Download SHRM-CP - Compensation & Benefits Exam Questions and Answers and more Exams Advanced Education in PDF only on Docsity!
SHRM-CP - COMPENSATION & BENEFITS EXAM QUESTIONS AND
CORRECT ANSWERS 100% VERIFIED
- George es un outstanding performer a largo plazo. His comparator ratio is 120 y su performance again has been exceeding expectations. Sin embargo, George gets a raise of only 3% while some coworkers with less tenure and just meeting expectations obtain bigger increases than his. He's outraged and has been waiting for you in your office. What to say?
A. You reprimand George, telling him that employees have no business discussing their compensation. B. You first explain to George that his compra-ratio indicates he's at the top of the range and that he already is earning above the market midpoint set in his pay grade. C. The pay adjustment matrix is outdated, and that you will classify him as a green-circled employee who should receive accelerated increases. D You immediately give George a lump-sum increase to bring his pay up as a 10% increase in his base pay. That is, you reward George with a pay increase but also want to - ANSWER B You explain to him that according to George's compa-ratio, he's already at the top of his pay range, which is already above the market midpoint as defined within his pay grade.
Under a competency-based pay system employees receive wages based upon A. their expertise and skills level possessed -irrespective if applying it or not. B. Based upon their rendering on particular jobs-measure via either quality or quantity of. C. on the basis of their scores on annual competency tests. D. on whether they have added value to the organization in the last year - ANSWER A. on the skills and knowledge they have, whether they use these or not.
The most commonly utilized method of sales compensation is the A. draw. B. straight commission. C. salary plus commission. D. differential commission. - ANSWER C. salary plus commission.
All of the following are compensation objectives of the organization EXCEPT A. legal compliance with relevant laws and regulations. B. internal, external and individual
equity for employees. C. the lowest total cost of compensation in the industry. D. performance enhancement for the organization. - ANSWER C. the lowest total cost of compensation in the industry.
A third-quartile approach is a compensation strategy A. in which the company pays higher wages than its competitors do. B. to pay below the average in the labor market. C. where one-third of the competitors in the labor market pay higher wages than what the company does. D. in which the company pays the median of what its competitors pay - ANSWER A. in which the company pays higher wages than its competitors do.
The OnionDome Manufacturing facility has taken a beating in recent years. Last year the board of directors fired the CEO and hired Simon Simple from one of its major competitors. Simple has laid off 20 percent of the hourly employees and 15 percent of the managers and professional staff in the company. He has sold off two unprofitable subsidiaries, and for the first time in five years the company has posted a small profit. This year the board of directors has given Simple a multi-million dollar bonus. Which of the following statements is TRUE? A. It is not common for a company experiencing mass layoffs to give large bonuses to executives.
B. Simple should not take a performance bonus this year because the profits are based on manipulation. C. The Sarbanes-Oxley Act does not allow this type of bonus. D. The employees at OnionDome may view this bonus as unethical to have been given to Simple. - ANSWER D. The employees at OnionDome may view this bonus as unethical to have been given to Simple. 7) Caroline works on a design team that develops costumes for historically-based and fantasy movies.
The designs are executed by professional seamstresses and tailors. Caroline's A. job would be suited for individual pay for performance because one can objectively judge the artistic merits of the costumes. B. individual performance can be isolated and measured separately from her team members' contributions. C. job would not be suited for pay for performance because the quality of the work product of the team is mostly based on subjective judgment. 118 D. Individual performance can be measured by the number of design drawings she produces, and her pay could effectively be tied to this number. - ANSWER C. job would not be suited for pay for performance because the quality of the work product of the team is mostly based on subjective judgment. 118 8) The CEO of MasterFiber Textiles attended a conference where he spoke with the CEO of Golden Fleece Manufacturing.
