Final answer:
The pay-setting approach that uses the pay policy line to derive pay rates for both key and nonkey jobs is known as a broad banding pay system.
Step-by-step explanation:
The pay-setting approach that uses the pay policy line to derive pay rates for both key and nonkey jobs is known as a broad banding pay system.
In a broad banding pay system, organizations group multiple job levels or positions into fewer pay grades or bands. This approach allows for more flexibility in determining pay rates and promotes internal job movement and career development.
For example, instead of having separate pay scales for different job levels, a broad banding pay system may have a few broad bands that encompass multiple job levels. Within each band, employees can be paid different rates based on factors such as their skills, experience, and performance.