Organisations can gain a competitive advantage through managing people effectively. “Achieving competitive success through people involves fundamentally altering how we think about the workforce and the employment relationship.” (Pfeffer, 2005) Pfeffer argues that wage compression and symbolic egalitarianism are practise that can be used in order to gain a competitive edge. Wage compression is flattening out the differentials between the highest and lowest paid jobs. Wage compression can create a sense of teamwork, collaboration and cooperation. Symbolic egalitarianism can signal to insiders and outsiders that there is a comparative equality within the organisation. This is done by diminishing status distinctions, for example eliminating executive dining rooms and not having reserved parking spaces for certain employees (Standford University, 1994). Pfeffer’s arguments can be valid however they can also be questionable, in whether they are the right practices to use. Culture, job factors and organisational context are important aspects to consider in determining whether these practises may or may not work.

Pfeffer’s rationale and casual logic for wage compression is that by “reducing interpersonal competition and enhancing cooperation, can lead to effective gains.” (Pfeffer, 2005) Although Pfeffer recognises that large differences in rewards can increase motivation and improve performance, Pfeffer believes that wage compression can produce a higher overall performance, as employees are not focused on gaming the system to gain extrinsic rewards for themselves.”(Pfeffer, 2005) The validity of Pfeffer’s argument suggests that a payment structure that focuses on physiological returns will increase overall performance if employees are intrinsically motivated. However his argument ignores external alignment, being payment structures of competitors. Individuals seek to