Uncertainty and More Uncertainty

With so much uncertainty in the job market, e.g. rising inflation and increasing turnover, employers are looking for the best practices, especially when it comes to things like engagement, pay structures, and empowering employees at every level of their organization. The competitive landscape demands a level of decisiveness that is for the most part, in stark opposition to current conditions.

The push to retain the best talent is causing many employers to re-examine their pay structures, while considering whether traditional job-based structures will fare better in the long-run than skills-based systems. Job-based structures are pay structures where employees are paid based on the responsibilities and experience associated with their jobs, which is not a great incentive for growth and improvement which would be better served with a skills-based structure where employees are paid based on the value of their skills, and how those skills relate to the achievement of organizational goals.

A further downside of the job-based structure is that in a season where flatter organizational structure is typically more conducive to addressing unpredictable change and never-ending dynamics, the job-based structure tends to maintain the hierarchical structure. On the other side of the coin, switching to more of a skills-based structure is not an easy task either since it would require extremely well-defined terms for skills, competencies and abilities. From a cost perspective, job-based structures are thought to also lead to top-heavy payrolls with insufficient pay at the bottom of the pyramid.

From an engagement perspective, those on the side of job-based positions would not have much incentive for growth and improvement, while those in the skills-based structure could end up in significant debate from a subjective system where a supervisor must evaluate the level of proficiency which could lead to higher levels of disagreement, lowering overall job satisfaction.

One plus however for the job-based structure is that it has the likelihood to lesson gender and minority discrimination since pay would be based on responsibilities associated with the job. That would increase the ability to regulate, removing argument for discrimination. A further downside of the skills-based structure would be the need for employers to carefully comply with all anti-discrimination laws and regulations, which could be costly and open the door to litigation. The latter could also increase competitiveness within the ranks, at a time when collaboration and teamwork are more the coveted tools for achieving goals.

It is indeed a season of uncertainty in the working world, one where even the answers to the uncertainty appear to raise yet more uncertainty.