Exam SHRM-SCP Topic 1 Question 48 Discussion

Actual exam question for SHRM's SHRM-SCP exam
Question #: 48
Topic #: 1

After a compensation study, the HR director learns that newly hired nurses have been paid higher wages than incumbent nurses for the past three years. Which is a cause for internal pay compression?

A. The market is flooded with highly qualified candidates for nursing positions. B. The company has not adjusted pay ranges in light of changes in the market. C. The company has not offered a cost-of-living increase recently. D. The company allows managers to make salary decisions independent of HR.

Suggested Answer: B Vote an answer

Internal pay compression occurs when there is a narrow difference in pay between employees regardless of their skills or experience. This often happens when new hires are paid higher wages due to current market demands, while incumbent employees' wages are not adjusted accordingly. If the company has not adjusted its pay ranges to reflect market changes, this can lead to new hires being paid more than existing employees, resulting in pay compression.
References:
* SHRM Compensation Data and Practices
* SHRM Learning System for SHRM-SCP

by Herman at Dec 02, 2024, 04:01 AM

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