A consultant presenting a plan for a group/team incentive plan emphasizes that the money to be used as incentive rewards will be generated by improved organizational performance. This aspect of the plan is called the __________ principle A. liquidating B. zero-sum-game C. pay-as-you-go D. self-funding - ANSWER D. self-funding
Of the following, which type of pay adjustment has the most ability to reward employee performance? A. cost-of-living adjustments. B. seniority increases C. lump-sum increases D. across-the-board increases - ANSWER C. lump-sum increases
The vice president of HR wants to closely correlate the team's efforts and its effective performance when designing the new team incentive plan for the company. Incentive payouts should occur A. monthly. B. quarterly. C. semiannually. 119 D. annually. - ANSWER A. monthly.
Brian is director of compensation and has been tasked by the board of directors with presenting the "employee cost factor" at the next board meeting.
The calculation Brian must perform is: A. total compensation and benefits ÷ FTEs B. total pay and benefits expenses C. revenue - operating expense - pay and benefits = adjusted profit ÷ FTEs D. revenue - operating expense - pay and benefits = adjusted profit ÷ pay and benefits - ANSWER A. total compensation and benefits ÷ FTEs 18) The major goals of organizational reward systems include all of the following EXCEPT A. to stimulate employee creativity. B. to attract and retain employees. C. to raise productivity. D. to enhance employee morale. - ANSWER A. to stimulate employee creativity.
- Steven is the vice president of manufacturing for a U.S. textile firm that is opening up a plant in India. He must decide how to pay the hourly workers in the Indian plant.
After much consultation with his peers at other companies he decides to follow the common practice of A. paying wages negotiated with the local community leaders in Indis. B. paying local Indian wages. C. paying the U.S. wage in Indian rupees. D. paying higher than the local Indian wages, but lower than the equivalent U.S. wage. -ANSWER B. paying local Indian wages. 20) Terri is a salaried line worker at Chicken Delight Poultry Processors.
Terri joking refers to herself as a "chicken dis-assembler." She often works more than 40 hours a week, and is not paid overtime. A. A. Terri's pay is in accordance with the FLSA because she is a salaried employee. B. Terri should be paid overtime under the FLSA because she is an exempt employee. C. Terri's pay is not in accordance with the FLSA because she is a non-exempt employee. D. Terri should be given compensatory time off but not overtime because she is a salaried employee. - ANSWER D. Terri is entitled to compensatory time off and not overtime since she is a salaried employee. 21) George is the compensation specialist for a large frozen foods company. He has been asked to identify compensable factors specific to the job of forklift operator in the company's extensive warehouse. In fact, this warehouse is one of the largest refrigerated warehouses in the country. George would likely include all of the following in his list EXCEPT A. working environment. B. safety hazards. C. use of specialized equipment. D. consequences of errors. - ANSWER D. consequences of errors.
The _______ type of pay-for-performance system is most likely to induce employees to behave unethically. A. commission B. ESOP C. performance awards D. gainsharing - ANSWER A. commission
In terms of procedural justice, the process of determining base pay, allocating pay increases, and measuring performance all must be seen by employees as A. fair. B. equal. C. logical. D. open. - ANSWER A. fair.
Aesthetic Decor, Inc. has made the philosophical decision to have absolute internal equity in its pay structure.
To that end, every job in the organization has been rigorously evaluated and assigned points according to the worth of the job to the organization. As a result, many traditionally femaledominated jobs are paid more than their traditional pay, and many traditionally maledominated jobs are paid less than their traditional pay. Which of the following statements is most likely to be TRUE? A. This system is based on the principle of pay equity. B. Although this system looks ethical on its face, it actually violates the Equal Pay Act because it will discriminate against male employees. C. Aesthetic Decor will have a hard time staffing any of the gender-stereotyped jobs in its organization. D. Aesthetic Decor's compensation for traditional male jobs will not be externally competitive. - ANSWER D. Aesthetic Decor's compensation for traditional male jobs will not be externally competitive. 25) Tom has just taken his first full time job with a salary of $38,000) He knows that he should plan his 120 personal recurring expenses, such as rent and car payments, around this amount because it is his A. total compensation. B.
the following EXCEPT A. absenteeism costs. B. turnover costs. C. customer satisfaction. D. accident rates -ANSWER C. customer satisfaction.
- What is a "draw?"
A.
an amount advanced to a sales employee and repaid from future commissions B. a system by which sales employees "draw down" their sales quotas C. a form of income averaging for tax purposes whereby sales representatives can draw down their earnings from a high-income year and transfer them to a low-income year D. a lump-sum payment or bonus at the end of the month - ANSWER A. an amount advanced to a sales employee and repaid from future commissions 33) You are the HR director, and you are discussing with the company's CEO the implementation of a competency-based compensation system.
You indicate that for the competency system to pay off A. the company must put its base pay in the third quartile. B. the company's pay structure must be broadbanded. C. the company must invest heavily in employee training programs. D. the company must employ a pay-for-performance system. - ANSWER C. the company must invest heavily in employee training programs. 34) In an equity calculation, an employee's base pay, variable pay, and benefits are the _________ he/she receives from a job. A. outcomes B. outputs 121 C. inputs D. motivators - ANSWER A. outcomes
_____ plans do not promise a specific benefit level for employees upon retirement. Rather, an individual account is established for each employee with guaranteed size of contribution A. Defined benefit B. Defined contribution C. Term benefit D. Unspecified contribution -ANSWER B. Defined contribution
Medical insurance, paid by the employer, is classified as _________ compensation.
A. indirect
B. direct
C. intangible
D. intrinsic
ANSWER A. indirect
- Integral to most executive compensation plans is the concept that A.
at the executive level, status and image are as important as actual compensation. B. executives should be rewarded if the organization grows in profitability and value over a period of years. C. the organisation's performance in the stock market determines the compensation of executives. D. the focus of executives is more on base compensation than on variable pay - ANSWER B. reward executives when the organisation gains in profitability and value over a number of years. 38) The Board of Directors of Clementine Minerals and Mining has been questioned by the shareholders about the overall compensation of the CEO.
The Board of Directors is considering all of the following questions to determine if the pay to the CEO is reasonable EXCEPT A. Would another company hire this CEO? B. How does the CEO's compensation compare with that of CEOs in other companies in the mining industry? C. Has the CEO's pay gone down in years when CMM has lost money? D. How much would an investor pay for the CEO's performance? - ANSWER C. Has the CEO's pay gone down in years when CMM has lost money? 39) In a division of compensation responsibilities, _________ typically ensure job evaluations and wage surveys are done. A. operating managers B. HR specialists C. Department of Labor analysts D. outside consultants -ANSWER C. Department of Labor analysts
Companies that have explicit policies about where they want to stand in the labor market use a/an _______ strategy. A. industry B. quartile C. benchmarking D. labor market - ANSWER B. quartile
A true cost-of-living raise A. must be implemented both in times of inflation and deflation. B. must be tied to economic indicators. C. is the same thing as an automatic increase. D. is the same thing as a merit raise. - ANSWER B. must be tied to economic indicators.
A job evaluation involves examining every job in the organization and establishing wages based upon A. the educational qualifications needed for employment. B. the relative worth of the job to the organization. C. the value of employees holding the job. D. the job's level in the organizational hierarchy. - ANSWER B. the relative worth of the job to the organization.
A____ is a group of jobs having common organizational characteristics. A. market band B. occupational category C. benchmark group D. job family - ANSWER D. job family
concerned that there will be widespread dissatisfaction and employee questions that will place the HR department and top management in a bad light. As a result, Megatherium has a strict pay secrecy policy and disciplines employees who discuss their pay. Which of the following is TRUE? A. Pay secrecy policies are very rare in the U.S. B. If Megatherium opens its pay policies employee retention will improve. C. Closed pay systems, such as Megatherium's are illegal unless they meet certain IRS requirements. D. It is possible that Megatherium's policy violates the National Labor Relations Act. ANSWER D It is possible that Megatherium's policy violates the National Labor Relations Act. 50) Justin is an hourly employee of Furnace Brick, a company that manufactures a special high-heatresistant brick for industrial kilns.
Justin is unhappy with the new compensation system the company's new plant manager and HR director have instituted. This system has done away with annual raises, the Christmas bonus, and raises based on seniority in favor of one that pegs every employee's raise directly to how well Furnace Brick is doing in the market. Additionally, the plant manager announced that twenty percent of the plant employees will receive no raise at all this year, irrespective of the performance of the company. Furnace Brick has moved from a/an _______ compensation philosophy, to a/an ____ compensation philosophy. A. budget-based, pay-as-you-go B. paternalistic, competitive C. entitlement, performance D. meet-the-market, lag-the-market - ANSWER C. entitlement, performance 51) The drawback of "employee of the month" type awards is that A. they can be seen as favoritism. B. they are typically awarded on the basis of objective criteria. C. it is difficult to link these awards with specific performance criteria. D. eventually all employees will have been employee of the month and the award will have lost its distinctiveness. - ANSWER A. they can be seen as favoritism.
In an organization with a performance-oriented philosophy, A. seniority plays little role in whether an employee receives a raise. B. all employees can at least count on an annual cost-of-living adjustment to their salaries. C. bonuses are based on what other companies in the industries are paying. D. marginal performers tend to be satisfied with their compensation. - ANSWER A. seniority plays little role in whether an employee receives a raise.
Distributing team incentives equitably means that 123 A.
each team member gets the same amount of bonus. B. team members are paid incentives that vary according to individual performance. C. teams that are in competition with one another are paid incentives based on their relative performance. D. each team in the company receives the same amount of discretionary incentive dollars to distribute - ANSWER B. team members are paid incentives that vary according to individual performance. 54) Andrew is excited about the new program at work.
He will be allowed to purchase 20 shares of stock at $45 per share for a limited period of time. Andrew is planning to take advantage of this _______ plan because he expects that the market price of the stock will far exceed $45 in a couple years. A. windfall incentive B. gainsharing C. stock option D. employee stock ownership (ESOP) - ANSWER C. stock option 55) Organizational-level incentives are designed to A. reward each employee for the performance of the entire company. B. aid in recruiting individualistic and entrepreneurial employees. C. motivate functional competition among employees to increase total performance. D. create an organizational culture of ethical behavior. - ANSWER A. reward each employee for the performance of the entire company.
- Abundance Nurseries has to hire hundreds of unskilled workers each spring and summer to plant, care for, and harvest the fields of flowers.
Abundance is situated in a region where there is an ample supply of unskilled labor, and it has few problems recruiting workers as needed. It would be reasonable for Abundance Nurseries to position its pay for these workers in the-quartile of the labor market. A. first B. second C. third D. fourth - ANSWER A. first 57) Bruce is the director of compensation for a regional medical center and he wants to analyze some pay survey data for the different classifications of nurses within the organization.
Bruce has heard there is concern regarding "price fixing" of wages. He determines he will utilize all of the following nursing pay information sources EXCEPT A. a pay survey of regional healthcare institutions that he will conduct himself during an upcoming conference of healthcare executives. B. nurses' pay data from the National Bureau of Labor Statistics. C. a management consulting firm that specializes in pay surveys of healthcare workers. D. a pay survey conducted by the local HR association. - ANSWER A. a pay survey of regional healthcare institutions that he will conduct himself during an upcoming conference of healthcare executives. 58) A compensation plan for expatriates that equalizes the cost differences between the international assignment and the same assignment in the home country of the individual or the corporation is the __________ approach. A. global market B. cost equalization C. total rewards D. balance sheet - ANSWER D. balance sheet
- Orville Brothers Construction, Inc. is bidding on a contract to build a bridge for the federal government. In that contract bid, the construction company must allow for ________ wages for the employees. A. median national industry B. minimum C. living D. prevailing - ANSWER D. prevailing
to provide disability plans that cover pregnancy-related disabilities B. to provide up to six weeks of paid leave to either parent upon the birth of a child C. to provide up to six weeks of unpaid leave to either parent upon the birth of a child D. that offer disability plans to treat pregnancy as they would any other disability - ANSWER D. that offer disability plans to treat pregnancy as they would any other disability 66) A differential piece-rate system pays employees A.
one piece-rate wage for standard production, but less if producing below quota. B. one piece-rate wage for units produced up to a standard output, and a higher piece-rate wage for units produced over the standard. C. a higher rate per piece for employees with more experience and seniority. D. differential wages depending on the differing responsibilities in the production of each unit. - ANSWER B. One piece-rate wage is paid for units produced up to a standard output, but a higher piece-rate wage is paid for units produced over the standard. 67) Bonuses are less expensive for the organization than across-the-board raises because A. bonuses are given preferential tax treatment. B. the amount given on an annual basis as a bonus tends to be smaller than what is given on an annual basis as a raise. C. bonuses are given in noncash form many times. D. bonuses do not become part of base wages for employees. - ANSWER D. bonuses do not become part of employees' base wages.
For a profit-sharing program to succeed, management must A. increase innovative solutions to technical problems. B. not have high expectations of performance impact in the first year of the program. C. be willing to disclose financial and profit information to employees. D. stabilize profits so that the annual payoff is consistent - ANSWER C. be willing to disclose financial and profit information to employees.
Compensatory time-off can be given to nonexempt employees in the private sector A.
if it is given to employees at the rate of one and one-half times the hours worked over a 40-hour week. B. if the comp time can be carried over for 60 days. C. if the employee's hourly wage is at least one and one-half times the minimum wage. D. only if the employer is a federal government contractor with contracts over $50,000. - ANSWER A. if it is given to employees at the rate of one and one-half times the hours worked over a 40-hour week. 70) An individual's _________ is that employee's current pay level divided by the midpoint of the pay range. A. compra-ratio B. market ratio C. target ratio D. matrix ratio ANSWER A. compra-ratio
Employer use of increased deductibles, coinsurance payments, policy exclusions and limitations, and establishment of maximum benefits 125 are examples of which of the following types of managed-care efforts? A. Alternative funding methods B. Claims review C. External cost-control systems D. Plan design - ANSWER D. Plan design
Which of the following is an important phenomenon encountered in cost control efforts?
A. A majority of health care costs are generated by a large percentage of employees. B. The administrative issues ensure that employees stick on to specific programs in spite of cost control efforts. C. Piecemeal programs may not work well. D. Employees are willing to aid in cost cutting efforts by not making unnecessary claims. - ANSWER C. Piecemeal programs may not work well. 73) Simon is outraged because Missy was granted a raise due to being the sister of the chairman of the board. Simon's sense of _______ has been violated A. compensatory equity B. distributive justice C. external equity D. procedural justice - ANSWER D. procedural justice
The Supreme Court, in the 1978 Manhart decision, determined it was discriminatory for employers to insist that A. physical exams be taken prior to extending job offers. B. women pay more than men into a defined benefit plan. C. employees purchase health insurance coverage D. employees retire by age 65) - ANSWER B. women pay more than men into a defined benefit plan.
As the director of HR for Megatherium Products, you're looking at ways of making the compensation function more effective. You're considering the idea of outsourcing some of the compensation functions to a vendor outside the organization. Of the following, the function that you are most likely to outsource will be A. employee performance appraisal. B. development of wage and salary structures. C. payroll processing. D. job evaluation. - ANSWER C. payroll processing.
Intertwined effects of pay and process refers to the idea that A.
the way workers are treated is just as important as the way they are paid B. changing the way workers are paid is more important than the way that they are treated C. productivity can only be boosted if employees in the same jobs are paid equally D. pay decisions do not impact productivity - ANSWER A. the way employees are treated is equally as crucial as how they are paid 77) Larry has decided to return to his home town
employees.
Variable pay plans may be based on any of the following metrics EXCEPT A. market share increase. B. total compensation expense reduction. C. customer satisfaction levels increase. D. return on investment. - ANSWER B. total compensation expense reduction.
Marie has been offered employment as a employee trainer for AgriEnterprise.
In this work, Marie shall utilize training materials provided by the employer and train employees in AgriEnterprise's three locations at the times determined by the company.
The company has promised Marie that it shall continue using her services for as long as her performance remains satisfactory. Marie has agreed not to work as a trainer for any other company while working for AgriEnterprise. The company pays Marie as a contractor. Which one of the following statements is true? A. Marie is a contractor. B. Marie is an employee. C. Marie is an independent contractor with only one client. D. Marie would properly be classified as a creative professional employee. - ANSWER B. Marie is an employee. 84) In terms of expectancy theory, the basic problem with profit sharing as a motivational tool for employee effort involves A. weak instrumentality perceptions. B. weak valence perceptions. C. weak expectancy perceptions. D. weak equity perceptions - ANSWER A. weak instrumentality perceptions. 85) Which of the following is common team-based pay structure? A. individual pay-for-performance based on input from team members B. skill-based pay plus percentage of base pay C. equal pay to each team member based on team performance D. team-based variable pay in addition to individual base pay -ANSWER D. team-based variable pay in addition to individual base pay
The _______ indicates the relationship between job value, derived from the job evaluation points, to the pay survey rates. A. compra-ratio B. isobar C. quartile D. market line -ANSWER D. market line
A firm that designs its pay system so that half of its competitors pay their workers more than it does and half of its competitors pay less than it does is pursuing the _______ market strategy. A. lag B. meet C. lead D. follow - ANSWER B. meet
Chuck has applied to a residential roofing firm for a job as a roofer during school vacation because the pay is very good. Roofing is considered hazardous work. Under the FLSA Chuck cannot be hired unless he is at least _______ years old. A. 14 B. 16 C. 18 127 D. 21 - ANSWER C. 18 127
Amanda is upset because she makes the same amount of money Carl does, although Amanda has 18 clients and Carl has only 11 clients. Amanda is making a judgment about A. extrinsic justice. B. intrinsic justice. C. internal equity. D. external equity - ANSWER C. internal equity.
Financial measures that can be used to judge executive performance include all of the following EXCEPT A. earnings per share. B. net income before taxes. C. market share. D. return on equity - ANSWER C. market share.
Which of the following statements is FALSE?
A. Research has not shown a strong relationship between CEO stock options and firm performance.
B. Answers A The Sarbanes-Oxley Act was in reaction to abuses of stock options by top executives. C Only at the level of chief executive is it possible for business conditions to be such that no bonus is paid, under a properly designed discretionary plan. D Perquisites remain in-use. Most are now taxed as income to the executive. - ANSWER A. Studies have not found a significant link between CEO stock options and firm performance. 92) When the point method of job evaluation is utilized, a ______ factor is utilized to locate a job value that is common throughout a group of jobs. A. compensable B. Hays C. value D. KSA - ANSWER A. compensable 93) Gainsharing can motivate employees as much as individual plans do because of A. the level of employee involvement and management cooperation B. the controllable nature of the performance measure and the frequency of payouts C. the relatively simplistic performance targets and large payouts. D. the high levels of employee ownership and teambased compensation. - ANSWER B. the controllable nature of the performance measure and the frequency of payouts
- Simon is a compensation specialist for Coreopsis, Inc. He is collecting data on compensation rates for workers performing similar jobs at other organizations, Simon is conducting a A. external equity study. B. pay survey. C. market review. D. competitive
