Reference no: EM133358192

External competitiveness implies that a company's pay is more similar to that of its direct competitors. It helps a firm explore various market variances to establish a better pay program, which may be a pull factor for the best talents. However, multiple factors have huge impacts on external competitiveness. They include market conditions, labor availability, and company policies (Milkovich et al., 2014). Market conditions are critical in determining an organization's level of external competitiveness. For instance, a company might increase its wages when its direct competitors provide low wages to their employees, thus providing a competitive advantage. As a result, the company acts as a pull factor for some of the best talents in the industry. When the company provides low rates relating to salaries, they increase their chances of becoming less competitive, thus losing a considerable base of customers and employees.

The availability of labor can also affect the external competitiveness of a company. For instance, a company with a massive pool of candidates can quickly provide better services and increase its productivity. However, a large pool can result in less competition since talents are abundant. In situations where the labor pool is not huge, companies tend to offer increased compensation to increase their competitive advantage in the market (Milkovich et al., 2014). The other factor that may impact a company is its policies. For instance, companies with strict educational requirements tend to have a limited number of candidates. However, this does not imply that the firms should lessen their academic requirements but should be fair and provide justifiable salaries to match the talent. The companies should ensure that their policies, labor pool, and market strategies are aligned with their objectives for sustainable endurance in the market.