skill-based pay and skill seeking

SKILL-BASED PAY AND SKILL SEEKING

Brian Murray

University of New Hampshire, Durham, NH, USA

Barry GerhartVanderbilt University, Nashville, TN, USA

Much discussion has been devoted to why organizations might wish to use

skill-based pay (e.g., its hypothesized effects on organizational outcomes

and fit with organizational design and processes). However, there has been

little attention given to conceptual development of the ``how'' of skill-based

pay in terms of how it affects key employee beliefs, intentions, and

behaviors. To begin to address this omission, we offer a model of perhaps the

most central process, the individual employee's skill seeking under skill-

based pay. Using a planned behavior approach, we propose that workers'

choice of whether or not to progress through the pay structure is a function

of the workers' attitudes (expectancies of the pay, training, job and personal

outcomes associated with skill-based pay), subjective norms (the develop-

mental, contribution, and achievement norms that develop under skill-

based pay), and perceived behavioral control (the individual's perceived pay-

related knowledge, self-efficacy, and support). Further, we propose that the

design and implementation of skill-based pay play an important role in

moderating whether workers' intentions to skill seek become skill-seeking

behavior through their influence on perceived behavioral control.

Skill-based pay has become a component of many U.S. companies' pay

systems. As evidence, the percent of large American corporations using

skill-based pay for at least some portion of their workforce grew from under

10 percent in 1986 (Gupta et al., 1986b) to over 50 percent in 1990 (Lawler,

Mohrman, & Ledford, 1992) to 60 percent by 1993 (Ledford, Lawler, &

Mohrman, 1995). Likewise, Fay, Risher, and Mahony (1997) reported that

about 20 percent of business or organizational units they surveyed had

adopted skill-based pay within the most recent 3 years to cover some portion

of their employees and another 20 percent of those surveyed were considering

its adoption. In addition, there is evidence that in some cases, skill-based pay

Direct all correspondence to: Brian Murray, Management Department, University of New Hampshire,

Durham, NH, 03824, USA, E-mail: [email protected]

Human Resource Management Review Copyright # 2000

Volume 10, Number 3, 2000, pages 271±287 by Elsevier Science Inc.

All rights of reproduction in any form reserved. ISSN : 1053 ± 4822

can provide positive benefits to organizations (Jenkins, Ledford, Gupta, &

Doty, 1992; Murray & Gerhart, 1998). Unfortunately, however, research

describing how it works is limited.

Skill-based pay is a base wage system that structures pay levels, differen-

tials, and criteria according to the skills an employee possesses, demonstrates,

and/or applies (cf. Franklin, 1988; Ingram, 1990; Jenkins et al., 1992). It

compensates individuals for demonstrating increased depth, breadth or ver-

tical acquisition of work related skills or knowledge (Jenkins & Gupta, 1985;

Lawler & Jenkins, 1992; Ledford, 1991b; Luthans & Fox, 1989; Recardo &

Pricone, 1996).

Discussion and research on skill-based pay have focused primarily on

estimating its prevalence (e.g., Gupta et al., 1986b; Hewitt Associates, 1989;

Lawler, Ledford, & Mohrman, 1989; Lawler et al., 1992), describing plan

components (e.g., Jenkins & Gupta, 1985; Lawler & Ledford, 1987; Lawler,

1991; Recardo & Pricone, 1996; Tosi & Tosi, 1986), and proposing organiza-

tional outcomes (e.g., Bunning, 1989; Franklin, 1988; Gupta et al., 1986a;

Jenkins & Gupta, 1985; Lawler & Ledford, 1987; Tosi & Tosi, 1986). While this

descriptive and results-level emphasis has been important and informative, it

has avoided the development of a research framework and provided little

attention to the process or behavioral-level that is most directly impacted.

Specifically, will individuals seek skills? The assumption seems to have beenÐ

if you pay for it, they will learn.

Yet, we know that incentive plans are rarely so simple in their design and

execution and that success or failure depends on how employees react to the

specific characteristics of the plan (Gerhart, forthcoming). Likewise, we know

that the motivation to seek skills and training is more complex than a simple

stimulus±response model (Noe, 1986; Noe & Schmitt, 1986; Noe & Wilk, 1993).

