To make matters more complicated, there are actually two labor markets in which inequities can exist: (1) the labor market within your firm and (2) and the labor market outside your firm. Companies try to develop compensation systems that are equitable both internally and externally. We focus predominantly on the job-based approach because many companies use this method to method to balance internal and external equity. We also discuss some of the newer forms of pay, such as skill-based pay, competency-based pay, and market pricing, as alternative approaches for designing compensation system. We describe all these approaches within the context of how they are used to address a firm’s internal alignment and external competitiveness.”