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Tom Farmer explains how to create a simple salary structure by using a file with employee information including name, job title, grade, function, salary, evaluation score, and market value. The market analysis has been completed, and all necessary data is available. It is important to remember that each person is assigned to a job, and multiple people can share the same job title. Jobs are matched to survey jobs, not people, in a one-to-many relationship, forming the basis for salary structure. Market data is sourced from surveys.