The market-based approach to setting rates involves conducting formal or informal salary surveys to determine what others in the relevant labor markets are paying for particular jobs.

Question

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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.

The Market-Based Approach to Setting Rates Involves Conducting Formal or Informal