Setting Pay Rates By Job Evaluation Methods. Employers use two basic approaches to setting pay rates: market-based approaches and job evaluation methods.
Many firms, particularly smaller ones, simply use a market- based approach. Doing so involves conducting formal or informal salary surveys to determine what others in the relevant labor markets are paying for particular jobs.
They then use these figures to price their own jobs. Job evaluation methods involve assigning values to each of the company’s jobs. This process helps produce a pay plan in which each job’s pay is equitable based on what other employers are paying for these jobs and based on each job’s value to the employer.

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