- 1. External Competitiveness: Determining the Pay level
External competitiveness refers to the pay rates of an
organization's jobs in relation to its competitors' pay
rates.
External Competitiveness refers to the pay relationships among
orgns the orgns pay relative to its competitors.
Thus, unlike the concept of internal equity, external equity is
concerned with relative pay rates among organizations. The
conventional view is that the lower bound of a jobspecific pay rate
is set by the labour market and the upper bound reflects product
market competition.
2. EXTERNAL COMPETITIVENESS IS EXPRESSED IN PRACTICE
BY:
- Selecting a pay level that is above, below or equal to
competitors.
[Pay level refers to the average of array ofrates paid by an
employer].
- By considering the mix of pay forms relative to those of
competitors.
[Pay forms refer to the mix of various types of payments that
make up total compensation].
3. PAY LEVEL AND MIX FOCUS ATTENTION ON TWO OBJECTIVES:
CONTROLLABOUR COSTS
ATTRACT AND RETAIN EMPLOYEES
4. FACTORS SHAPING EXTERNAL COMPETITIVENESS
1. Labour Market Factors:
5. Nature of Supply2. Product Market Factors:
6. Level of Product Demand3. Organization Factors:
- Industry, Strategy and Size
7. Individual ManagerEXTERNAL COMPETITIVENESS
8. LABOUR DEMAND
- The marginal product of labour is the additional output
associated with the employment of one additional HR unit, with
other production factors held constant.
9. The marginal revenue of labour is the additional revenue
generated when the firm employs one additional unit of HRs, with
other production factors held constant.