Skill-based pay systems compensate employees for the different skills or knowledge they possess rather than for the job they hold in a designated job category.

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Skill-based pay systems compensate employees based on the skills and knowledge they possess rather than the job title or category they hold within an organization. This approach encourages employees to develop new skills and knowledge, recognizes their value and contribution to the organization, and can lead to more flexible and agile work arrangements.

Skill-Based Pay Systems Compensate Employees for the Different Skills or Knowledge