KevinBishop-InternalExternalComp

Risks overall the plan has been beneficial to intel

Info icon This preview shows pages 3–4. Sign up to view the full content.

View Full Document Right Arrow Icon
risks, overall the plan has been beneficial to Intel, which remains lucrative in the competitive technology industry. External equity is found in organizations in which an employee in an organization’s pay is equal to prevailing rate in that organizations industry or sector. ( Lederer & Weinberg, 1995). Both PepsiCo and Coca Cola utilize external equity compensation analysis. The process of developing a pay scale based on external equity requires a detailed and updated study on market wages and compensation. In addition to wages, other aspects to compensation, such as employee stock options must also be considered. (Singer & Francisco, 2009). This has given both companies the advantage of being able to retain highly qualified employees over time, as a pay structure based on external equity will find employees less attracted to other companies, as compensation packages will be similar across the market. (Heneman, 2002). Additionally, by creating equity in relation to the market, companies have a higher retention rate, which can lead to employee loyalty (Mathis & Jackson, 2008). The disadvantage to this system is that it can lead to inflated wages that do not take into account the economic environment as a whole, and can also lead to internal dissatisfaction if there are wage discrepancies between individuals working at the same level in the organization. While this may be sustainable short term, should an organization’s performance fall in the market, whether due to internal factors or market
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern