Internal and External Compensation: Riordan Manufacturing Essay

Excerpt from Essay :

Riordan Manufacturing: Internal and External Compensation

Riordan Manufacturing: External and Internal Equity Compensation

Riordan Manufacturers, being a leader in its industry, appreciates the need to meet the needs of its employees through a fair compensation policy - one that equates pay with the value of the task performed, because fair treatment boosts employee performance and morale, and is an effective employee retention technique (Romanoff, Boehm & Benson, n.d.). Internal equity compensation describes an employee's compensation in relation to that of other employees at the same level within Riordan Manufacturing (HR Council, 2014). External equity, on the other hand, compares Riordan Manufacturing's wages with those of organizations within the industry.

Employee compensation is fundamental to Riordan Manufacturing, just as is stipulated in the company's compensation philosophy. Riordan realizes the intensity of global competition and understands that in order to maintain its industry position and market share, it has to acquire the best in terms of personnel. The quality and R&D disciplines are the backbone of
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the company's future. Riordan's pay program seeks to help the company realize its objectives by attracting and retaining highly-qualified personnel. This pay program determines an employee's pay by examining and rating the position's compensable factors and then evaluating these against the external job market's compensation packages.

In order to effectuate this pay plan, the HR department identifies the compensable factors relating to any new positions, and then uses these to place the position in the appropriate level in the hierarchical structure. The compensation factors appertaining to a position are determined on the basis of:

Education required

Skills required

Experience required

Manual dexterity

Physical demands

Working conditions and health hazards

Public contact

Supervisory responsibility

The position's appropriate level is determined using these compensable factors, with positions requiring higher educational, skill, and experience levels ranking at a higher level within the hierarchical structure.

Riordan is committed to ensuring the satisfaction of its employees at all times. Ours is, to this end, a flexible pay system designed to allow for reviews and upgrades in…

Sources Used in Documents:


HR Council. (2014). Compensation and Benefits. HR Council. Retrieved 2 May 2014 from

Romanoff, K., Boehm, K., & Benson, E. (n.d.). Pay Equity: Internal and External Considerations. Pay Equity Article. Retrieved

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