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WorldatWork Regulatory Environments for Compensation Programs Sample Questions:

1. Step-rate increase programs provide employees the opportunity to receive two regular pay increases at which points?

A) Once when they move a step, and again when the step value changes
B) At established dates and then every six months thereafter
C) On January 1 and July 1 of each year
D) At the anniversary date and at the annual merit increase date

2. Which of the following statements best describes defined contribution (DC) plans?

A) The benefit is based on a formula that considers pay and service.
B) They generally provide better benefits to employees with longer service.
C) The employee assumes the risk for the investments.
D) They require complex actuarial calculations and assumptions.

3. What best describes a use of strategic analysis?

A) Evaluating prior year performance for the narrative portion of annual financial reports
B) Forecasting profit, growth and investment performance to develop realistic budgets
C) Understanding your business and its competitive strengths and weaknesses
D) Pricing your products appropriately

4. What type of pay increase is given when an organization finds that its compensation program is behind competitive market rates?

A) Cost of living
B) Merit
C) General
D) Automatic

5. Which of the following statements best describes defined benefit (DB) plans?

A) They are often integrated with government-sponsored programs.
B) Employees are at risk for financial resources.
C) There is no promise of a specific benefit at retirement.
D) Individual accounts must be maintained for each participant.

Solutions: