SHRM Certified Professional Practice Exam 2026 – All-In-One Resource to Master Your Certification!

A person-based system is characterized by compensation practices that emphasize individual employee competencies, skills, and abilities rather than the tasks or job responsibilities alone. In this system, pay is determined based on how well a person can perform their job tasks and their overall capacity for growth and contribution within the organization. This method recognizes the value of developing talented individuals and often ties compensation to their specific qualifications or competencies, encouraging ongoing professional development and skill enhancement.

This approach differentiates itself from other compensation systems, such as those based on performance, seniority, or structured salary systems, which may not take individual competencies into account as a primary determinant for pay. By focusing on the unique capabilities of employees, a person-based system aims to align compensation with the actual value and contributions each employee brings to the organization.