COMPENSATION EQUITY ISSUES

Presented ByVaibhav Sharma

COMPENSATION EQUITY
The employee compares his/her take home salary with those working along at the same work place and expects an equitable compensation.

EQUITY THEORY
Equity theory describes how an employee determines if his or her pay is fair
An employee judges if his or her pay is fair by examining 4 factors:
The employees pay (and other rewards) The employees contributions Other employees pay (and other rewards) Other employees contributions

Equity Theory
Id feel underpaid if:
My contributions are the same as my co-workers, but Im paid less Im paid the same as my coworkers, but my contributions are greater than my co-workers contributions

COMPENSATION EQUITY ISSUES

Individual Equity Internal Equity External Equity

INTERNAL EQUITY IN PRACTICE

Job analysis
Collecting data about jobs

Job evaluation
Valuing jobs

EXTERNAL EQUITY PAY POLICIES

Match The Market Lead The Market Lag The Market

INEQUITIES
Inequities exist within an organization when the salaries of employees are out of alignment. Internal inequity exists when employees in an organization with comparable qualifications, levels of responsibility, and performance within the same salary grade are not paid at comparable rates. External inequity exists when an organizations pay rates are not in line with those of the relevant market.

HOW COMPANIES VIEW EQUITY ?

The belief that failure to match other companies' salaries will lead to a decline in employee morale and productivity. The belief that below-average wages will hinder company's ability to attract good people. The opinion that management is morally obligated to pay prevailing wages, and that an inability to do so is an admission of managerial failure.

Arigato Gozaimas