SHRM-CP Total Rewards & Compensation

Question 1

Which compensation philosophy positions an organization's pay rates at or above the 50th percentile of the market?

Accepted Answer

Lead the market strategy

Answer

A lead-the-market strategy intentionally sets compensation above the median to attract and retain top talent.

Question 2

A compa-ratio of 1.10 for an employee means:

Accepted Answer

The employee is paid 10% above the midpoint of their pay grade

Answer

A compa-ratio above 1.0 indicates the employee's pay exceeds the midpoint; 1.10 means 10% above the grade midpoint.

Question 3

Which pay structure characteristic allows employees to progress through a wide salary band with few distinct pay grades?

Accepted Answer

Broadbanding

Answer

Broadbanding consolidates many narrow pay grades into a few wide salary bands, providing flexibility for lateral moves and varied skills.

Question 4

The Equal Pay Act of 1963 requires equal pay for equal work. Which factors LEGALLY justify pay differences under this law?

Accepted Answer

Seniority, merit, quantity or quality of production, and any factor other than sex

Answer

The Equal Pay Act permits pay differentials based on seniority, merit, production-based systems, or any bona fide factor other than sex.

Question 5

A defined benefit pension plan provides retirement income based on:

Accepted Answer

A formula using years of service and final average salary

Answer

Defined benefit plans calculate benefits using a predetermined formula, typically incorporating years of service and final or average salary.

SHRM-CP - Society for Human Resource Management Certified Professional Practice Test