1 What is the rationale for skill-

or competence-

based pay? City of Lima (Ohio) Utilities Department About a decade ago, the City of Lima (Ohio) Utilities Department created a leadership development plan as part of its competitive reorganisation strategy. At the core of its strategy was a firm determination to pay employees based on the level of their skills and performance.

Nearly a decade later, skill-

based pay became a standard employee expectation. It is now claimed that skill-

based pay played a pivotal role, along with the outcome of the department’s reorganisation, in helping to build a more independent and resourceful workforce capable of managing the utility’s service demands (Sheely et al., 2011).

UNISYS UNISYS moved away from a PRP scheme to a skill (competence)-based pay scheme.

Behaviour was assessed using criteria such as teamwork, customer orientation, innovative practices, accountability and motivation. Employees assessed using these criteria were placed in four categories, with different levels of reward associated with each category.