Discuss the implications of your decisions on internal and external equity.

Internal equity pertains to the fairness of a company’s compensation policies and practices for its employees. Companies must ensure that their compensation is fair and equitable within each job level, as well as being competitive with market forces in order to attract and retain talent. In setting compensation levels, employers should consider internal factors such as the duties and responsibilities associated with each job; experience, qualifications, and expertise required; performance standards expected; the value of each position to the organization; and external competitiveness.

External equity refers to how a company’s salary structure compares with those of other firms in its industry or geographic area. When determining external equity, an employer may use surveys or benchmark studies that compare salaries for similar positions across different organizations, taking into account differences in cost of living among various regions or cities. An employer should also consider changes in economic conditions when making decisions about salary structures in order to remain competitive within their industry.

The decisions you make regarding internal and external equity will have important implications on recruitment, retention, motivation levels amongst employees and employee morale within your organisation. If your decision is not aligned with industry practises it could lead to talented individuals moving away from your organisation seeking better remuneration elsewhere resulting in lower productivity levels overall decreasing the quality of work outputted by your organisation leading to decreased customer satisfaction which can have serious financial implications for businesses short term & long term prospects.