Total Rewards & Compensation Flashcards
7 cards from real SHRM 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 & Compensation flashcards as text
Which long-term incentive grants employees the right to purchase company stock at a predetermined price after a vesting period?
Answer: Stock options
Stock options grant the holder the right to buy shares at a fixed exercise (strike) price, profiting if the stock price rises above that price.
An organization surveys 10 peer companies and finds its average pay is at the 50th percentile of the market. This organization's pay philosophy is best described as:
Answer: Match the market
Paying at the 50th percentile reflects a 'match the market' philosophy, aiming to be competitive without paying above or below average.
Which component of total rewards strategy addresses flexible scheduling, remote work options, and employee well-being programs?
Answer: Work-life effectiveness
Work-life effectiveness encompasses programs that help employees balance personal and professional responsibilities, boosting engagement and retention.
A company provides a non-qualified deferred compensation plan. Which statement is true about this plan?
Answer: Employee contributions reduce current taxable income but funds remain at risk from company creditors
Non-qualified deferred compensation plans defer employee taxes on contributions, but plan assets are unsecured and subject to employer insolvency risk.
Which job evaluation method ranks all jobs from highest to lowest value without analyzing individual factors?
Answer: Job ranking method
The job ranking method is the simplest evaluation approach, ordering jobs by overall worth without breaking down specific compensable factors.
Under the Affordable Care Act employer mandate, large employers (50+ FTEs) that fail to offer minimum essential coverage may face what consequence?
Answer: Employer Shared Responsibility Payment (ESRP) penalties
The ACA's employer shared responsibility provision imposes Employer Shared Responsibility Payments on large employers that don't offer qualifying coverage.
Which pay-for-performance approach ties merit increases to a matrix that considers both the employee's performance rating and their position within the pay range?
Answer: Merit matrix (merit grid)
A merit matrix guides pay increase decisions by intersecting performance ratings with an employee's current position in their pay range (compa-ratio).