Question

Q. How does an organization set ranges of salaries based on external equity by using point method?  

Word Limit- 450-500

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Answer 1

Setting and targeting the right ranges for the salaries based on the external equity by using the point methods means to compare the salary of an individual or employee of your organisation by dividing into the levels which are assigned like the points. Each individual or job level os rated with a job and salary evaluation statement which helps us to determine what is the right level of salary range to be given to the employee considering the external factors of the job and of the market.

This External equity method is one of the compensation establishment method which helps in attracting and retaining the most effective and top talent for the organisation requiring the most substantially different approaches to the management of these salaries points considering what are the market factors to decide the same.

Using the right external equity method the salary competitiveness is compare with the market changing factors of the economy. Having a fir pay in the organisation where everyone is getting the tight salary as per the performance and the jobs performed by the individual is very hard to decide or even impossible if you are not having the right look into the industry about what is happening in the economy or regionally specific market data to establish what are the most appropriate salary ranges that is to be offered for each position in the organisation.

Depending on the variety of business goals, various organisations have various different strategies and specific targets that are used effectively to address and pay the fair salary to the individual. However, Compensation and Pay practices Strategy survey, there still exists three most common and widely practiced approaches that help the organisation to consistently provide the right salary range to the employees:

1. Leveraging and using the effective regional based market data to establish the externally competitive pay ranges for the employees working in your organisation
2. Build a transparent and open culture to foster and improve position employee perceptions about their pay and compensation and to actively speak about the decisions in the organisations.
3. Using the right business analytics and decisions for also making the employee pay internally equitable.

Organisations can ensure that they are keeping with the ever changing job market by evaluation and checking the HR reported market analysis and reports effectively. Many organisations depend on market survey and the data analytics to make sure the pay they are offering is competitive helping them to attract and retain the right talent and people from the market to join their company. These market data and population research helps the company to establish the most effective pay ranges for the positions offered in the organisation and also help on deciding the salary structure as well.