Internal and External Pay Equity Research Paper Example | Topics and Well Written Essays - 250 words

Internal and External Pay Equity - Research Paper Example The equity theory states that the wages of the employee must match the job standards and the labor market (Dreher & Dougherty 2002). The managers hence believe that if they fail to match the wages wit the rest of the industry, chances are the best qualified employees will migrate to the rest companies that are paying better. The company that pays lowly will also not attract qualified people. This implies that incompetent personnel will be guiding the company which is translated as a management failure. According to Dreher & Dougherty (2002) matching the pay to the overall industry pay roll or the value of the job plays a great role in ensuring the satisfaction of the employee. This is because the morale of the employee is boosted when the relative wage that he or she is being paid is equal to the skills and abilities that he or she provides. When the image of a company is recognized, the employee feel appreciated, and works effectively to ensure the same level is either maintained or pushed to higher standards. According to the article, the only better way to ensure the best and qualified personnel are maintained in a business or company is by ensuring that their pay checks match those of their colleagues or the value of the job they are carrying out. The consequence of ignoring this is losing them to other companies and risking the operations of the company. Remuneration is termed the best motivation an employee