PHR Total Rewards and Compensation 3 — Questions and Answers
Question 1: What is the main purpose of a job evaluation in compensation?
- To establish the internal relative worth of jobs (Correct answer)
- To assess individual employee performance
- To set the company's revenue targets
- To determine training needs
Correct answer: To establish the internal relative worth of jobs
Job evaluation ranks jobs by their value to the organization to support internal equity.
Question 2: The point-factor method of job evaluation works by:
- Assigning points to compensable factors and summing them (Correct answer)
- Comparing whole jobs to one another
- Matching jobs to market survey data
- Ranking jobs from highest to lowest
Correct answer: Assigning points to compensable factors and summing them
Point-factor evaluation scores jobs on compensable factors like skill, effort, and responsibility.
Question 3: Under the Equal Pay Act, pay differences between men and women in the same job are permitted when based on:
- A seniority system, merit system, or factor other than sex (Correct answer)
- The employee's negotiation skill alone
- Market demand for one gender
- Manager preference
Correct answer: A seniority system, merit system, or factor other than sex
The EPA allows differentials based on seniority, merit, quantity/quality of production, or any factor other than sex.
Question 4: A 401(k) plan is an example of what type of retirement plan?
- Defined contribution plan (Correct answer)
- Defined benefit plan
- Cash balance plan
- Pension annuity
Correct answer: Defined contribution plan
In a defined contribution plan, contributions are defined but the final benefit depends on investment performance.
Question 5: Which law governs the administration and fiduciary standards of most private-sector retirement plans?
- ERISA (Correct answer)
- FLSA
- COBRA
- HIPAA
Correct answer: ERISA
ERISA sets minimum standards for participation, vesting, funding, and fiduciary conduct in private plans.
Question 6: Total rewards typically includes all of the following EXCEPT:
- Competitor stock dividends (Correct answer)
- Compensation
- Benefits
- Recognition and development
Correct answer: Competitor stock dividends
Total rewards encompasses pay, benefits, work-life, recognition, and development—not competitors' dividends.
Question 7: An incentive plan that rewards employees for cost savings shared with the company is called:
- Gainsharing (Correct answer)
- Profit sharing
- Stock option
- Merit pay
Correct answer: Gainsharing
Gainsharing distributes a portion of measurable productivity or cost-saving gains back to employees.
PHR Total Rewards and Compensation 3
What is the main purpose of a job evaluation in compensation?