BASE PAY ADMINISTRATION AND PAY FOR PERFORMANCE STUDY
GUIDE 2025/2026 QUESTIONS WITH ANSWERS RATED A+
✔✔Steps / Strategy for Determining Merit Payouts - Step 2: Determine anticipated
mean performance rating - ✔✔This mean will show how high or low the distribution will
fall within the ratings. Calculating this mean is the same as determining a weighted
average.
✔✔The two most often-used approaches for timing increases are: - ✔✔Anniversary
date
Focal point
✔✔Anniversary Date advantages - ✔✔Spreads the administrative burden throughout
the year
Payroll increases are staggered, reducing the financial impact that accompanies a singe
(company-wide) jump
Performance evaluation and increase is based on an individual performance
Employee believes the process is focused specifically on them
Allows the manager to spend more time specific
to the employee evaluation
Internally, in the HR function, the paperwork stream will be minimal due to spacing of
reviews
✔✔Anniversary Date disadvantages - ✔✔Relative performance is hard to judge
Occasionally conservative budget management
might lead to lower increases at the beginning of
the year, and higher increases toward the end
HR function will spend additional time doing
projected spending analysis
✔✔Focal point advantages - ✔✔Ability to project budgetary impact
Consolidates the administrative burden
Increases can become part of the yearly budgeting process
Linkage among business-unit performance, individual performance and merit increases
can be clearer
, Allows for the HR function to better utilize budget
analysis time, rather than projected spending
✔✔focal point dis advantages - ✔✔May put pressure on managers of large
departments to complete all employee reviews at
one time
Workload may be onerous if the timing of the
salary increase program coincides with other major efforts
Cash-flow implications for the organization may be
extreme when all increases occur simultaneously
Employee might not get the one-on-one attention
needed to explain and answer any questions that
might arise
✔✔Components of market based salary budget - ✔✔Percentage necessary to match
market as of Jan 1st
Anticipated percent of next years market movement
desired position above or below the market
✔✔Steps of Market Model Analysis - ✔✔Collect survey data
Age survey data to start of plan year
Develop a market model
✔✔Steps of Market Model Analysis - Develop a market model - ✔✔describe the relation
between aged external survey data and internal grades for benchmarked jobs
✔✔The quality of the market model increases when - ✔✔Survey matches are good
Sampling is representative of the company's population
✔✔Data we will need for a market model analysis - ✔✔Benchmark job data
Historical competitive pay movement during the year surveys were conducted
Anticipated competitive pay movement during the new plan year
Company pay policy
GUIDE 2025/2026 QUESTIONS WITH ANSWERS RATED A+
✔✔Steps / Strategy for Determining Merit Payouts - Step 2: Determine anticipated
mean performance rating - ✔✔This mean will show how high or low the distribution will
fall within the ratings. Calculating this mean is the same as determining a weighted
average.
✔✔The two most often-used approaches for timing increases are: - ✔✔Anniversary
date
Focal point
✔✔Anniversary Date advantages - ✔✔Spreads the administrative burden throughout
the year
Payroll increases are staggered, reducing the financial impact that accompanies a singe
(company-wide) jump
Performance evaluation and increase is based on an individual performance
Employee believes the process is focused specifically on them
Allows the manager to spend more time specific
to the employee evaluation
Internally, in the HR function, the paperwork stream will be minimal due to spacing of
reviews
✔✔Anniversary Date disadvantages - ✔✔Relative performance is hard to judge
Occasionally conservative budget management
might lead to lower increases at the beginning of
the year, and higher increases toward the end
HR function will spend additional time doing
projected spending analysis
✔✔Focal point advantages - ✔✔Ability to project budgetary impact
Consolidates the administrative burden
Increases can become part of the yearly budgeting process
Linkage among business-unit performance, individual performance and merit increases
can be clearer
, Allows for the HR function to better utilize budget
analysis time, rather than projected spending
✔✔focal point dis advantages - ✔✔May put pressure on managers of large
departments to complete all employee reviews at
one time
Workload may be onerous if the timing of the
salary increase program coincides with other major efforts
Cash-flow implications for the organization may be
extreme when all increases occur simultaneously
Employee might not get the one-on-one attention
needed to explain and answer any questions that
might arise
✔✔Components of market based salary budget - ✔✔Percentage necessary to match
market as of Jan 1st
Anticipated percent of next years market movement
desired position above or below the market
✔✔Steps of Market Model Analysis - ✔✔Collect survey data
Age survey data to start of plan year
Develop a market model
✔✔Steps of Market Model Analysis - Develop a market model - ✔✔describe the relation
between aged external survey data and internal grades for benchmarked jobs
✔✔The quality of the market model increases when - ✔✔Survey matches are good
Sampling is representative of the company's population
✔✔Data we will need for a market model analysis - ✔✔Benchmark job data
Historical competitive pay movement during the year surveys were conducted
Anticipated competitive pay movement during the new plan year
Company pay policy
