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Pay Structure Changes Based on Job Market Conditions

The student case study was:
Explain the relationship between pay structure change and market conditions. Discuss the major issues and sub-issues that influence the employee's pay.

Two market conditions explored in this solution include the economy and job market. When unemployment is high, organizations have a plethora of job candidates to select from. This may result in a lowering of the typical pay structure as jobs are in high demand. The reverse is true when unemployment is low; organizations must compete with each other for the top talent. The economy also impacts pay structures; by how much organizations can spend on compensation. In difficult times, organizations may opt to grant increases to their top performers; wanting to secure the top achievers. This solution provides several examples of how organizations adapt pay to job market conditions.

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There are two major factors in market conditions that drive pay structure: workforce availability and inflation factors; such as the consumer price index. When the unemployment rate is high and the availability of candidates is voluminous; organizations are not in a dynamic of competing with each other to attract top talent. With a sluggish economic recovery evidence by departing 2012; most employers are budgeting conservative pay increases for existing staff; while being particularly generous with their best performers (weblink below). In this scenario, pay structures may be "flat" for entry level and ...

Solution Summary

What organizations pay their employees are vastly impacted by job market conditions; such as workforce availability (the amount of skilled workers to effectively fill the positions) and the economy, which influences "typical" pay increases via standards like the Consumer Price Index (CPI). This solution is about 375 words and includes a reference, thoroughly analyzing how both of these factors impact how an organization constructs its pay structure and how it may change based on market conditions.