Developing a Fair Compensation Plan essays There are many factors to consider when developing a fair compensation plan. Internal and external equity are key considerations for offering comparable salary and benefits. Internal equity refers to fairness between employees in the same company while external equity refers to relative wage fairness compared to wages with other businesses. In addition to wages, it's important to determine what affects an individual's motivation. In this effort, expectancy theory can be applied. Expectancy theory is based on three perceptions, valence, instrumentality and expectancy. This paper describes the steps to achieve internal and external equity as well as high levels of motivation and cautions of the repercussions for failure to do With regards to internal equity, job descriptions, job analysis and job evaluation help employers compare different jobs and create fair compensation.
