Benefits and Compensation

What’s Your Market Position?

By Sharon McKnight, CCP, SPHR

One of the primary elements of any compensation philosophy is the company’s stance on employee pay relative to the market. Essentially, there are three options: lead, lag, and lead-lag.

A company that leads the market seeks experienced talent and pays higher than market wages to attract and retain fully qualified employees. It sets pay at a rate anticipated for the end of the year.

For example, the market rate for a position in January may be $30,000 but, to lead the market, they will “age” the salary to the start of the next year, paying ahead of the market (leading the market) until it catches up the following year.

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