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Internal Equity

In: Computers and Technology

Submitted By muneca39
Words 352
Pages 2
EqUity (or fairness), a central theme in compensation theory and practice, arises in many different contexts. Here, for example, are some major areas: • The legal and economic issue of equal pay for similar work (comparable worth). • Pay differences caused by external competition or market pressures. • The fairness of individual wage rates for people who are doing the same job. • Individual employee views of their value relative to their pay. A company's approach to equity is as important as the actual pay programs it im¬ plements. Companies typically emphasize external equity in the design of their com¬ pensation structures. This focus on external equity enables a ,company to develop compensation structures and programs that are competitive with other companies in appropriate labor markets. Perceptions of equity can also influence a company's abil¬ ity to attract, retain, and motivate its employees. Employee perceptions of equity and inequity are equally important and should be carefully considered when a company sets compensation objectives. Employees who perceive equitable pay treatment may be more motivated to perform better or to sup¬ port a company's goals. Individual employees, however, perceive equity in many different ways. Therefore, it is difficult to specify one definition of equity that is ap¬ plicable to all s i t u a t i o n s . ' In sum, compensation equity poses a conceptual and practical challenge: how to reconcile the company's ability to pay:
The main purpose of this project is to point out the relationship between external equity in discussing pay versus benefits, and also to investigate the best compensation package (with special focus on external market competitiveness and internal equity) that will be of benefit to recruit and retain productive and motivated staff members.
Basically, employees make comparison of their job inputs (Effort,…...

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