C236 Compensation and Benefits Practice Questions - Set 3 - Part 1

Test your knowledge of Compensation and Benefits concepts with these practice questions. Each question includes detailed explanations to help you understand the correct answers.

Question 1: A company offers a higher-than-average base salary while matching market standards for benefits. This is an example of:

a) Lagging Reward Strategy

b) Hybrid Reward Strategy

c) Leading the Market Strategy

d) Pay Form Specific Reward Level Strategy

Question 2: Which of the following is an example of a Centralized Global Rewards Strategy?

a) Managers in each country customize rewards based on local labor market conditions

b) A single set of reward policies is used across all global locations

c) Pay levels are adjusted based on the performance of individual teams

d) Reward policies are developed independently at each location

Question 3: An organization using a Point Factor System for job evaluation is primarily focused on:

a) Allocating rewards based on job classifications

b) Assigning points to jobs based on their value to the organization

c) Using external market data to set compensation levels

d) Creating a flat organizational structure

Question 4: Which of the following best defines a Differential Piece-Rate system?

a) Employees receive a flat rate for all units produced

b) Employees are paid a higher rate after producing a certain number of units

c) Employees receive fixed pay for all hours worked

d) Employees are paid based on the time spent working

Question 5: Which of the following is an example of a Job-Based Approach to Internal Reward Alignment?

a) Employees are paid based on their competencies and skills

b) Employees are compensated according to their job roles, not individual characteristics

c) Pay is tied to the employee’s performance over time

d) Rewards are based on the employee's seniority in the organization

Question 6: Which of the following is most likely to lead to Pay Compression?

a) Offering large bonuses to top performers

b) Paying new hires salaries close to or higher than experienced employees

c) Establishing wide pay ranges with significant overlap

d) Lagging the market in benefits

Question 7: Which of the following is a characteristic of broadbanding?

a) It increases the number of pay grades in the organization

b) It provides fewer pay grades but wider pay ranges

c) It tightly controls pay increases for all employees

d) It limits lateral career mobility

Question 8: An employee receives a bonus at the end of the year based on the overall performance of their department. This is an example of:

a) Individual-Based Pay

b) Team-Based Bonus

c) Spot Award

d) Merit Pay

Question 9: What is the primary focus of a Scanlon Plan?

a) Reducing labor costs

b) Increasing stock options for employees

c) Improving overall productivity through financial incentives

d) Sharing profits from increased sales with employees

Question 10: A company that uses a Compensation Benchmarking strategy primarily aims to:

a) Create pay ranges that exceed the industry standard

b) Align its pay structure with that of its competitors

c) Establish fixed pay for all positions

d) Implement pay ranges based on employee skill levels

Question 11: A decentralized approach to reward strategy would likely involve:

a) Reward decisions being made by local managers

b) HR controlling all aspects of the reward system

c) Uniform rewards for all employees across locations

d) Pay scales that are consistent globally

Question 12: A company rewards employees with shares of stock at a set price that they can purchase in the future. This is an example of:

a) Profit Sharing

b) Stock Options

c) Spot Award

d) Performance-Based Pay

Question 13: Which of the following would most likely encourage employees to stay with a company for a longer period?

a) Spot Awards

b) Stock Options

c) Piece-Rate Pay

d) Merit-Based Pay

Question 14: A system that rewards employees based on how well they acquire and apply new skills is called:

a) Job-Based Pay

b) Competency-Based Pay

c) Merit-Based Pay

d) Fixed Pay

Question 15: In a company using a Gain Sharing Plan, how are rewards distributed?

a) Based on individual sales targets

b) According to company-wide profits

c) Based on improvements in unit-level performance

d) By offering employees shares of stock

Question 16: What is a key feature of a Preferred Provider Organization (PPO) health plan?

a) Employees can visit any doctor without restriction

b) Employees must use in-network providers to receive coverage

c) Employees can choose any healthcare provider but receive better rates in-network

d) Employees are required to obtain a referral for specialist care

Question 17: Which of the following compensation strategies would best suit a project-based work environment where roles change frequently?

a) Job-Based Pay

b) Fixed Pay

c) Competency-Based Pay

d) Performance-Based Pay

Question 18: A team achieves a significant cost savings in production, and the company shares a portion of those savings with the team. This describes:

a) Profit Sharing

b) Gain Sharing

c) Piece-Rate Pay

d) Team-Based Bonus

Question 19: A company rewards its employees by matching a percentage of their contributions to their retirement accounts. This is an example of:

a) Deferred Compensation

b) Defined Benefit Plan

c) Employer Matching

d) Profit Sharing

Question 20: Which of the following statements best describes a Defined Benefit Plan?

a) Employees receive fixed payments from the employer after retirement

b) Employees' retirement benefits depend on the performance of their investments

c) Employees are responsible for making all contributions to their retirement plan

d) Employees can only access their retirement funds after a certain age

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