Competency-based pay has become the focus of much heated debate today. While its advocates assert it achieves precisely measurable benefits, its opponents argue that it tends to lead to unfair, invalid, and discriminatory outcomes. Among companies that have implemented competency-based pay, there is evidence that the failure rate is relatively high. Over the next few years however, with the growing need to emphasize employee development, the authors expect to see a major movement toward formal competency-based pay systems and, along with an increase in experience and learnings, a greater rate of success. "It makes sense to put money behind those things the company values-skills, competencies, behavioral change. And, based on our observations to date, it can be a highly effective way to motivate employees and create change," the authors argue.
techniques were used to generate sampling distributions of the correlation coefficient between two variables, each measured by two quantitative models of the randomized response technique (RRT): The additive constants model and the unrelated question model. Various parameter combinations were explored and the resulting standard errors for the RRT models and direct questioning are reported. As expected, the RRT models yield less statistically efficient estimates of the population correlation coefficient, and inefficiency increases as the population correlation increases. Comparisons of efficiency between the two models favor the additive constants model for constants less than certain limiting values. Warner's (1965) randomized response technique (RRT) was designed to eliminate evasiveness in response to questions of a sensitive, possibly embarrassing or stigmatizing nature that require a dichotomous response. In Warner's technique, the respondent is presented with two questions, the sensitive question (e.g., Have you ever had an abortion?) and its logical complement (e.g., Have you never had an abortion?). With the aid of a randomizing device, the respondent is directed to answer the sensitive question with probability P and to answer its logical complement with probability 1 -P. Because only the respondent knows to which question the answer pertains, the technique provides confidentiality and should increase the respondent's willingness to truthfully answer sensitive questions.Warner (1965) showed that estimates of population parameters could be derived by applying elementary probability theory. Because of the added randomization process, however, Warner's technique was quite inefficient statistically. Since then considerable efforts have been made to develop other RRT models with greater efficiency (see reviews by Fox & Tracy, 1980;Horvitz, Greenberg, & Abernathy, 1976).In addition to RRT models for categorical questions, a number of models have been developed for questions that require a quantitative or numerical response (e.g., How many abortions have you had? What is your income?). In the quantitative version of the unrelated question RRT (Greenberg, Abul-Ela, Simmons, & Horvitz, 1969), the respondent is directed by the randomizing device to give a numerical response to the sensitive question with probability P and to give a numerical response to a totally unrelated and innocuous question with probability 1 -P. Another RRT model that can be applied to quantitative responses is the linear RRT (Himmelfarb & Edgell, 1980;Pollock
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