Library Worklife

Salaries & Pay Equity

Alternative Compensation Plans

Skills-Based Pay, Gain Sharing, Temporary Pay

By Paula Singer

This article has been adapted from Developing a Compensation Plan for Your Library; Chapter 10: Trends; by Paula Singer; © 2002 by the American Library Association. Developing a Compensation Plan for Your Library is available from the ALA Store at www.alastore.ala.org.

In this issue, skills/knowledge-based pay, gain sharing, and temporary pay are described. In tough economic times, creativity is required to give employees incentives that recognize excellence while keeping the budget balanced.

Skills/Knowledge-Based Pay

Employees in a system that grant skills- and knowledge-based pay are encouraged to learn as much as they can about their careers. The library compensates employees for learning new skills related to their jobs and the library as a whole. The employee’s pay is linked to the number and type of skills the employee is qualified to perform or to the competencies acquired.

It can be designed and implemented for all employees, for certain positions, or to reward skill enrichment of incumbents. However, skills-based pay is expensive if used at all levels. It can be cost effective when offset by higher productivity; the need for less staff; and higher quality, more productive, and more flexible employees. If a library is having difficulty recruiting employees with certain skills, this type of program may also be structured so the library can recruit internally for employees. Employees who have a high potential to learn but who may not currently have minimum qualifications to enter the difficult-to-recruit position can have the opportunity to develop needed skills.

Gain Sharing/Success Sharing

Gain or success sharing is any unit-wide or organization-wide incentive designed to reward all members for improved performance. The institution measures "gains" or real dollar savings that resulted from the performance of the unit or organization and shares with all employees based on a predetermined formula incorporating the savings. Gain-sharing programs focus on improving quality and productivity, increasing the pace of service, reducing costs, and improving employee relations. Employee involvement and information sharing are critical components of gain sharing.

Temporary or Supplemental Pay

Temporary or supplemental pay is compensation that is in addition to, but not part of base pay. It is designated for a period of time for "hot" skills or special project work. Included are employees that have been assigned a task of higher scope and responsibility level, who should be given "acting" pay while in that role, in a separate check that is not attached to base pay. In this economy, temporary pay or a separate salary scale is often recommended for positions requiring "hot skills." Project pay is rarely as generous as temporary pay for the skill of the day. When ranges are wider and realistic reflect the market, when employees are expected to work flexibly and not stay within the four corners of a narrow job description, working on special projects becomes an important part of many jobs.

This leads to one of the concept’s two major shortcomings. First, it is hard to demarcate and justify when the extra project falls into the employee’s regular job versus being "special." This can be a difficult and disagreeable task if the employee or his or her manager disagree. Second, the "add on" to base salary often results in an expensive, permanent pay raise because sometimes management is reluctant to "take away" salary.

In the next issue, broadbanding and pay-for-performance will be described.

You may contact Paula Singer at pmsinger@singergrp.com.