Pay Equity: Internal and External Considerations Essay

3545 Words Jul 13th, 2012 15 Pages
When setting pay rates, compensation managers must take into consideration the employees' perception of fair, equitable compensation.

Pay Equity: Internal and External Considerations

KENT ROMANOFF
Associate Hay Group, Inc.

KEN BOEHM
Labor Economist Pacific Telesis

EDWARD BENSON
Vice-President, Hay Group, Inc.

EqUity (or fairness), a central theme in compensation theory and practice, arises in many different contexts. Here, for example, are some major areas: • The legal and economic issue of equal pay for similar work (comparable worth). • Pay differences caused by external competition or market pressures. • The fairness of individual wage rates for people who are doing the same job. • Individual employee views of their
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in mathematics from UCLA and an M.B.A. from Pepperdine University. In addition to being a Certified Compensation Professional (CCP), Boehm is a member of the National Associa­ tion of Business Economists, the American Compensation Association, the Northern California Human Resources Council, the Human Resources Systems Professionals, and the American Management Association. EDWARD E. BENSON JR" a vice-president in Hay's Wal­ nut Creek office, consults in the area of human resources, providing management and orga­ nization services to a wide variety of clients. During the last three years, Benson has been particularly active in developing total compensation and human resource programs for start­ up ventures within major corporations. He holds a B.S. in industrial rrianagement/psychol­ ogy and an M.S. in business administration from San Jose State University, where he was a research assistant to the dean of the business school.

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PAY EQUITY

• Perform dissimilar jobs. • Work within the same department. • Work in different departments. Externally, equity can be expressed in terms of employees who have these relation­ ships to one another: • In the same industry. • In different industries. • In the same union. • In the same profession. • In the same geographic location. • In different geographic locations. • In organizations of similar size. • In organizations of differing sizes. Specifically, equity

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