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WorldatWork Regulatory Environments for Compensation Programs Sample Questions:

1. The Delta Company has experienced increased turnover in the past two years. Data from exit interviews indicate that most of those leaving did so for better opportunities and higher compensation. If Delta pays at the highest percentile of the market for their peer group, what data analysis should they do?

A) No additional data analysis is needed. Delta should increase pay rates based on the existing data to decrease turnover.
B) Qualitative data collection in the form of an employee survey with questions about employee satisfaction with pay levels
C) Additional quantitative analysis to determine whether pay rates are truly competitive or existing data are unreliable
D) Qualitative data collection to talk to key stakeholders and employees and determine whether the exit interviews accurately reflect their concerns

2. What statement is most accurate regarding communication of compensation information?

A) Compensation professionals should anticipate the level of the audience and tailor messages to their needs.
B) Compensation terms are well-known and easily understood by most stakeholders.
C) The ready availability of information online has made it unnecessary for compensation professionals to tailor messages since individuals can research terms and concepts after the fact if they don't understand a communication.
D) Compensation terms and practices are unclear to most individuals who do not work in this area and communication should be tailored to the least informed member of the target audience.

3. 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 usually require more detail for senior employees regarding plan details and performance and the needs from one employee group to another can vary greatly.
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 tend to be fairly consistent because the elements of pay may differ, but the concerns are universal.

4. The "return" represented by the Total Shareholder Return (TSR) metric is the increase in what?

A) Earnings
B) Market capitalization
C) Shares
D) Increased market value and reinvested dividends paid

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

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

Solutions: