Business Acumen for Compensation Professionals v1.0 (C8)

Page:    1 / 6   
Total 85 questions

What happens to the marginal cost if revenue accelerates slower than variable costs but fixed costs remain the same?

  • A. It remains the same.
  • B. It decreases because variable costs are increasing.
  • C. It increases at the same rate as variable costs.
  • D. It becomes increasingly higher as revenues increase.


Answer : D

Internal process metrics are most useful in which of the following situations?

  • A. Assessing how well the business is running
  • B. Determining employee satisfaction levels
  • C. Measuring the financial success of the business
  • D. Evaluating customer perceptions of products or services


Answer : A

What best describes the primary purpose of budgeting?

  • A. Limiting spending to a fixed percentage of organizational revenue
  • B. Making choices about spending based on expectations of performance
  • C. Increasing profitability of the business annually to maximize shareholder/owner value
  • D. Complying with local legislation and maintaining accurate records to prepare financial reports and tax documents


Answer : B

The Delta Company has experienced increased turnover in the past two years. Data from exit interviews indicate that most of those leaving did so for better opportunities and higher compensation. If Delta pays at the highest percentile of the market for their peer group, what data analysis should they do?

  • A. Additional quantitative analysis to determine whether pay rates are truly competitive or existing data are unreliable
  • B. Qualitative data collection to talk to key stakeholders and employees and determine whether the exit interviews accurately reflect their concerns
  • C. Qualitative data collection in the form of an employee survey with questions about employee satisfaction with pay levels
  • D. No additional data analysis is needed. Delta should increase pay rates based on the existing data to decrease turnover.


Answer : B

Your company has had a strong fiscal year with a 15% increase in net income over the prior fiscal year. Share prices are at an all time high. Working with Finance, you have arrived at a 2.5% merit increase budget for the next fiscal year, a smaller increase than the last fiscal year. Finance has indicated that some large capital expenditures will be needed next year, so the company needs to conserve resources. Additionally, Legal is in final negotiations on a lawsuit that may be very costly to the company. Word of the smaller increases has line management concerned that they will lose their best performers. Given all of these factors, what is your best course of action?

  • A. Implement the merit increase budget as is because the anticipated financial obligations have made it necessary
  • B. Meet with Finance and make a case for a larger merit increase budget because the loss of key talent will cost more over the long term than the savings from the smaller merit increases
  • C. Gather the perspectives of all stakeholders, analyze their individual concerns and meet to determine whether a compromise solution is possible
  • D. Recommend a reduction in force to eliminate poor performers, which will increase the merit budget by reducing headcount


Answer : C

Which of the following best describes the most likely perspectives of different groups in the organization that compensation professionals must be aware of?

  • A. Investors and Finance want to see money spent wisely. Legal must ensure compliance, and HR and operating departments want to see their needs taken into account to attract, retain and motivate a high quality workforce.
  • B. Operating departments and HR understand the company must live within its means and Finance cannot allocate funds to a budget if it is likely that profitability will be adversely affected.
  • C. Investors want to maximize gains and want to see compensation tightly controlled and Legal needs to ensure that compensation plans do not attract undue scrutiny.
  • D. Operating departments view compensation as it applies to them, HR must balance available resources to attract, retain and motivate employees and Finance knows the value of a motivated workforce and will provide the budget necessary to achieve it.


Answer : A

Regarding fixed and variable costs, what are Financeג€™s primary concerns?

  • A. Fixed costs must be kept to a minimum, but variable costs can fluctuate since they tend to correlate with revenue.
  • B. Variable costs often have a heavier focus than fixed costs, which applies to all areas, including compensation.
  • C. Fixed costs and variable costs are equally important and both should be kept to a minimum.
  • D. Fixed costs are not a concern because they cannot be changed, so the focus is primarily on variable costs.


Answer : B

What statement is most accurate regarding communication of compensation information?

  • A. Compensation professionals should anticipate the level of the audience and tailor messages to their needs.
  • B. Compensation terms and practices are unclear to most individuals who do not work in this area and communication should be tailored to the least informed member of the target audience.
  • C. The ready availability of information online has made it unnecessary for compensation professionals to tailor messages since individuals can research terms and concepts after the fact if they donג€™t understand a communication.
  • D. Compensation terms are well-known and easily understood by most stakeholders.


Answer : A

When trying to achieve compromise and collaboration to achieve your goals, on which stakeholder(s) should you focus most of your efforts?

  • A. The most senior leader with the highest level of authority
  • B. No one person. Identify your stakeholders and work to achieve consensus among the majority.
  • C. Influencers and decision-makers who have the respect of employees and are both proponents and opponents of your objectives
  • D. Individuals with power in the organization who have the authority to overrule the concerns of opponents


Answer : C

What best describes the most effective tactic for getting stakeholdersג€™ attention and buy-in?

  • A. Ask them to review or provide feedback, especially on something you have done for them
  • B. Talk to the individuals they report to in advance and gain their support so the stakeholders realize upper management already supports your position
  • C. Schedule a meeting of all stakeholders and make a strong case that overcomes all of their objections
  • D. Explain in precise terms to each stakeholder how your position is the most realistic approach to the issue or concern


Answer : A

When connecting with other business units, what best describes a reason why is it important to keep up to date on organizational challenges?

  • A. Because you will be more informed when differences of opinion occur, lending more credibility to your position
  • B. Because you can demonstrate your understanding of issues from multiple perspectives
  • C. Because you will be able to explain the negative consequences of opposing your position
  • D. Because stakeholders with diverse opinions tend to compromise when they are aware that others know their weaknesses


Answer : B

What statement is most accurate regarding compensation communications with employees at varying levels?

  • A. They tend to be fairly consistent because the elements of pay may differ, but the concerns are universal.
  • B. They generally require a greater degree of detail for lower level employees who have less of an understanding of pay plan design.
  • C. They usually require more detail for senior employees regarding plan details and performance and the needs from one employee group to another can vary greatly.
  • D. They should be kept to a minimum for employees at all levels to maximize efficiency and efforts can be focused only on those who have questions.


Answer : C

As a general rule, what are individual contributors most likely to ask about their compensation?

  • A. What the take-home pay will be
  • B. How their pay compares to co-workers
  • C. How the company sets compensation budgets
  • D. How the company makes pay decisions that affect them


Answer : D

Who are you most likely to hear from if there are questions about an employeeג€™s compensation?

  • A. The employee
  • B. A concerned co-worker
  • C. The employeeג€™s manager
  • D. The employeeג€™s department head


Answer : C

How are the compensation communication needs of managers different from those of individual employees?

  • A. They arenג€™t. Managers are concerned about their compensation also.
  • B. They are also responsible for merit increases, incentives and hiring so they have greater information needs.
  • C. They tend to have more influence, so it is important to resolve any concerns they have quickly and efficiently.
  • D. They have more duties and responsibilities and are less likely to have the time to discuss compensation issues.


Answer : B

Page:    1 / 6   
Total 85 questions