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WorldatWork Regulatory Environments for Compensation Programs Sample Questions:

1. Which of the following statements best describes defined benefit (DB) plans?

A) There is no promise of a specific benefit at retirement.
B) Employees are at risk for financial resources.
C) Individual accounts must be maintained for each participant.
D) They are often integrated with government-sponsored programs.

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

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

3. Which one of the following practices will help to ensure proper documentation for compliance with legislation?

A) Use one survey source instead of several
B) Be consistent in procedures and completeness
C) Allow employees easy and unlimited access to documentation

4. What happens to the marginal cost if revenue accelerates slower than variable costs but fixed costs remain the same?

A) It increases at the same rate as variable costs.
B) It decreases because variable costs are increasing.
C) It becomes increasingly higher as revenues increase.
D) It remains the same.

5. Which of the following best describes the most likely perspectives of different groups in the organization that compensation professionals must be aware of?

A) Operating departments view compensation as it applies to them, HR must balance available resources to attract, retain and motivate employees and Finance knows the value of a motivated workforce and will provide the budget necessary to achieve it.
B) Investors and Finance want to see money spent wisely. Legal must ensure compliance, and HR and operating departments want to see their needs taken into account to attract, retain and motivate a high quality workforce.
C) Operating departments and HR understand the company must live within its means and Finance cannot allocate funds to a budget if it is likely that profitability will be adversely affected.
D) Investors want to maximize gains and want to see compensation tightly controlled and Legal needs to ensure that compensation plans do not attract undue scrutiny.

Solutions: