Company executives, along with HR managers/compensation committees, must decide if their organization will be a pay leader or follower. Strategically, companies should be certain they are able to operate and still make a profit. Think of a company that follows a lag policy and a company that follows a lead policy.

Company executives, along with HR managers/compensation committees, must decide if their organization will be a pay leader or follower. Strategically, companies should be certain they are able to operate and still make a profit.
Think of a company that follows a lag policy and a company that follows a lead policy. Why do they believe it pays to pay differently? Can you think of any companies that follow performance driven and/or work/life balance policies? Explain your choices.

                                                CLASSMATE’S RESPONSE

The Leader decide to offer pay that is higher than other companies in the same marketplace. If the meet or beat the pay rate of the other companies, it ensures they are getting the top workers with the best talent. The Lagers opt to compensate their employers my other means outside of pay. Days off, in office parties and any small jesters that will cover for the difference in pay. Government agencies lag policies and private companies use lead. Profits are greater for private entities and pay can be adjusted accordingly. Most companies use performance based pay policies for accountability as well as motivation. Employees do best when pay is the reward. Cost of living (work/life) increases are sometimes used in the same way.