Our goal then is to develop a model that helps explain how an organiza-

tional intervention, skill-based pay, influences an individual acting within

a pay for skills environment. Thus, we focus on employee skill seeking

and advancement through the pay structure because we believe that these

processes are central to the success or failure of skill-based pay programs.

PREVIOUS RESEARCH ON SKILL SEEKING AND ADVANCEMENT

With the exception of the lowest skill levels, skill seeking under skill-based pay

is typically a voluntary activity (Jenkins et al., 1992). Individuals can and do

choose to seek, and in some cases not to seek, different levels of skill

acquisition (Murray & Gerhart, 1998). While no empirical study has specifi-

cally tested skill level progression rates, Murray and Gerhart (1998) reported

in their study of one skill-based pay plan that 6 percent of workers stayed at a

particular pay level while coworkers with greater and lesser tenure progressed

beyond them in the pay structure.

Likewise, Jenkins et al. (1992) reported that in the sample of pay plans

which they surveyed, the typical employee only mastered about 68 percent of

HUMAN RESOURCE MANAGEMENT REVIEW VOLUME 10, NUMBER 3, 2000272

the available skill units and only 10 percent of employees tended to reach the

highest pay level. They accordingly concluded that it is often the case that

employees choose to stop seeking skills prior to ``topping out.'' In contrast, other

authors have reported that in some organizations, employees seek skills and

progress so quickly through the skill-based structure as to top out (Lawler &

Lawler & Ledford, 1987; Luthans & Fox, 1989), causing organizations to

impose vacancy quotas on the progression through pay levels (Jenkins &

Gupta, 1985; Luthans & Fox, 1989).

Given the limited empirical and case literature, it is difficult to form

conclusions regarding the rates of individuals' choices to, or not to, seek skills

and pay advancement. Exacerbating this problem is that most studies of

skill-based pay which make it to publication report primarily success stories

(e.g., Jenkins et al., 1992; Murray & Gerhart, 1998; Parent & Weber, 1994; cf.

Morris, 1996). It is likely, however, that poorly managed skill seeking is one

source of plan failure and may therefore be underreported in the literature.

As evidence, authors have noted the difficulties in implementing skill-based

pay associated with the availability of training and training resources (e.g.,

Dewey, 1994; Jenkins et al., 1992; Lawler & Ledford, 1992; Ledford, 1991a;

Morris, 1996).

Our reading of the literature suggests that some basic, yet important

questions remain unanswered. These include: (a) what are the components

of skill-based pay that affect individual perceptions and attitudes toward the

intention to seek skills and progress through the pay structure?; (b) what are

the characteristics of the skill-based pay context that influence the intention to

seek skills and advance pay levels?; and (c) how might skill-based pay affect

the social or work group influences on the intention to seek skills within a pay

for skills environment?

SKILL-SEEKING BEHAVIOR UNDER SKILL-BASED PAY: A PLANNEDBEHAVIOR MODEL

At a general level, we hypothesize that skill seeking is a function of

characteristics of both the skill-based pay plan and the individual. Although

there is generally one plan across a group of employees, individual differ-

ences among the employees may yield different behavioral outcomes. Some

individuals may thrive under skill-based pay, while others may withdraw.

Likewise, an individual may react positively to one skill-based pay program,

but withdraw from another, differently designed plan. At the same time,

plans with particular design and implementation features may be more or

less likely, on average, to result in skill seeking. In other words, the specific

characteristics of a skill-based pay program direct, encourage, or constrain

skill seeking and acquisition.

We have chosen to approach this problem from a cognitive choice perspec-

tive which defines differences between intention to behave and actual beha-

vior, and which recognizes that there are both perceived and actual constraints

SKILL-BASED PAY 273

on behavior. This perspective is best represented by Ajzen's (1988, 1991)

theory of planned behavior.

Ajzen developed a model of behavioral choice after the theory of reasoned

action (Ajzen & Fishbein, 1980; Fishbein & Ajzen, 1975) that included three

primary determinants of an intention to behave. The first of these was

attitudes toward behaviors, which are behavioral beliefs derived from expec-

tancy±value evaluations about an object and its association with other objects,

characteristics or events (Ajzen, 1991; Fishbein & Ajzen, 1975; see also Vroom,

1964). The attitude was formally defined as proportional to the sum of the

products of belief strength by the subjective evaluation of the belief's attribute

(Ajzen, 1991).

