A junior sales manager is told that that maximum salary incr - SHRM-CP Practice Questions
Question
A junior sales manager is told that that maximum salary increase he can receive is $6,000 because a raise in excess of that amount would result in a salary higher than that of his boss. This is an example of:
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Explanation
The situation described is an example of pay compression.Pay compression occurs when there is a minimal difference in pay between employees regardless of their skills, experience, or job responsibilities. In this case, the junior sales manager's maximum salary increase is limited to $6,000 to avoid surpassing his boss's salary, indicating a lack of significant pay differentiation between levels of responsibility. This can lead to dissatisfaction among employees, particularly those with more experience or higher responsibilities, as it undermines the incentive structure typically associated with promotions and raises.
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