Internal and External Equity
Internal and External Equity Comparison
Vaughn V. Van Over
HRM/324
June 29, 2015
Professor Rebekah Benson
Times change and as a result businesses have to change. Today 's businesses face a very competitive globalized economy. For any organization to be successful in that market they have to take a substantial stand toward equity. Equity can affect an organization 's ability to attract new employees, motivate current employees, and retain the best employees. All companies regardless of size have a compensation package, whether formal or informal all have some compensation plan for their employees. A compensation plan is one of, if not the most important aspects of a successful organizational environment. Both external and internal equity play an important role in an organization 's design and implementation of its compensation structure. This paper will examine the total compensation plans for the Lowe 's Companies Inc. and Yum Brands Quick Service Restaurants with a focus on internal as well as external equity.
Internal and External equity It is important first to understand what internal and external equity is. According to WageWatch.com "external equity is a measure of market competitiveness forming its basis on job functions and duties, internal equity is a measure of internal worth with a basis in job autonomy and responsibility" (Best Practices…2012). External equity, going from the definition given, is when employers reward their employees with fair compensation to those who perform similar jobs in other organizations. Internal equity is when the employees are being provided with fair wages relative to the value of their jobs within the organization. In short, internal is within and external is outside of the organization. One company that places a large emphasis on its internal equity is Lowe 's Companies Inc. An American owned company, Lowe 's offers its employee a very well rounded benefit program which includes, but is not limited to;
Vaughn V. Van Over
HRM/324
June 29, 2015
Professor Rebekah Benson
Times change and as a result businesses have to change. Today 's businesses face a very competitive globalized economy. For any organization to be successful in that market they have to take a substantial stand toward equity. Equity can affect an organization 's ability to attract new employees, motivate current employees, and retain the best employees. All companies regardless of size have a compensation package, whether formal or informal all have some compensation plan for their employees. A compensation plan is one of, if not the most important aspects of a successful organizational environment. Both external and internal equity play an important role in an organization 's design and implementation of its compensation structure. This paper will examine the total compensation plans for the Lowe 's Companies Inc. and Yum Brands Quick Service Restaurants with a focus on internal as well as external equity.
Internal and External equity It is important first to understand what internal and external equity is. According to WageWatch.com "external equity is a measure of market competitiveness forming its basis on job functions and duties, internal equity is a measure of internal worth with a basis in job autonomy and responsibility" (Best Practices…2012). External equity, going from the definition given, is when employers reward their employees with fair compensation to those who perform similar jobs in other organizations. Internal equity is when the employees are being provided with fair wages relative to the value of their jobs within the organization. In short, internal is within and external is outside of the organization. One company that places a large emphasis on its internal equity is Lowe 's Companies Inc. An American owned company, Lowe 's offers its employee a very well rounded benefit program which includes, but is not limited to;
References: Best Practices: Balancing Internal and External Pay Equity. (2012, December 20). Retrieved from: WageWatch.com: http://ibrief.wagewatch.com/2012/12/20/best-practices- balancing-internal-and-external-pay-equity/ Employee Benefits Program/Lowe 's Employees.com. (n.d.). Retrieved from: http://lowesemployees.com/lowes-employee-benefits/