An analysis of the relationship between employee cross training and base pay in a merit-pay environment

Abstract

The researcher is employed at a large manufacturing facility in the Midwest. This organization is subject to typical market forces – sometimes business is good, sometimes not. Because demand can fluctuate, the organization prefers to have a flexible, adaptable workforce. Therefore, employee cross training is viewed as a desirable goal. However, in a busy production environment, supervisors frequently see cross training as a luxury they cannot afford. They feel pressure to assign employees to the machines and processes they are best at, in order to meet production schedules. In this environment, employees often have to insist that they become cross trained, and not very many take this initiative. This organization also believes in "merit pay." That is, individual pay increases are indexed to employee performance, rather than tenure with the company. Therefore, the more productive an employee is, the higher their pay increases are. Although there is a very strong correlation between organizational tenure and pay, it is expected that over time the employees that are the most consistently productive would be paid higher than their peers with similar tenure. If it's true that the more cross trained an employee is, the more effective they are to the organization, it would follow then that the more cross trained an employee is, the higher their base pay is. If it can be shown that cross training leads to higher pay in this specific manufacturing location, more employees at this organization may insist that they be cross trained, which is ultimately good for the organization. It might also be possible to generalize these results to other organizations.