The second determinant was subjective norms. This construct was developed

from normative beliefs, which are ``concerned with the likelihood that impor-

tant referent individuals or groups approve or disapprove of performing a

given behavior'' (Ajzen, 1991, p. 195). Formally, subjective norms were defined

as proportional to the sum of the products of the normative belief strength by

motivation to comply (Ajzen, 1991).

The third determinant was perceived behavioral control, which is the

defining difference between the theory of reasoned action and planned

behavior. It refers to the individual's beliefs about his or her ability to

control behavior. These beliefs are a function of the available resources,

opportunities, obstacles and impediments, and may be based on either

personal experience or others' experiences (Ajzen, 1991). Ajzen (1991) defined

perceived behavioral control formally as proportional to the sum of the

(non)existence of a controlling factor by an estimate of the power of that

factor to facilitate or inhibit performance.

Ajzen (1988, 1991) proposed that the preceding three beliefs directly

influence an individual's intention toward a specific behavior. However,

perceived behavioral control plays a particularly important part in the theory

because it is additionally hypothesized to moderate the relationship between

intention and behavior. Ajzen (1991, p. 182) notes that although behavior is

typically volitional to an important degree, it is also true that it usually

``depends to at least some degree on such nonmotivational factors as avail-

ability of requisite opportunities and resources'' (p. 182). This fits well with

what we have learned from the skill-based pay literature regarding factors

such as access to training and certification as factors that may influence skill-

seeking intentions and behaviors.

We adapted Ajzen's model to the skill-based pay context (see Fig. 1) by

specifying skill-based pay plan characteristics and individual characteris-

tics as determinants of specific skill-based pay relevant attitudes, sub-

jective norms, and perceived behavioral control. We defined the

behavioral performance as skill seeking rather than skill acquisition

(cf., Ackerman, 1987; Kanfer, Ackerman, Murtha, Dugdale, & Nelson,

1994; Proctor & Outta, 1995) because we believe that skill-based pay

more directly influences the former, while training and development

systems facilitate the latter. We did recognize, though, that skill-based


pay serves a motivational role for trainees and influences the training's

content and context.

It is important to note that the Ajzen model takes an approach to person

characteristics that is different from personality trait models. Ajzen (1991)

distinguishes between what he refers to as generalized versus behavior-

specific personal characteristics. Traits such as locus of control and self-esteem

fall in the former category, whereas attitudes, subjective norms, and perceived

behavioral control fall into the latter category. A fundamental premise of

Ajzen's model is that specific behaviors are better predicted by behavior-

specific person characteristics than by more traditional personality traits,

which are seen as influencing behavior only insofar as they influence inten-

tions through the three behavior-specific person factors specified in the model.

Therefore, to the extent that big five characteristics (e.g., conscientiousness),

anxiety, locus of control, and general self-concept measures matter (Colquitt,

Lepine, & Noe, 1998), their effects would be indirect. The same would be

hypothesized regarding other person factors included in the Colquitt et al.

study such as cognitive ability and demographics like age and gender.

It is also important to note that the behavior-specific factors in Fig. 1

capture situational aspects insofar as these influence employee beliefs. Thus,

although the situational factors in Fig. 1 all have to do with skill-based pay, it

is clear that the behavior-specific factors will also be influenced to a significant

degree by other contextual factors. For example, we would expect culture,

Figure 1. A Planned Behavior Model of Skill Seeking under Skill-Based Pay

SKILL-BASED PAY 275

other aspects of the pay strategy, and group norms regarding development,

contributions, and achievement to influence subjective norms.

Skill-Seeking Behavior

Planned behavior theory predicts specific rather than general behavior

(Ajzen, 1991). While individuals may in general seek training and develop-

ment opportunities, skill seeking under skill-based pay are those enrollment

or engagement behaviors specifically performed by the individual to facil-

itate the acquisition of skills rewarded by the skill-based pay program. We

define skill-seeking behavior as informal or formal activities on the part of

the employee driven by motivation to learn and acquire skills. We define the

dimensions of skill-seeking behavior to include formal engagement, which is

the enrolling and participating in organizational training programs, perso-

nal pursuit, which is exploring opportunities for self-directed learning, and

information search, which is searching for information about available

training opportunities.

