Two  important factors in the determination of pay for any given position are  the position’s pay in relation to the marketplace and the position’s  pay relative to others within the organization. The first factor is  known as external equity and the latter as internal equity. However, in  many cases, external equity is used to determine the position’s pay when  there is a different result that reflected by the two methods. This  leads to a perception of unfairness when viewed from the internal equity  perspective. The most notable situation concerns pay for women in many  job categories. This arises because many jobs that are primarily held by  women pay less than jobs primarily held by men. From an internal equity  perspective, the jobs may be evaluated equally by the job evaluation  system, but in the marketplace, the jobs in which women predominate are  paid less. Organizations then face a dilemma—should the jobs be paid at  the market rate or the internal rate?
In more  than 100 countries, the decision has been to base pay on the principle  of internal equity and pay jobs with equal job evaluation points the  same without regard to external rates. However, in the U.S. this has not  been the case. For example, in Washington state the average pay for  women was found to be 20% lower than men in jobs that had the same  number of job evaluation points. Additionally, the Bureau of Labor  Statistics reports that 80 percent of U.S. female workers are employed  in occupations in which at least 70 percent of all employees are women.  This leads, for example, to the situations in which the pay of school  teachers is less than that of the groundskeepers.
Legislation  was introduced in Congress in 2005 (the Fair Pay Act) to require  internal equity for Federal workers, and similar legislation has been  discussed for the private sector. To date, this legislation has received  little support.
Are you in  favor of fair-pay type legislation to equalize the pay between men and  women? Why or why not? If you were to make a case for your position,  what job evaluation principles would you apply and why? What internal  and external equity principles would you use to explain your position?  Justify your chosen position by analysis, reasoning, and example. 


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In its annual issue on executive compensation Forbes  magazine in 2007, reported that “the chief executives of America’s 500  biggest companies got a collective 38% pay raise last year, to $7.5  billion.” Leading the pack was Steve Jobs of Apple, Inc. with total  compensation of $646.6 million. CEO’s pay has been a hot topic for the  last couple of years and looks to continue to be in the news. University  presidents are now also getting in the news with many of them earning  in excess of $1 million annually with expense accounts as high as  $700,000.

What is  your view on executive compensation? Is it too much? Is it justified? Is  it the result of the CEO appointing friendly colleagues to the board  who willingly support pay increases for their friends? Is it simply the  free market at work?
What do  others say about CEO’s pay? Cite at least one credible external  reference on each side of this issue in stating and justifying your  position.
Review your peers’ postings and comment on whether you agree or disagree with their positions and defend your own position.

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