Question

What is internal and external equity and why they need to be considered when making decisions about compensation and benefits.

Answer 1

Internal equity:

Employee pay package compare to others in the same organization. That is when comparison made within the organization, that is called internal equity.

External equity:

Comparison made with other organization. That is when employee compare the pay package with others in other organization.

Decision making:

1. Equity considered in decision making process.

2. Equity eliminates descrimination.

3.these improves outcome from employee .

4.Equity positively motivates the employees.

5.it creates fainting in decision making process.

Compensation:

1.External equivalent: focus on multiple reviews for salary.

Focus on survey of various university for competitive salaries.

2. Internal equivalent:

Compare with same organizational level for qualifications, responsibility and scope. Based on comparison make incentives.

Benefits:

1. Faireness

2. Positive motivation

3.create eequity

4. Improve output

5.eliminate descrimination