Skill-Based Pay Plans Weaknesses Strengths Adds to labor costs Incentive to improve skills May lead to inequity Improved perceptions employee Not cost effective if competence skills are not used Staffing flexibility Problems Employees see determining skill “big picture'' differences among employees 10 10 Skill-Based Pay Plans Strengths ❖ Incentive to improve skills ❖ Improved employee competence ❖ Staffing flexibility ❖ Employees see “big picture” Weaknesses ❖ Adds to labor costs ❖ May lead to inequity perceptions ❖ Not cost effective if skills are not used ❖ Problems determining skill differences among employees