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SHRM-CP Competencies Questions - Part 49
1. Refer to the following scenario for the next 4 questions. A company has four full-time sales employees who receive a base salary, a 10% commission on new sales to existing clients, and a 30% commission on new sales to new clients. One sales employee has an existing, established territory. The clients were established prior to the salesperson's employment, and sales to these clients are strong and consistent, providing an excellent income for the employee. This employee makes no effort for new sales due to satisfaction with the current income level. The other three sales employees are in new territories and work hard to make sales. Their income levels are lower than that of the first sales employee. Management believes that the current sales compensation structure is unfair and that the first sales employee is overpaid in comparison to the others. Additionally, the current structure does not provide any incentive for the first sales employee to obtain new clients. Management has requested the HR director to reduce the first sales employee's compensation to be consistent with that of the other three sales employees. Which action should the HR director take regarding the compensation structure?
A) A. Explain to management that changing the current system can impact morale and employees might leave.
B) B. Talk to the sales employees to ask their opinion about the current system.
C) C. Compare the current structure to the organizational strategy to evaluate alignment.
D) D. Conduct an assessment of the current compensation system to determine if it meets the needs of employees.
2. Which action should the HR director take to make sure that the sales compensation structure is internally and externally equitable?
A) A. Use valid external wage information and the organization's strategy to develop a structure that compensates employees for performance.
B) B. Contact other organizations in the same geographic region and ask about their salary structure for sales employees.
C) C. Purchase three external wage surveys and ask management and the employees to decide what is equitable.
D) D. Use external wage information to recommend a commission-only compensation structure that is aligned with industry standards.
3. Which action should the HR director take if management is interested in exploring other compensation systems?
A) A. Hire a compensation consultant to design a number of different systems for management to choose from.
B) B. Analyze, evaluate, and price the jobs and compare how various compensation systems align with the organization's strategy.
C) C. Explain the difference between a salary structure and a commission structure and recommend that the structure be changed to commission-only.
D) D. Contact an outside vendor that specializes in compensation structures and have someone speak to management about the various systems.
4. Management recommends that the first sales employee be paid a straight salary, since the employee is not generating new sales from new clients. What action should the HR director take to address this recommendation?
A) A. Ignore the request and hope management forgets about the recommendation.
B) B. Agree with management and change the employee to a straight salary.
C) C. Explain how it might make the employee feel singled out and disengaged.
D) D. Share an analysis of the benefits of a commission structure aligned with business goals.
5. What is the first step in evidence-based decision making (EBDM)?
A) Phrasing the problem in the form of a question to be answered
B) Looking for logical connections among the gathered data
C) Verifying the value of the activity to the organization
D) Identifying good, reliable sources of data
A) A. Explain to management that changing the current system can impact morale and employees might leave.
B) B. Talk to the sales employees to ask their opinion about the current system.
C) C. Compare the current structure to the organizational strategy to evaluate alignment.
D) D. Conduct an assessment of the current compensation system to determine if it meets the needs of employees.
2. Which action should the HR director take to make sure that the sales compensation structure is internally and externally equitable?
A) A. Use valid external wage information and the organization's strategy to develop a structure that compensates employees for performance.
B) B. Contact other organizations in the same geographic region and ask about their salary structure for sales employees.
C) C. Purchase three external wage surveys and ask management and the employees to decide what is equitable.
D) D. Use external wage information to recommend a commission-only compensation structure that is aligned with industry standards.
3. Which action should the HR director take if management is interested in exploring other compensation systems?
A) A. Hire a compensation consultant to design a number of different systems for management to choose from.
B) B. Analyze, evaluate, and price the jobs and compare how various compensation systems align with the organization's strategy.
C) C. Explain the difference between a salary structure and a commission structure and recommend that the structure be changed to commission-only.
D) D. Contact an outside vendor that specializes in compensation structures and have someone speak to management about the various systems.
4. Management recommends that the first sales employee be paid a straight salary, since the employee is not generating new sales from new clients. What action should the HR director take to address this recommendation?
