Compensati

on
Mohammad Faisal Bariyaly

Why do Millions of
people go to work
each day?

Drive to
acquire:-

We all have a

Money
Things
Prestige
power

Equity: Equity is a concept that people derive job satisfaction

and motivation by comparing their : efforts (inputs)
Income (outputs)
Motivation

Internal Equity

External Equity

Individual Equity

Perception
of Fairness

Commitment

performance

Internal Equity:Internal equity is the perceived fairness of pay

differentials among different jobs within an organization.
1.

Job ranking

2.

Job classification

3.

Point system

4.

Factor comparison

External Equity:External equity involves employee perception of their

fairness of their compensation relative to those outside
the organization.
1. Lead policy
2. Lag policy
3. Market policy

Individual Equity:Individual equity considers employee perception of pay

differentials among individuals who hold identical jobs in
the same organization.
1.
2.
3.
4.
5.

Seniority-based pay systems.

Merit-based pay systems.
Incentive plans.
Skills-based pay.
Team-based pay.

Tha
nk
You