What is Knowledge-based Pay ?
‘Knowledge-based Pay’ refers to a system of compensating an employee based on their knowledge and skills along with the time they spend working. It works like a reward for gaining any specific job related skills which also benefits the company in the long run.
It is rewarding for the employee too since they are gaining extra skills and knowledge while also getting paid for the same. As it works like an incentive for the employee, they will also be motivated to gain more skills.
It also encourages personal growth and development, which will result in a more efficient company. However, there has also been criticism that an employee having more skill would be paid more for doing the same job than a lower skilled employee, which would give rise to unwanted competition.