What is pay compression? 1. A situation that arises when a new employee receives a higher salary or better benefits than established employees doing the same job. 2. A situation that arises when employees compare their salaries to those of other employees inside a company. 3. A situation that arises when employees compare their salaries to those of other employees outside a company. 4. A situation that arises when a company in a retrenchment strategy decides to pay less than the going rate to employees.

What is pay compression?

1. A situation that arises when a new employee receives a higher salary or better benefits than established employees doing the same job.
2. A situation that arises when employees compare their salaries to those of other employees inside a company.
3. A situation that arises when employees compare their salaries to those of other employees outside a company.
4. A situation that arises when a company in a retrenchment strategy decides to pay less than the going rate to employees.

Answer

• A situation that arises when employees compare their salaries to those of other employees inside a company.
  Explanation:

• Pay compression is a situation in which there is a little difference in pay between the employees, regardless of their differences in skills, experience, abilities and their respective knowledge.
• This is common in organizations whereby a new employee receives almost the same pay as long-time employees.
• This can be caused by high minimum wage, inconsistency in salary payment, and if the market rate for starting salaries increases.