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SHRM-CP PEOPLE Questions - Part 24
1. Which is a disadvantage of a time-based pay system?
A) Quantity of work may be favored over quality of work.
B) An enhanced performance management and appraisal system will be required.
C) The organization could be subject to significant equal pay litigation.
D) Pay levels may be raised over time regardless of performance.
2. What is the advantage of nonqualified deferred compensation plans?
A) They protect the plans' Β funds from creditors in the event of the failure of the business.
B) They allow all company employees to contribute more than the limits prescribed by qualified plans.
C) They provide more-favorable tax advantages to employers than qualified plans.
D) They provide incentives for key executives to stay with the organization.
3. An organization has been forced to hire new employees at higher pay rates than usual due to a tight labor supply. Employees who have been with the organization for one to three years are earning the same or only slightly more than the new hires they have to train. What is the organization experiencing?
A) Red-circle rates
B) Premium pay
C) Pay compression
D) Competency-based differential
4. An organization implements changes to its pay structure, resulting in new hires now being started at the same wage as workers who have been on the job for two years. What type of pay variation will most likely be created?
A) Green-circle rates
B) Pay compression
C) Red-circle rates
D) Lead-market strategy
5. Benefits and Perquisites HR is in the process of recruiting a senior-level position for a global organization. Which benefit might distinguish the organization from the competition?
A) Club membership
B) Termination payments
C) Unemployment insurance
D) Social security
A) Quantity of work may be favored over quality of work.
B) An enhanced performance management and appraisal system will be required.
C) The organization could be subject to significant equal pay litigation.
D) Pay levels may be raised over time regardless of performance.
2. What is the advantage of nonqualified deferred compensation plans?
A) They protect the plans' Β funds from creditors in the event of the failure of the business.
B) They allow all company employees to contribute more than the limits prescribed by qualified plans.
C) They provide more-favorable tax advantages to employers than qualified plans.
D) They provide incentives for key executives to stay with the organization.
3. An organization has been forced to hire new employees at higher pay rates than usual due to a tight labor supply. Employees who have been with the organization for one to three years are earning the same or only slightly more than the new hires they have to train. What is the organization experiencing?
A) Red-circle rates
B) Premium pay
C) Pay compression
D) Competency-based differential
4. An organization implements changes to its pay structure, resulting in new hires now being started at the same wage as workers who have been on the job for two years. What type of pay variation will most likely be created?
A) Green-circle rates
B) Pay compression
C) Red-circle rates
D) Lead-market strategy
5. Benefits and Perquisites HR is in the process of recruiting a senior-level position for a global organization. Which benefit might distinguish the organization from the competition?
A) Club membership
B) Termination payments
C) Unemployment insurance
D) Social security
1. Right Answer: D
Explanation: A major disadvantage of a time-based pay system is that it does not reflect performance differences, except for unsatisfactory performance, and it can raise average pay levels over time even if performance is below average.
2. Right Answer: D
Explanation: Nonqualified deferred compensation plans allow organizations to provide additional benefits to a select group of key executives, which motivates them to stay with the organization.
3. Right Answer: C
Explanation: Pay compression, or salary compression, occurs when there is only a small difference in pay between employees regardless of their experience, skills, or seniority. Pay differentials may be narrowed over time in an organizational hierarchy.
4. Right Answer: B
Explanation: Pay compression, or salary compression, describes situations where there is only a small difference in pay between employees regardless of their experience, skills, level, or seniority. Pay compression can occur if the labor market, inflation, or some other reason causes market pay increases to rise faster than the employer's pay adjustments
5. Right Answer: A
Explanation: Perquisites are special incidental payments, benefits, or privileges given to individuals over and above their regular rewards. Often awarded to senior-level positions, 'perks' may extend to furnished housing, luxury transportation, and membership in exclusive clubs. Social security and unemployment will vary by country but not by organizations within the same country. Termination payments will vary by country and may not be at the sole discretion of the employer where unions are in place.
Explanation: A major disadvantage of a time-based pay system is that it does not reflect performance differences, except for unsatisfactory performance, and it can raise average pay levels over time even if performance is below average.
2. Right Answer: D
Explanation: Nonqualified deferred compensation plans allow organizations to provide additional benefits to a select group of key executives, which motivates them to stay with the organization.
3. Right Answer: C
Explanation: Pay compression, or salary compression, occurs when there is only a small difference in pay between employees regardless of their experience, skills, or seniority. Pay differentials may be narrowed over time in an organizational hierarchy.
4. Right Answer: B
Explanation: Pay compression, or salary compression, describes situations where there is only a small difference in pay between employees regardless of their experience, skills, level, or seniority. Pay compression can occur if the labor market, inflation, or some other reason causes market pay increases to rise faster than the employer's pay adjustments
5. Right Answer: A
Explanation: Perquisites are special incidental payments, benefits, or privileges given to individuals over and above their regular rewards. Often awarded to senior-level positions, 'perks' may extend to furnished housing, luxury transportation, and membership in exclusive clubs. Social security and unemployment will vary by country but not by organizations within the same country. Termination payments will vary by country and may not be at the sole discretion of the employer where unions are in place.
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