Original Date: 11/13/1995
Revision Date: 01/18/2007

JLG instituted a skill-based pay (SBP) program in 1994 to reward employees for the number of basic skills they can perform rather than for the jobs to which they are assigned. Prior to initiating this system, pay increases were based on a merit system. The merit system is still in effect; however, the SBP program focuses emphasis on continued acquisition of new skills. It also helps JLG maintain competitive pay rates with the current wage market.

The SBP program is integrated into the existing payroll system and is supported by a computerized tracking and reporting system. As an employee acquires and masters a new skill, pay is increased on a scheduled basis. Pay increases are directly proportional to employee "value" through skill acquisition. This method focuses on the individual and is a departure from the traditional concept of set pay rates for specific jobs.

Pay adjustment increments are 30¢ per hour and can be made in addition to regularly scheduled merit increases. Qualified employees are eligible to receive a skill-based wage adjustment at three specific times. The first increase is available at the completion of an initial six-month probationary employment period. An additional skill-based adjustment may be paid in conjunction with the employee's annual merit review. Other skill-based adjustments can be made yearly and six months after the annual merit review.

All hourly production workers and maintenance employees are designated in one Job Family at any specified time. A Job Family consists of a group of employees performing similar activities and requiring similar skills. Each Job Family has a set of required skills including those related to the job as well as quality and safety. Target rates are based on the degree of mastery of the complete skill set required for a Job Family. To determine qualifications for an SBP adjustment, a comparison is made between the employee's current wage rate and a target rate within the Job Family to which the employee is assigned. If the current wage rate is equal to or greater than the target range, no pay adjustment is made. If the current rate is below the target range, a skill-based adjustment will be authorized.

Skill-based assessment is an ongoing process. Formal evaluation begins at the completion of the six-month probationary period at which time the employee is tested for mastery of the minimum skills required for the Job Family; a 100% mastery rate is required for successful completion of the probationary period. After this period, the employee's progress is analyzed and training objectives are established twice a year. Careful consideration is given to the employee's interest, capabilities, limitations, and cross training requirements. Overall responsibility for skills acquisition and career development rests with the employee. The employee determines his/her level of participation in acquiring new or additional skills. Supervisors assist the process by helping the employee identify and plan for new skills to be acquired, creating opportunities for cross training, and certifying the skills training.

In place since 1994, the program is producing benefits. It allows supervisors and employees more flexibility in accomplishing work and managing careers. The greater skill base permits faster adaptation to changes in technology and product mix. Workers are better able to focus on problem areas and avoid idle time waiting for problems to be fixed or for work done by others. Employees can participate more actively in problem-solving and improvement activities because of a wider perspective on total work flow. The program permits lower overall staffing levels by incorporating specialized functions into team skill requirements. Workers are experiencing higher self esteem from development of personal talents and improved self managing abilities. The company has been able to raise minimum hiring qualifications. Overall increases in productivity have enabled expansion of capacity.

For more information see the Point of Contact for this survey.