Compensation and Benefits Administration Test Preparation
Course Introduction
Compensation and Benefits Administration is a course that explores the strategies, policies, and practices organizations use to manage employee compensation and benefits packages. Students learn about job evaluation, salary structures, incentive plans, and the legal aspects that influence pay systems. The course also covers topics such as health and welfare benefits, retirement plans, and compliance with regulatory requirements. Emphasis is placed on aligning compensation and benefits programs with organizational goals to attract, motivate, and retain talent while maintaining internal and external equity. Practical applications, case studies, and current trends in compensation are examined to prepare students for effective decision-making in human resource management.
Recommended Textbook
Strategic Compensation in 6th Canada Edition by Richard Long
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Page 2
Chapter 1: A Road Map to Effective Compensation
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Sample Questions
Q1) Which of the following would be an example of an extrinsic reward?
A) interesting and meaningful work
B) pay for performance based on the number of units produced per hour
C) being able to see the company's product being used by a satisfied customer
D) work that allows for enhanced personal development
Answer: B
Q2) An owner of an enterprise asks you to describe the major components of a compensation system.What would you exclude in your description?
A) base salary
B) performance pay
C) employee benefits
D) flexible work schedules and some element of job autonomy
Answer: D
Q3) A reward strategy is the plan for the mix of rewards to be provided to organization members along with the means through which they will be provided.
A)True
B)False
Answer: True
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3
Chapter 2: A Strategic Framework for Compensation
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Sample Questions
Q1) Narrow jobs characterize high involvement systems.
A)True
B)False Answer: False
Q2) An organization's vision refers to its long-term,optimal desired state.
A)True
B)False
Answer: True
Q3) Which term describes an organization's core values and understandings shared by its members?
A) organizational structure
B) organizational culture
C) organizational domain
D) organizational strategy
Answer: B
Q4) Group and organizational pay systems characterize firms that use a classical managerial strategy.
A)True
B)False
Answer: False
Page 4
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Chapter 3: A Behavioural Framework for Compensation
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Sample Questions
Q1) Your employer has not kept his promises in relation to pay,benefits,and ongoing training and development opportunities.Which of the following best describes your situation?
A) unethical behaviour
B) lack of organizational justice
C) perceived inequity
D) violation of the psychological contract
Answer: D
Q2) In an effort to improve the relationships with employees,management at ABC recently implemented policies to make their pay more consistent across jobs that were similar.What would this change help with?
A) improving the psychological contract
B) improving perceptions of procedural justice
C) improving perceptions of distributive justice
D) decreasing perceptions of relative deprivation
Answer: B
Q3) Distributive justice refers to the fairness of the process in giving rewards.
A)True
B)False
Answer: False
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Chapter 4: Components of Compensation Strategy
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Sample Questions
Q1) Which of the following is an example of mandatory indirect pay?
A) major health benefits such as medical coverage
B) registered retirement savings plans (RRSPs)benefits
C) employee services
D) workers' compensation benefits
Q2) According to the textbook,what are the key conditions for using output-related pay?
Q3) An advantage of indirect pay is that benefits receive more favourable income tax treatment than direct pay.
A)True
B)False
Q4) The main types of individual performance pay are piece rates,commissions,merit pay,and goal-sharing plans.
A)True
B)False
Q5) Which base pay method best supports behaviours needed by high-involvement firms?
A) market pricing
B) pay for knowledge
C) job evaluation
D) broad banding
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Chapter 5: Performance Pay Choices
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Sample Questions
Q1) John's employer decides to provide him with regular advances against his future commissions as a way to smooth out John's income.Which term best describes the pay plan used by John's employer?
A) sales stipend system
B) draw system
C) pay advance system
D) security income
Q2) Your CEO is concerned that employees are not saving enough for their retirement.At the same,the CEO wants to have some of the company's profits shared with all employees.To address these issues,your CEO asks you,a human resource compensation specialist,to recommend the most appropriate profit-sharing plan to address this retirement issue.Which profit-sharing plan would you recommend?
A) deferred
B) combination
C) current distribution
D) cash plan
Q3) Identify and briefly define each of the three types of employee stock plans.
Q4) There are three types of profit-sharing plans discussed in the textbook.Identify and briefly explain each of them.
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Chapter 6: Formulating the Reward and Compensation Strategy
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Sample Questions
Q1) Which type of legislation covers issues such as overtime pay rates,paid time off,and minimum wage levels?
A) human rights
B) employment standards
C) trade union
D) tax
Q2) Briefly describe the five main steps in the formulation of compensation strategy.
Q3) What is the most important factor driving executive compensation?
A) firm size
B) firm performance
C) fraud
D) political connections on boards
Q4) Which statement best explains the legal difference between an employee and a contractor?
A) Only employees are allowed on the work site.
B) Contractors cannot hire another person to complete the work.
C) Contractors are exempt from employment standards legislation.
D) Employees can be forced to work overtime.
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Q5) Briefly summarize the legislative framework that compensation must comply with.
Chapter 7: Evaluating Jobs: the Job Evaluation Process
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Sample Questions
Q1) As a human resource professional,you have been asked by your organization to develop a job description for the heavy-duty mechanic role.What are you likely NOT to include in the job description?
A) some statement describing the conditions under which the mechanic will work under B) the appropriate pay grades,ranges,and future pay increase scales
C) the level of skill and certification required for the role
D) the fact that the mechanic will be working under the supervision of a senior technician
Q2) Two methods of job evaluation are ranking/paired comparison and classification/grading.
