Skill utilization at work: Opportunity and motivation

Organizations differ in their cultures, power structures, management styles, competitive strategies, and adoption of management practices [4], [5], [6]. These differences are reflected in how organizations make use of their workers’ skills. In general, skilled workers are instrumental for firms producing or supplying high-quality, innovative, and highly customized products or services [6]. At first glance, the heterogeneity of skill utilization may be linked to workplace organization: it is low in Tayloristic workplaces that employ strict command-and-control managerial styles, and much greater in high-performance workplaces, which are characterized by varied worker tasks and high worker autonomy. However, the spectrum of workplace heterogeneity is much wider than this simple classification suggests, and it creates a moral hazard and a coordination problem that affect the quality of matches between workers and organizations.

The management of skills

If organizations are to benefit from workers’ skills, they need to recruit a solid base of skilled workers, motivate them to use those abilities, and provide them with the opportunity to do so. The motivational aspect is of fundamental importance because workers, and the human capital with which they are endowed, represent an asset over which organizations have only partial control. The motivation to use skills and the opportunity to do so should not be treated as entirely distinct elements, since the opportunity to use one's skills has a motivational component [5].

Job design incorporates the tasks and responsibilities falling under a given job title, and it reflects the importance of skills for organizations; it includes roles, behaviors, and work methods—(i.e. how work is to be organized, enacted, and experienced [5]). Job design also specifies the relationships between positions (job titles) and defines the social and personal requirements of the job holder. Ultimately, variations across organizations in terms of technology, managerial practices, organizational culture and work climate, and product market strategies will be reflected at the job level, resulting in job design heterogeneity [6].

Skill requirements are linked to the complexity of the tasks mandated by the design of a given job [7]. Job complexity may be articulated along three dimensions [8]. First, complex jobs involve the performance of multiple tasks (multiskilling and high cognitive demands). Task variability refers to the number and range of different tasks (and roles) of job holders; the greater the task variability in a job, the more skilled and experienced a job holder needs to be to execute the job proficiently. Second, complex jobs include non-routine tasks. Routine tasks, in which skills are honed and perfected by means of repetition, are generally easier to perform than non-routine tasks. Jobs including non-routine tasks are more difficult in that workers will face different and potentially new work-related situations to which they must find an answer. Non-routine tasks may therefore require workers to find solutions to complex problems, and they may require workers to learn new skills. The routine nature of tasks is particularly important for the decision to automate or outsource jobs; however, developments in artificial intelligence have increased the capacity of machines to cope with non-routine situations and recent evidence suggests that routine jobs are not more “offshorable” than non-routine ones. Finally, complex jobs tend to be interconnected, so that a job holder's performance is more difficult to assess by supervisors and line managers because it is connected to that of his/her colleagues.

Firms adopting complex job design implicitly recognize that workers possess important knowledge that can be deployed alongside their skills and ability to respond to work-related situations [4]. To this end, workers in complex jobs are granted some degree of discretion in deciding how their jobs should be carried out (and possibly increased involvement in decision making at the job level).

Complex jobs are very diverse in nature since there are many different ways in which a given job can be enriched with additional tasks. For example, salespeople may be in charge of the sales of a well-established product, may be required to develop a market, and may be expected to collect intelligence on technologies and the innovations of clients and competitors. Further differences in job design may arise from the varying degrees of autonomy granted to workers. The combination of job complexity and job discretion determines the scope for skill utilization. If organizations are to obtain the full benefits from their skilled workforce, they must effectively communicate organizational goals and targets so that their employees can choose what skills and strategies they need to activate, and how to do so, in different work situations.

To perform effectively, workers need to direct their skills (via effort, concentration, and attention) to specific work tasks amid distractions, obstacles, and setbacks. Moreover, technological developments, career progression, and unplanned events may drive workers to develop their skills and learn new things. Both skill development and skill utilization require an act of volition on the part of workers that cannot be mandated by means of contractual agreements and which must be supported by motivational incentives.

Fortunately, complex job design provides motivational resources that induce workers to tap their knowledge and ability and to use their skills [5]. Job complexity provides psychological resources that enhance rewards deriving from the proper exercise of skills, thus making skills utilization sustainable [9]. These psychological resources can be traced back to the role of work in satisfying psychological needs of autonomy, relatedness, and mastery or competence [5]. For example, the use of skills needed to solve difficult (but not too difficult) problems, or to attain difficult (but not too difficult) goals is costly to workers in terms of physical and mental energy, but it can be very rewarding when a state of complete absorption is attained (a state of flow) [9]. Autonomy to decide the method of work, the sequence of tasks, and the timing of work contributes to the experience of psychological ownership of work-related activities. In this way, operational autonomy satisfies the psychological need of autonomy. Feedback from co-workers and supervisors, together with support from colleagues and managers, promote the development of a sense of affiliation to the organization. Finally, jobs that stimulate personal growth, learning, and development sustain a worker's sense of mastery.

