What Is Succession Planning Commerce Essay

In Lawrence S. Kleimans Hagiographas about the post-hiring stage, he suggests several elements that include preparation and development, compensation, productiveness betterments and both fiscal and non-financial wagess ( p.8 ) . However, another important component that today ‘s employees earnestly see when accepting a occupation chance is the sequence be aftering model of the administration in inquiry. Sequence be aftering fundamentally involves the establishing of the right people in the right places at the right clip to enable the division and finally the administration to come on towards its ends. Atwood ( 2007 ) reiterates this when he explains that sequence planning is the ongoing procedure of placing future leaders in an administration and developing these leaders to enable them to helm the administration efficaciously ( p. 1 ) . Atwood besides goes on to explicate that the sequence planning procedure involves the reviewing of the administration ‘s strategic programs, analyzing the bing work force, calculating possible tendencies and developing employees through a structured program to take over from current leaders who retire or decide to go forth the administration for whatever grounds ( p. 1 ) .

In Rothwell ‘s ( 2010 ) Hagiographas, sequence planning is defined as a agency by which to place and develop “ internal endowment to run into current and future endowment demands of the administration ” ( p. 7 ) . The writer farther emphasises that sequence planning is a deliberate and systematic attempt of an administration to guarantee leading continuity within the administration. It is besides a means to develop rational and knowledge capital for the hereafter, and to spur single promotion ( p. 7 ) .

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Singer and Griffith ( 2010 ) suggest that sequence planning is more than merely “ replacing planning ” or simply filling vacancies within the administration as they occur. The writer besides states that comprehensive sequence direction integrates talent direction with the administration ‘s strategic planning ( p. 1 ) . Sequence planning is a proactive enterprise which does non wait for the endowment or those in cardinal places to go forth the administration before the procedure kick-starts. Succession planning is an enterprise that is in front of the curve, expecting, developing, and guaranting that cardinal undertakings are accomplished and cognition is shared every bit good as transferred healthily ( p.7 ) .

Another account of sequence planning to chew over over is Olstein, Marden, Voeller and Jennings ( 2005 ) , whereby the writers suggest that sequence planning is a public-service corporation that encompasses a well-developed program to fix for the future generational alteration ( p.15 ) . Sequence planning is farther reiterated as a methodical procedure that involves analyzing the bing work force, placing the demands of the work force in the hereafter and finding the spread between the current and future. It besides includes implementing solutions so that the administration is able to accomplish its corporate aspirations ( p. 16 ) .

Hastings ( 2005 ) explains sequence planning in four stages as illustrated below in diagram 1.1:

Diagram 1.1: Four Phases of Succession Planning ( Source: Hastings, 2005, p. 2 )

The diagram above negotiations about 4 stages in sequence planning that are important for the procedure to be effectual. Hastings besides reiterates the earlier statements that sequence planning is an ongoing procedure and non merely a erstwhile attempt. The administration has to maintain the rhythm of sequence planning traveling in order for it to be able to efficaciously place its leading campaigners in the right topographic points.

1.1 Who Needs Succession Planning?

Sequence planning should be undertaken by administrations who wish to go on their successes in the hereafter or who plan to spread out their success in the hereafter. Shipman ( 2007 ) states that competitory administrations know that puting in their employees with calling development and a good sequence planning model is an investing that will harvest multiple wagess ( p. 24 ) . Shipman besides states that due to the ageing work force, sequence planning is a precedence that must be looked into in today ‘s administrations ( p. 25 ) . It is an enterprise that should affect employees with good public presentation and who show great potency for leading functions within the administration. Succession planning can affect employees from all degrees of occupations.

Hastings ( 2005 ) states that sequence planning is needed for staff, with input from staff every bit good, as staff demand to be aligned to the administration ‘s sequence planning model in order for it to work efficaciously ( 3 ) .

In Rothwell ‘s ( 2005 ) Hagiographas he states that organizational leaders must gain that their company ‘s long-run viability is at interest if they do non earnestly construction sequence planning. It will impact the keeping of qualified endowments within the administration which will take to serious effects on the administration ‘s strategic aims ( p. 27 ) .

