GronLan Inc., a company with a majority of workers with high seniority, decides to hire 1,000 college graduates to meet the sudden productivity requirements generated by a growth in the market.Which of the following statements is most likely to be happen in this situation?
A)The compa-ratio of the company will become greater than one.
B)The average pay actually paid by the company will fall below its range midpoint.
C)The salary range midpoint of the company will become lesser than the compa-ratio.
D)The number of employees being paid red circle rates will increase.

Question

Quizplus · Accepted Answer

Hiring 1,000 college graduates will likely bring down the average pay actually paid by the company since the college graduates will be paid lower salaries compared to the current high-seniority employees. This will cause the average pay to fall below its range midpoint. Option A is unlikely since compa-ratio is the ratio of an employee's pay to the midpoint of the salary range for their job, which is unlikely to be greater than 1 if the company is paying market rates to the college graduates. Option C is also unlikely since the salary range midpoint is not directly related to the compa-ratio or the hiring of college graduates. Option D is incorrect since red circle rates are typically paid to employees who are being paid above their salary range, which is unlikely to happen in this scenario where new hires are likely to be paid market rates or below.