Management can support workers’ autonomy by delegating decision-making powers when they can be trusted to act in the interest of the company. Such delegation of authority can be supported by an organizational culture (the values, beliefs, norms, and assumptions that are important for a company) that guides worker behavior by facilitating shared meaning and goals, something which can be effectively transmitted via a coherent system of human resource (HR) practices [10]. It can also be encouraged by a cooperative industrial relations climate, in which unions or other forms of employee representation cooperate with management to increase productivity. Worker autonomy is positively related to the level of trust characterizing the workplace [6] and by the presence of communication policies that clearly indicate organizational goals and objectives [4].

Performance management and other HR practices can also communicate to workers how and when to draw on their skills and deploy them in the best interest of the organization. Training and development opportunities help direct workers’ human capital investments toward the skills needed in the company (provided that managers and co-workers support those willing to enroll in training). An organizational culture that values and facilitates knowledge exchanges among co-workers supports skills development through peer-learning and on-the-job learning. Finally, workers’ initiative is encouraged when mistakes are effectively managed rather than being simply reprimanded [11].

Organizations can complement the set of psychological incentives through the use of monetary incentives (efficiency wages, pay-for-performance schemes, wages linked to the ability to operate multiple machines or the ability to cover various work roles, wage increases linked to promotions, and gainsharing or profit sharing schemes). Monetary incentives can effectively induce people to use initiative, work harder, and draw on their skills. The types of incentives that can be used are influenced by job design characteristics. If pay can be linked (ex-ante) to objective measures of performance, pay-for-performance (i.e. piece rate) incentive schemes can effectively align the interests of the workers and the company. The difficulty in implementing such incentives increases with the difficulty in obtaining an objective measure of performance, the degree of random variation in workers’ performance, and the degree of risk aversion among workers (which will have to be compensated for, unless it can be filtered out by means of relative performance evaluations). Skilled workers may also be attracted to piece rates because of their higher productivity [4].

Job complexity may require multitasking. To ensure that workers focus on the entire set of tasks, a mixture of incentives should be put in place to motivate them to deliver effort along all job dimensions (e.g. a piece rate for performance on easily observed tasks, complemented by bonuses based on subjective performance evaluations regarding the hard-to-observe tasks or to incentivize desirable work behaviors). Finding the right mix of incentives is not easy, however.

In complex jobs, for which it is typically more difficult to define performance (and consequently more difficult to link pay to performance ex-ante), ex-post (i.e. subjective) performance evaluation can be used to award bonuses [4]. Certain group-level incentive pay schemes, namely profit sharing and gainsharing, are supported by organizational policies aimed at disclosing information on financial results and profitability. In turn, the transparent business environment supports the development of a climate of trust and serene industrial relations, which support skill utilization and development.

All these motivational resources, when properly aligned, support employee engagement, which is a state of sustained skill deployment [9]. However, a company may adopt different combinations of monetary and non-monetary incentives to support and direct workers’ effort. The mix of incentives adopted will influence the skill set needed by workers to do well in the workplace.

Complex jobs, with high demands and rich in-job resources, induce a high degree of skills utilization, and they also support workers’ motivational processes (work engagement), resulting in high individual performance. This configuration is typical of high-performance workplaces. At the company level, an engaged workforce that is effectively drawing on its skills can result in improved business outcomes through reduced costs, increased quality, product and process innovation, and better communication supporting a more effective implementation of the business strategy [9].

The devil is in the details when implementing incentive schemes

Despite the many positive aspects associated with job complexity, it also poses a significant challenge to both managers and workers.

Whilst it is often asserted by managers that the skills and commitment of their employees are their company's most valuable assets, many managers also say that they can only manage what they can measure. Job complexity can be understood as a measure of the uncertainty faced by managers regarding the best way to carry out job tasks. Consequently, job complexity and worker autonomy present a moral hazard to management because factors that may influence performance are beyond managerial control and instead under the direct control of employees. To be specific, job complexity raises two challenges for management. First, in jobs characterized by high task variety it is difficult to assess the appropriateness of workers’ behavior in response to specific work situations. Second, in interdependent jobs characterized by non-routine situations and task variety it is difficult to define and assess an individual worker's performance [4]. In fact, skills utilization and the production of work effort are not directly observable to managers and supervisors (except in cases of very close monitoring), even in very simple work settings.