An effectual sequence program will heighten the smooth transportation of concern and let the administration to keep good relationships with employees and concern spouses by manner of ( extract from the Canada Business Network ) :

Protecting the concern ‘ bequest

Constructing value for the administrations and its concern

Supplying fiscal security for stakeholders

Covering with unexpected leading absences such as decease, surrenders or expiration.

Fixing for the hereafter of the concern

Therefore it can be concluded that sequence planning is non merely necessitate for the administration ‘s work force but besides for the administration itself to keep its fight and to accomplish its corporate aims and ends.

1.2 The Importance of Succession Planning

Harmonizing to Rothwell ( 2005 ) , sequence planning is of import for 4 chief grounds ( p. 41 ) :

The continued success and endurance of the administration which depends on the right people being at the right places at the right clip.

The deficiency of good leading in the market at big to take on the helm of an administration

To promote diverseness and multiculturalism within the administration

To set up the footing for calling way planning, development and preparation programs

In the Houston Chronicle ( hypertext transfer protocol: //smallbusiness.chron.com/importance-succession-planning-5129.html ) , Louise Balle suggests that sequence planning is an attack whereby an administration or concern proprietor transportations knowledge or even the disposal of the concern to another capable or well-equipped single upon retirement, disablement or even decease. Balle farther reiterates that a sequence program is of import because it offers the administration ‘s direction or the concern proprietor an option for when the demand arises.

In Elizabeth Harrin ‘s ( 2010 ) article in The Glasshammer web site, it is stated that the figure of directors available to step into leading functions will drop dramatically in the coming old ages harmonizing to a survey by EgonZehnder International. The survey states that the mean company will be left with merely one half of its endowments by 2015, due to the fact that there are merely non sufficient people with the right accomplishments and experience to take the reigns for the hereafter ( except from hypertext transfer protocol: //www.theglasshammer.com/news/2010/04/27/developing-future-leaders/ ) . Therefore, sequence planning is a important component to guarantee leading continuity within an administration, without which the administration will hold no capable leaders at the helm for the hereafter.

The HR Council for the Non-Profit Sector ( excerpt from hypertext transfer protocol: //hrcouncil.ca/hr-toolkit/planning-succession.cfm # _secA3 ) states that sequence planning is of import because it can offer the undermentioned benefits:

The confidence that the administration is prepared for leading crises and can keep leading continuity.

The continued supply of qualified and motivated people who are capable and prepared to take on the current senior places within the administration.

Assures alliance of the administration ‘s vision and human resources that reflect a good apprehension for strategic human capital planning.

Shows the administration ‘s strong committedness towards developing its people ‘s calling waies every bit good as enabling the administration to ease effectual enlisting and keeping of high-performing employees.

A strong repute as an employer who invests in its people and provides chances for promotion.

Strengthen employee battle conveying the message that the administration values its employees.

In an article in The StarBiz ( 2 July 2007 ) , it is stated that Malayan companies are by and large cognizant of the importance of sequence planning, peculiarly larger corporations. The article quotes SMR Technologies Bhd Chairman and Chief Executive Officer, Dr R. Palan as stating that common sense dictates that an administration should hold a sequence program in topographic point despite their size and position. Palan besides states that in Malayan government-linked companies, much attempt has been made to develop the following degree of leading in a witting and planned mode. He said that there is a common tendency worldwide for big companies to concentrate on developing stars and “ A ” participants – the top 5 per cent of a company ‘s work force. He reiterates that smooth sequences were a consequence of well-thought programs to guarantee concern continuity ( extract from hypertext transfer protocol: //biz.thestar.com.my/news/story.asp? file=/2007/7/2/business/18179462 & A ; sec=business ) .

Dr Palan offers an illustration in The General Electric Company ( GE ) , whereby he states GE is arguably one of the most successful companies in the universe with a good path record of returns to stockholders. Dr Palan explains that this is attributed to GE ‘s CEO Jack Walsh, holding a pool of three replacements, before he retired, to take on the disposal of the company. One succeeded Jack Walsh whilst the other two went on to lend successfully in other corporations. Dr Palan stresses that companies should hold a sequence program as it is the lone manner to remain relevant in a changing universe ( extract from hypertext transfer protocol: //biz.thestar.com.my/news/story.asp? file=/2007/7/2/business/18179462 & A ; sec=business ) .

Another statement by a Malayan concern loyalist in The StarBiz ( 2 July 2010 ) – Dr Michael Yeoh states that Malayan corporations were now progressively cognizant of the importance of sequence planning in order to set up concern continuity in the involvements of stakeholders. He quotes that some listed companies on Bursa Malaysia now have three or four possible campaigners that could replace the CEO if and when necessary ( hypertext transfer protocol: //biz.thestar.com.my/news/story.asp? file=/2007/7/2/business/18179462 & A ; sec=business ) .

1.3 The Current Issues in Succession Planning

The current issues impacting sequence planning can take on many aspects. Harmonizing to Rothwell ( 2001 ) , these issues can include ( article 78 ) ;

An aging work force and retirement of Baby Boomers.

Changes in the work environment with changing procedures, engineerings and mechanisms.

Changes in the work force with respect to diverseness, with the increasing figure of immigrant workers in all sectors.

Globalisation which includes regulations and ordinances, authorities constabularies and procedures every bit good as germinating methods of concern minutess.

Military struggles, impacting states with civil instability.

Technology gas pedals, that enable concern to be done in a myriad of methods which are different from past concern minutess in the 1990s and before that.

Fast labor market

Unethical and unprofessional behavior of administration leading, that includes bias, unequal chances and unprofessionalism, amongst others.

Harmonizing to Mathis and Jackson ( 2010 ) , issues environing sequence planning are prevailing worldwide. The writers province that the per centum of the aging population in the work force in Japan, Germany, Italy and England, are even higher than in the USA. Their analysis says that with the growing of the immigrants, employers are confronting both legal and workforce diverseness issues. The writers besides province that in states with turning native work forces, such as China and India, sequence planning is important ( p. 290 ) .

Mandi ( 2008 ) explains that issues associating to succession planning can stem from assorted facets. Effective sequence be aftering involves the designation and choice of future cardinal leaders, nevertheless, if there are no suited campaigners for leading within the administration, that poses another job ( p. 88 ) . Administrations must hold a formal and structured sequence planning model to guarantee the success of this procedure. Without a formal and structured model, administrations are certain to run into failure. Many administrations today, particularly the smaller constitutions, may non see the sequence planning as mission critical until a leading crises hits them. However, sequence planning does non ever warrant success for the administration, nevertheless, it can put the administration on the right way to success. Achieving that success is wholly another facet to see and analyze.

1.4 How To Efficaciously Conduct Succession Planning

Harmonizing to an article in The Star ( 30 October 2012 ) , alteration can be traumatic. Large administrations, little concerns, households and even authoritiess are at their most vulnerable during a leading passage. In many instances, the minute a new CEO takes up the reins, there will be issues, irrespective of how competent or experienced the new leaders is on paper. The article suggests 6 critical stairss to kick-start sequence planning within the administration:

Align the board and top direction with the administration ‘s concern scheme and map out short-run, mid-term and long-run wins. It defeats the intent of placing new leading campaigners to take the administration into the hereafter if the hereafter itself is non clear.

Build leading profiles. Identify the properties needed to assist the company accomplish its corporate ends. Identify the ideal accomplishments needed and analyse the board ‘s or top direction ‘s vision of the ideal CEO in the following five to ten old ages.

Identify high possible endowment. Find people within the administration and externally, who have leading potency and fit them to the ideal vision of the corporate leading.

Develop endowment. Have clear cut developmental programs for high-voltage leading campaigners, so as to prepare these campaigners to take on the intended leading functions within the administration. Identify their countries of failing or rawness and device structured programs to turn to these countries and supply them with chances for more exposure within the administration. This might intend giving them the chance for hands-on experience in direction places that they have ne’er dealt with antecedently, directing them on abroad assignments, bettering their proficient accomplishments and concern acumen and even shadowing a member of senior direction to larn the ropes.

Coach high possible campaigners. Management sequence campaigners should have one-on-one Sessionss with high degree executives to larn more about top direction maps and how to pull off jobs. Internal mentoring is a powerful tool and is improbably valuable. External executive coaching is besides an first-class manner to larn new and advanced techniques from other successful leaders.

