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Secondly, the internal pay equity creates a good sensible business; thus improving the firm’s retention of its top performers and maximize its chances of hiring a top talent in the industry. Therefore, failure to manage the internal pay equity can result in losing employees to other companies and creates disloyalty among the employees (Kramar & Syed, 2012).
The external pay equity management is also important for company’s success. Employers are expected to manage carefully determine the appropriate markets. Therefore, the management of the appropriate markets helps in having accurate external wage comparison. Thus, this reduces unnecessary payments in some areas (Kramar & Syed, 2012). For instance, a narrow determination of a market can lead to wage that higher that is expected.
Therefore, employee inequity and equity perception are equally significant, and companies should consider as it sets its compensation objectives (Perkins & Perkins, 2011). Employees perceiving equitable pay treatment can be more motivated in supporting the company goals of performing better. In conclusion, about compensation, fairness is reached when pay is equal to work performed
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(Week 2 #2 Coursework Example | Topics and Well Written Essays - 250 Words)
“Week 2 #2 Coursework Example | Topics and Well Written Essays - 250 Words”, n.d. https://studentshare.org/human-resources/1698338-week-2-2.
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