External equity pay comparisons focus on what:
A. other employees within the same organization in the same job are paid.
B. other employees within the same organization but in a different job are paid.
C. employees in other organizations are paid for doing the same general job.
D. employees in other organizations are paid for doing other jobs with higher responsibility.
E. employees in other organizations are paid for doing other jobs with lower responsibility.
The correct answer and explanation is :
The correct answer is C. employees in other organizations are paid for doing the same general job.
Explanation:
External equity refers to the comparison of an organization’s pay levels with the pay offered by other organizations in the labor market for similar jobs. It’s an important concept for organizations to ensure they remain competitive and retain employees by offering fair compensation relative to the external job market. External equity is often used as a benchmark to determine if an organization’s wages are comparable with those of other companies in the same industry or region.
Here’s a breakdown of the options:
- Option A: “Other employees within the same organization in the same job are paid” – This refers to internal equity, not external equity. Internal equity focuses on ensuring fairness in pay within the organization for similar roles.
- Option B: “Other employees within the same organization but in a different job are paid” – This also pertains to internal equity, as it is concerned with pay fairness for different roles within the same company.
- Option C: “Employees in other organizations are paid for doing the same general job” – This is external equity, as it compares the pay for similar positions in other organizations in the same industry or labor market.
- Option D: “Employees in other organizations are paid for doing other jobs with higher responsibility” – This is a comparison of pay for different jobs with higher responsibilities and pertains more to job evaluation and internal equity rather than external equity.
- Option E: “Employees in other organizations are paid for doing other jobs with lower responsibility” – Similar to option D, this is also a comparison of different types of jobs rather than a focus on external equity for the same job.
In summary, external equity is specifically concerned with ensuring that an organization’s pay practices are competitive and fair when compared to other companies offering similar roles, helping to attract and retain talent in the labor market.