This week we looked at the differences between person based pay systems and position based pay systems. The company I have chosen to look into regarding their pay structure is Ferrari, an exotic car manufacturer in Italy.
Ferrari has always been an icon of luxury, and their cars reflect the craftsmanship that is a standard within their company. Ferrari utilizes a person, or skill, based pay structure for their workers, due in part to the quality requirements. For instance, the employees who paint the cars by hand are compensated differently based on the difficulty of the paint style they are working on. The person painting the standard Ferraris will make less than the expert painter who works on the high end, limited run cars that cost over a million dollars.
For Ferrari, this is likely the best way to compensate their workers. When a large portion of the job responsibilities comes down to the employees ability to have a high attention to detail and make no mistakes, they should be compensated based on their performance, not their job title. Drawing back to the paint example; an expert painter who never makes any mistakes while painting would be irritated if he was being paid the same as a novice who is still learning the ropes. Even though they both occupy the same position within the company, and their job responsibilities are the same, they are being paid based on their craftsmanship and ability to not make mistakes. For this reason, I think Ferrari should maintain their current pay structure of skill based compensation, as it incentivizes younger employees to hone their skills in order to be paid more.
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