Transportation cognition. It is important for sequence planning to set up mechanisms that maintain sequence planning despite board or direction turnover. The sequence planning impulse must be maintained irrespective of the alterations go oning within the administration. Merely so can succession be aftering be efficaciously administered within the administration.

Close monitoring of campaigners ‘ advancement. Sequence campaigners must be closely monitored with respect to their advancement and development. A campaigner chosen today may non be suited any longer after a annual period. Campaigners must be evaluated sporadically on their current suitableness for possible leading places in the hereafter.

Harmonizing to Durai ( 2010 ) , prerequisites for successful sequence planning include the undermentioned ( p. 246 ) ;

Complete support and backing from top direction.

The administration must sporadically reexamine the list of critical places within the administration and convey them under the sequence planning programme.

Whilst finding HR schemes for preparation and development, the sequence planning demands must be taken into history.

The cognition, accomplishments and capablenesss of employees must be developed on a sustained footing.

A proper mechanism must be established to supply changeless feedback to the possible replacements about their public presentation and advancement.

The administration needs to follow a strategic and holistic attack to succession planning every bit good as the development of its leading.

1.5 Decision

Many administrations realise the importance of sequence planning and have great programs to back up this thought. However good these programs may hold been crafted, there may be enlistments in them that need to be addressed. Harmonizing to Durai ( 2010 ) , these hindrances may include the undermentioned ( p. 246 ) :

Lack of standards for the designation of the replacement

Administrations must put distinct standards for the choice of possible sequence campaigners. This will sketch an indifferent model for the choice of eligible and capable campaigners.

Being of traditional sequence planning systems

Many traditional sequence be aftering systems entail the choice of sequence campaigners to replace specific persons alternatively of the place. This sort of system can frequently end-up with the designation of a few subsidiaries by the senior directors for inclusion in the sequence planning programme. The administration should alternatively place cardinal places to be included in the sequence planning programme. Merely so it should develop a pool of high-voltage campaigners for inclusion in the sequence planning procedure.

Inaccurate diagnosing of development demands

There are many instances where administrations make a incorrect appraisal of accomplishments demands of possible campaigners. When accomplishments demands are misjudged, it can take to the inaccurate choice of preparation and development attacks every bit good as public presentation rating methods. Therefore it is important for administrations to prosecute proven methods to place accomplishments and cognition demands for its sequence planning campaigners.

Insufficient accent on interpersonal accomplishments demands

Leaderships should hold good interpersonal and team-building accomplishments that can assist them prosecute employees. Therefore, sequence planning campaigners for leading places must be evaluated on their ability to prosecute people within the administration. Often this is non decently evaluated go forthing spreads on communicating, motive and socialization accomplishments for possible campaigners.

Lack of sufficient and timely sharing of feedback

The deficiency of feedback and counsel towards a sequence campaigner can drive the replacement out of the administration due to defeat and a deficiency of intent. Therefore it is importance for possible campaigners to cognize that they are in the sequence planning line for leading places in order for them to be well-aligned with HR ‘s programs.

Lack of follow-up actions

In many administrations, sequence planning frequently remains in the background without distinct follow-up programs and actions. In these administrations, direction fails at taking sequence planning to its logical terminal, ensuing in the chosen campaigners for sequence being left in oblivion. This speaks about bad planning and execution for sequence planning within the administration.

Absence of managerial enterprise and support

Management enterprise and support are important to the success of sequence planning. Therefore it is of import for HR to educate direction on the benefits of sequence planning so that direction can back up this construct on a sustained footing.

Psychological effects and insecurity of higher-ups

It is rather common for directors to experience threatened when sequence planning is done for their places as they see it to be an terminal of their ain calling. In instances like this, an insecure higher-up may expose neutrality and even apathy in sharing his accomplishments and cognition with possible campaigners. To turn to this, top direction must edify directors about the intent environing the sequence planning model and chase away apprehensivenesss about the programme.


2.1 What is Competency-based Pay?

Lawrence Kleinman ‘s article on Human Resource Management ( HRM ) offers a wide position of human resource direction. The article suggests that human resource has gone beyond merely engaging and paying employees. Alternatively, he states that HRM encompasses a whole paradigm of human capital direction with many aspects, one of which includes the strategic purpose behind an employee ‘s wage graduated table.

