Internal Equity Definition

Internal equity is defined as a fairness criterion that offers fair wages based on the value of the employee within the organization.

Extended Definition

Internal equity is a criterion adopted by organizations to ensure fair pay in pay structure. The compensation awarded to employees is determined through internal equity and is calculated depending on the relative value of the employee.

This equity is aimed at striking a balance in the compensation awarded to employees based on organizational hierarchy. The corresponding wages to each job profile are calculated after considering compensable factors, which include:

  • Job ranking
  • Level of management
  • Job classification

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