This document discusses internal equity in pay structures. It defines internal equity as existing when employees perceive their rewards as fairly corresponding to the value of their jobs relative to other jobs in the same organization. An internal equity study examines pay equity between similar positions and ensures all roles follow the same compensation guidelines, with each role assigned a pay range based on criteria. Fairness is ensured through job ranking, classification, management level, status, and factor comparison. An example is given of comparing social workers' salaries to determine if internal equity exists between those in the same role.

1. Internal Equity
Pay Structures

2. Prepared By
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Manu Melwin Joy
Assistant Professor
Ilahia School of Management Studies
Kerala, India.
Phone – 9744551114
Mail – manu_melwinjoy@yahoo.com

3. Internal Equity
• The internal equity
method undertakes the
job position in the
organizational hierarchy.

4. Internal Equity
• The process aims at balancing
the compensation provided
to a job profile in comparison
to the compensation
provided to its senior and
junior level in the hierarchy.

5. Internal Equity
• “Internal equity exists when
employees in an organization
perceive that they are being
rewarded fairly according to
the relative value of their jobs
within an organization”.

6. Internal Equity
• Another way of stating this is to say
that a person’s perception of their
responsibilities, rewards and work
conditions is seen as fair or equitable
when compared with those of other
employees in similar positions in the
same organization.

7. Internal Equity
• An internal equity study can
determine if there is pay
equity between like-
positions and if all roles in
the organization are
governed by the same
compensation guidelines.

8. Internal Equity
• Usually each role is assigned
a pay range with
corresponding criteria that
outlines how to determine
where an employee should
be placed in the range.

9. Internal Equity
• The fairness is ensured
using job ranking, job
classification, level of
management, level of
status and factor
comparison.

10. Internal Equity

11. Example
• An agency may employ a
number of social workers to
work with similar client
groups. By reviewing the
salary of each employee and
comparing it with others in
the same role, you will be
able to determine if internal
equity exists.

12. Example
• This does not mean that all
employees are paid the
same; it means that they are
paid fairly in relation to
other staff in the same role.
Differences in salary may be
based on education,
experience, years of service,
or responsibility level.