A software company operates in a competitive labor market where the standard salary for a developer is well-established. However, this company chooses to pay its developers a salary 25% above the market standard. The individual daily output of a developer is difficult to measure accurately, making direct performance monitoring challenging.

Analyze the economic rationale behind this company's decision to pay a higher-than-market wage. In your explanation, detail how this compensation strategy creates a 'cost of job loss' and why that is particularly important given the challenges in monitoring employee performance.