquisition as a base pay increase criterion. However, use of such pay systems is broad but not deep. Surveys consistently show that a relatively high percentage of firms use some form of pay for skills, knowledge, and competency, but typically with just a small percentage of the workforce. Two decades ago, various authors ...