There are several policy issues that need to be addressed for establishing a fair and equitable compensation system. Most basic wage and salary system establish pay ranges for certain jobs based on the relative worth of a job to the organizations and wage and salary survey. Determining the relative worth of a job to the organization maintains fair and equitable pay structure internally by comparing jobs within the organization while wage and salary surveys ensures that the payment range is comparable to the payment systems in other similar establishments or occupations. An individual’s performance on the job should then determine where that individuals pay fall within the job’s range Determining internal fairness: Conducting Job Evaluation Job evaluation It is a systematic determination of the value of each job in relation to other jobs in the organization. If it is done properly, the relative value of the jobs is reflected in the relative wage rate for the jobs. It involves1To enumerate the requirements of a job 2The jobs contribution to the organization 3Classifying it according to importance Steps in job evaluation 1.Gather information on the job being evaluated. The information is obtained from job analysis. 2.Determining factors that are to be used in determining the worth of different jobs to the organization like education, skill, initiative, responsibility, working conditions
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