Total Rewards Quiz Questions

During a workforce planning session, HR identifies that within 5 years, 25% of the workforce will be nearing retirement age. The organization wants to ensure that there is steady recruitment of a new generation. Which activity during the benefits needs assessment is most relevant to the recruitment strategy? a. Analyze the utilization data on all benefit plans. b. Review the strategy of the organization's competitor. c. Analyze the workforce demographics. d. Review the organization's management structure.

a. Analyze the utilization data on all benefit plans. Analyzing the utilization data on all benefit plans could result in changes to the benefits mix based on the demographics and possible elimination of underutilized or high-cost plans for the aging workforce. Reviewing the competitor's strategy or the organization's management culture is not part of the benefit needs assessment activity. It is assumed that the workforce demographics have already been analyzed to identify the population nearing retirement age.

HR is in the process of recruiting a senior-level position for a global organization. Which benefit might distinguish the organization from the competition? a. Club membership b. Social security c. Unemployment insurance d. Termination payments

a. Club membership Perquisites are special incidental payments, benefits, or privileges given to individuals over and above their regular rewards. Often awarded to senior-level positions, "perks" may extend to furnished housing, luxury transportation, and membership in exclusive clubs. Social security and unemployment will vary by country but not by organizations within the same country. Termination payments will vary by country and may not be at the sole discretion of the employer where unions are in place.

Which is the best example of indirect compensation? a. Granting compensatory time off to a salaried employee for extra hours worked b. Awarding store gift cards to top performers in a sales contest c. Paying individual bonuses to team members for meeting critical project deadlines d. Paying non-management employees at a higher rate for overtime hours worked

a. Granting compensatory time off to a salaried employee for extra hours worked. Compensatory time off is considered indirect compensation. Cash recognition and achievement awards (gift cards), overtime pay, and cash bonuses are all considered direct compensation.

How does a broadbanding approach support an egalitarian organization? a. By decreasing the involvement of line managers b. By encouraging de-layering efforts c. By reducing the value of pay ranges d. By restricting employee movement

b. By encouraging de-layering efforts Surveys indicate that broadbanding reduces the number of job grades within an organization. This approach can be used to support de-layering efforts, which reduce the number of reporting levels within an organization.

What form of equity is an HR function assuring when it conducts annual surveys of compensation practices in its labor markets? a. Strategic b. External c. Internal d. Cultural

b. External External equity refers to employees' perceptions that they are being fairly compensated in terms of what employers in the same labor market would offer. Internal equity relates to perceptions of fair compensation in terms of the work for the employer. Strategic and cultural alignment are objectives for compensation systems. A strategic analysis could point to a lack of alignment in compensation by department and/or position. A cultural analysis of a compensation system would examine the alignment of the system with the culture's values.

Which is the most important factor an HR leader should use when planning pay increases? a. HR systems b. Financial implication c. HR workload d. Employee support

b. Financial implication HR should consider the potential financial implications of recommendations and actions. Financial analyses and HR decisions are always intertwined. While HR systems, employee support, and HR workload are all viable factors, they are not the most important and are not part of the decision-making. They are factors to consider for implementing and communicating the increases.

Which is an organizational benefit of using differential pay? a. It can identify employees who are not suited for certain types of work activities. b. It can incent employees to perform less desirable work or work in undesirable locations. c. It can reduce employees' taxable income while increasing benefit options for all. d. It can improve key measures when comparing individual and group collaboration and performance.

b. It can incent employees to perform less desirable work or work in undesirable locations. By using differential pay, organizations are able to incent employees to perform less desirable work (shift work, hazardous area, being on-call or standby, frequent or regular travel) or in less desirable locations or locations that have a higher cost of living. The differential pay is provided separate from the employee's base pay to allow for organizational flexibility, resulting in the ability to better control fixed labor costs.

What is true of a lead-lag market competition pay strategy? a. It leads the market during the first half of the calendar year and lags the market during the second half. b. It leads the market during the first half of the fiscal year and lags the market during the second half. c. It leads the market on base pay and bonuses but lags the market on other benefits. d. It leads the market on base pay but lags the market on bonus eligibility.

b. It leads the market during the first half of the fiscal year and lags the market during the second half.

