Question

Please answer the following short essay questions:

35. Why would an organization choose to follow a lead or lag external competitiveness strategy rather than simply meeting the external market for rewards? (6 points)

Answer 1

Today in many organisation the employers are following lead or lag external competitiveness strategy. This lead or lag competitiveness strategy are chooses when the labour market market is very much competitive. The lead market strategy is a strategy of paying or compensation through which higher compensation are given to employees. This compensation is generally higher than the market prevailing compensation. Through lead external competitiveness compensation strategy the qualified candidates comes, the selection process of qualified candidates increases, the productivity and involvement of workers increases, decreases unionization among employees. As a result overall it gives better outcome to the employers in terms of production and productivity of the company. But in general external competitiveness and rewards do not attract the qualified candidates in such a way. The external market for rewards becomes less attractive than lead external competitiveness strategy.

Similarly in lag external competitiveness strategy are taken by those employers who do not have enough financial resources to pay higher compensation to pay and instead of monetary compensation they gives non-monetary compensation to decrease the dissatisfaction among the employees. The compensation are lower than market prevailing pay but here the employers try to retain the employers and try to attract the qualified candidates through giving non-monetary compensation. But this is not that much effective to attract those qualified candidates. But employers take this decision rater external competitiveness market for rewards because it gives company to pay the employees in non-monetary terms. It is effective than external competitiveness rewards when the employers are not financially enough strong to pay higher rate than market prevailing rate.