Which of the following represents an internal factor that shapes and determines an organization's employee compensation strategy?

Compensation determination is influenced by two distinct categories of factors: Internal Determinants and External Determinants. Internal Factors originate within the control and operational scope of the organization. These include: Organizational Business Strategy and Compensation Policy (e.g., market leading vs. market matching pay strategies) Relative job worth (Job Evaluation) Employer's financial capacity / ability to pay Employee performance and productivity levels External Factors arise from the macro-environment outside the direct control of the firm. These include: Cost of Living indices and inflation rates Labour Market conditions (supply and demand of specific talent) Labour Union demands and industry-wide wage agreements Government regulations and statutory wage legislation