6.2. Compensation

Deciding how best to compensate employees for the work they do is based on various factors including internal value (the importance of jobs relative to each other), external value (economic factors, such as supply and demand), and the knowledge, skills, and abilities (KSAs) individual employees demonstrate on the job.

Organizations must be aware of a variety of external factors when developing programs and administering compensation including economics, the labor market, competition in the product market, and other pressures such as those related to tax and accounting requirements and government legislation and regulations.

Economic factors

The ability of an organization to find qualified employees is affected by a number ...

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