What Is Competency-based Pay?

Competency-based pay is a pay structure in which companies reward employees in accordance with:

  • their level of skills,
  • knowledge, and
  • Experience.

Rather than paying them just for their job title or position.

This helps companies to keep their employees motivated and constantly developing their skills.

If a company pays an employee based on their knowledge, experience, etc, this employee will be interested in learning and developing their skills in order to get higher compensation.

In a competency-based pay structure, staff can increase their pay by getting better at their skills and gaining knowledge associated with their job taking their work to the next level.

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