Internal EquityPay Structures

Prepared By

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Manu Melwin JoyAssistant Professor

Ilahia School of Management Studies

Kerala, India.Phone – 9744551114

Mail – manu_melwinjoy@yahoo.com

Internal Equity

• The internal equity

method undertakes the

job position in the

organizational hierarchy.

Internal Equity

• The process aims at balancing

the compensation provided to

a job profile in comparison to

the compensation provided to

its senior and junior level in the

hierarchy.

Internal Equity

• “Internal equity exists when

employees in an organization

perceive that they are being

rewarded fairly according to

the relative value of their jobs

within an organization”.

Internal Equity

• Another way of stating this is to say

that a person’s perception of their

responsibilities, rewards and work

conditions is seen as fair or

equitable when compared with

those of other employees in similar

positions in the same organization.

Internal Equity

• An internal equity study can

determine if there is pay

equity between like-

positions and if all roles in

the organization are

governed by the same

compensation guidelines.

Internal Equity

• Usually each role is assigned

a pay range with

corresponding criteria that

outlines how to determine

where an employee should

be placed in the range.

Internal Equity

• The fairness is ensured

using job ranking, job

classification, level of

management, level of

status and factor

comparison.

Internal Equity

Example

• An agency may employ a number of social workers to work with similar client groups. By reviewing the salary of each employee and comparing it with others in the same role, you will be able to determine if internal equity exists.

Example

• This does not mean that all employees are paid the same; it means that they are paid fairly in relation to other staff in the same role. Differences in salary may be based on education, experience, years of service, or responsibility level.