Internal Equity and External Equity
Internal Equity
- It refers to the perceived fairness of the pay structure within a firm.
- It is the comparison of positions within the business to ensure fair pay
External Equity
- It refers to the perceived fairness of pay relative to what other employees are paying for the same type of labor.
- It refers to the relationship between one company’s pay levels in comparison to what other employers pay. Some employers set their pay levels higher than their competition, hoping to attract the best applicants. This is called “leading the market.”
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