INTERNAL ENVIRONMENT -

sunandaC

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INTERNAL ENVIRONMENT -
Among the internal factors which have an impact on pay structure are the company's strategy, job evaluation, performance appraisal, and the worker himself or herself.

Business Strategy: The overall strategy which a company pursues should determine the remuneration to its employees- Where the strategy of the enterprise is to achieve rapid growth, remuneration should be higher than what competitors pay.

Where the strategy is to maintain and protect current earnings, because of the declining fortunes of the company, remuneration level needs to be average or even below average.

Job Evaluation and Performance Appraisal: Job evaluation helps establish satisfactory wage differentials among jobs. Performance appraisal helps award pay increases to employees who show improved performance

The Employee: Several employee-related factors interact to determine his or her remuneration. These include performance, seniority, experience, potential, and even sheer luck.


Performance is always rewarded with a pay increase. Rewarding performance motivates the employee to do better. Managements prefer performance to affect pay increases hut unions view seniority as hc most objective criterion for pay increases.

Experience makes an employee gain valuable insights and should therefore be rewarded- Potential is useless if it is never realized. Yet, organisations do pay some individuals based on their potential.

Young managers are paid more because of their potential to perform even if they are short of experience. Some people have luck to be at the right place at the right time.
 
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