Describe competency-based pay. 14. Explain how team-based compensation should be determined.

Management, Loose-Leaf Version
13th Edition
ISBN:9781305969308
Author:Richard L. Daft
Publisher:Richard L. Daft
Chapter12: Managing Human Talent
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13. Describe competency-based pay.

14. Explain how team-based compensation should be determined.

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INTRODUCTION

The competency-based pay plan is a plan which encourages employees of an organization to reach the pay rate by taking charge of improving their knowledge and skill.

EXPLANATION
  1. Competency-based pay refers to a pay structure that compensates according to the knowledge, skill of an employee rather than his position or job title in the organization. It focuses to increase the potential of the employees. It creates self-motivation, increased transparency, reduced turnover, etc. 
  2. Team-based compensation refers to the compensation provided by an organization as a reward to a group of members or a department for the successful completion of a task or project. The compensation recognizes the team as a whole and divides the reward equally among the team members.
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