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PHR · Question #131
PHR Question #131: Real Exam Question with Answer & Explanation
The correct answer is A. $79,000. Lagging the market means offering compensation below the prevailing market rate. With a market average of $87,500, only $79,000 falls below that benchmark.
Question
You are the HR Professional for your organization and you have been asked to hire a project manager. The average market salary for the project management position, you have available is $87,500. Which one of the following salaries would be indicative of lagging the market?
Options
- A$79,000
- B$101,000
- C$87,500
- D$88,000
Explanation
Lagging the market means offering compensation below the prevailing market rate. With a market average of $87,500, only $79,000 falls below that benchmark.
Common mistakes.
- B. $101,000 exceeds the market average and represents a lead-the-market pay strategy, which is the opposite of lagging.
- C. $87,500 exactly matches the market average, representing a match-the-market pay strategy rather than lagging.
- D. $88,000 is slightly above the market average and also represents a lead-the-market position, not a lag.
Concept tested. Compensation market pay strategy - lag the market
Reference. https://www.shrm.org/topics-tools/tools/toolkits/designing-developing-pay-structure
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