Base Pay Administration and Pay for
Performance - GR4/C4- Questions and Answers
What are the suggested actions if employees are paid above the range maximum? Correct
Ans-Freeze pay, less frequent increase, reduce base pay and make up differences with lumpsum,
reduce salary, Promote employee to higher level job they can perform, give lump-sum increases
in future.
What are the causes that employee is paid below the range minimum? Correct Ans-recent
promotion, then range moves, hired at minimum, then range moves, job re-evaluation,
reorganization or acquisition
What are the suggested actions if employees are paid below the range minimum? Correct
Ans-Raise pay to new minimum when range moves, raise pay to minimum, separate merit
budget from adjustment to minimum, evaluate to see if position is properly graded
What is compression? Correct Ans-the difference between two grades or in certain instances
when the pay difference between two employees is too small
What causes compression? Correct Ans-new hire pay rates are higher, supervisor/subordinate
total pay, midpoint differentials too close, automatic increase, merit pay inadequacies, unionized
environment
,What are the ways to maintain pay structures? Correct Ans-Review benchmark jobs, re-
evaluate jobs, re-evaluate competitive posture, review internal equity and external
competitiveness, adjust policy line, evaluate impact, management understanding
How can the salary structure be kept current? Correct Ans-Review compensation strategy and
competitive posture, determine competitive pay movement, consider COLA or just market
movement, determine the amount for adjustment
What is one of the consideration of base pay program review and audit? Correct Ans-
External/internal equity, job information/job descriptions, salary ranges and broadbands, pay
policies
Who can conduct the salary audit? Correct Ans-HR and design team, senior management,
operations management, employees, outside consultants
When the salary audit should be conducted? Correct Ans-Usually after a program cycle is
completed
How the audit process is planned? Correct Ans-timetable, collect baseline information,
measure results and review survey/other feedback, comprehensive, structured, detailed and
planned according to schedule
Which of the following is a typical approach used to correct green circle rates? Correct Ans-
granting 3% increase every four months until pay equals or exceeds the range minimum
,What best describes an effective approach to reducing supervisor and subordinate pay
compression? Correct Ans-include supervisors in an incentive plan
which of the following is the most effective method for maintaining a pay structure? Correct
Ans-Re-evaluate jobs that have changed sufficiently to bring grades into question
What should be included in the criteria or performance standards used to evaluate compensation
systems? Correct Ans-compensation costs
What criteria should be selected for base pay program review and audit? Correct Ans-
Acceptance by interested parties, compensation costs, impact on organization's performance,
human resources effectiveness, goodness characteristics
What measures should be taken into consideration while evaluating the measures for audit?
Correct Ans-Results, process, compliance/alignment, documentation
What features should be taken into consideration while performing the technical audits?
Correct Ans-Measure actual results against intended results, identify sources of
malfunctioning, identify potential fixes, review program fairness and pay delivery
What features should be taken into consideration while conducting the perception audits?
Correct Ans-Identify various interested parties, measure perceptions, analyse gaps, identify
potential fixes to programs or policies
, Once the compensation program review and audit are completed, to whom the essential findings
to be shared with? Correct Ans-CEO, executive management, and compensation committee
of the board
What should be included in the executive summary once the compensation program review and
audit are completed? Correct Ans-Summary of objectives and methods, executive interview
themes / implications, focus group themes / implications, survey results, external analyses
results, internal reviews of specific programs.
Why is it important for HR to be involved early in the M&A process? Correct Ans-HR
professionals need to align process and activities to the new organization's business strategy.
Which of the following would raise a potential red flag during a merger or acquisition?
Correct Ans-Unions
Which statement regarding communication of compensation plans during a transaction is most
accurate? Correct Ans-It is important to communicate with individual as well as the whole
organization
What are the activities regarding the communication of compensation plan during a transaction
HR professional will do? Correct Ans-Build, manage and participate on teams, perform due
diligence, plan the integration process early
What are the activities regarding the communication of compensation plan during a integration
HR professional will do? Correct Ans-Create a sense of involvement and security, promote
Performance - GR4/C4- Questions and Answers
What are the suggested actions if employees are paid above the range maximum? Correct
Ans-Freeze pay, less frequent increase, reduce base pay and make up differences with lumpsum,
reduce salary, Promote employee to higher level job they can perform, give lump-sum increases
in future.
