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Process of Developing a Competitive Compensation System

1. Explain how an organization can balance external competitiveness with internal equity to achieve a successful market-based compensation program.

2. Illustrate with actual examples of employers achieving this balance. Also, provide examples of organizations failing to achieve one or both and illustrate what might result.

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Step 1
An organization can balance external competitiveness with internal equity to achieve a successful market-based competition program (a). At the beginning the company must begin with studying the jobs in its organization (c). This is job analysis. Next each job needs to be evaluated. This establishes internal equity. After this the company has to identify its pay policy (d). This is determining whether the organization wants to meet the market in competition, lead the market, or be behind the market. After this compensation data collected from other companies should be analyzed. Normally this data is collected through a survey (e). Finally, the internal evaluation should be merged with the market pay rates. This method balances ...

Solution Summary

This solution explains the process of developing competitive compensation system. The sources used are also included in the solution.

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