INTERNAL & EXTERNAL EQUITY

Internal and External Equity Comparison

Internal and External Equity Comparison

Introduction

In this paper, it will be discuss the comparison between the internal and external equity. Before, we start it is necessary to know what compensation plan is? Compensation plan is part of Human Resource in which HR professionals put a lot of time in research, and consume energy to develop a strong and attractive employee compensation plan (See Appendix 1). Benefits like profit sharing and team-based pay onto sufficient compensation done then that approach researched, reviewed, and polished over time.

Total compensation plan focused on internal equity

Elements underlying basis Remuneration Policy Sets are the level of responsibility and complexity position. The company will respect the internal equity of pay, establishing and maintaining a compensation structure fair and consistent with the relative importance of the posts, so that a higher level of responsibility and / or complexity will refer to a higher level of fixed remuneration. The result is a hierarchy in levels of all positions. Therefore, the levels reflect the responsibility and complexity of a job and the impact on value creation for the company (Henderson, 2003).

Another function of compensation is payable under the impact of each position in the business results. This involves evaluating the impact through job evaluation techniques to ensure fair and consistent look to all positions of the organization. The fair is that using the same set of variables and the same units of measurement to weigh the relative importance of all charges. Fairness is it not, as some people believe, that the results of the evaluation are homogeneous.

The level of remuneration satisfies several objectives, one of which is payable at the beginning remuneration in proportion to what expected to provide a person from a position. Given that total compensation is the sum of fee payment and payment by results, internal equity position is associated with a central criterion when hiring a person, then, since actual performance is unknown, you paid according the value of salary assigned to the office. For this reason, equity income is a determinant of a person's income.

Total compensation plan focused on external equity

The administration of wages is part of personnel management that studies the principles; and a technique to achieve the overall compensation a worker receives is adequate to the importance of their role, their personal effectiveness, and their needs to the possibilities of the company.

In an organization, each function or each ...