Skill-Based Pay: Fad or Classic?

Abstract

Paying employees based on their skills and abilities rather than their current job is an idea that has been around for more than 25 years. Despite strong support from leading experts, it has not achieved the level of use that many expected. Although it continues to be recommended, usage has actually declined in recent years. This article examines the skill-based pay concept using an innovative tool that applies eight criteria to determine if an idea is a management classic or passing fad. It identifies the reasons why the pay practice has endured, despite bearing the markings of a fad.