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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
Which compensation approach positions pay levels slightly above the market median to attract and retain high-value talent?
The Correct Answer is: C. Lead policy.
A lead pay policy sets compensation levels slightly above the market median to attract and retain top-performing or highly skilled employees. This approach signals organizational competitiveness and value for talent, helping reduce turnover and strengthen employer branding. Although it increases labor costs, it enhances productivity, engagement, and commitment by rewarding skill and contribution. Companies using this strategy typically operate in competitive industries where high-caliber employees drive innovation and profitability.
Why Other Options are Incorrect:
A. Lag policy:
A lag policy positions pay below the market rate to control costs. While cost-effective, it risks higher turnover, lower morale, and difficulty attracting skilled talent since compensation does not align with external market expectations or industry competitiveness.
B. Match policy:
A match policy aligns pay with the market median, ensuring external equity but offering limited differentiation. It attracts average talent but may not appeal to high-value performers seeking compensation that reflects their superior skills or contributions.
D. Hybrid policy:
A hybrid policy combines elements of lead, lag, or match approaches depending on role or market conditions. While flexible, it does not specifically aim to attract top talent across the board through consistent above-market compensation positioning.
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