Question

What do you mean by external equity

Answer 1

Explanation:

External equity represents the perception of employees of a company’s pay structure and compensation system. In a market society, companies most often need to pay the market rate in order to hire competent employees. Paying below the market rate results in negative external equity as individuals do not see value in working for the business. Compensation rates above the market rate will attract more potential employees, but there is no guarantee these individuals are better than those paid at the market rate. Companies can gauge their perceived external equity through a review of internal and external human resource factors.