CPHR Total Rewards and Compensation 5

Question 1

Which approach to compensation administration gives individual managers full authority to set pay for their direct reports without structured guidelines?

Accepted Answer

Decentralized pay administration

Answer

Decentralized pay administration delegates pay decisions to individual managers, increasing flexibility but risking inconsistency and pay inequities across the organization.

Question 2

An employee's base salary of $80,000 is increased to $84,000 following a strong performance review. The merit increase percentage is:

Accepted Answer

5.0%

Answer

Merit increase % = (new salary − old salary) ÷ old salary × 100 = ($84,000 − $80,000) ÷ $80,000 × 100 = 5.0%.

Question 3

Which regulatory requirement mandates that federal contractors disclose their compensation practices and prohibits pay secrecy policies that punish employees for discussing wages?

Accepted Answer

Executive Order 11246 and OFCCP pay transparency rules

Answer

Executive Order 11246, enforced by the OFCCP, prohibits federal contractors from maintaining pay secrecy policies and requires affirmative action in compensation.

Question 4

A company offers employees the right to purchase company stock at a 15% discount through payroll deductions. This is best described as a(n):

Accepted Answer

Employee stock purchase plan (ESPP)

Answer

An ESPP allows employees to purchase employer stock at a discount (up to 15% under Section 423 plans), typically through accumulated payroll deductions.

Question 5

Which of the following compensation elements is MOST effective at retaining employees over a multi-year horizon due to its vesting schedule?

Accepted Answer

Long-term incentive with cliff or graded vesting

Answer

Long-term incentives with vesting schedules create 'golden handcuffs,' incentivizing employees to remain with the organization until awards vest.

(CPHR) Chartered Professional in Human Resources Practice Test

(CPHR) Chartered Professional in Human Resources Practice Test

CPHR Total Rewards and Compensation 5