To be internally consistent while also being competitive in the market is a difficult undertaking. To be able to develop a compensation system takes multiple steps and a considerable amount of effort. They need to be internally consistent is important for companies to be able to retain their most talented employees. To be able to be internally consistent they first need to conduct a job analysis and job evaluation, these are two timely processes, but necessary to be able to form a compensation system. To be able to create a market competitive compensation system has an even more complex process. The company must conduct a strategic analysis of the internal and external factors of the company. They must then look at the pay practices of competing companies. They can do this through the use of compensation surveys then they have to use an analysis calculator to match the companies internal job structure with external market compensation rates. Trying to find the best fit can have some major challenges. The pay structure that the company tries to implement has to fit both internally and externally ‘these two aligning can be hard. Alongside the end result working out, the collection of data can have some challenges. Firstly, the amount of data required is timely to collect and then l organize, This can be a challenge to find employees that can be assigned and have the time to complete this role. Secondly, there is another challenge involved in the data collection this is the time it can take to collect and compile the information can mean it is outdated and need to be redone.