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article review...

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Job analysis and evaluation

Article review 1: pay equity: internal and external consideration

Doctor Khalil COTRAN

Ola SYAGHA

18/12/2018

Title This article falls under the title “Pay Equity: Internal & External Considerations” written by each of Kent ROMANOFF, Kenneth BOEHM, and Edward BENSON. This work was delivered by the combination of three knowledgeable experts in the field of HR. Kent ROMANOFF, as an associate at Hay group and a compensation consultant, Kenneth BOHEM as a Corporate Labor Economist for Pacific Bell and Edward BENSON as a vice president in Hay Walnut Creek office.

Outline Wide-ranging Outline on Equity in terms of different approaches and perceptions of employees, company and experts  How the company approaches equity is as important as establishing the pay system itself  The prominence of evaluating constituents other than the external equity in setting a compensation Plan  Considering the economic and legal part in the repayment process  Individual reimbursement amounts and the pressure of external competition  How employees view their pay in terms of input sand outputs Company’s attitude to equity:  How the company steers the wheel is very critical in the compensation process  Most companies stress external equity when designing their pay arrangement  External equity plays a major role in creating added value and competitive advantage  The compensation’s structure affects the firm’s capability to attract, motivate and retain top employees

Employees’ approach to equity:

 Perception of employees in terms of equity are very important to be well-thought-out as the company creates its strategy  As perceived justice increases in the workplace, so does the overall motivation and performance of employees  Equity have varying definitions in the eyes of the beholders. Theoretical and concrete encounters Modeled by reward equity:  Very important to integrate the firm’s ability, its desires and what to pay in tandem with the preferences of the employees.

A general outlook on equity  Equity is defined as a reciprocal relation between inputs and outputs  Fairness is achieved when outcomes are equivalent or of similar worth to input  Inequity occurs when the value of outcomes aren’t similar to the effort or input generated by the employees. Equity theory: o Equity is directly related to the overall performance and attitude of workers o Direct effect of inequitable treatment on employee’s behavior and performance. o Internal equity based on different jobs within the same organization o External equity based on jobs outside one’s own company o Personal equity focused on personal perceptions of equity o Individual equity is based on individual performance of similar jobs in the organization

Companies view to Equity

Compensation structure should be weaved into an overall strategic-based plan that takes the consideration of several factors into the process.  They decide upon how to evaluate an employee’s performance, how much to compensate, and how pay differentials among laborers’ performance level vary  Companies focus on external comparison due to the need to attract, motivate top talent maintain a decent stand in a competitive environment and other reasons  Awareness of the companies of the mentality associated basically with external comparisons only

Employees’ View to equity:  impacts the company, since they view it in terms of comparisons with other employees in the company  The most affected groups are those who believe are remunerated unjustly relative to other employees in the company  Employees can take into evaluation other related job factors like working conditions and job security and design.  Employees tend to react differently into inequity by taking courses of actions to correct unjust acts The Experts' Opinion:  Debate on the different approaches of compensation strategies.  Both internal and external approaches are important and operate interchangeably in a wide wage compensation policy.  Few exceptions and customization may be needed for specific kinds of business to guarantee full enclosure of all details and possibilities. Conclusion:  Any company should be open enough to adopt a two branched strategy in structuring the reimbursement program, delicately considering the dissimilar aspects of both internal and external equity.

This article took a remarkable start off when it prefaced with a quote that advised employers to always consider employees’ perception of fairness in the wage setting process, although the definition of equity is hard as admitted by the authors. That is to say, because employees’ and employers’ perspectives of equity don’t intersect, the company’s approach to equity is as important as the implementing the program itself, since it affects employees’ motivation and their ability to support organizational objectives. This pushes the companies in front of a conceptual challenge: how do companies bring together their ability to pay, the need to pay at market levels, to pose a specific image and to appeal to the employees own perceptions of equity? To be able to answer the above question the writers begun by elaborating on equity and its different types. Initially, Equity is defined when the exchange between input and outputs are nearly equally valued. After that, the authors pointed out the influence generated by equitable and inequitable treatment on employees, and from there they were able to call out the four different types of equity; external equity occurs when wages pays is based on that of external labor markets pays, internal equity exists when pay is based on the internal value of each job, individual pay which is based on the individual performance and personal pay is related to the own employee’s perception of what is just or not. Additionally, the authors called employers out to pay attention to several factors that can cause inaccurate wage comparisons, ending up setting wages too broad or too narrow. In view of that, the authors assimilated the different views of companies, employees and experts respectively. On the part of firms, they formulate their decisions based mainly on the outside market with considerations of other strategic and basic decisions as a competitive attempt to maintain a strong image and attract qualified employees. As a part of the process, companies perform costly wage surveys to browse the labor market for high quality data o help them in accurately faming their wage levels. On the other side, employees focus on internal equity more and thus view it differently from their employers. The article depicted that Studies found out that employees are most infuriated when they found out that they are paid less with a differential of more than 15%for the same job in their own organization. The writers then argued that this feeling of inequity can be related to pay or other intrinsic job related factors like working conditions, relations with coworkers, and growth opportunities, and at all cases it can cause employees dissatisfaction and poor productivity, and at extreme cases, cause the employees to leave, leaving the company to deal with the cost.Although internal equity is different from external equity, but they operate interdependently, and cannot be seen outside the context of each other. For further elaboration, the authors added the experts view on the issue which selectively stressed the importance of one on the other, but

