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WorldatWork Regulatory Environments for Compensation Programs Sample Questions:

1. Under the Equal Pay Act, which is an acceptable defense to justify differences between the rates of pay for men and women assigned to the same job?

A) The women are all graduates of the most prestigious schools, and graduates from those schools command higher salaries.
B) The male employees have substantially more education than the female employees.
C) The differential is due to the fact that the men have more seniority with the employer.
D) All of the women have some professional certification or registration, whereas none of the men have comparable credentials.

2. What statement is most accurate regarding compensation communications with employees at varying levels?

A) They generally require a greater degree of detail for lower level employees who have less of an understanding of pay plan design.
B) They tend to be fairly consistent because the elements of pay may differ, but the concerns are universal.
C) They should be kept to a minimum for employees at all levels to maximize efficiency and efforts can be focused only on those who have questions.
D) They usually require more detail for senior employees regarding plan details and performance and the needs from one employee group to another can vary greatly.

3. Your company has had a strong fiscal year with a 15% increase in net income over the prior fiscal year. Share prices are at an all time high. Working with Finance, you have arrived at a 2.5% merit increase budget for the next fiscal year, a smaller increase than the last fiscal year. Finance has indicated that some large capital expenditures will be needed next year, so the company needs to conserve resources. Additionally, Legal is in final negotiations on a lawsuit that may be very costly to the company. Word of the smaller increases has line management concerned that they will lose their best performers. Given all of these factors, what is your best course of action?

A) Recommend a reduction in force to eliminate poor performers, which will increase the merit budget by reducing headcount
B) Meet with Finance and make a case for a larger merit increase budget because the loss of key talent will cost more over the long term than the savings from the smaller merit increases
C) Gather the perspectives of all stakeholders, analyze their individual concerns and meet to determine whether a compromise solution is possible
D) Implement the merit increase budget as is because the anticipated financial obligations have made it necessary

4. Regarding cost analysis of compensation expense, which job is most likely to incur fixed costs for the company?

A) HR Director
B) Production worker
C) IT contractor
D) Account executive

5. Which one of the following should be included in a compensation guide for managers?

A) Individual salary rates of employees in their department
B) The consequences of various disciplinary measures
C) Information on common management processes

Solutions: