When using the direct market pricing approach for employee compensation decisions all of the following are accurate EXCEPT:
A) an internal structure based on the value the organization places on each job is unnecessary.
B) collecting internal information must be completed before external information can be used.
C) external data is collected on as many of the organization's jobs as possible.
D) accurate external data is critical for this approach to be effective.
E) small sample sizes can lead to incorrect assumptions being made about the external data.

Question

Quizplus · Accepted Answer

This statement is inaccurate. In the direct market pricing approach, external data is collected first, and then internal data is collected to ensure that the organization's pay levels are in line with the market.

When Using the Direct Market Pricing Approach for Employee Compensation