Lead-the-market pay strategies. An employer may choose to establish an internal compensation strategy that is in excess of the pay rates in the prevailing marketplace. This compensation strategy may increase the supply of candidates, increase selection rates of qualified applicants, decrease employee turnover, increase morale and productivity, or prevent unionization efforts. However, prior to implementing a lead compensation strategy, an organization should carefully consider what benefits it expects to realize from such a strategy, keeping in mind that this type of structure has the greatest propensity of increasing overall labor costs.
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