Total Rewards and Compensation Flashcards
7 cards from real CPHR practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Total Rewards and Compensation flashcards as text
Which approach to compensation administration gives individual managers full authority to set pay for their direct reports without structured guidelines?
Answer: Decentralized pay administration
Decentralized pay administration delegates pay decisions to individual managers, increasing flexibility but risking inconsistency and pay inequities across the organization.
An employee's base salary of $80,000 is increased to $84,000 following a strong performance review. The merit increase percentage is:
Answer: 5.0%
Merit increase % = (new salary − old salary) ÷ old salary × 100 = ($84,000 − $80,000) ÷ $80,000 × 100 = 5.0%.
Which regulatory requirement mandates that federal contractors disclose their compensation practices and prohibits pay secrecy policies that punish employees for discussing wages?
Answer: Executive Order 11246 and OFCCP pay transparency rules
Executive Order 11246, enforced by the OFCCP, prohibits federal contractors from maintaining pay secrecy policies and requires affirmative action in compensation.
A company offers employees the right to purchase company stock at a 15% discount through payroll deductions. This is best described as a(n):
Answer: Employee stock purchase plan (ESPP)
An ESPP allows employees to purchase employer stock at a discount (up to 15% under Section 423 plans), typically through accumulated payroll deductions.
Which of the following compensation elements is MOST effective at retaining employees over a multi-year horizon due to its vesting schedule?
Answer: Long-term incentive with cliff or graded vesting
Long-term incentives with vesting schedules create 'golden handcuffs,' incentivizing employees to remain with the organization until awards vest.
In a job evaluation using the point-factor method, 'accountability' and 'problem-solving complexity' are examples of:
Answer: Compensable factors
Compensable factors are the dimensions of job value—such as skill, effort, responsibility, and working conditions—that are scored to determine a job's relative worth.
An organization pays employees at a rate 10% below market median to offset higher than average vacation time and flexible work arrangements. This strategy is known as:
Answer: Total compensation trade-off strategy
A total compensation trade-off strategy deliberately offsets lower cash pay with superior non-cash benefits, relying on total value rather than base salary alone to attract talent.