What best describes an effective core technique for communicating with executives?
- A . Focus on negative issues first, such as compensation costs exceeding budget, to get their attention
- B . Provide a wide range of facts and figures. With their high level of responsibility, executives must have all the data before they can make informed decisions.
- C . Assume they have little knowledge of the issue and make a detailed presentation leading up to the purpose of the meeting.
- D . Recommend a solution that will solve the issue and explain why it is the best solution available.
Which of the following best describes present value?
- A . The current value of holdings
- B . The current value of holdings and how much it will grow over time at a given rate of return
- C . The desired value in the future and what needs to be invested today to realize that amount
- D . The difference between the desired value in the future and the current value as a percentage of the desired value
When connecting with other business units, what best describes a reason why is it important to keep up to date on organizational challenges?
- A . Because you will be more informed when differences of opinion occur, lending more credibility to your position
- B . Because you can demonstrate your understanding of issues from multiple perspectives
- C . Because you will be able to explain the negative consequences of opposing your position
- D . Because stakeholders with diverse opinions tend to compromise when they are aware that others know their weaknesses
The Alpha company ships an order to a customer on March 1st and invoices the customer for the product with the shipment, with payment terms of net 30 days. The customer’s payment is received on April 5th. The payment clears the bank and shows on Alpha’s account on April 8th.
If Alpha is using accrual accounting, when does it record the revenue for this sale?
- A . March 1st
- B . March 31st
- C . April 5th
- D . April 8th
What best describes the primary purpose of budgeting?
- A . Limiting spending to a fixed percentage of organizational revenue
- B . Making choices about spending based on expectations of performance
- C . Increasing profitability of the business annually to maximize shareholder/owner value
- D . Complying with local legislation and maintaining accurate records to prepare financial reports and tax documents
What is the most likely explanation for why compensation and rewards require a strong grasp of business acumen for compensation professionals?
- A . Because the internal and external environments are constantly changing
- B . Because the best interests of the organization take priority, which can lead to difficult decisions and implementation issues
- C . Because they are emotional issues and stakeholders have many vested interests
- D . Because strong business acumen is required for all compensation decisions
What best describes what forecasting helps the organization to do?
- A . Recognize possible issues and concerns that will drive budget planning
- B . Prepare quarterly and annual reports and their associated statements
- C . Withhold payroll taxes for all elements of compensation
- D . Anticipate future capital needs by determining when the organization will enter the next phase of the business lifecycle
Which of the following factors has the greatest impact on how aggressive a stance (high vs. low) an organization will take in terms of where it positions itself against the market with its compensation strategy?
- A . The industry it operates in
- B . The bottom line
- C . The organizational headcount
- D . The risk tolerance of compensation leaders
Assessment of current and future staffing needs should be based primarily on what?
- A . Compensation budgets only because staffing cannot exceed the funds available
- B . A combination of organizational goals and budget realities
- C . The consensus of HR management and line management estimates
- D . The opinions of senior leaders in the organization
The “return” represented by the Total Shareholder Return (TSR) metric is the increase in what?
- A . Earnings
- B . Shares
- C . Market capitalization
- D . Increased market value and reinvested dividends paid
What is the most accurate definition of organizational vision?
- A . A description of who the organization is, where it is headed and what it wants for the future
- B . A written explanation of the intention or purpose of the organization and why it is in business
- C . A statement of what kind of organization it wants to be and the guiding principles and/or beliefs shared by stakeholders
- D . A detailed account of the organization’s goals, directions to achieve them and how it will compete
If a company has a higher percentage of employees with fixed compensation than variable compensation, what happens as revenues increase?
- A . Compensation costs eventually stabilize and become a consistent percent of revenue.
- B . Compensation costs and revenue increase at approximately the same rate.
- C . Compensation costs eventually decrease as a percent of revenue, increasing profit growth.
- D . Compensation costs remain the same as a percent of revenue until variable compensation costs exceed fixed compensation costs.
How are the compensation communication needs of managers different from those of individual employees?
- A . They aren’t. Managers are concerned about their compensation also.
- B . They are also responsible for merit increases, incentives and hiring so they have greater information needs.
- C . They tend to have more influence, so it is important to resolve any concerns they have quickly and efficiently.
- D . They have more duties and responsibilities and are less likely to have the time to discuss compensation issues.
Gross margin is which of the following, as percent of revenue?
- A . Revenue minus cost of goods sold
- B . Expenses plus taxes and depreciation
- C . Gross profit minus expenses
- D . Cost of goods sold
Which of the following best describes the most likely perspectives of different groups in the organization that compensation professionals must be aware of?
- A . Investors and Finance want to see money spent wisely. Legal must ensure compliance, and HR and operating departments want to see their needs taken into account to attract, retain and motivate a high quality workforce.
- B . Operating departments and HR understand the company must live within its means and Finance cannot allocate funds to a budget if it is likely that profitability will be adversely affected.
- C . Investors want to maximize gains and want to see compensation tightly controlled and Legal needs to ensure that compensation plans do not attract undue scrutiny.
- D . Operating departments view compensation as it applies to them, HR must balance available resources to attract, retain and motivate employees and Finance knows the value of a motivated workforce and will provide the budget necessary to achieve it.
When trying to achieve compromise and collaboration to achieve your goals, on which stakeholder(s) should you focus most of your efforts?
- A . The most senior leader with the highest level of authority
- B . No one person. Identify your stakeholders and work to achieve consensus among the majority.
- C . Influencers and decision-makers who have the respect of employees and are both proponents and opponents of your objectives
- D . Individuals with power in the organization who have the authority to overrule the concerns of opponents
What is the most common term for the broad framework of principles and approaches that guide day-to-day decisions affecting the business, including how it positions itself in the market?
- A . The business plan
- B . The corporate objective
- C . The mission statement
- D . The competitive strategy
Which of the following is the earnings available to equity owners after paying debt and taxes?
- A . EBIT
- B . EPS
- C . Net income
- D . Operating profit
Using efficient and cost-effective approaches to integrate technology into the workplace is most likely to do what?
- A . Reduce compensation expense
- B . Improve program efficacy
- C . Select the best vendors
- D . Compensate employees competitively
What choices are most commonly faced by companies in the decline phase of the business lifecycle?
- A . Whether to improve productivity, obtain new operating capital or generate new sales growth
- B . Whether to reinvest in existing products, create new products or maximize profits with current products as long as possible
- C . Whether to acquire competitors with greater market share or merge with more successful companies
- D . Whether to increase sales, maximize distribution capacity or increase efficiency to meet growing demand