A system in which pay increases are linked to the number or depth of skills an employee acquires is known as ____ _______ pay.

A system in which pay increases are linked to the number or depth of skills an employee acquires is known as ____ _______ pay.

• A. Skill-based pay
• B. Merit-based pay
• C. Competency-based pay
• D. Performance-based pay

Answer: (A)

Pay tied to the number or depth of skills an employee gains is a system that rewards how much skill the person has and how proficient those skills are. This approach drives learning and multi-skilling, since each new skill or deeper expertise leads to higher pay. It’s different from merit-based pay, which rewards performance appraisals or outcomes rather than skill development; and from performance-based pay, which focuses on achieving specific results rather than the skill set itself. Competency-based pay can be related, but the phrase about accumulating and deepening skills most clearly describes skill-based pay.

Pay tied to the number or depth of skills an employee gains is a system that rewards how much skill the person has and how proficient those skills are. This approach drives learning and multi-skilling, since each new skill or deeper expertise leads to higher pay. It’s different from merit-based pay, which rewards performance appraisals or outcomes rather than skill development; and from performance-based pay, which focuses on achieving specific results rather than the skill set itself. Competency-based pay can be related, but the phrase about accumulating and deepening skills most clearly describes skill-based pay.