Question

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.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.

Answer 1

The key objective of HR Manager is to help organization attain business goals by selecting and recruiting right people and then facilitating with appropriate training and administering them in the correct way thus facilitating to ensure consistency of the process. Key Performance Indicator (KPI) is an employee efficiency measurable tool which effectively utilized by HR administrators to elucidate how effectively the enterprise is able to attain the key business objectives.

Furthermore organizations can use KPIs at multiple levels to effectively examine and evaluate their success at reaching targets. High-level KPIs may focus on the overall performance of the enterprise whereas low-level KPIs concentrates on processes in departments such as sales, marketing etc.

Lead policy elucidates with a pay structure that facilitates an organization to remain ahead of the market for the whole year however you need to fasten your midpoints to be competitive all through the year. Thus by targeting the fiscal year end date of 31^st December indeed would facilitate to stay ahead of the game even as the market slowly catches up. Furthermore you would lead the market for both first and second six months of the year.

Lag policy observes the opposite scale if you're contented to remain behind the market for the whole fiscal year then you indeed can peg your pay structure to be competitive only for one day which in fact can be the first day of the year. However from 2^nd January onward your structure would then slip behind the market falling even further all the way through till 31^st December. Thus you would lag the first six months and even more so for the second six months.

However HR manager with a conscious strategy many choose to fix their market competitiveness to a certain ascertained calendar date which can be either the first day, midway or the end of the year. Furthermore their goal is to position themselves to either lead or lag the market as of that target date which would mean that their competitive situation would fluctuate before and after.