From the course: Human Resources: Compensation and Benefits
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Internal alignment
From the course: Human Resources: Compensation and Benefits
Internal alignment
- Why do high tech firms pay more for software engineers than for accountants? And why does an entry level engineer make less than a lead engineer? It's because many organizations design their pay structures around jobs and job levels. Internal alignment refers to the pay relationships among different jobs within a single organization, how much pay one job receives relative to another. Four external factors help shape those pay relationships. First is economic pressures, the supply and demand for labor. For example, right now, data scientists are in high demand, but the supply of qualified data scientists is low. That imbalance defines a tight labor market, and it puts upward pressure on wages. Now, consider clerical and administrative workers. There's an oversupply of them, but limited demand for their skills. That imbalance defines a loose labor market, and it puts downward pressure on wages. Government policies, laws, and regulations are also external factors that shape the pay…
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