Question 1

What is the primary reason why a compensation professional working for a multinational company should understand regulatory requirements and application of rewards globally?

Options :

A : Because legal compliance with compensation-related regulations is the responsibility of the compensation department

B : Because the compensation professional has a fiduciary responsibility to ensure that the financial resources of their organization are spent in a prudent manner

C : Because it is possible to pay significantly less for talent in different countries and compensation should advise management on when and where to locate various jobs within the company

D : They shouldn't. Due to the complexities of global regulations and practices, compensation administration outside of the home country should be outsourced.

Answer: B

Question 2

To ensure appropriate funding levels, the compensation professional must generally do which of the following?

Options :

A : Possess a high level of education and competency in accounting principles

B : Determine which programs are crucial to the enterprise and which programs are expendable

C : Partner with multiple departments and external consultants and vendors

D : Demonstrate broad understanding of principles of financial management and business expertise

Answer: D

Question 3

Regarding fixed and variable costs, what are Finance's primary concerns?

Options :

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

Question 4

If employees have a significant impact on the bottom line, what type of pay mix is most appropriate?

Options :

A : A varying mix depending on employee influence on goals to provide the necessary incentive to maximize profits

B : 100% variable pay to motivate all employees to maximize productivity and sales

C : 90/10 for the majority of employees (base/variable) to share in the company-s success with increased variable pay for management/executives to motivate employees to seek higher positions

D : High base pay and low variable pay to ensure predictability of total compensation expense

Answer: A

Question 5

Why are lump-sum increases generally used?

Options :

A : To control annual fixed costs from base pay adjustments

B : To elevate employees who are below the midpoint in the range

C : To reward employees under short-term incentive plans

D : To make up for benefits not provided by the organization

Answer: A