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Many students who study using our platform have reported that a large number of the practice questions here are very similar to those that appear in real exams. View Courses
Many students who study using our platform have reported that a large number of the practice questions here are very similar to those that appear in real exams. View Courses
A recent compensation study indicates 30% of employees are underpaid relative to external benchmarking. In this situation, which of the following would be the next step to take?
The correct answer is: B. Analyze the data relative to internal policies and affordability.
Before making compensation changes, HR must analyze the benchmarking results in the context of internal pay policies, budget constraints, and organizational priorities. While external benchmarking highlights market competitiveness, internal equity and affordability are critical for sustainable decisions. Acting immediately without this analysis could create inconsistencies, strain budgets, or conflict with existing compensation structures. Careful evaluation ensures that adjustments are fair, financially feasible, and aligned with both organizational strategy and compliance requirements.
Why Other Options are Incorrect:
A. Increase pay to external benchmarking so valuable employees are not lost
While competitive pay helps retain talent, immediate increases without evaluating internal policies and affordability may cause financial strain. It could also create internal inequities by selectively addressing pay gaps without a broader compensation strategy.
C. Give all employees a 10% increase to minimize some of the inequity
Across-the-board raises do not address specific gaps identified in benchmarking. This approach may reward already overpaid employees and overlook affordability, ultimately wasting resources and failing to correct true inequities in pay.
D. Revise pay ranges to eliminate the negative effects of the benchmarking information
Revising pay ranges may be part of a long-term solution but should not be the immediate step. Without analyzing data and affordability, changes risk being unsustainable or inconsistent with company compensation philosophy.
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