Alyana Mae V.

Salon BSBA-HRM3

There’s a need to compare employee's pay against the market pay because job market trends
change frequently, it is necessary to compare employee pay to market pay. Businesses can benefit from
managing regular compensation analyses to ascertain whether they are offering a fair salary or whether
they must reconsider their pay in order to retain and attract talented employees. Market-based pay
compares, using external data, the pay rates of similar jobs carried out in the same industry or region.
The objective is to align pay with the market value that your employees' skills and competencies
command. Competitiveness, employee retention, and adaptability to changing economic conditions can
all benefit from market-based compensation. However, it also has some drawbacks, such as the
difficulty in locating reliable and pertinent market data, the possibility risk of deteriorating internal
equity and regularity, as well as the potential to result in employee wage inequality. It is in line with the
job description because market pay takes into account the abilities and talents that an employee can
contribute to the workplace.

REFERENCE:

https://www.linkedin.com/advice/0/what-advantages-disadvantages-using-market-
based#:~:text=Market%2Dbased%20pay%20is%20a,employees%20bring%20to%20the%20table.