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External Equity and the employees

Do you agree or disagree with this statement?

External equity should always be the primary concern in compensation. It attracts the best and most talented employees and prevents top performers from leaving.

Solution Preview

Disagree. The external equity stems from the concept that salaries given by the company must be at par and comparable to the average compensation of the industry.

Although external equity is the 'primary function', there are other factors influencing the decision of an employee to leave or enter an organization. ...

Solution Summary

This solution shows that external equity is not always a primary concern of a company. There a other things that matter for the employees beyond external equity. It further clarifies that external equity may not be effective when used as a factor in retaining or attracting talented and top performing employees.