Human Resources Compensation & Benefits 3

Question 1

What is 'broadbanding' in compensation structure?

Accepted Answer

Using wide salary ranges that consolidate multiple traditional pay grades

Answer

Broadbanding consolidates many narrow pay grades into fewer, wider salary bands, giving managers more flexibility in pay decisions.

Question 2

What is a 'cafeteria plan' (Section 125 plan) in employee benefits?

Accepted Answer

A flexible benefits plan allowing employees to choose among pretax benefit options

Answer

A Section 125 cafeteria plan lets employees select from a menu of pretax benefit options, allowing customization of their benefits package.

Question 3

What does 'pay compression' mean in compensation management?

Accepted Answer

When the pay gap between new hires and more experienced employees narrows unacceptably

Answer

Pay compression occurs when starting salaries rise faster than incumbent wages, creating inequitable gaps that can fuel turnover among experienced staff.

Question 4

What is the purpose of a job evaluation in compensation?

Accepted Answer

To determine the relative worth or value of jobs within the organization for pay purposes

Answer

Job evaluation assigns relative value to jobs within an organization to create an internally equitable pay structure.

Question 5

Which payroll tax funds the federal unemployment insurance system?

Accepted Answer

FUTA

Answer

The Federal Unemployment Tax Act (FUTA) funds the federal portion of the unemployment insurance system and is paid solely by employers.

Human Resources Practice Test

Human Resources Practice Test

Human Resources Compensation & Benefits 3