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Explain internal and external equity. Why are they important? Provide an example of a time you...

Explain internal and external equity. Why are they important? Provide an example of a time you worked where there was good or poor internal or external equity. How did that impact morale and the organization? Knowing what you know now, what would you change if you could?

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Answer-Internal equity means the perception of the employees regarding their duties, work condition, and compensation with those of other employees working in a similar position in the same company. External equity exists when the pay rate of a company is at least equal to the average pay rates in the sector or markets.

Internal and external equity may lead to an increase in the employees' motivation, productivity, and their efficiency.

There was a good internal or external equity structure as the company provides equal pay to the employees which increase their morale. A company may provide its employees with extra benefits such as rewards.

Explanation:

1. Internal equity means the perception of the employees regarding their duties, work condition, and compensation with those of other employees working in a similar position in the same company. External equity exists when the pay rate of a company is at least equal to the average pay rates in the sector or markets.

2. Importance of internal equity and external equity:

Internal and external equity provide equal pay to the employees either working in the same organization or different organizations of the same sector or markets. This will lead to an increase in employees' motivation, productivity, and their efficiency. Equal pay or pay on the basis of employee performance may also reduce conflicts among the employees.

3. There was a good internal or external equity structure as the company provides equal pay to the employees working in the same position or as per performance, if the employees are working at the different hierarchy.

4. The activity of the company to provide a fair salary or pay always increases employees' morale and their efficiency. If the employees of the company are working properly and effectively, then the company will be able to achieve its goals.

5. A slight change can be done in the pay structure of the company that is, it can provide rewards to the employees either in monetary terms such as bonuses or in non-monetary terms such as promotion.

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