What are the causes that employee is paid below the range minimum? Correct Ans-recent
promotion, then range moves, hired at minimum, then range moves, job re-evaluation,
reorganization or acquisition
What are the suggested actions if employees are paid below the range minimum? Correct
Ans-Raise pay to new minimum when range moves, raise pay to minimum, separate merit
budget from adjustment to minimum, evaluate to see if position is properly graded
What is compression? Correct Ans-the difference between two grades or in certain instances
when the pay difference between two employees is too small
What causes compression? Correct Ans-new hire pay rates are higher, supervisor/subordinate
total pay, midpoint differentials too close, automatic increase, merit pay inadequacies, unionized
environment
,What are the ways to maintain pay structures? Correct Ans-Review benchmark jobs, re-
evaluate jobs, re-evaluate competitive posture, review internal equity and external
competitiveness, adjust policy line, evaluate impact, management understanding
How can the salary structure be kept current? Correct Ans-Review compensation strategy and
competitive posture, determine competitive pay movement, consider COLA or just market
movement, determine the amount for adjustment
What is one of the consideration of base pay program review and audit? Correct Ans-
External/internal equity, job information/job descriptions, salary ranges and broadbands, pay
policies
Who can conduct the salary audit? Correct Ans-HR and design team, senior management,
operations management, employees, outside consultants
When the salary audit should be conducted? Correct Ans-Usually after a program cycle is
completed
How the audit process is planned? Correct Ans-timetable, collect baseline information,
measure results and review survey/other feedback, comprehensive, structured, detailed and
planned according to schedule
Which of the following is a typical approach used to correct green circle rates? Correct Ans-
granting 3% increase every four months until pay equals or exceeds the range minimum
,What best describes an effective approach to reducing supervisor and subordinate pay
compression? Correct Ans-include supervisors in an incentive plan
which of the following is the most effective method for maintaining a pay structure? Correct
Ans-Re-evaluate jobs that have changed sufficiently to bring grades into question
What should be included in the criteria or performance standards used to evaluate compensation
systems? Correct Ans-compensation costs
What criteria should be selected for base pay program review and audit? Correct Ans-
Acceptance by interested parties, compensation costs, impact on organization's performance,
human resources effectiveness, goodness characteristics
What measures should be taken into consideration while evaluating the measures for audit?
Correct Ans-Results, process, compliance/alignment, documentation
What features should be taken into consideration while performing the technical audits?
Correct Ans-Measure actual results against intended results, identify sources of
malfunctioning, identify potential fixes, review program fairness and pay delivery
What features should be taken into consideration while conducting the perception audits?
Correct Ans-Identify various interested parties, measure perceptions, analyse gaps, identify
potential fixes to programs or policies
, Once the compensation program review and audit are completed, to whom the essential findings
to be shared with? Correct Ans-CEO, executive management, and compensation committee
of the board
What should be included in the executive summary once the compensation program review and
audit are completed? Correct Ans-Summary of objectives and methods, executive interview
themes / implications, focus group themes / implications, survey results, external analyses
results, internal reviews of specific programs.
Why is it important for HR to be involved early in the M&A process? Correct Ans-HR
professionals need to align process and activities to the new organization's business strategy.
Which of the following would raise a potential red flag during a merger or acquisition?
Correct Ans-Unions
Which statement regarding communication of compensation plans during a transaction is most
accurate? Correct Ans-It is important to communicate with individual as well as the whole
organization
What are the activities regarding the communication of compensation plan during a transaction
HR professional will do? Correct Ans-Build, manage and participate on teams, perform due
diligence, plan the integration process early
What are the activities regarding the communication of compensation plan during a integration
HR professional will do? Correct Ans-Create a sense of involvement and security, promote
