The Two Main Pillars of Compensation Systems

There are two main pillars around which most Compensation Systems or Structures are based. And they are:

Internal equity and External Competitiveness.

I will first introduce the concept of internal equity and then over the next few posts I will raise various issues and concerns about how in practice this concept is misused and distorted thus resulting in many continuing problems and challenges.

In order to achieve internal equity companies should go through a process. The components of these processes are: 1) Job analysis, 2) Job description writing, 3) Job evaluation resulting in a classification system or job rankings, 4) and finally the end product being a job structure. This resulting in a job structure is supposed to achieve the admirable goal of   internal equity.

But does it?  I do not think so. 

Over the next few posts I will be discussing in detail some theory based underpinnings of the internal equity concept. But, on the other hand I will also present thoughts and opinions about the misuses of the internal equity concept.