CHRP Total Rewards and Compensation 2 — Questions and Answers
Question 1: A company wants to ensure its base pay is competitive. Which market pricing approach compares jobs based on actual duties rather than job titles?
- Job title matching
- Whole job ranking
- Factor comparison
- Content-based matching (Correct answer)
Correct answer: Content-based matching
Content-based matching evaluates jobs by comparing actual duties and responsibilities to benchmark jobs in salary surveys, not just titles.
Question 2: Which pay structure element defines the range of pay for a specific job grade, typically expressed as a minimum, midpoint, and maximum?
- Pay band
- Pay grade range (Correct answer)
- Compa-ratio
- Green circle rate
Correct answer: Pay grade range
A pay grade range sets the boundaries (minimum, midpoint, maximum) for compensation within a specific grade level.
Question 3: An employee earning $45,000 is in a pay grade with a midpoint of $50,000. What is their compa-ratio?
- 90% (Correct answer)
- 111%
- 88%
- 95%
Correct answer: 90%
Compa-ratio = actual pay ÷ midpoint × 100 = $45,000 ÷ $50,000 × 100 = 90%.
Question 4: Under the Fair Labor Standards Act (FLSA), which test component examines whether an employee's primary duty is management of the enterprise or a department?
- Salary basis test
- Duties test — executive exemption (Correct answer)
- Duties test — administrative exemption
- Salary level test
Correct answer: Duties test — executive exemption
The executive exemption duties test requires that the employee's primary duty be management of the enterprise or a recognized department or subdivision.
Question 5: A broad-banding pay structure consolidates many pay grades into a few wide bands. What is a key disadvantage of this approach?
- It reduces pay equity
- It eliminates the ability to reward performance
- It can obscure career progression signals for employees (Correct answer)
- It increases administrative complexity significantly
Correct answer: It can obscure career progression signals for employees
Broad bands can make it harder for employees to see clear career advancement milestones since many levels are collapsed into one wide range.
Question 6: Which type of variable pay plan pays employees a fixed dollar amount or percentage for each unit of output they produce?
- Gain sharing
- Piece-rate plan (Correct answer)
- Profit sharing
- Merit pay
Correct answer: Piece-rate plan
Piece-rate plans compensate employees directly based on the number of units or pieces they produce.
Question 7: When designing a total rewards strategy, which framework considers non-monetary elements such as career development, work-life balance, and recognition alongside pay and benefits?
- Total compensation model
- Total rewards model (Correct answer)
- Point-factor job evaluation
- Market pricing model
Correct answer: Total rewards model
The total rewards model encompasses compensation, benefits, work-life effectiveness, recognition, performance management, and talent development.
CHRP Total Rewards and Compensation 2
A company wants to ensure its base pay is competitive.
Which market pricing approach compares jobs based on actual duties rather than job titles?