Attitudes Toward Skill Seeking

Just as the target behavior is explicitly defined in planned behavior theory,

so must attitudes be specific rather than general (Ajzen, 1991). Ajzen (1991)

reviewed work on the relationship between general dispositions, like locus of

control, and specific behaviors and illustrated the lack of relationship. He

concluded that general dispositions and attitudes better serve to explain a

person's typical rather than specific behavior. Accordingly, we have included in

the model constructs specific to skill seeking and skill-based pay environments.

Work-Related Expectancies. There are two expectancies directly influenced by

skill-based pay, pay level increases and work composition changes. Because

skill-based pay assigns wage increases for skill acquisition and certification

(Gerhart & Milkovich, 1992; Jenkins et al., 1992; Lawler, 1991; Lawler &

Ledford, 1987; Ledford, 1991a; Tosi & Tosi, 1986), individuals who value more

pay will be drawn to and have a more positive attitude toward avenues for

learning and advancement. To the extent that the individual believes skill-

seeking behavior will lead to opportunities for pay increases and desires more

income, he or she will have a more favorable attitude toward and greater

intention to engage in skill-seeking behavior of all forms.

Skill acquisition and certification are also accompanied by changes, or

potential changes, in the content of the individual's work activities (Ledford,

1991b; Murray & Gerhart, 1998; Tosi & Tosi, 1986). The individual may

positively or negatively value the increased variety or complexity of the

work. We expect negative valuation to be held by individuals who perceive

that the increase in duties will cause undesired stress, role ambiguity,

cognitive or physical demands, or performance failure risk, or more simply,

who will be required to engage in activities they find unpleasant. Negative


valuation of job composition change for individuals seeing skill seeking as

the first step toward changing job activities will cause an intention not to

engage in skill-seeking behavior.

Alternatively, positive valuation will be held by individuals who desire an

enlarged or enhanced role and greater understanding or control of their work.

To the extent that the net job composition valuation is positive and individuals

see skill seeking as an avenue to achieve a change in job activities, they will

develop a more positive attitude toward skill-seeking behavior and have a

greater intention to seek skills.

Training System Expectancies. Training system expectancies regard formal

engagement skill-seeking behavior. These expectancies have two dimensions,

trust in the training and the training experience. Trust in the training refers to

a belief that the training is useful for achieving the ultimate goal of learning.

Trust is developed both through past experience with the training program

and through received knowledge about the reputation and quality of training

in the organization. To the extent that the organization is able to facilitate

greater trust in the individual, he or she will develop a stronger intention to

skill seek.

Attitudes derived from the training experience, on the other hand, refer not

to the learning outcomes of training, but rather to an affective or hedonic

response to past training experiences, including the process of enrolling in

training. Attitudes resulting from past training experiences are important for

understanding future learning motivation. Positive attitudes may be devel-

oped through experiences where the individual's self-esteem was supported or

where he or she was entertained or challenged, experienced positive, self-

affirming feedback, or engaged in pleasurable social interactions. Negative

attitudes, on the other hand, may result from humiliating, boring, overly

difficult, stressful, or demoralizing experiences during training. The intention

to engage in skill-seeking behavior will be positively related to the net training

experience expectancy and resulting attitude.

Even though the individual may have both low trust and negative experi-

ences, he or she may still have an intention to seek skills. In lieu of formal

engagement, the individual may choose to skill seek through personal pursuit.

Like formal engagement, the attitude toward personal pursuit will be a

function of both past experience and received knowledge about alternative

training, including both its outcome and experience expectancies. We expect,

however, that due to the increased personal cost of self-directed learning

compared to organization-provided learning and the difficulty of finding

directly relevant learning opportunities especially for firm specific skills, all

else equal, the individual's primary attitude formation will be from formal

engagement expectancies.

Personal Growth Expectancy. Because the development motivated by skill-

based pay can potentially provide the individual interesting and challenging

learning opportunities, the individual's growth need strength may play a role

in determining the intention to seek skills. Growth need strength has been

SKILL-BASED PAY 277

proposed to be an important moderator of how individuals respond to job

characteristics (Hackman & Lawler, 1971; Hackman & Oldham, 1976, 1980)

and changes in those characteristics (Graen, Scandura, & Graen, 1986).

