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Influence of Pay Ratio and Equity on Employee Performance

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Describe the influence that pay ratio and pay equity has on employee performance and the importance of relating pay to the strategy and tactics of the organization.

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Pay ratio and pay equity has a tremendous influence on employee performance, largely due to the fact that individuals tend to perform at the highest level when they feel that they are compensated in a fair and just manner. Individuals within an organization are well aware of the value of their skills and contributions to the given organization, so it is very important that the senior leadership and or human resources department of an organization be sure to develop a pay scale that is equitable to the industry standard for each job description. In addition, when there is an equitable and just pay scale within a given organization, employees will tend to seek to attain a higher status within the organization with its accompanying increase in pay, which will serve to benefit the organization, due to the fact that any increase in ...

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