Internal and External Equity Compensation
Internal and External Equity Comparison
Compensation packages are one of the most valuable pieces of the puzzle when an organization creates a program designed to attract and retain suitable employees. A well designed compensation package can ensure that employees are not only attracted to beginning work at an organization, but are also willing to stay within a corporation over time. A higher retention rate for employees can increase productivity and reduce costs for an organization over time. Two of the factors that affect a company’s compensation plan are internal and external equity. In this paper, internal and external equity is explored, including the advantages …show more content…
In conclusion, both types of compensation plans help to support an organization’s objectives, because in analyzing the compensation plans and tailoring them to either the organization and/or market, companies are trying to ensure that they attract and retain good employees. A company will be well served to choose the type of compensation plan best fit to their place in the market.
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