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Human Resource Management

Write a paper, in which you identify a total compensation plan for an organization focused on internal equity, and a total compensation plan for an organization focused on external equity.

Identify advantages and disadvantages of internal and external equity for the organizations.

Explain how each plan supports that organization's total compensation objective and the relationship of the organization's financial situation to its plan.

Include at least 2 scholarly sources

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The response addresses the queries posted in 1019 words with references.

//The formulation of the compensation plans is based on the organization's focus on internal or external equity. This paper deals with the identification of compensation plans based on internal and external equity along with their pros and cons. It will also explain how these plans helps in supporting the organizations total compensation objectives//

Before formulating the compensation plans based on internal and external equity, it is important to first understand what internal and external equity refers to. Internal equity is said to be existing in the organization when the employees are been provided with fair remuneration in accordance to the relative value of their jobs within the organization. In other words, responsibility, rewards and compensation conferred to an employee should be in equity with the other person working at similar position in the organization. On the other hand, external equity is said to be prevailing in the organization when the employees in the organization are rewarded with the fair remuneration in accordance to those who perform similar jobs in other organizations or we can say that external equity persists when an organization's pay rates are equal to the rates prevailing in the organization's market/sector Lederer & Weinberg, 1995).

Compensation plan focusing on internal equity:

For the purpose of formulating an effective compensation plan that is based on the internal equity, it is important to first consider the basic factors. The very first step is to understand the types and varieties of jobs being performed by various employees within ...

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The response addresses the queries posted in 1019 words with references.

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