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Pay: Internal Alignment & External Competitiveness

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Distinguish external competitiveness policies from internal alignment policies. What is external competitiveness? What factors shape an organization's external competitiveness? Why is external competitiveness so important?

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External competitiveness is the pay relationships among organizations. The organization's pay relative to that of its competitors is external competitiveness. External competitiveness typically sets the pay level above, below, or equal to that of competitors. Internal alignment policies are those that enable a firm to pay fairly based on internal relative worth. These help assess the value to the employer of the work performed and give an internal ranking of the job. Internal alignment means employees who perform similar jobs, perform dissimilar jobs, work within the same department, and work in different ...

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This solution explains external competitiveness and internal alignment of pay. The sources used are also included in the solution.