Success and Survival of Skill-Based Pay Plans

Abstract

Factors related to the success and survival of skill-based pay (SBP) plans are addressed in a longitudinal study of 97 facilities. Results indicate that certain design features and support variables relate to increased workforce flexibility and to SBP survival, and supervisor support also relates strongly to SBP survival. The results also show that SBP plans are more successful and sustainable in manufacturing facilities than in service facilities, and SBP survival is less likely in facilities pursuing a technical innovation strategy. Implications of the research for theory and practice regarding SBP plans, compensation systems, and human resources management innovations are addressed.