concluded to the writers’ opinions the relative prominence of both, and in the middle of the argument that wonders which equity theory’s importance precedes the other’s, came the authors say that calls for the creation of a dual tactic that considers both the internal and the external equity In the company’s pay level setting. In addition, the writers chose to mention that this strategic wage level policy may need to dedicate specific exceptions for family jobs affected by demands and supply or affected by their geographical locations for best compensational structuring. In other words, this article was trying to shed light not only on the eminence of equity for the company’s welfare, but also on its intricacy, that requests comprehensive management and the handling of two cleft approach.

Pay equity is a very important topic that constitutes a major part in the success of companies, for the way employees are treated says a lot about not only their satisfaction, but also about the destination the company is going to reach at the end as a result. I believe that the article presented by the writers demonstrated a very strong literature that was easy to red, comprehend, and shed lights in several important concepts in a very clear and precise terminology and flow of ideas. Primarily, this article succeeded in explaining the equity theory clearly and in pointing out the different types of equity, keeping in mind that even though the varying and instable nature of this theory made it hard to derive a concrete and tangible definition, it didn’t stop the writers from conveying the fundaments of this scheme. At the beginning and throughout the article, the writers induced the term of fairness in the contextual meaning of the equity in the workplace, for the writers through this tact tried to ring the bell to a fundamental message which is that the point of equity is not only in being paid, but being treated and paid fairly. Another important matter that was brought up in this article was the perceptions owned by employees. Although, to design remuneration’s packages, organizations cannot break a limb without superintending the pay trends in the labor market, a missed corner that management overlooks is what employees consider worthwhile, and because perceptions will have to do with emotions and attitudes, employers will have to pay a lot of attention to these perceptions, because perceptions of inequity turn to counterproductive actions, and by this the writers lead us to the importance of the human capital thoughts and their management. A very crucial that caught my attention, is that although the writers gave a good advice to reconcile both internal and external consideration in the compensation creating process, however they didn’t fall a prey for generalization this suggestions for all companies at all levels, contrariwise they paid attention to the possibility of atypical occurrences at organizations that may call out for the adoption of one policy over the other, While this may be true, personally, this article conversely bore some weaknesses some shortcoming. Since this article was about the considerations upon equity, the writers followed an abstract and theoretical route rather than a practical and concrete one in his recommendations. For more illustration, I also noticed that the article focused more on

giving prescriptive guidelines rather than advising of how to perform the actions. When the writers stressed that compensation pay carries several challenges, they failed to elaborate on these challenges and to prescribe how to deal with them. A second part where it seemed to lack extra elaboration is the individual and the personal equity part, for the authors forgot to mention that each employee may view fairness differently from others even in the same exact scenarios. This is very important to consider in appealing to employees’ aspirations. Moreover, in the last part, when the writers concluded that the best way to deliver a compensation structure is to base it on internal and external equity, they fell short in describing how to be able to combine two different approaches in one policy, for it is apparent that it needs analysis and effort. What is more, is that, this article was poor in real life stories, case studies and scientific data that serve editorials nothing but equip them with validation and credibility, although the writer eclipsed some studies done by Allan N. Nash about the effect of employee perceptions and the compensation experts that gave the article a touch of credibility, other areas could have been honed by attaching more supportive data to them. For example, if the writer had added some success stories where employers embraced the internal and external equity in a welldesigned strategy, and some occurrences where queer perceptions had made employees to behave in a certain way, it could have boosted this work to be considered more reliable by practitioner and concerned people. To add on that, the writer could have elaborated more on how internal and intrinsic factors affect employees’ performance, and that there could be other aspects different from and has same effect as pay exerts on employees’ performance, and this concept could help employers so that they can embrace those intrinsic factors in a way that could give them a grip over motivation. In a sum, this article draw thin lines between the different types of equity, and how the full comprehension of the equity theory could really help employers in building a competitive workforce that supports the organizational needs. As a final rundown, the article provides a wide overview of the concept of equity in the workplace, how its aspects and types differ, how those different aspects can affect the organizational welfare. It provides a comparison between the different views of employees, companies and added the experts view. This is manifested in the proposed argument between the perceived weight of the importance between external and internal equity. Moreover, This article serves a very crucial purpose which is raising awareness to the importance of the perceptions held by employees, because in the end perceived opinions of equity will affect not only the way of employees’ thinking but also their behaviors accordingly, this capitalizes the necessity of managing and being able to tame such attitudes. On other terms, the writer fell short in several points regarding the addition of scientific back up and prescriptive guidelines of how to implement the proposals in different settings and situations. However, all in all this article focuses on the idea that several factors should be used in the rearrangement of the compensation process, in which internal and external assessments are equally important to the concept

of equity and organizational goals, and should be performed in a two faced strategy to insure that the conception of fairness is achieved in both employees’ and the organizational eyes....