Fall SemeSter 2025 – Hrm3705 CompenSation
management | november/DeCember portFolio
Complete anSWerS | UpDateD 2025/2026 eDition
| veriFieD UniSa HUman reSoUrCe management
StUDy gUiDe | DUe 12 DeCember 2025 | 100%
exam-reaDy reSoUrCe For UniverSity oF SoUtH
aFriCa StUDentS
Question 1:
What is the primary purpose of a salary survey in compensation management?
A) To determine employee satisfaction
B) To establish pay equity
C) To evaluate employee performance
D) To identify training needs
Correct Option: B) To establish pay equity
Rationale: Salary surveys are conducted to gather data on compensation levels for
similar positions in the market. This information helps organizations ensure that their
pay structures are competitive and equitable, thereby attracting and retaining talent.
Question 2:
Which of the following is NOT a component of total compensation?
A) Base salary
B) Benefits
C) Work-life balance initiatives
D) Performance bonuses
Correct Option: C) Work-life balance initiatives
Rationale: While work-life balance initiatives contribute to employee satisfaction and
engagement, they are not typically classified as a direct component of total
compensation, which primarily includes monetary and tangible benefits like base
salary, benefits, and bonuses.
Question 3:
In the context of compensation strategy, what does "pay for performance" mean?
A) Employees are paid based on their tenure
B) Compensation is linked to individual or organizational performance
,C) Employees receive the same pay regardless of output
D) Pay increases are automatic
Correct Option: B) Compensation is linked to individual or organizational
performance
Rationale: "Pay for performance" is a compensation strategy that ties employee
earnings to their performance levels, incentivizing higher productivity and aligning
employee efforts with organizational goals.
Question 4:
What is the primary advantage of a broadbanding compensation system?
A) It simplifies job classifications and pay structures
B) It increases the number of pay grades
C) It focuses purely on performance metrics
D) It standardizes pay across all industries
Correct Option: A) It simplifies job classifications and pay structures
Rationale: Broadbanding reduces the number of job classifications and pay grades,
which simplifies the compensation structure and allows for greater flexibility in
employee pay.
Question 5:
Which method of job evaluation considers the importance of each job within the
organization?
A) Job ranking
B) Point-factor method
C) Job classification
D) Market pricing
Correct Option: B) Point-factor method
Rationale: The point-factor method assigns points to various factors of a job, such as
skills and responsibilities, to determine its relative value within the organization.
Question 6:
What type of pay structure is most commonly associated with unionized environments?
A) Traditional step-based pay
B) Performance-based pay
C) Skill-based pay
D) Commission-based pay
,Correct Option: A) Traditional step-based pay
Rationale: Unionized environments often rely on traditional step-based pay structures,
where employees receive predetermined raises based on tenure and job classification.
Question 7:
Which of the following is an example of indirect compensation?
A) Base salary
B) Health insurance
C) Bonuses
D) Overtime pay
Correct Option: B) Health insurance
Rationale: Indirect compensation includes benefits that are not part of direct pay, such
as health insurance, retirement contributions, and paid time off.
Question 8:
What is the primary goal of pay equity analysis?
A) To increase overall salaries
B) To ensure fairness in compensation among employees
C) To reduce payroll costs
D) To standardize benefits
Correct Option: B) To ensure fairness in compensation among employees
Rationale: Pay equity analysis aims to identify and correct discrepancies in pay among
employees performing similar work, ensuring fair compensation practices.
Question 9:
Which compensation strategy focuses on retaining top talent?
A) Competitive pay strategy
B) Cost leadership strategy
C) Pay-for-performance strategy
D) Internally equitable strategy
Correct Option: A) Competitive pay strategy
Rationale: A competitive pay strategy offers salaries and benefits that are attractive
compared to the market, helping organizations retain top talent.
, Question 10:
What is the primary difference between exempt and non-exempt employees under the
Fair Labor Standards Act (FLSA)?
A) Exempt employees are not entitled to overtime pay; non-exempt employees are.
B) Exempt employees have higher salaries than non-exempt employees.
C) Non-exempt employees can be terminated at any time.
D) Exempt employees receive more benefits.
Correct Option: A) Exempt employees are not entitled to overtime pay; non-exempt
employees are.
Rationale: Under the FLSA, exempt employees are not entitled to overtime pay for
hours worked beyond the standard workweek, while non-exempt employees must
receive overtime pay.
Question 11:
Which of the following compensation components is considered a variable pay?
A) Base salary
B) Commission
C) Health benefits
D) Retirement contributions
Correct Option: B) Commission
Rationale: Variable pay, such as commission, is contingent upon performance and can
fluctuate, unlike base salary, which remains fixed.
Question 12:
Why is it important to conduct a compensation analysis regularly?
A) To reduce employee turnover
B) To comply with legal standards
C) To ensure competitiveness in the labor market
D) To standardize pay across departments
Correct Option: C) To ensure competitiveness in the labor market
Rationale: Regular compensation analysis helps organizations adjust their pay
structures to remain competitive and attract top talent, while also addressing any pay
equity issues.
