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COMPETENCY-BASED APPROACH TO LABOUR COMPENSATION

Large-scale introduction of competency-based approach into human resource management system determined the demand for corresponding correction in methods of staff classification, assessment and stimulation [1]. Contemporary business improves through staff development. Labour efficiency can be increased due to unique individual abilities of people, their knowledge, skills, experience, and personal characteristics which manifest through their labour behavior and orientation, interest and creativity.

Successful strategic development of any business requires staff abilities, knowledge, professional and social skills that altogether form personnel competencies. Competency-based approach initiates changes at every organizational level: employees, groups and business as a whole gain the opportunity to evaluate and apply their potential, to grow, to develop new management techniques, to obtain new intellectual, communicative, and other resources [1].

Before a company can form and initiate implementation measures to identification, formation, development or stimulation of certain competencies in its staff, a great deal of work shall be undertaken to study competency-based job requirements, their grouping and definition of correlations between goal obtaining, successful work, and competence level. This work needs to be performed by managers in close cooperation with executors.

It is important to point out two sides of a competency definition:

- competency is the persons potential as a combination of internal qualities;

- competency manifests as real (observable and measurable) result of professional activities.

This definition is essential from the point of view of staff competencies identification and evaluation in any organization as well as selection of particular measures to be undertaken for competencies development and labour stimulation [2].

When the competency-based approach in human resource management the key evaluation parameter for any employee is his competence competitiveness level which, on one hand, demonstrates his possessing the required set of well formed and developed competencies to permit their realization, and on the other hand, can be 5. - measured by the degree of activity and success of their actual realization in problem solving to achieve the objectives set for the employee and the organization as a whole.

Direct correlation between the staff effort and business strategy realization determines the necessity to develop new form of staff motivation and stimulation.

Competency-based wage setting gives the company opportunities for vast range of management solutions in labour compensation system [3].

In this case, as well as in understanding of the business competencies definition, it is important to take into account both above-mentioned aspects. An employee may possess good competency potential formed by formal education, working experience and even inborn abilities, but still remain unsuccessful in problem solving due to various reasons: either lack of application, motivation for the ability realization or external barriers which the employee cannot overcome temporarily or permanently. By contrast, low of potential may be enlarged by steady effort of highly motivated employee. On the other hand, managers should not be tempted to set the bonuses for an employee based only on the effort put during the specific period of time in case of lack of required skills or simply understanding of the set task that cannot lead to any success for the organization. Stimulation and punishment system should be based on both effort and success.

Consideration of competences in the choice of monetary stimulation meets the principle of correlation between reward and employees effort in obtaining the final result as well as fair wage differentiation.

Staff members with the same qualification level may achieve different results due to their unequal personal qualities, natural abilities, experience and application.

These differences should be attended while forming the monetary stimulation system.

So, the guaranteed part of wage is defined by the law while the stimulating part shall be determined by individual and collective efficiency [2].

Usually organization personnel efficiency is assessed by two main methods:

- cost method (asset value model) ratio of the final result of organizational activity (normally profit) and the expenses;

- cost-free method (utility estimate model as social expectation satisfaction measure) ratio of the final result and satisfied needs, achieved goals, etc.

Competency-based approach suggests personnel assessment through comparison of the results, labour quality and complexity with the job description standards. Set of competencies may be defined and labour behavior required for successful work in the current position.




140 .


Based on the stated above the pros of the competency-based approach

integrating compensation schemes include:

- unification of job requirement description and work efficiency definition;

- formation of comparable labour results and their assessment for the employees with significantly different job descriptions;

- identification of strong and weak points of each employee with further use of this information for his personal and professional growth and improvement;

- similar unified and fair distribution of both financial compensation and nonThus, consideration of staff competencies development and use levels is necessary for labour compensation scheme formation but cannot be performed without difficulties. The problems can only be solved by thorough analysis of each given situation in a certain company. Individual solutions are to be suggested which probably are impossible to be made by the management itself, without external professional help and consulting.

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