Traditionally, rewards have ever been determined by the assigned occupation of an employee. However, in today ‘s human resource direction, many administrations are following the attack of competency-based wage. Harmonizing to Caruth and Handlogten ( 2001 ) , competency-based wage is a salary construction whereby workers are paid non merely for the occupation they may be making soon, but on the footing of the entire figure of occupations they are able to execute or on the footing of the deepness of cognition they have acquired ( p. 146 ) . Another account of competency-based wage by Baldwin ( 2003 ) states that employees ‘ value depends on what they can make, based on their several competences. The more an employee is able to make, the more the administration can anticipate and the greater the person ‘s value ( p. 101 ) . The writer states that competency-based wage emphasiss importance on the competence of an employee ( p. 101 ) .

Harmonizing to Robbins, Odendaal and Roodt ( 2003 ) , competency-based wage is another alternate to job-based wage. Alternatively of holding an person ‘s occupation rubric specify his or her wage, competency-based wage sets pay degrees on the footing of how much an employee can make and how many skills the employee has ( p. 161 ) . The United Kingdom ‘s Local Government Employers ( extract from www.lge.gov.uk ) specify competency-based wage as a system that rewards persons who positively contribute to the overall values and aims of the administration – fundamentally significance, honoring the manner people work and non merely admiting their bringing capablenesss.

Another definition to see is one by Jackson, Schuler and Werner ( ) , who explain that a competency-based wage construction is associated with the accomplishments of persons, whereby wage rates are reflect the value assigned to the demonstrated accomplishments of employees and non the value affixed to their occupation or undertaking ( p. 383 ) . In article by Sriyan De Silva ( 1998 ) for the International Labour Office, competency-based wage or skill-based wage refers to a wage system which is linked to the deepness of accomplishments an employee acquires and applies. De Silvafurther adds that competency-based wage is a person-based wage system and non a job-based wage system. It rewards an employee for what the employee is deserving – it rewards a wide scope of accomplishments which encourages the employee to be multi-skilled and flexible ( excerpt from hypertext transfer protocol: //www.ilo.org ) .

2.2 Why Adopt A Competency-based Pay Scheme?

Caruth and Handlogten ( 2001 ) suggest that the competency-based wage strategies are a consequence of organizational retrenchment and restructuring. As administrations become leaner and more cost witting, it is important for employees to be able to execute multiple undertakings. ( p. 146 ) . Kusluvan ( 2003 ) states that competency-based wage systems motivate employees to develop and use their legerity and enterprise when executing their responsibilities or serving clients ( p. 795 ) . This is a sort of inducement to pull more concealed endowments out of employees and tackle their concealed potency. In today ‘s mercenary universe, every bit much as it may sound decadent, money is the highest motivation factor for workers. Employees who were one time excess and unproductive can be really alter to be more advanced, lend more fruitfully and accomplish public presentation excellence by manner of pecuniary inducements. This, of class, may non work for certain groups of people who are non motivated by money nevertheless, the bulk seems to leap with the sight of monetary-based inducements.

Robbins, Odendaal and Roodt ( 2003 ) suggest that competency-based wage offers flexibleness from a direction position ( p. 161 ) . Filling vacancies is easier when employee accomplishments are interchangeable – this is particularly true in today ‘s context whereby administrations are downsizing and cutting the size of their work forces. The writers province that downsized administrations require more Renaissance mans as compared to specializers ( p. 161 ) . With competency-based wage strategies employers are less likely to meet self-centeredness amongst employees and the attitude of “ It ‘s non my occupation ” . Another facet that Robbins, Odendaal and Roodt ( 2003 ) rise is that competency-based wage strategies help run into the demands of ambitious employees who confront minimum promotion chances ( p. 161 ) . These employees are able to increase their earning capacity and cognition without a publicity in occupation rubric or function. Competency-based wage is besides able thrust public presentation excellence and betterments. Robbins, Odendaal and Roodt quote study of Fortune 1000 companies which found that 60 per cent of those on a competency-based wage strategy indicated higher success rates in increasing organizational public presentation, whilst merely 6 per cent considered this attack unsuccessful ( p. 161 ) .

