Week3 Discussion1 – Peer Responses – Building Blocks

  • Topic: Week3 Discussion1 – Peer Responses – Building Blocks
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Original Question: Discuss the basic building blocks of developing a market competitive pay system, including the relationship between internal and external equity. Respond to at least two of your fellow students’ postings.

Response 1 – 1/3 Page: Ashley Green –
Market-competitive pay systems are essential in business for the development of the employees and growth of the organization. Additionally, they help recruit and retain the most suitable candidates for the role. According to the course text, “Market-competitive pay systems represent companies’ compensation policies that fit the imperatives of competitive advantage (Martocchio, 2017). Moreover, the systems are made up of four elements which are the building blocks for developing a Market- competitive pay system. The first element is conducting a strategic analysis. This process consists of researching the internal and external factors of a company. The second element is the process of assessing competitors’ pay practices with compensation surveys. Through the surveys data is collected on the wage and pay practices of other competitors. The third element is the process of integrating internal job structure with the external market pay rates. According to the text, “The integration results in pay rates that reflect both the company’s and the external market’s valuations of jobs (Martocchio, 2017). The last element is the process of determining compensation policies. The element is essential because companies are responsible for deciding on compensation policies that will benefit the organization and the employee.


Response 2 – 1/3 Page: Faye Dean
According to Martocchio (2017) “Market-competitive pay system represents companies’ compensation policies that fit the imperatives of competitive advantage. It involves implementing a compensation program that is competitive with other companies or organizations that have some similar business or interest. The market competitive pay system is based on recruitment and retention of qualified employees. The market-competitive pay systems are based on four activities. The activities are: performing strategic analysis, compensation surveys, integrating the internal job structure with the external market pay rates and determining compensation policies. The compensation policies include three levels of market lead (paying higher rates), market lag (paying lower rates), and market match (paying equal pay).

Internal factors involve the financial condition and functional capabilities. External market factors involves the industry profile information on competition and long-term prospects (Martocchio 2017).


Response 2 – .5 Page: Dawnn Johnson
Developing a market competitive pay system includes about four main parts. Those four things are conducting strategic analysis and assessment of competitors pay practices with compensation surveys integrating the internal job structures with external market pay rate into start determining current compensation policies. The main goal when developing a market competitive pay system is to have a pay that is attractive to employees and will keep employees at the job while also continuing to make a profit. When conducting a strategic analysis and assessing competitors pay it really focuses on what competitors and others in the same market pay and how they are handling their compensation package to kind of compare and be able to you know Identify what type of things are attracting the type of employees that I want it. There are multiple surveys that are completed in regards to salary and other benefits that are offered and a lot of people use websites like Lastor or indeed especially when job searching to compare and contrast these type of compensation packages and employers are using the same kind of survey material in order to determine what kind of package to offer. Internal and external equity refers to the employees perception of being treated in the same way as other employees in the same job and add different organizations. So when mentioning this it is taking it’s a consideration how employees would compare themselves to other employees in the same company and another employees in different companies and how they feel that they measure up and how their treatment compares to those of others. Internal and external equity is important because if an employee feels that one they are not being treated up to par as other employees or that another company is doing or treating their employees better the most likely they are going to become less interested in the position they are at that place of employment and apply for employment in the other jobs.

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