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Tom Farmer explains how to create a simple salary structure by utilizing a file with employee information including name, job title, grade, function, salary, evaluation score, and market value. He notes that the data is fictitious and for illustration purposes only, emphasizing the importance of matching jobs to survey data rather than individuals. Market analysis has already been completed, providing all necessary information for developing the salary structure. The relationship between jobs and employees is described as one-to-many, with the focus on matching jobs to survey data.