1. INTERNAL ALIGNMENT

3. Compensation Strategy: Internal Consistency

4. Internal Alignment

6. Pay Structure

8. Structures Vary

9. Strategic Choices in Designing Internal Structures
Fitting or tailoring the pay structure to be internally aligned involves two strategic choices
How tailored to organization design and work flow to make the structure
How to distribute pay throughout the levels in the structure

10. Strategic Choices in Designing Internal Structures (cont.)
Tailored versus loosely coupled
Tailored
Well designed jobs with detailed steps or tasks
Very small pay differentials among jobs
Loosely coupled
Requires constant innovation

11. Strategic Choices in Designing Internal Structures (cont.)
Egalitarian versus hierarchical
Egalitarian structures send the message that all employees are valued equally
Advantages
Fewer levels and smaller differentials between adjacent levels and between highest- and lowest-paid workers
Disadvantages
‘Averagism’ brings to light that equal treatment can mean more knowledgeable employees feel underpaid

12. Strategic Choices in Designing Internal Structures (cont.)
Egalitarian versus hierarchical (cont.)
Hierarchical structures send the message that the organization values the differences in work content, individual skills, and contributions to the organization
Multiple levels include detailed descriptions of work done at each level
Outlined responsibility for each

13. Strategic Choice: Hierarchical versus Egalitarian

14. Which Structure Has the Greatest Impact on Performance? on Fairness?

15. Consequences of an Internally Aligned Structure