The presence of a cooperative work climate and high levels of trust in organizations may diminish the extent of the threat posed by moral hazard within complex jobs. However, these factors may be disrupted when organizations need to downsize or reduce wage costs. In workplaces characterized by the absence of trust or by the presence of distributional conflicts, the incentives for skill utilization will need to be carefully designed.

Concerns about the moral hazard problem can lead to the adoption of a command-and-control management style thus reducing workers’ motivational resources and their opportunities to deploy skills.

Companies managing the moral hazard risk through monetary incentives that are linked to objective performance measures may set the wage rate too high or too low. Moreover, monetary and non-monetary incentives may not deliver the desired impact on workers’ behavior if the workforce perceives them as a form of increased managerial control rather than a form of support (reinforced reward). For example, concerns about the piece rate being set too low can induce workers to slow down the pace of work [4]. If compensation cannot be linked to performance ex-ante and is instead linked to ex-post performance evaluations (as in the case of performance bonuses or efficiency wages), the effectiveness of these in providing worker incentives is associated with how well the job holder's and the supervisor's performance assessments match up.

In complex jobs with multiple tasks, it is often the case that the performance of each task is not equally visible to, or as easy to evaluate for, supervisors. Organizations may be tempted to make workers’ performance contingent on a subset of easily observed tasks. This strategy, however, will divert workers’ effort away from tasks that are not part of their performance evaluation criterion.

Job complexity is challenging for workers as well. Complex job design imposes higher demands on workers’ skills [7]. Workers must expend mental and physical energy when they apply their skills to job tasks. To sustain their effort, workers draw on various sources of energy: physical energy, emotional energy, and cognitive energy. The consequence is that workers in complex jobs without adequate resources and support may experience resource depletion over time, potentially leading to stress-induced burnout [9].

Consequently, the adoption of complex job design requires the support of appropriate HR practices. However, the implementation of HR practices may not deliver the desired outcomes. This is because their successful implementation relies on cooperation between HR managers and line managers. Line managers are tasked with setting goals and expectations, providing feedback, drafting performance evaluations, identifying training needs, acting as gatekeepers for training participation, providing leadership and motivation, and influencing rewards (non-monetary rewards depend upon the line manager's ability to recognize a worker for good performance; monetary rewards are influenced by the allocation of bonuses and promotion decisions). If line managers’ priorities differ from those of HR managers, or if they perceive HR practices as an increased administrative burden, the practices may not have the desired effects on workers’ motivation [11].

If HR practices are not appropriately implemented, complex job design may result in work intensification, which drives work-related stress, leads to burnout, fosters counterproductive work behavior (damage, theft, lateness, sabotage, decreased cooperation, withholding/not sharing important information), and, ultimately, results in increased staff turnover.

Paradoxically, workers may experience a lack of support when HR practices intended to assist their work effort are introduced. Workers’ understanding of the reasons why management has introduced certain HR practices influences the ability of those practices to deliver the desired result. If workers perceive that the introduction of HR practices reflects management's genuine concern with their well-being and safety, the practices will provide those workers with positive motivational resources. On the contrary, if the introduction of HR practices is ascribed to a managerial attempt to control workers’ efforts more tightly (e.g. due to a lack of trust between managers and workers), the practices will fail to deliver the appropriate motivational resources [9], [11].

The coordination problem

The heterogeneity of job complexity is compounded by the varied ways in which such jobs can be designed and managed, as well as from the many different ways in which things may go wrong. This, combined with further heterogeneity of incentive systems (which may produce different motivational outcomes in different organizational climates), results in highly idiosyncratic workplaces.

The coordination problem generated by the diverse ways in which organizations use skills and design jobs which have the same job title is formulated by the skill–weight approach [12]. Workers tend to invest in the skill mix with the highest currency in the labor market: the one adopted by the majority of firms. As a consequence, organizations adopting skill profiles that deviate from what the majority of firms do will tend to attract applicants who do not possess all of the skills needed [3]. Organizations adopting such an idiosyncratic skill mix and wanting to adopt an arm’s-length relationship with the workforce (by recruiting applicants who “hit the ground running,” for example) may encounter serious difficulties in sourcing the skills they need. However, the misalignment between the skill profile sought by organizations and that possessed by applicants need not persist over time; it may be mitigated if organizations provide training to support workers in the skill development process and offer prospects of long-term employment, in which work incentives encourage both parties to continue the relationship [4].