A) A. Ignore the request and hope management forgets about the recommendation.
B) B. Agree with management and change the employee to a straight salary.
C) C. Explain how it might make the employee feel singled out and disengaged.
D) D. Share an analysis of the benefits of a commission structure aligned with business goals.
5. What is the first step in evidence-based decision making (EBDM)?
A) Phrasing the problem in the form of a question to be answered
B) Looking for logical connections among the gathered data
C) Verifying the value of the activity to the organization
D) Identifying good, reliable sources of data
1. Right Answer: C
Explanation: C is the best answer. An assessment should be completed, and the system must be compared to the organizational strategy. The system must also be equitable. A is incorrect. Organizations may need to change compensation structures to match the organizational strategy. B is incorrect. It may be only a part of the assessment process. D is incorrect. The primary goal should be to assess whether the compensation system fits the organizational strategy.
2. Right Answer: A
Explanation: A is the best answer. It uses external information along with the organizational strategy, and it is transparent to the employees, so they will understand how their performance will affect their compensation. B is incorrect, because it focuses on only external equity, not internal equity. Additionally, the wage information received may not be valid. C is incorrect, because it focuses on only external wage information. D is incorrect. The structure should be aligned with the organization's goals, not the industry's standards.
3. Right Answer: B
Explanation: B is the best answer. The HR director should evaluate the jobs, develop a comparison, and show how each system aligns to the organizational strategy. A is incorrect. This would only pass the responsibility on to a consultant and would not demonstrate the HR director's value. C is incorrect. The HR director should be prepared to provide information about other structures as well. D is incorrect. This is one reference that the HR director may use, but it is something that an assistant could arrange. There are better strategic ways to add value.
4. Right Answer: D
Explanation: D is the best response, because it demonstrates the HR director's ability to use objective information in consulting with management. A is incorrect. Ignoring a recommendation from management does not demonstrate the HR director's ability to provide consultation. B is incorrect. HR would be missing an opportunity to consult with management. C is incorrect. Changing only one employee's compensation structure and not changing the structure for other employees in the same job category could be discriminatory and demonstrates inequity.
5. Right Answer: A
Explanation: The first step in EBDM is to ask the question that will guide the subsequent search for relevant data. What problem are we trying to solve?
Explanation: C is the best answer. An assessment should be completed, and the system must be compared to the organizational strategy. The system must also be equitable. A is incorrect. Organizations may need to change compensation structures to match the organizational strategy. B is incorrect. It may be only a part of the assessment process. D is incorrect. The primary goal should be to assess whether the compensation system fits the organizational strategy.
2. Right Answer: A
Explanation: A is the best answer. It uses external information along with the organizational strategy, and it is transparent to the employees, so they will understand how their performance will affect their compensation. B is incorrect, because it focuses on only external equity, not internal equity. Additionally, the wage information received may not be valid. C is incorrect, because it focuses on only external wage information. D is incorrect. The structure should be aligned with the organization's goals, not the industry's standards.
3. Right Answer: B
Explanation: B is the best answer. The HR director should evaluate the jobs, develop a comparison, and show how each system aligns to the organizational strategy. A is incorrect. This would only pass the responsibility on to a consultant and would not demonstrate the HR director's value. C is incorrect. The HR director should be prepared to provide information about other structures as well. D is incorrect. This is one reference that the HR director may use, but it is something that an assistant could arrange. There are better strategic ways to add value.
4. Right Answer: D
Explanation: D is the best response, because it demonstrates the HR director's ability to use objective information in consulting with management. A is incorrect. Ignoring a recommendation from management does not demonstrate the HR director's ability to provide consultation. B is incorrect. HR would be missing an opportunity to consult with management. C is incorrect. Changing only one employee's compensation structure and not changing the structure for other employees in the same job category could be discriminatory and demonstrates inequity.
5. Right Answer: A
Explanation: The first step in EBDM is to ask the question that will guide the subsequent search for relevant data. What problem are we trying to solve?
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