What job evaluation method assesses the responsibilities and requirements of each job and its relationship to other jobs in the organization? a. Market-based b. Job-content-based c. Quantitative d. Survey-based

b. Job-content-based The relative worth of different jobs is based on the assessment of their content, and they can then be compared to other jobs within the organization.

Which is an advantage of using the point-factor method in job evaluation? a. Easier for employees to understand b. Provides documentation and an audit trail c. Reduces administration thus is less time-consuming d. Relies on some degree of judgment by evaluators

b. Provides documentation and an audit trail The correct answer is the most distinguishable feature of the point-factor method; it is the most systematic and analytical method and it includes documentation of the process. Other job evaluation methods do not have this.

How should an HR leader evaluate an organization's return on labor expenses? a. By the number of high performers compared to low performers in the organization b. Through a well-crafted pay-for-performance program that measures performance compared to goals c. By adding salaries, overtime, benefits, and bonuses and then dividing by total costs d. By reviewing the overall employee output compared to the overall sales revenue

b. Through a well-crafted pay-for-performance program that measures performance compared to goals A well-crafted and executed pay-for-performance program allows an organization to evaluate the return on labor expenses.

When conducting a benefits needs assessment, what is the next step HR should take after analyzing the design and utilization data for all benefit plans? a. Analyze the current and projected demographics of the organization's workforce. b. Review the organization's total rewards philosophy, compensation approach, and related objectives. c. Compare organizational needs, employee needs, and current benefit offerings. d. Review the organizational strategy to align with the current benefits offered.

c. Compare organizational needs, employee needs, and current benefit offerings. A gap analysis compares organizational needs, employee needs, and the existing set of benefits to identify the benefits that best match the needs of the organization and its employees.

To better meet the growing need for new parents to balance work with family, which program should HR include as part of the organization's employee benefits? a. Unlimited unpaid leave b. Employee assistance program c. Flexible work schedules d. Automatic increased vacation time

c. Flexible work schedules Flexible work schedules help employees balance work roles with family roles. Increasing vacation time selectively will create problems with engagement and compliance. Unlimited paid leave is not equitable to the organization. Employee assistance programs can provide advice possibly but not relief for the basic problem here, the competition of work and life demands.

How does communicating the guiding principles behind employee pay support an effective compensation philosophy? a. It eliminates local conditions in pay considerations. b. It guarantees how much employees are paid. c. It creates a framework for transparency. d. It removes leadership from pay decisions.

c. It creates a framework for transparency. A compensation philosophy creates a framework for consistency and transparency. Communicating the guiding principles behind employee pay plays a key role in being transparent. A compensation philosophy will guide how an organization pays employees, but it will not guarantee how much an employee will be paid. Compensation philosophies are typically created in collaboration with leadership. Compensation philosophies take local conditions into consideration as part of the review for competitiveness.

In addition to salary, health benefits, and welfare benefits, which item should be included in an individualized total compensation statement? a. Alternative work locations b. Flexible work schedule c. Paid time off d. Employee discount programs

c. Paid time off Paid time off should be included in the compensation statement; a dollar figure for it can be calculated based on salary. There is no consistent or tangible way to calculate the value of a flexible work schedule or an alternative work location. Employee discount programs (gym, movie theaters, streaming services, etc.) are based on the volume of participants; therefore, determining an accurate dollar value would be difficult.

An exit interview assessment finds that the primary reason employees leave is for better total rewards offered at other organizations. Which is the best action HR should take to gather information on competitive total rewards packages to potentially offer its employees? a. Survey employees to identify what total rewards the company should offer to them. b. Conduct a focus group session for management input on the effectiveness of total rewards. c. Participate in an external remuneration survey to assess the competitiveness of the organization's current offerings. d. Send an internally developed survey to local competitors asking what total rewards they offer.

c. Participate in an external remuneration survey to assess the competitiveness of the organization's current offerings. Using an external remuneration survey to collect information draws on extensive databases of incumbents and industry benchmarks. These benchmarks can be used to assess competitiveness.

What is the advantage of nonqualified deferred compensation plans? a. They provide more-favorable tax advantages to employers than qualified plans. b. They protect the plans' funds from creditors in the event of the failure of the business. c. They provide incentives for key executives to stay with the organization. d. They allow all company employees to contribute more than the limits prescribed by qualified plans.

c. They provide incentives for key executives to stay with the organization. Nonqualified deferred compensation plans allow organizations to provide additional benefits to a select group of key executives, which motivates them to stay with the organization.

An organization finds that, without consciously meaning to, it is rewarding behaviors that violate its values. As it returns to the beginning of the total rewards strategy process, what factor should the organization be sure to include in its assessment of the needs of its total rewards? a. Competitive forces that may be driving the behaviors b. Effectiveness of the current code of conduct c. What leaders are willing to tolerate in high performers d. Executive commitment to the required investment for the strategy

c. What leaders are willing to tolerate in high performers In this case, HR needs to ask leadership what behavior they are willing to accept from individuals who are contributing to the organization's strategic success. This will affect the total rewards system's design and implementation. This is not an issue of willingness to invest money but of commitment to the priority of stated values. Competitive factors may be influencing employees' behaviors, but rewarding that behavior through compensation systems goes back to the basic question of whether leaders are willing to sacrifice revenue for the organization's values. The code of conduct defines desired behaviors but may be ineffective in changing behavior if the rewards system is not aligned with the code.

A competency-based pay approach works best in an environment that fosters which of the following? a. Comparing inputs and outcomes by employees to those of their peers b. Focusing predominantly on seniority and longevity versus performance c. Linking measures of quality or goals to individual performance d. Acquiring knowledge and skill that enhances employee performance and satisfaction

d. Acquiring knowledge and skill that enhances employee performance and satisfaction Competency-based pay fosters acquisition of knowledge and skills.

A compensation and benefits specialist conducted a salary data survey last year but did not have time to benchmark the results to the organization's pay structure. What action should the specialist take at this point in time? a. Level the data to determine relevance. b. Completely redo the survey from the beginning. c. Weight the data compared to other survey data. d. Age the data to make it current.

d. Age the data to make it current. When data is aged, older wage survey data is changed to reflect the movement of salaries in the market since the survey was conducted. If the data is aged, it is still usable.

Which is the best example of direct compensation? a. Use of a company car b. Disability insurance c. Deferred pay d. Cash achievement award

d. Cash achievement award Direct compensation is cash compensation. It includes wages, commissions, and cash achievement awards. Indirect compensation includes benefit programs and items like a company car, disability insurance, and noncash rewards.

Which component of a total rewards system should an organization consider as an indirect benefit to employees? a. Commissions b. Yearly bonus c. Competitive salary d. Life insurance

d. Life insurance Life insurance is considered an indirect benefit. Salaries, commissions, and bonuses are part of an employee's compensation and are considered direct benefits.

An organization implements changes to its pay structure, resulting in new hires now being started at the same wage as workers who have been on the job for two years. What type of pay variation will most likely be created? a. Red-circle rates b. Green-circle rates c. Lead-market strategy d. Pay compression

d. Pay compression Pay compression, or salary compression, describes situations where there is only a small difference in pay between employees regardless of their experience, skills, level, or seniority. Pay compression can occur if the labor market, inflation, or some other reason causes market pay increases to rise faster than the employer's pay adjustments

Which is a disadvantage of a time-based pay system? a. Enhanced performance management and appraisal system will be required. b. Quantity of work may be favored over quality of work. c. The organization could be subject to significant equal pay litigation. d. Pay levels may be raised over time regardless of performance.

d. Pay levels may be raised over time regardless of performance. A major disadvantage of a time-based pay system is that it does not reflect performance differences, except for unsatisfactory performance, and it can raise average pay levels over time even if performance is below average.

Which type of survey should an HR professional use to collect information on base pay, incentive plans, and benefits? a. Marketplace b. Global c. Competitiveness d. Remuneration

d. Remuneration Remuneration surveys, the global terminology for compensation and benefit surveys, are used to collect information on prevailing market compensation and benefit practices. This type of survey allows an organization to check its remuneration structures against global and local trends.