Which term describes the process in compensation that compares external market salaries for similar jobs?

Which term describes the process in compensation that compares external market salaries for similar jobs?

• A. Salary Alignment Review
• B. Internal Equity Analysis
• C. Pay-For-Performance Assessment
• D. Market-Based Job Evaluation

Answer: (D)

Using external market data to set compensation for similar jobs is market-based pricing. This approach collects salary survey data from the external market, matches your job to comparable roles, and then establishes pay ranges that reflect what others are paying. The term Market-Based Job Evaluation specifically captures this practice by evaluating a job’s value against market benchmarks and applying that benchmark to determine pay levels. This is different from internal equity, which looks at fairness among employees within the organization; pay-for-performance assessment, which links pay to performance; and a salary alignment review, which isn’t inherently focused on benchmarking against the external market.

Using external market data to set compensation for similar jobs is market-based pricing. This approach collects salary survey data from the external market, matches your job to comparable roles, and then establishes pay ranges that reflect what others are paying. The term Market-Based Job Evaluation specifically captures this practice by evaluating a job’s value against market benchmarks and applying that benchmark to determine pay levels. This is different from internal equity, which looks at fairness among employees within the organization; pay-for-performance assessment, which links pay to performance; and a salary alignment review, which isn’t inherently focused on benchmarking against the external market.