Further, it has been demonstrated to be related to employees' appraisals of

involvement program outcomes and participation in employee involvement

programs (Allen, Lucero, & Van Norman, 1997).

In order to evoke this attitude toward skill-seeking behavior, the content of

skill-based pay and the process of learning must be personally interesting or

challenging, or represent a ``growth'' experience for the individual. It may

require that some skills be general, or more related to the person, than firm

specific, or related to equipment or job tasks. To the extent that the person

values personal development and believes that skill seeking will lead to a

personal or professional growth experience, he or she will develop stronger

intentions to engage in skill seeking behavior.

Achievement Expectancy. Individuals high in need for achievement desire

more challenging work and perform better in enriched jobs (Steers & Spencer,

1977). Because skill seeking can be a challenging experience with opportu-

nities for failure or success, its certification process delivers a tangible

indicator of achievement, and it creates the potential for enhanced job design,

individuals with a professional achievement motivation, or a need for profes-

sional achievement, may exhibit more positive attitudes toward skill seeking.

To the extent that these individuals believe skill seeking is an avenue toward

professional achievement, they will have stronger intentions to skill seek.

Subjective Norms about Skill-Seeking Behavior

Norms and culture can both influence and be influenced by the pay system

(Lawler, 1987; O'Reilly, 1989; Schein, 1992) Under skill-based pay, the in-

dividual may anticipate the (dis)approval by others of choices whether to

pursue higher skill levels. These referent others can include both the manager

and coworkers. The manager may have feelings about individuals who select

out of the skill-seeking process, and coworkers, especially interdependent team

members, may judge the usefulness of people who stop developing their skills.

Alternatively, the coworkers may have developed a norm of noncompliance

with management initiatives or a culture of underachievement (e.g., Roy, 1952;

Whyte, 1955); that is, individuals who engage in behaviors to increase

productivity or to distinguish themselves through work may be looked upon

as oddities or undesirable. Consistent with Ajzen (1991), individuals faced with

the opportunity to skill seek will first estimate the level of approval or

disapproval of each referent and then adjust by how much they care about

the referent's assessment. The net of all assessments is positively related to

the resulting intention to seek skills (cf. Noe & Wilk, 1993).

Development Norm. The development norm refers to the learning culture of

the organization. To the extent that the organization has a history and

expectation of developmental activities, the greater will the individual expect


disapproval from selecting out of skill seeking from both managers and cow-

orkers. Individuals who value their subjective standing in this culture, as

evaluated by managers and coworkers, will consequently have greater inten-

tion to skill seek.

Contribution Expectations. Skill-based pay has been associated with a variety of

work systems (Lawler, Ledford, & Chang, 1993). Those systems which demand

more from individuals may enact cultures where useful contribution to

production is valued. These environments can be typified by employee involve-

ment and participation programs, ranging from quality circles to self-managed

teams. In this context, the individual can expect to be judged more harshly

when he or she chooses to constrain his or her maximum potential contribution

level. Consequently, individuals who value their subjective standing among

coworkers in high demand work environments will have a greater intention to

skill seek.

Achievement Norm. An achievement-based culture values behavior that is

directed toward tangible successes. The informal beliefs or rules in this

environment encourage individuals to engage in competitive behaviors and

would censure withdrawal or limiting behavior. Further, the formal systems

associated with this culture may reward based on performance. Under skill-

based pay, the primary achievement related activity is skill seeking and

certification. In this context, individuals who value their subjective standing

among coworkers will have a greater intention to skill seek.

Perceived Behavioral Control

Control perceptions under skill-based pay arise from the individual, the pay

system rules, the content of the skill blocks, participation, and the activities of

management. Ajzen (1991) offers self-efficacy (Bandura, 1977) as one way to

conceptualize an individual's perceived behavioral control. It subsequently has

been shown to predict behavioral intent and choice across a number of studies

(Sadri & Robertson, 1993). Gist and Mitchell (1992) summarized the various

determinants of self-efficacy to include task attributes, interpersonal and task

environment, ability, knowledge, skills, personal characteristics, performance

strategies, and effort.

