In what ways is internal alignment an important policy in a strategic perspective of compensation?, Peer Review 3 help


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1.In what ways is internal alignment an important policy in a strategic perspective of compensation? Discuss the factors that influence internal pay structures. Based on your scholarly research, how do these shape a compensation strategy?

Internal alignment is the pay relationships between different jobs, skills needed to perform these jobs and its competencies within an organization. “These relationships form a pay structure that should support the organization strategy, support the work flow, and motivate behavior toward organization objectives” (Milkovich, Newman, & Gerhart, 2014). There are internal and external factors that influence internal pay structures. Some of the internal factors include the organizations strategy, and the qualifications needed to perform the job duties. “Although employers generally try to keep their salary structures competitive, there are companies with salaries slightly lower or higher than the market rate” (Mayhew, n.d.). Lower salaries are utilized by organizations that hire candidates with little to no experience in order to groom them to specific skills that go with its job description requirement. Higher salaries are used to attract experienced candidates. This in turn relates to the organizations ability to pay for certain skill level of its employees. A startup company may not be able to afford to pay high level, experienced workers. “When an employer is safely operating in the black, it may revisit its compensation structure and modify salaries so they are more competitive with other employers in the industry” (Mayhew, n.d.). Other internal factors are technology, cost implications, the way the organization is designed with different job levels. These job level tie into other HR Policies that influence internal pay structures. “Most organizations tie money to promotions to induce employees to apply for higher level positions. The more levels an organization has to more promotions it has to offer. This gives the employees the sense of career progress (Milkovich, Newman, & Gerhart, 2014). Some of the external factors include external stakeholders such as unions, stockholders, and political groups. Government policies, laws, and regulations such as discrimination laws, minimum wage, and required health coverage are just a few examples. The labor market is also an external factor that has a significant impact. “When unemployment rates are high, there are many more people looking for work than there are jobs. In this case, employers might lower their starting wages because they anticipate job seekers may settle for lower wages” (Mayhew, n.d.). Labor market supply and demand forces are strong influences in the setting of wages. No matter what an organizations job evaluation results indicate, it is unlikely it will be able to pay wages drastically lower or higher than the going rate (Billikopf, 2006). All these factors greatly influence an organizations internal pay structure by dictating how an organization will meet its objectives.


Billikopf, G. (2006, August 11). Internal Wage Structure. Retrieved from University of California:…

Mayhew, R. (n.d.). Internal & External Factors for Salary Differences. Retrieved from Chron:…

Milkovich, G., Newman, J., & Gerhart, B. (2014). Compensation. New York: McGraw-Hill .