C236 Compensation and Benefits Practice Questions - Set 2 - Part 1

Correct Answer: c) Piece-rate system

The piece-rate system compensates employees based on the quantity of work completed, with a fixed amount paid per item produced.

Correct Answer: b) The first 10 units are paid at a lower rate, and subsequent units are paid at a higher rate

In a Differential Piece-Rate system, employees receive different pay rates depending on how many units they produce, often with higher rates for greater output.

Correct Answer: d) Hybrid Reward Strategy

A Hybrid Reward Strategy combines fixed pay with variable, performance-based pay, allowing flexibility in compensation.

Correct Answer: b) Pay compression happens when employees with similar qualifications and experience are paid similar amounts regardless of tenure

Pay compression occurs when the pay gap between experienced employees and new hires narrows, often leading to dissatisfaction among longer-tenured staff.

Correct Answer: b) Pay Form Specific Reward Level Strategy

The Pay Form Specific Reward Level Strategy allows an organization to lag the market in one area (base salary) while leading in another (health benefits).

Correct Answer: b) Managers and supervisors have discretion over reward decisions

In a decentralized approach, reward decisions are made by managers or supervisors at a local level, rather than being centrally controlled by HR.

Correct Answer: a) Employee pay to the midpoint of the pay range

A Compa-Ratio compares an employee’s salary to the midpoint of their pay range, helping organizations assess pay equity.

Correct Answer: c) Variable Pay

Variable pay helps align labor costs with company performance, ensuring that labor costs decrease when performance is low.

Correct Answer: c) Employees are paid based on their skills, competencies, and abilities

In capability-based pay systems, employees are compensated based on the skills and competencies they bring to the job, rather than fixed hours or performance.

Correct Answer: b) Manufacturing

Manufacturing often uses skill-based pay systems, where employees are rewarded based on acquiring and applying specific technical skills.

Correct Answer: c) Hybrid pay system

A hybrid pay system combines individual performance-based pay with team-based outcomes, allowing for multiple incentives to be integrated.

Correct Answer: b) A lump-sum reward based on team performance

Team-based bonuses are lump-sum rewards given based on collective team performance and are separate from base pay.

Correct Answer: c) Gain Sharing Plan

Gain sharing rewards employees for improving unit-level performance above a set baseline, encouraging collective efforts to boost results.

Correct Answer: b) Health Savings Account (HSA)

HSAs are typically paired with high-deductible health plans, allowing employees to save pre-tax dollars to cover medical expenses.

Correct Answer: c) The system will expire after a specific period

A Sunset Clause specifies that a policy, reward system, or law will expire at a set date unless renewed.

Correct Answer: b) Traffic congestion and long commute times

Negative Location Externalities are non-monetary disadvantages employees experience due to the location, such as traffic congestion.

Correct Answer: b) Incentive Stock Option

Incentive Stock Options provide employees with the opportunity to purchase shares at a predetermined price, typically above the current market, expecting the company’s performance to increase share value.

Correct Answer: c) Stock Options

Stock options align employees with the company’s long-term success, promoting retention as employees benefit from increasing share prices over time.

Correct Answer: a) Competency-Based Pay

Competency-based pay rewards employees for demonstrating specific skills, making them more valuable to the organization.

Correct Answer: b) Scanlon Plan

The Scanlon Plan focuses on labor cost savings and shares the financial benefits of these savings with employees, encouraging cost efficiency.