Question

What factors should be taken into account in decisions about salary equity? For example, should a teacher and a truck driver be paid the same, or should a computer programmer make more money than a teacher? What factors would you consider in making such decisions?

Answer 1

Salary equity does not mean same salary for all types of workers; it means same salary for workers who perform similar kind of jobs. A teacher and truck driver cannot be paid the same salary because these jobs are completely different from each other. A computer programmer can be provided with more salary than teacher based on the risks involved and profit made by the role. While taking decisions about salary equity, there are many factors to be considered. Equity involves both external and internal equity. External equity is achieved when the company pays similar to other companies for similar jobs. Internal equity is achieved by providing similar salary for employees who perform similar jobs within the organization. Some factors may affect external equity even if the jobs are similar and those factors may include economy, financial conditions of the company and industry regulations. Economy within which the company operates is a factor in determining equity because a company operating in a better economy would be able to make more profit and provide more wages. The company profit or financial condition is another factor as a company with average profit cannot pay salary like a highly profitable company. Regulations in labor field require the companies to pay a minimum salary level and they cannot provide a low salary to achieve equity. Internal equity may be decided by considering factors like job responsibilities, risk involved in the job, contribution towards company and performance. An employee working in high risk conditions should be given more salary than other employees even if the job responsibilities are similar. The roles that contribute more towards company are considered critical and such employees also would be provided with more salary. Performance is also a great factor because the profit made by a division or a project depends upon the productivity of the employees and highly performing employees may receive more salary and benefits than other employees.