CAIIB ABM Module B UNIT 13 MCQ - Employees' Feedback and Reward System

CAIIB ABM Module B UNIT 13 MCQ – Employees’ Feedback and Reward System.

Question 1: What primary purpose does gathering regular employee feedback serve for progressive organisations?

A. To primarily discipline underperforming employees.
B. To assess market competition and adjust product pricing.
C. To refine human resource policies and initiatives based on employee perspectives.
D. To solely determine annual bonus amounts for senior management.

Show Explanation

Correct Answer: C. To refine human resource policies and initiatives based on employee perspectives. Employee feedback provides valuable information on employee attitudes and satisfaction, which helps organisations adjust their HR practices.

Question 2: Which method is considered a formal way of gathering employee feedback within an organisation?

A. Observing employee behaviour during lunch breaks.
B. Holding informal chats with employee representatives.
C. Administering well-designed questionnaires or using psychological instruments.
D. Analysing suggestions casually dropped in a suggestion box.

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Correct Answer: C. Administering well-designed questionnaires or using psychological instruments. Formal feedback collection uses structured methods like surveys and instruments, distinct from informal discussions or observations.

Question 3: In the context of employee feedback, what do exit interviews primarily help management understand?

A. The upcoming marketing strategies of competitors.
B. The reasons why employees, especially those leaving unexpectedly, choose to depart and their expectations.
C. The technical specifications required for new machinery.
D. The preferred catering service for company events.

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Correct Answer: B. The reasons why employees, especially those leaving unexpectedly, choose to depart and their expectations. Exit interviews offer insights into employee expectations and reasons for leaving, useful for refining personnel policies.

Question 4: What is the main objective of conducting climate surveys in an organisation?

A. To measure the physical temperature and humidity levels in the office.
B. To assess employees’ perceptions of the prevailing work environment and atmosphere.
C. To evaluate the financial performance of different departments.
D. To conduct market research on new product ideas among employees.

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Correct Answer: B. To assess employees’ perceptions of the prevailing work environment and atmosphere. Climate surveys gauge employee views on various aspects of the organisational environment, like structure, support, and rewards.

Question 5: Which department typically coordinates the process of climate surveys, including design, administration, and tabulation?

A. The Finance Department.
B. The Marketing Department.
C. The Human Resources Development/Management department.
D. The Production Department.

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Correct Answer: C. The Human Resources Development/Management department. The HR department usually takes the lead in managing the entire climate survey exercise, often with assistance from line managers.

Question 6: In a typical climate survey, what does the dimension ‘Responsibility’ assess?

A. The physical safety measures present in the workplace.
B. The employees’ feeling of autonomy, role clarity, and being their own boss.
C. The availability of parking spaces for employees.
D. The quality of canteen facilities provided by the organisation.

Show Explanation

Correct Answer: B. The employees’ feeling of autonomy, role clarity, and being their own boss. The ‘Responsibility’ aspect of a climate survey relates to the sense of independence and clarity of roles employees feel they have.

Question 7: What potential negative consequence can arise from an improperly conducted employee survey?

A. It might lead to an unexpected increase in company profits.
B. It can create more confusion and problems than it solves if not done scientifically.
C. It generally results in immediate salary increases for all staff.
D. It usually leads to a reduction in the number of holidays.

Show Explanation

Correct Answer: B. It can create more confusion and problems than it solves if not done scientifically. If surveys are not scientifically designed and employees are not prepared, they can generate more issues and confusion.

Question 8: According to the fundamental principles discussed, what is considered the prime motive for an individual to take up a job?

A. To gain social status and recognition.
B. To meet basic needs through wages earned.
C. To have access to company recreational facilities.
D. To receive free transportation to the workplace.

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Correct Answer: B. To meet basic needs through wages earned. The primary reason people seek employment is to earn wages to satisfy their fundamental necessities.

Question 9: What is a likely outcome if an organisation’s compensation is significantly disproportionate to the work type and industry standards?

A. The company will attract the best talent available in the market.
B. The company may attract poor quality employees or experience high staff turnover.
C. The company’s stock value will automatically increase.
D. The company will face fewer challenges in employee motivation.

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Correct Answer: B. The company may attract poor quality employees or experience high staff turnover. Inadequate compensation compared to the work and market rates can lead to difficulties in attracting good employees and retaining existing ones.

Question 10: What does the concept of “Total Rewards” encompass in an organisational context?

A. Only the basic salary paid to employees.
B. The combination of monetary and non-monetary investments an organisation makes in its workforce.
C. Exclusively the annual performance bonus structure.
D. The health and safety regulations implemented by the company.

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Correct Answer: B. The combination of monetary and non-monetary investments an organisation makes in its workforce. Total Rewards includes all forms of rewards, both financial (like pay) and non-financial (like benefits, work-life balance), used to attract, retain, and engage employees.