In today ‘s concern environment, where productiveness is figure one, competency-based wage systems offer employers an border to earn more productiveness from their employees, ensuing in better concern public presentation and more betterments.

2.3 The Advantages and Disadvantages of Competency-based Pay



Harmonizing to Messmer ( 2007 ) , competency-based wage strategies create inducements for sustained improved public presentation ( p. 174 ) . This attack entreaties to high performing artists who prefer to be paid on the footing of what they contribute and non on senior status ( p. 174 ) .

Harmonizing to Messmer ( 2007 ) , competences must be outlined carefully to avoid possible favoritism charges. Messmer besides suggests that it may be incompatible with labour contracts associated with nonionized workers ( p. 174 ) .

Competency-based wage strategies helps employees turn in topographic point and provides them the counsel for shuting cognition spreads required for sidelong moves within the administration ( Arthur, 2001, p. 67 ) .

Competency-based wage strategies can take to employees being “ topped-out ” , which means they can larn all the accomplishments the programme calls for them to larn, which in bend will thwart employees after they have become challenged by an environment of acquisition, growing and continual wage rises ( Robbins, 2003, p. 179 ) .

It reduces the demand for publicity in order to gain higher rewards and offers employees the chance earn higher rewards through accomplishments enhancement ( DeSilva, 1998, www.ilo.org ) .

Competency-based wage strategies do non turn to the degree of public presentation, alternatively it lone trades with whether an employee can execute the accomplishment ( Robbins, 2003, p. 179 ) .

The widening of accomplishments consequences in employees developing a better position of operations in its entireness ( DeSilva, 1998, www.ilo.org ) .

Associating competence to pay requires significant investings in preparation and development installations every bit good as competency appraisal systems, in order to supply all employees the chance to increase competence and wage degrees ( White, Druker, 2000, p. 88 ) .

Competency-based wage strategies break down narrow occupation categorizations and enlarges occupation functions ( DeSilva, 1998, www.ilo.org ) .

Can be boring and disputing to pull off as wage has to be invariably calculated based on the set expression and standards.

2.4 How To Conduct An Effective Competency-based Pay Scheme For Middle Managers in the Marketing Department

It is important for an administration to constantly evaluate and reexamine their entire wage construction in order to stay relevant in the ever-evolving concern environment and to retain critical endowments. In order to drive public presentation and maximise value, it is important to compensate employees based on their competency degrees, accomplishments sets, capablenesss, parts and result-based public presentation.

Competency-based Pay for Campap ‘s Middle Management

This survey will analyze competency-based wage strategy to be implementedforCheeWah Corporation Berhad – a stationary solutions supplier in Malaysia runing with the trade name name Campap ( excerpt from www.campap.com ) . The company has mercantile establishments located in major metropoliss in Malaysia and has a selling section comprising of 55 employees. The selling section comprises the undermentioned organizational construction:

Diagram 2.1: CheeWah Corporation ‘s Marketing Department Organisation Chart

In the instance of CheeWah, the competency-based wage strategy will be introduced foremost to middle directors in the selling section, which are the Senior Marketing Managers. The competency-based wage strategy will necessitate to take into history the company ‘s vision which is “ We aspire to be the LEADING provider that commits to run into and transcend our client ‘s outlooks ” ( excerpt from www.campap.com ) . Their human resource direction is aligned around the subject “ Developing our people to drive corporate growing ” . Before this survey delves into CheeWah ‘s competency-based wage theoretical account, other wage theoretical accounts will be discussed for comparing.

Competency-based Pay Models

Kusluvan ( 2003 ) describes a competency-based wage theoretical account whereby it is a procedure indistinguishable to a choice scheme where traits most valued by the administration are identified and ways to implant these traits into the employees ‘ competences and public presentation ends are derived ( p. 795 ) .

Heneman ( 2002 ) describes a competency-based wage theoretical account whereby compensation is adjusted when an employee demonstrates with cognition and public presentation trials that he or she has the needed accomplishments to make the following degree ( p. 160 ) .

Wright ( 2004 ) describes a competency-based wage theoretical account that takes into history invention, quality sweetening and cost decrease aside from the employee ‘s accomplishments and competences ( p. 4 ) .

In the instance of CheeWah, the competency-based wage theoretical account for in-between directors will take the undermentioned attack:

CheeWah Corporation ‘s Competency-based Pay Model for the Marketing Department

Organizational Vision, Business Strategy and Human Resource Mandate

Required Employee Behaviour

HR and Reward Policies

Industry Leadership

Proactive and invariably seeking to spread out their countries of coverage.

Regular association and battle with industry leaders and leading platforms.

Pay rise based on one-year accomplishments of industry battle chances.

Fiscal wage for each leading platform penetrated on an one-year footing.

Corporate Growth

The ability to set up new concern chances and perforate new markets.

A 2 per centum committee on each new concern gained and 10 % increment per annum for the entire figure of new concern gained per annum.

The chance for an all-paid abroad trip for the accomplishment of industry awards for public presentation excellence.

Cost Reduction/ Minimisation

The strategic ability to cut down cost whilst increasing productiveness and new concern chances.

Monetary inducements of 1 per cent of entire cost nest eggs per annum.


Advanced steps implemented on a quarterly footing to promote corporate growing, higher trade name equity and greater incursion in the market.

The ability to actuate the selling squad through advanced programmes and enterprises.

An addition of 2 per cent per one-fourth for successful executions or enterprises that can show mensurable consequences.

CheeWah ‘s competency-based wage theoretical account takes into history the company ‘s vision and human resource dogmas.

Deciding on the Core Competencies of the Selling Directors

It is besides of import to place the selling directors ‘ nucleus competences when implementing the competency-based wage strategy. In CheeWah ‘s instance, both senior selling directors will be rated on the following nucleus competences and must run into a requirement of 3 competences out of 5 before they will be eligible to have their pecuniary wagess ;

Core Competence



Demonstrated advanced and reliable thought

Anticipates future chances and challenges

Generates alone and practical thoughts

Pull offing Relationships

Builds strong concern relationships with makers and clients

Maintains strong external webs

Developing Business

Participates in the coevals of new concern thoughts and schemes

Develops solutions from natural thoughts

Encourages an environment for developing new thoughts to perforate the market.


Is a good squad participant and leader

Supports squad members and motivates team to public presentation better

Provides squad with good way


Constantly undertakings a positive image

Influences the ideas of others

Positively changes the sentiments of others

An overall good positive influence on the squad

How To Measure Employee Using the Competency-based Pay Scheme

At CheeWah Corporation, at the minute the competency-based wage strategy is to be implemented for in-between selling directors. However, the system will shortly embrace employees excessively. When it involves employees, the system has to take on an integrated attack with a comprehensive compensation mix that will include hard currency wagess on a long and short-run footing every bit good as a comprehensive employee public assistance programme. Where employees are concerned, the following table identifies the entire competency-based wage theoretical account based on an integrated compensation mix construct proposed:

Diagram 2.2: Integrated Compensation Mix Model ForCheeWah ‘s Competency-based Pay Scheme for Employees

In order for employees to be eligible for the comprehensive compensation mix, they will necessitate to be evaluated based on a competency-based construction. Harmonizing to Armstrong and Baron ( 2002 ) , competence-based occupation rating is purposed to value the work of people from the angle of their competencies demonstrated to execute efficaciously in different functions and at different degrees within the administration ( p. 97 ) . A competency-based attack can so help in the development and execution of incorporate human resources direction procedures. Armstrong and Baron farther elaborate that a competency-based rating is valuable in that it captures what people in their functions are expected to make and accomplish, taking into consideration the dynamic factors of the said functions ( p. 98 ) .

2.5 Decision

This survey has analysed the topic of competency-based wage system and has linked it to the execution of this system in a Malayan company. A competency-based wage system may non work for all companies but companies meaning to force for aggressive growing whilst maximizing resources are encouraged to look into this system which may give them an added border in accomplishing their aspirations. In today ‘s aggressive concern environment, more companies are traveling towards this construct. The Towers Watson 1997 European Survey found 20 per centum of participants associated accomplishments and competences with wage, whilst 70 per cent program to present this exercising ( Neathey, Reilly, 2003, p. 5 ) . Another study by the Industrial Society in 1998, found that a 3rd of employers had a competency-based wage system or intended to present one over the undermentioned 12 months ( Neathey, Reilly, 2003, p. 5 ) .



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