- Employers may want to consider skill-based compensation programs — which offer workers temporary bonuses for acquiring skills — as a way to build a workforce that meets current and future needs, Aon said in a new report on compensation. By adopting these programs,"businesses are better able to upskill their current workforce rather than rely exclusively on hiring new talent" and can encourage workers to acquire new proficiencies, said Aon.
- The key to a skill-based compensation program is making training and certification a clear part of the annual review process, Aon noted. Employees should be encouraged to acquire skills that matter to their own personal development, even if that employee is not interested in management.
- Aon proposed six steps for a skill-based compensation program: 1) identify the skills categories in their organization; 2) identify the skills their organization needs; 3) assess their current workforce; 4) establish a skill-based bonus system and certification program; 5) decide whether to follow a traditional or progressive skill-based compensation model; and 6) establish a monitoring system to ensure that skills are keeping pace with technology.
Skill-based compensation programs can not only help employers keep and maintain a proficient workforce, but they also can provide clear paths toward advancement, serving as a talent retention tool. In fact, a LinkedIn study showed that employees stay on staff longer when they can advance or make a lateral move internally. Similar results from a Glint study found that workers who believe they have a chance to grow internally are more engaged.
Money still tops workers' incentives for seeking or accepting a job, although other incentives have become nearly equally as important, such as better benefits, more flexible work schedules and development opportunities. Nevertheless, a Mercer study released in July found that 1 in 5 U.S. workers said they'd be willing to quit their jobs for more money.
Employers offering skilled-based compensation also may be able to satisfy workers' desires for higher pay. According to data from HRO Today Magazine and outsourcing firm Yoh, confidence among workers was at record-high levels in late 2019, which means they expect wages to increase going into 2020. But while wage increases may not be rising far above the 3% mark just yet, employers have increasingly turned to variable pay bonuses to make up the difference — and paying employees for learning new skills may just fit the bill.