When is pay compression MOST likely to develop?
A) When employee skill levels increase faster than managerial skill levels
B) When the market rate for starting salaries increases faster than organizations can give raises to existing employees
C) When an organization's internal resources increase faster than it is able to hire new employees
D) When the organization can provide monetary rewards more easily than intangible benefits
E) When existing employees make more than new entrants in the organization

Question

Quizplus · Accepted Answer

Pay compression occurs when market rates for starting salaries increase faster than the organization can provide raises to existing employees. This can lead to new employees being hired at a similar or higher salary than existing employees who have been there longer and have more experience.

When Is Pay Compression MOST Likely to Develop