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Tom Farmer explains how to develop a simple salary structure using employee data such as name, job title, grade, function, salary, evaluation score, and market value. He emphasizes that the information is fictitious for illustration purposes and that jobs are matched to survey data, not individual employees. Market data is essential for creating a salary structure, with a one-to-many relationship between jobs and employees. It is important to match job titles to survey data accurately to ensure a fair and competitive salary structure.