Human Resoure Unit 8

Compensation Purpose and Strategy Document

The purpose of this assignment is to choose a compensation philosophy that is appropriate for your chosen firm and 

articulate a rationale for this selection. 

There are two aspects to this assignment. First, describe the risks and benefits with leading, meeting, and lagging the 

market in overall compensation and benefits. Next, choose the appropriate strategy (lead, meet, or lag) for your firm, and 

provide rationale about why this is appropriate. 

There is a minimum requirement of 500 words for the compensation purpose and strategy document.

Consider some of the following factors in your assignment:

1. Payroll expenses are usually the highest expense at most firms. If you lead the market, this expense can 

be taxing.

2. If you are pursuing top talent in human capital rich industries (e.g., software engineering), lagging the market may 

keep you from competing for market share against your competitors.

3. If you meet the market, paying average will generally not attract top talent, and in addition, you will not have the 

labor-cost savings of a lag-the-market strategy.

Any sources used, including the textbook, must be referenced; paraphrased and quoted material must have