From this perspective, the individual assesses whether if he or she at-

tempted the behavior, he or she would perform successfully. Under skill-based

pay, resources upon which the individual may perceive that he or she can draw

to perform are knowledge of the pay administration activities and rules,

prerequisite or content knowledge of the required skills, and access support

from managers.

Impediments, on the other hand, include an ignorance of the procedures for

formal engagement, insufficient prerequisite preparation to skill development,

and management activities or skill-based pay rules which limit access to

training. To the extent that the individual perceives that the resources are

available and provide sufficient facilitation, net of the existence and inhibiting

SKILL-BASED PAY 279

power of the impediments, he or she will have a stronger intention to seek

skills (cf. Noe & Wilk, 1993, see also Mathieu, Martineau, & Tannenbaum,

1993; Mathieu, Tannenbaum, & Salas, 1992).

Knowledge. There are two forms of knowledge under skill-based pay about

which the individual can self-assess to determine his or her control belief.

First, the individual can evaluate whether he or she understands the rules by

which the skill-based pay system operates and which determine access to skill

development opportunities. An intention toward formal engagement skill

seeking will be inhibited to the extent that the individual perceives deficient

knowledge, ambiguity, or incomplete information risk about how to enter or

participate in the development system.

Second, the individual can self-assess his or her readiness to take on new

skills or knowledge. He or she can evaluate this based on acquired information

from the formal system, for example, prerequisite requirements, from personal

experience, like past failure, or from received information, for instance, cow-

orker assessments of the skill development experience. The greater the

individual feels that he or she has insufficient preparation, the stronger will

be the inability-to-perform judgment. The lower the perceived content knowl-

edge, or prerequisite knowledge, the weaker will be the intention toward

formal engagement skill seeking.

Despite the weakening effect of knowledge impediments on formal engage-

ment skill seeking, perceived deficiencies may lead to forms of remedial skill

seeking. First, the individual may seek to increase system knowledge through

information seeking behaviors. The more the individual perceives that there

are accurate, reliable, accessible sources of information, the stronger will be his

or her information search skill seeking intention. Second, the individual may

seek to develop prerequisite knowledge through personal pursuit. To the

extent that individuals perceive remedial training to be available and afford-

able, the benefit of increased pay outweighing the cost of self-directed learning,

they will have stronger intentions to engage in personal pursuit skill seeking.

Participation. Participation facilitates individual's feelings of control and own-

ership over their work practices (Porter, Lawler, & Hackman, 1975). Likewise,

skill-based pay has been associated with greater employee involvement and

participation (Lawler et al., 1993). Therefore, as individuals participate in the

development of the skill-based pay program, they develop perceptions of

familiarity with the workings and content of skill blocks, related training,

and rules (Jenkins & Lawler, 1981). Due to greater involvement and subse-

quent feelings of control and ownership, workers will exhibit stronger support

of the skill-based pay program, including intentions to participate through

skill seeking.

Management Support. Under skill-based pay, individuals rely on management

to allow them to engage in training, to sit for certification, and to progress up

the pay levels (Dewey, 1994; Jenkins et al., 1992; Jenkins & Gupta, 1985;

Lawler & Ledford, 1992; Luthans & Fox, 1989; Ledford, 1991a; Morris, 1996).


Depending on the behavior of supervisors and the system rules, individuals

may perceive that managers inhibit or facilitate skill seeking (Noe & Wilk,

1993). Individuals will perceive that their control is limited when managers

restrict or do not allow time away from the production line for training

(Salinger, 1973), system rules ration training opportunities, and vacancy or

payback rules restrict pay advancement. The greater the perceived limitations

on skill seeking and reward attainment, the weaker will be the intention to

seek skills.

