National Center on Adult Literacy

This report explores the impact of an innovative compensation system on the development of literacy skills among manufacturing and assembly workers in a high performance organization. The “pay-for-knowledge” (PFK) compensation system ties workers’ wages directly to the work-related skills and knowledge they demonstrate. By developing additional jobrelated skills, workers directly increase their rate of pay. The report analyzes the development of work-related literacy skills in 185 manufacturing and assembly workers during the initial year of the PFK compensation system. Four specific workplace literacy skills in the PFK system are analyzed in detail: blueprint reading, gauge reading, shop math, and introductory statistical process control. Most workers participated in training, acquired new job-related skills, and increased their pay substantially as a response to this new compensation system. Both formal training and informal learning contributed to the observed skill acquisition. 76092-NCAL TR-06 1/26/99 4:12 PM Page 5