Question 11: Which of the following are considered the three primary categories of rewards within the “Total Rewards” framework?

A. Salary, Housing, and Transportation.
B. Pay, Benefits, and Intangible Rewards.
C. Bonuses, Stock Options, and Health Insurance.
D. Training, Promotions, and Annual Leave.

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Correct Answer: B. Pay, Benefits, and Intangible Rewards. The framework identifies Pay (compensation), Benefits (like healthcare), and Intangible Rewards (like career development, work environment) as key categories influencing employee decisions.

Question 12: According to the WorldatWork Total Rewards Model, which element involves programmes used by an employer to supplement cash compensation, such as health and retirement plans?

A. Compensation.
B. Work-Life Effectiveness.
C. Benefits.
D. Talent Development.

Show Explanation

Correct Answer: C. Benefits. Benefits refer to non-cash programmes like health insurance, income protection, and retirement savings that provide security to employees and their families.

Question 13: Which element of Total Rewards focuses on organisational practices and policies that support employees in achieving success both at work and at home?

A. Recognition.
B. Performance Management.
C. Work-Life Effectiveness.
D. Compensation.

Show Explanation

Correct Answer: C. Work-Life Effectiveness. This element comprises policies and programmes designed to help employees balance their professional and personal lives effectively.

Question 14: What does the ‘Talent Development’ component of Total Rewards provide to employees?

A. Fixed monthly salary payments.
B. Opportunities and tools to advance their skills and competencies for career growth.
C. Reimbursement for daily commuting expenses.
D. Performance-based cash bonuses only.

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Correct Answer: B. Opportunities and tools to advance their skills and competencies for career growth. Talent Development focuses on providing resources and chances for employees to enhance their skills for short-term and long-term career progression.

Question 15: What reason does research suggest is often behind the failure of Total Rewards programmes to achieve their objectives?

A. The programmes are usually too generous towards employees.
B. The programmes are often overly complicated in their design.
C. The programmes suffer from poor delivery and implementation.
D. The programmes lack sufficient financial backing from the organisation.

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Correct Answer: C. The programmes suffer from poor delivery and implementation. Research indicates that ineffective delivery, rather than poor design, is frequently the cause of Total Rewards programmes not meeting their intended goals.

Question 16: According to the management principles described by Armstrong & Murlis, what essential function does a reward strategy serve?

A. It primarily calculates the exact annual budget for employee salaries.
B. It guides how reward management practices should evolve to support the overall business objectives and strategy.
C. It focuses exclusively on implementing legally required employee benefits.
D. It dictates the specific software used for payroll processing.

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Correct Answer: B. It guides how reward management practices should evolve to support the overall business objectives and strategy. A reward strategy ensures that compensation and benefits development aligns with the company’s goals, like fostering innovation if that’s a business aim.

Question 17: When formulating the purpose of a reward program, identifying its meaningfulness to employees is crucial. Why is this important?

A. It helps calculate the precise cost of the program per employee.
B. It ensures the program genuinely motivates employees by connecting with their needs and values.
C. It determines the market competitiveness of the program.
D. It simplifies the administration process for the HR department.

Show Explanation

Correct Answer: B. It ensures the program genuinely motivates employees by connecting with their needs and values. A program is more effective if employees perceive it as valuable, such as health benefits providing peace of mind, thus making it meaningful.

Question 18: For any component, like training opportunities or health insurance, to be formally considered part of an organisation’s “Total Rewards” strategy, what two conditions must it meet?

A. It must be offered globally and be entirely unique to the organisation.
B. It must involve only cash payments and be reviewed monthly by the CEO.
C. The company must actively manage it as a specific program, and employees must perceive it as having value.
D. It must be the most expensive program offered and be available only to new hires.

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Correct Answer: C. The company must actively manage it as a specific program, and employees must perceive it as having value. For example, a mentorship scheme is part of Total Rewards if the company runs a structured mentorship program, and employees find value in participating.

Question 19: Analysing described reward philosophies (like those aiming to attract top talent or ensure fairness), what is a central purpose of such philosophies?

A. To minimise all reward expenditures regardless of impact.
B. To ensure the reward system directly supports the organisation’s specific culture, values, and strategic goals.
C. To standardise rewards identically across all industries and company sizes.
D. To base rewards solely on employee tenure within the company.

Show Explanation

Correct Answer: B. To ensure the reward system directly supports the organisation’s specific culture, values, and strategic goals. Reward philosophies articulate how compensation and benefits will be used strategically, for instance, to attract innovative people or to reflect egalitarian values.

Question 20: Considering systems designed for employee recognition, such as providing platforms for appreciation or acknowledging specific behaviours, what key principle often contributes to their effectiveness?

