Final answer:
Competency-based pay plans assess overall job performance, including a range of skills and behaviors, while skill-based pay plans focus on specific, measurable job-related skills. Competency plans are not just about qualifications and skill plans are not inherently subjective.
Step-by-step explanation:
Competency-based pay plans and skill-based pay plans differ in the aspects that they emphasize within an employee’s work profile. A competency-based pay plan focuses on an individual’s overall competencies, which include a combination of knowledge, skills, behavior, and aptitudes that contribute to their ability to perform in a job. This may cover a wide range of attributes, from problem-solving abilities to leadership and communication skills. In contrast, a skill-based pay plan emphasizes specific job-related skills that an employee possesses. These skills are usually more tangible and measurable, such as proficiency in a certain software, operating a piece of machinery, or expertise in a particular craft or trade.