A)True
B)False
Q3) Which of the following practices can NOT be used to achieve pay equity?
A) Pay levels for male comparator jobs will be lowered.
B) All positions in a job class will receive adjustments in dollar terms.
C) Each female job class must receive a yearly adjustment until pay equity is achieved.
D) Inequitable female job classes with the lowest job rate must receive a greater adjustment.
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9
Chapter 8: Evaluating Jobs: the Point Method of Job Evaluation
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Sample Questions
Q1) The primary drawback associated with using the point method of job evaluation is that it provides an illusion of a scientific process when in fact the method relies significantly on the judgment of evaluators in selecting appropriate weights
A)True
B)False
Q2) Two thousand points are distributed between compensable factors,based on the following: education 750 points,time pressure 350 points,customer contact 500 points,and communication skills 400 points.Which step in developing a job evaluation system using the point method recognizes these variations in importance?
A) defining the factors
B) weighting the factors
C) scaling the factors
D) testing the system
Q3) Broad banding results in fewer jobs in a pay grade.
A)True
B)False
Q4) Job evaluations help to establish internal equity.
A)True
B)False
10
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Chapter 9: Evaluating the Market
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Q1) Which of the following provides the best-quality compensation data?
A) personal interviews
B) questionnaires
C) telephone interviews
D) mail surveys
Q2) What is NOT a main step in conducting a proper compensation survey?
A) identifying jobs to be surveyed
B) identifying employees to be surveyed
C) determining the information needed
D) determining how you will collect the data
Q3) Which condition tends to explain why jobs in the higher hierarchy positions of the public sector tend to be paid less than similar positions in the private sector?
A) a strong union
B) publicly visible salaries
C) the levels of indirect pay provided to senior public sector positions
D) a poor industry reputation
Q4) Discuss some of the advantages and disadvantages of in-house surveys.
Q5) Identify and briefly describe the four main steps in conducting a compensation survey.
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Chapter 10: Evaluating Individuals
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Sample Questions
Q1) Performance appraisals accurately reflect employees' performance.
A)True
B)False
Q2) Many organizations do not offer merit raises to employees who are at the top of their pay ranges.This can cause morale problems for these employees.What is a potential solution to this issue?
A) Cut pay for employees who are below the top of the pay range.
B) Give merit bonuses to the affected employees.
C) Re-evaluate the performance appraisal methods.
D) Increase minimum pay for all employees.
Q3) A particular organization uses a forced ranking system to appraise employees.As a peer appraiser,why might an employee be tempted to give colleagues a low rating?
A) Rating errors can be balanced out.
B) A limited amount of merit pay is available.
C) Conflict and ill will among peers is reduced.
D) You can all benefit if you rate each other low.
Q4) Identify and describe the various perceptual errors that can affect appraisal accuracy.
Q5) Define and describe the key elements of performance management.
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Chapter 11: Designing Performance Pay Plans
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Sample Questions
Q1) Which of the following is NOT an example of a nonmonetary award?
A) stock bonuses
B) a pat on the back for a job well done
C) a company picnic
D) an all-expenses-paid holiday
Q2) ABC Ltd.generated one million Canadian dollars in profits this year.ABC Ltd.decides to place 200,000 Canadian dollars (20 percent of pre-tax profits)in a bonus pool.In previous years,this figure has ranged from zero to 50 percent of pre-tax profits.What type of formula is ABC Ltd.using to determine contributions into the pool?
A) fixed percentage
B) fixed threshold
C) discretionary
D) percentage approach
Q3) Identify and briefly comment on the key issues in designing profit-sharing plans.
Q4) Employee participation is not necessarily a component of goal-sharing plans.
A)True
B)False
Q5) Discuss the key issues in designing a nonmonetary reward plan.
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Chapter 12: Designing Indirect Pay Plans
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Q1) As a result of a recent human resource audit,it was determined that a particular company has an "underfund liability" associated with its retirement plan,requiring an immediate injection of cash.What type of pension plan or retirement plan is this company likely using?
A) hybrid flexible plan
B) registered retirement savings plan (RRSP)
C) mandatory retirement plan
D) defined benefit plan
Q2) Deferred profit-sharing plans tend to be classified as "contributory benefits."
A)True
B)False
Q3) Which variable is NOT used to determine the income level provided to employees upon retirement under a "defined benefit program"?
A) some variable (percentage)of the average income over a certain period of time,usually three to five years
B) the company's profit level over a period of three to five years
C) employees' years of service
D) employees' salary level
Q4) Discuss the pros and cons of flexible versus fixed benefits plans.
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Chapter 13: Activating and Maintaining an Effective Compensation System
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Sample Questions
Q1) According to a recent survey of HR professionals,what is the predominant use of human resources management systems?
A) planning and research
B) time and attendance
C) payroll
D) benefits
Q2) When does communication occur in compensation communications?
A) not until understanding passes from the sender to the receiver
B) once the communication tool,such as a podcast,is launched
C) only after evaluations prove that the communications were effective in increasing employee satisfaction
D) not until employee attitudes are changed
Q3) Which statement best describes outsourcing among Canadian firms?
A) Outsourcing of HR functions is on the decline.
B) Outsourcing of HR functions is increasingly used.
C) Larger firms outsource their HR functions more than smaller firms.
D) Outsourcing does not offer any benefits
Q4) What are the primary areas for computer applications in a compensation system?
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Q5) Identify the tasks involved in preparing to implement a compensation system.