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Tom Farmer explains how to develop a simple salary structure using a file with employee information, including name, job title, grade, function, salary, evaluation score, and market value. The data is fictitious and for illustration purposes only. It's important to match jobs to survey data, not people, as there can be multiple incumbents in a job. Market data is used to establish salary structures based on job roles rather than individual employees. The tutorial emphasizes the one-to-many relationship between jobs and people.
