Describe the reasons a company would choose below-market or above-market compensation policy and the advantages and disadvantages of open versus secret pay policies.

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Compensation Policies
The firm recognizes that the workforce is a crucial element in the attainment of the objectives of the organization particularly those associated with profit maximization. Therefore, it is the responsibility of the human resource management department to ensure that the employees’ welfare is given priority during the decision making process. Compensation is one of the areas that the management has to put much emphasizes on considering that pay dissatisfaction has been linked to the increase in staff turnover within companies. On the other hand, the firm is concerned with attracting the best personnel from the current marketplace while at the same time retaining those already employed (Gómez-Mejia, et al. 297). This will require the incorporation of the necessary compensation philosophies to implement policies such as above-market or below market payment strategies to keep the workforce motivated.
In most instances, companies are prone to market forces that determine price and the costs of production that will be inclusive of the wages and other incentives given to the employees. Furthermore, the stiff competition in the industry has contributed to the management attaching lucrative pay packages to attract labor from the market. Firms operating in labor competitive sectors are forced to incorporate above-market compensation policies to retain their workforce. By adopting the strategy, the base salary offered by the company will be in excess in comparison to those of other employers in the same field.

Such a decision will play a significant role in recruitment as the organization will become a preference for most job applicants. Moreover, the workforce will add to motivation since they will feel wanted in the company and they will, in turn, pledge their loyalty.
The employer will also enjoy a supply of potential workers that will be higher than that of competitors. However, the management has to maintain that the amount payable to the staff will profitable in the long run with the increased labor costs. On the other hand, the existence of unions has set high wages for unionized employees hence supporting the above market policies. Depending on the prevailing market forces a firm may be facing financial constraints that would otherwise not allow the provision of labor rates higher than those in the market. In such a case, the employer will be forced by the circumstances to turn to the below-market strategies to accommodate the costs of production and remain operational at the same time.
The human resource manager may choose to employ other nonmonetary compensation tools to keep the workforce motivated and reduced the level of turnover. In a competitive market, such a company will be at a disadvantage because the qualified. When it comes to payment of wages it is necessary that the firm ensures open communication where information on the amount is put on record, and everybody is at liberty to see it whenever (Gómez-Mejia, et al. 298). This has been seen a way of reducing dissatisfaction among workers and reduce turnover. Secret pay would be useful in high-level managerial positions with firms opting to maintain a standard wage with subordinate staff only rewarding those exhibiting exemplary performance.
In conclusion, pay is something that workers hold dear, and it would play a significant role in determining their preferences when it comes to employers. A firm should strive to have the best policies to stay ahead of the competition but ensure that costs are with the budget constraints. This will be the only way to attract a qualified workforce that will work towards profit maximization.
Work Cited
Gómez-Mejia, Luis R., et al. Managing human resources. Pearson, 2016.