Skill-Based Pay, Intention, and Behavior

The components of a skill-based pay program and the management of the

associated pay communication play an influential role in determining the

extent to which intentions become skill seeking behavior. Skill-based pay has

been characterized by its rules including certification (Recardo & Pricone,

1996), vacancy-requirements (Jenkins & Gupta, 1985; Luthans & Fox, 1989),

and payback or performance time (Jenkins et al., 1992; Ledford, Tyler, &

Dixey, 1991). Each of these is specifically meant to limit progression through

the skill-based pay structure. Accordingly, we expect that they will affect the

translation of intentions into skill seeking behavior either directly or indirectly

by influencing perceived behavioral control. Important moderators also are

access and information which rely on the interaction between the information

management system and the workers' information seeking. Access and infor-

mation refer to the existence of training opportunities, knowledge of the

procedures necessary to pursue training and rules regarding entrance to

training programs, and ability to attend training or devote time.

Management controls the scheduling of training and the allowance of

work time for training; however, the individual's unique circumstance

determines the ability to devote time. Therefore, as the net time increases

individuals' intentions to seek and acquire skills will become actual skill

seeking behavior.

Knowledge is also controlled by the management and the individual.

Management determines how much information is made available and in

what format it is provided. Management can communicate which skills are

valued, how they are acquired and certified, and what rewards will be

received. The individual, on the other hand, focuses on and remembers that

information which he or she believes is most important to the job, the

ability to get into and succeed in training, or achieving other work outcomes

(Markus & Zajonc, 1985). The selective attention determines the accuracy

and completeness of the information upon which he or she acts. To the

extent that management provides information to facilitate skill seeking in a

form that is easily understood by the individual and clearly ties skill-based

pay to the job, training, and pay outcomes, the individual will more often

turn intentions into actual skill seeking.

Participation also plays an important role in workers' information or knowl-

edge. It is a vehicle for increasing the ``amount and accuracy of information

SKILL-BASED PAY 281

workers have about work practices and the environmental contingencies

associated with them'' (Porter et al., 1975; see Steers, Porter, & Bigley, 1996,

p. 351). Through participation, individuals have direct access to information

about the workings of the pay program, including skill-seeking rules, and may

play a part in designing those procedures. Therefore, as individuals participate

in the design of the skill-based pay program they will be more likely to

translate their intentions to skill seek into skill-seeking behavior.

Research Directions for Skill-Based Pay and Skill-Seeking Behavior

From a process perspective, research knowledge about the behavioral work-

ings of skill-based pay is lacking. Besides demonstrating that individuals both

choose to seek and not seek skills, we have no evidence to describe or support

the skill seeking process under skill-based pay. Consequently, research would

be best directed at descriptive studies of how and under what conditions skill-

based pay participants seek skills. The model we have developed is certainly

preliminary and relies on the validity of planned behavior assumptions to

answer our research questions.

What are the Characteristics of the Individual which Influence the Intention to SeekSkills? From the development of the model, we expect that skill seekers

will value pay and enhanced job content outcomes, will have needs for

professional growth and achievement, will believe that they have system

and skill content-related knowledge, and will possess self-efficacy toward

skill seeking.

What are the Characteristics of the Skill-Based Pay Context that Influence theIntention to Seek Skills? Because much of intention according to planned

behavior is in part determined by expectancies, resources, and impediments,

the characteristics of the pay context which define these will be important.

Stronger intentions should be driven by greater levels of pay increase, more

motivating or interesting work activities, tangible indicators of skill seeking

and acquisition achievement, and effective training programs which have a

positive reputation among workers as effective and create positive affect

from trainees.

The content of the skill blocks, information about the pay program, and

access to skill seeking opportunities also appear to potentially play a role in

skill seeking. First, when the content includes skills or knowledge valuable to

the individual, including skill content that is related to the individual and his

or her personal or professional growth, skill seeking will increase. The degree

of skill seeking, however, may depend on the mix of skills within a skill block

among both general and firm-specific skills.

Second, accessible program information and opportunities for remedial

preparation may be determinants. Skill seeking may be determined by

whether the information about the skill-based pay program is available both

pre-implementation and throughout the life of the plan, or if it is more

extensive regarding skills and skill seeking than in other pay environments.


Third, supervisory support toward allowing access to and participation in

skill-based pay program activities may be a determinant. Vacancy rules and

training rationing should influence seeking behavior. Likewise, seeking may

be determined by whether opportunities for training are scheduled into an

individual's work time.