Question 13:
management | november/DeCember portFolio
Complete anSWerS | UpDateD 2025/2026 eDition
| veriFieD UniSa HUman reSoUrCe management
StUDy gUiDe | DUe 12 DeCember 2025 | 100%
exam-reaDy reSoUrCe For UniverSity oF SoUtH
aFriCa StUDentS
Question 1:
What is the primary purpose of a salary survey in compensation management?
A) To determine employee satisfaction
B) To establish pay equity
C) To evaluate employee performance
D) To identify training needs
Correct Option: B) To establish pay equity
Rationale: Salary surveys are conducted to gather data on compensation levels for
similar positions in the market. This information helps organizations ensure that their
pay structures are competitive and equitable, thereby attracting and retaining talent.
Question 2:
Which of the following is NOT a component of total compensation?
A) Base salary
B) Benefits
C) Work-life balance initiatives
D) Performance bonuses
Correct Option: C) Work-life balance initiatives
Rationale: While work-life balance initiatives contribute to employee satisfaction and
engagement, they are not typically classified as a direct component of total
compensation, which primarily includes monetary and tangible benefits like base
salary, benefits, and bonuses.
Question 3:
In the context of compensation strategy, what does "pay for performance" mean?
A) Employees are paid based on their tenure
B) Compensation is linked to individual or organizational performance
,C) Employees receive the same pay regardless of output
D) Pay increases are automatic
Correct Option: B) Compensation is linked to individual or organizational
performance
Rationale: "Pay for performance" is a compensation strategy that ties employee
earnings to their performance levels, incentivizing higher productivity and aligning
employee efforts with organizational goals.
Question 4:
What is the primary advantage of a broadbanding compensation system?
A) It simplifies job classifications and pay structures
B) It increases the number of pay grades
C) It focuses purely on performance metrics
D) It standardizes pay across all industries
Correct Option: A) It simplifies job classifications and pay structures
Rationale: Broadbanding reduces the number of job classifications and pay grades,
which simplifies the compensation structure and allows for greater flexibility in
employee pay.
Question 5:
Which method of job evaluation considers the importance of each job within the
organization?
A) Job ranking
B) Point-factor method
C) Job classification
D) Market pricing
Correct Option: B) Point-factor method
Rationale: The point-factor method assigns points to various factors of a job, such as
skills and responsibilities, to determine its relative value within the organization.
Question 6:
What type of pay structure is most commonly associated with unionized environments?
A) Traditional step-based pay
B) Performance-based pay
C) Skill-based pay
D) Commission-based pay
,Correct Option: A) Traditional step-based pay
Rationale: Unionized environments often rely on traditional step-based pay structures,
where employees receive predetermined raises based on tenure and job classification.
Question 7:
Which of the following is an example of indirect compensation?
A) Base salary
B) Health insurance
C) Bonuses
D) Overtime pay
Correct Option: B) Health insurance
Rationale: Indirect compensation includes benefits that are not part of direct pay, such
as health insurance, retirement contributions, and paid time off.
Question 8:
What is the primary goal of pay equity analysis?
A) To increase overall salaries
B) To ensure fairness in compensation among employees
C) To reduce payroll costs
D) To standardize benefits
Correct Option: B) To ensure fairness in compensation among employees
Rationale: Pay equity analysis aims to identify and correct discrepancies in pay among
employees performing similar work, ensuring fair compensation practices.
Question 9:
Which compensation strategy focuses on retaining top talent?
A) Competitive pay strategy
B) Cost leadership strategy
C) Pay-for-performance strategy
D) Internally equitable strategy
Correct Option: A) Competitive pay strategy
Rationale: A competitive pay strategy offers salaries and benefits that are attractive
compared to the market, helping organizations retain top talent.
, Question 10:
What is the primary difference between exempt and non-exempt employees under the
Fair Labor Standards Act (FLSA)?
A) Exempt employees are not entitled to overtime pay; non-exempt employees are.
B) Exempt employees have higher salaries than non-exempt employees.
C) Non-exempt employees can be terminated at any time.
D) Exempt employees receive more benefits.
Correct Option: A) Exempt employees are not entitled to overtime pay; non-exempt
employees are.
Rationale: Under the FLSA, exempt employees are not entitled to overtime pay for
hours worked beyond the standard workweek, while non-exempt employees must
receive overtime pay.
Question 11:
Which of the following compensation components is considered a variable pay?
A) Base salary
B) Commission
C) Health benefits
D) Retirement contributions
Correct Option: B) Commission
Rationale: Variable pay, such as commission, is contingent upon performance and can
fluctuate, unlike base salary, which remains fixed.
Question 12:
Why is it important to conduct a compensation analysis regularly?
A) To reduce employee turnover
B) To comply with legal standards
C) To ensure competitiveness in the labor market
D) To standardize pay across departments
Correct Option: C) To ensure competitiveness in the labor market
Rationale: Regular compensation analysis helps organizations adjust their pay
structures to remain competitive and attract top talent, while also addressing any pay
equity issues.
Question 13:
