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WorldatWork Regulatory Environments for Compensation Programs Sample Questions:

1. Which statement is most accurate regarding the effect of taxation on the benefits that employers offer?

A) Taxation is the primary reason that employers offer benefits; in the absence of tax incentives, employers would be unlikely to offer them.
B) Taxation affects the level of benefits offered, the source of benefits and the employer/employee cost- sharing basis.
C) Taxation has no effect on employee benefits; employers offer benefits for competitive reasons only.

2. Why are lump-sum increases generally used?

A) To elevate employees who are below the midpoint in the range
B) To reward employees under short-term incentive plans
C) To control annual fixed costs from base pay adjustments
D) To make up for benefits not provided by the organization

3. What happens to the marginal cost if revenue accelerates slower than variable costs but fixed costs remain the same?

A) It increases at the same rate as variable costs.
B) It decreases because variable costs are increasing.
C) It becomes increasingly higher as revenues increase.
D) It remains the same.

4. Which of the following is a type of variable pay?

A) Piece rate
B) Bonuses
C) Hourly pay
D) Pay for time not worked

5. Which of the following best describes the most likely perspectives of different groups in the organization that compensation professionals must be aware of?

A) Operating departments view compensation as it applies to them, HR must balance available resources to attract, retain and motivate employees and Finance knows the value of a motivated workforce and will provide the budget necessary to achieve it.
B) Investors and Finance want to see money spent wisely. Legal must ensure compliance, and HR and operating departments want to see their needs taken into account to attract, retain and motivate a high quality workforce.
C) Operating departments and HR understand the company must live within its means and Finance cannot allocate funds to a budget if it is likely that profitability will be adversely affected.
D) Investors want to maximize gains and want to see compensation tightly controlled and Legal needs to ensure that compensation plans do not attract undue scrutiny.

Solutions: