Senior Professional in Human Resources (SPHR) Certification 2025 – 400 Free Practice Questions to Pass the Exam

The correct response is based on the fact that placing all employees at the 50th percentile of the labor market reflects a strategy aimed at aligning compensation with the median pay for similar positions in the external market. This approach is often categorized as a market-based compensation strategy, where the organization aims to match the median compensation levels to remain competitive while also minimizing payroll costs.

This strategy indicates the employer’s intention to provide employees with pay that is neither particularly high nor particularly low compared to the wider labor market. By targeting the 50th percentile, the employer seeks to attract and retain talent without straying too far from the average, which can be an effective way to manage compensation expenses while still being attractive to job seekers.

In contrast, other options represent different philosophies or approaches. For instance, entitlement strategies may focus on providing employees with consistent pay increases regardless of external market conditions or individual performance, while performance-based strategies emphasize rewarding employees based on their contributions and achievements. Equity strategies, on the other hand, are focused on ensuring fairness and consistency in pay among employees performing similar work within the organization, often aligning with internal equity rather than strictly with external market percentiles.