TREX Job Architecture & Market Pricing 3 — Questions and Answers
Question 1: What does a 'compa-ratio' of 0.85 indicate about an employee's pay?
- The employee is paid 15% below the midpoint of their pay range (Correct answer)
- The employee is paid 15% above the midpoint of their pay range
- The employee's pay is at the 85th percentile of the market
- The employee has received an 85% performance rating
Correct answer: The employee is paid 15% below the midpoint of their pay range
A compa-ratio below 1.0 means the employee's pay is below the range midpoint; 0.85 means pay is 85% of midpoint, or 15% below it.
Question 2: Which job evaluation method ranks jobs by comparing each job against every other job using paired comparisons?
- Paired comparison ranking (Correct answer)
- Point-factor method
- Classification method
- Market pricing method
Correct answer: Paired comparison ranking
Paired comparison ranking systematically compares each job to every other job, resulting in a ranked order based on overall value.
Question 3: In a broad-band pay structure, what is a key ADVANTAGE compared to a traditional multi-grade structure?
- Greater flexibility to recognize individual performance and lateral career moves (Correct answer)
- More precise pay control with narrow salary ranges
- Easier compliance with equal pay legislation
- Reduced need for compensation analyst expertise
Correct answer: Greater flexibility to recognize individual performance and lateral career moves
Broad bands allow managers more discretion to differentiate pay within a wider range, supporting lateral development and performance-based differentiation.
Question 4: Which factor would cause an organization to use a HIGHER number of pay grades in its salary structure?
- A tall, hierarchical organization with many distinct job levels (Correct answer)
- A flat organization with few management layers
- Heavy reliance on variable pay over base salary
- A strategy of aggressive market positioning at the 90th percentile
Correct answer: A tall, hierarchical organization with many distinct job levels
Organizations with many distinct levels of authority and responsibility benefit from more grades to reflect the finer distinctions in job value.
Question 5: When survey data shows a 'weighted average,' what variable is the data typically weighted by?
- Number of incumbents reported by each participating company (Correct answer)
- Revenue of each participating company
- Number of years each company has participated in the survey
- Geographic footprint of each participating company
Correct answer: Number of incumbents reported by each participating company
Survey data is typically weighted by incumbent count so that companies with more employees in a role have proportionally greater influence on the aggregate figure.
Question 6: A job evaluation committee assigns 'compensable factors' to rate jobs. Which of the following is a typical compensable factor used in point-factor systems?
- Skill/knowledge required to perform the job (Correct answer)
- The employee's years of tenure in the role
- The employee's educational degree obtained
- The number of direct reports the employee currently manages
Correct answer: Skill/knowledge required to perform the job
Compensable factors like skill/knowledge, effort, responsibility, and working conditions are inherent to the job itself and are used to assign point values in point-factor evaluation.
Question 7: What is the MAIN risk of relying exclusively on a single compensation survey for market pricing?
- Narrow participant pool may skew results and fail to represent the full labor market (Correct answer)
- Data will always be biased toward lower pay levels
- Regulatory agencies require use of multiple surveys
- Single surveys cannot report data by industry or geography
Correct answer: Narrow participant pool may skew results and fail to represent the full labor market
A single survey may have a limited or biased participant pool; blending multiple surveys provides a more representative view of the labor market.
TREX Job Architecture & Market Pricing 3
What does a 'compa-ratio' of 0.85 indicate about an employee's pay?