Finally, certification issues play a role in skill-based pay that roughly

parallels the role played by performance appraisal in a merit pay system. In

fact, one might argue that there is even more pressure on certification because

the link between skill proficiency and pay is so clearly specified in a skill-based

program. Consequently, perceived behavioral control and skill seeking would

seem to depend to a very important degree on whether the certification process

satisfies the distributive and procedural justice criteria that we apply to

performance appraisal systems.

What are the Social or Work Group Influences on the Intention to SeekSkills? Skill-based pay has been associated with involvement programs and

team-based work (Berkman, 1993; Hequet, 1990; Jenkins et al., 1992; Johnson

& Ray, 1993; Lawler & Ledford, 1987; Lawler et al., 1993; Ledford, 1991a;

Ledford et al., 1991; Luthans & Fox, 1989; Murray & Gerhart, 1998; Walton,

1982; Tosi & Tosi, 1986). The social design of these systems fosters the

development and importance of referent others' opinions about an individual's

work-related activities (Thomas & Griffin, 1989). The characteristics of the

culture enacted by these collective opinions, or norms, will influence skill

seeking. Subjective norms which should strengthen skill-seeking intentions

include valuing development and encouraging training participation, en-

hanced expectations about team member roles and contributions to the group,

and encouraging competitive comparisons by bestowing recognition on indivi-

duals according to skill-level achievement.

Accordingly, we propose that intention strength is greater for participants

who value enhanced or motivating work activities and personal or professional

growth, possess adequate system and prerequisite skill knowledge, and are

members of groups or teams which espouse strong developmental norms and

higher contribution expectations.

Methods for Studying Skill-Based Pay. We evaluated the propositions, findings,

and conclusions from the literature in light of the quality and purpose of those

studies and reports. Much of the literature on skill-based pay has been

anecdotal and written for practitioner-oriented journals. With notable excep-

tions (e.g., Murray & Gerhart, 1998; Parent & Weber, 1994), the cases have not

provided statistical tests, empirical data, or detailed descriptions to support

their conclusions. Likewise, many of the outcomes were operationalized as

managers' perceptions, rather than direct measures, of changes in organiza-

tional production, quality, flexibility, and others.

Our model of the skill-seeking process and the information drawn from

the literature both indicate that a primary focus for future research is the

measurement of the intervening variables, or processes, within skill-based

pay. Attention focused on these is important both for establishing caus-

SKILL-BASED PAY 283

ality, and, subsequently, for having sufficient confidence in the workings of

skill-based pay to make policy recommendations regarding how effective

systems should be designed.

Given the limited research, and its absence regarding skill seeking, many

methods can enhance existing knowledge. Case studies, though, must consider

in greater detail the actions, characteristics, and decision inputs of individuals

who choose to seek skills compared to those who do not. For survey research,

because behavior as specific as the decision to seek skills under skill-based pay

cannot be well predicted by general disposition or attitudes (Ajzen, 1991),

scales must be tailored to skill seeking intentions. Finally, if the moderating

effects of the pay system and context are to be tested, multiple plans with

varying conditions will need to be included in the sample.

CONCLUSION

Taking skill-based pay research in the direction we propose advances

skill-based pay knowledge from the descriptive ``what'' and ``why'' questions,

like determinants, outcomes, and context, to the next level, the ``how''

question which aids managers in identifying opportunities to manage beha-

vior. There appears to be a variety of tools available to the manager both to

encourage and restrict skill seeking and advancement among pay levels.

Research is needed to estimate the effects of these program elements to

better guide management decisions.

We believe that the model of planned behavior offers advantages for both

research and practice. From a research perspective, the model comes with

solid validity evidence in that it has proven to be effective in predicting a wide

range of specific behaviors in other contexts such as job search, voting, and so

forth (see Ajzen, 1991). It also provides a useful tool for thinking about what

skill-based pay design and context factors are most likely to be relevant in

terms of influencing the three key factors in the model: attitude, norms, and

perceived behavioral control.

From a practice point of view, the model can be used as a tool to determine

how conducive plan design and context are to encouraging or discouraging skill

seeking. Managers may be able to use the three key factors in a checklist

fashion to audit their plans for shortcomings in any of the three areas that

could derail the ability of the skill-based plan to influence employees as

intended. The simplicity of the model should provide a way of organizing past

advice and research that has identified a large and diverse set of possible

success and failure factors.

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