What is the characteristic of a company that is a Pay Follower?

A company identified as a Pay Follower typically aligns its compensation practices with the market average rates. This means that the organization observes what similar organizations are paying their employees and adjusts its salary structures to match those prevailing wage levels. By doing so, a Pay Follower aims to attract and retain talent without necessarily leading the market in terms of pay.

Choosing to comply with market average rates allows the company to remain competitive while managing its compensation costs effectively. This strategy can be beneficial in industries where labor is not as scarce or where talent supply can easily be met at these average rates.

In contrast, a company that pays above market rates would be considered a Pay Leader, which can be expensive and may not be sustainable if the company does not have the financial capacity. On the other side of the spectrum, paying well below market rates can result in high turnover and difficulty attracting qualified candidates. Competitive salaries might imply a strategy that hovers close to what the market offers but doesn't necessarily indicate strict adherence to the average.

Thus, the defining characteristic of a Pay Follower is its commitment to aligning its pay structures with what exists in the market, ensuring they stay competitive without leading in compensation.