WorldatWork C1 Regulatory Environments for Compensation Programs Exam Practice Test

Production worker

Account executive

IT contractor

HR Director

Compensation professionals should anticipate the level of the audience and tailor messages to their needs.

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.

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 don’t understand a communication.

Compensation terms are well-known and easily understood by most stakeholders.

They are all reported on the balance sheet.

They are all sources of capital.

They all incur the same costs to the business.

Nothing. Each of these is a different financial metric.

Market adjustment

Longevity

Individual performance

Skills   

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.

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.

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.

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.

They require complex actuarial calculations and assumptions.

The benefit is based on a formula that considers pay and service.

They generally provide better benefits to employees with longer service.

The employee assumes the risk for the investments.   

Because you will be more informed when differences of opinion occur, lending more credibility to your position

Because you can demonstrate your understanding of issues from multiple perspectives

Because you will be able to explain the negative consequences of opposing your position

Because stakeholders with diverse opinions tend to compromise when they are aware that others know their weaknesses

Americans with Disabilities Act

Vocational Rehabilitation Act

Civil Rights Act of 1991

Age Discrimination in Employment Act

In the methods and processes used to make pay decisions

In the details of their individual compensation packages

In the overall program objectives

In the differences in pay levels for the different levels of the organization

Compensation costs eventually stabilize and become a consistent percent of revenue.

Compensation costs and revenue increase at approximately the same rate.

Compensation costs eventually decrease as a percent of revenue, increasing profit growth.

Compensation costs remain the same as a percent of revenue until variable compensation costs exceed fixed compensation costs.

Taxation has no effect on employee benefits; employers offer benefits for competitive reasons only.

Taxation is the primary reason that employers offer benefits; in the absence of tax incentives, employers would be unlikely to offer them.

Taxation affects the level of benefits offered, the source of benefits and the employer/employee cost-sharing basis.   

It is required by the Department of Labor

It is required in determining increase budgets

It determines what information and data sources will be used in the audit

It builds in a process of continuous improvement

Assessing how well the business is running

Determining employee satisfaction levels

Measuring the financial success of the business

Evaluating customer perceptions of products or services