A. Recognition is most effective when delayed by several months.
B. The value of recognition primarily depends on a large monetary award.
C. Timely appreciation, especially from immediate supervisors, significantly impacts employee morale and motivation.
D. Recognition should only be given publicly during large company events.

Show Explanation

Correct Answer: C. Timely appreciation, especially from immediate supervisors, significantly impacts employee morale and motivation. Effective recognition systems often emphasize promptness and the role of the direct manager in acknowledging effort or achievements, which can be highly motivating.

Question 21: In the context of employee rewards, what does ‘compensation’ typically encompass?

A. Only the intangible benefits like a positive work environment.
B. The fixed monthly salary, excluding any performance bonuses or allowances.
C. The total monetary value received for work, including salary/wages, bonuses, allowances, and quantifiable benefits like insurance contributions.
D. The opportunities provided for career advancement and training.

Show Explanation

Correct Answer: C. The total monetary value received for work, including salary/wages, bonuses, allowances, and quantifiable benefits like insurance contributions. Compensation refers to the complete financial package provided to an employee for their services.

Question 22: When an organisation determines its compensation levels, which internal factor often serves as a fundamental basis?

A. The geographical location of the company headquarters.
B. The overall strategic objectives of the company, such as aiming to be a top payer to attract elite talent.
C. The number of employees currently on sick leave.
D. The brand colour used in the company’s marketing materials.

Show Explanation

Correct Answer: B. The overall strategic objectives of the company, such as aiming to be a top payer to attract elite talent. Company goals heavily influence pay strategy; for example, a company focused on cost leadership might offer lower base pay compared to one focused on innovation.

Question 23: How can the external market situation impact the compensation offered for specific job roles?

A. A large supply of qualified candidates generally drives compensation levels up.
B. Prevailing market rates and the demand-supply balance for specific skills significantly influence compensation; scarce skills often command higher pay.
C. Compensation levels are completely independent of external market factors.
D. Increased competition among companies typically leads to lower wages for specialised roles.

Show Explanation

Correct Answer: B. Prevailing market rates and the demand-supply balance for specific skills significantly influence compensation; scarce skills often command higher pay. If few people possess a required skill set (e.g., niche software development), companies must offer higher compensation to attract and retain them due to market demand.

Question 24: Among different wage concepts, which one aims to provide a wage sufficient not only for basic sustenance but also for satisfying social needs and providing a measure of security like insurance?

A. Minimum wage.
B. Fair wage.
C. Need-based minimum wage.
D. Living wage.

Show Explanation

Correct Answer: D. Living wage. This concept extends beyond mere survival (minimum wage) to include elements allowing participation in society and covering needs like health, education, and saving, aiming for a decent standard of living.

Question 25: What is a primary goal behind labour laws such as The Payment of Wages Act and The Minimum Wages Act in India?

A. To set maximum working hours per day for all employees.
B. To ensure timely payment of earned wages, prevent unfair deductions, and establish a basic floor for wages to protect workers from exploitation.
C. To mandate specific types of non-monetary benefits for all industries.
D. To regulate the process of employee promotions within organisations.

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Correct Answer: B. To ensure timely payment of earned wages, prevent unfair deductions, and establish a basic floor for wages to protect workers from exploitation. These laws aim to provide basic financial security and fairness for workers, particularly those in lower-paid jobs.

Question 26: What fundamental activity does ‘Job Evaluation’ involve within an organisation?

A. Evaluating the annual performance of individual employees against their targets.
B. Systematically assessing the relative importance and value of different jobs compared to one another.
C. Analysing the financial profitability of different departments or product lines.
D. Planning the schedule for mandatory employee training sessions.

Show Explanation

Correct Answer: B. Systematically assessing the relative importance and value of different jobs compared to one another. Job evaluation aims to create an internal hierarchy of jobs based on factors like skill, responsibility, and effort to ensure fair pay structures.

Question 27: One key objective achieved through the process of Job Evaluation is to:

A. Decide the company’s dividend payout to shareholders.
B. Establish logical pay differentials between jobs based on varying requirements like skill, effort, hazards, and responsibility.
C. Conduct background checks on potential new hires.
D. Develop marketing campaigns for new products.

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Correct Answer: B. Establish logical pay differentials between jobs based on varying requirements like skill, effort, hazards, and responsibility. By assessing job worth, evaluation helps justify why different jobs receive different levels of compensation within a structured system.

Question 28: Job evaluation techniques are generally divided into two main categories based on their approach. What are these categories?

A. Fast Methods and Slow Methods.
B. Subjective Methods and Objective Methods.
C. Non-quantitative Methods (evaluating the whole job) and Quantitative Methods (using factors and points/values).
D. Departmental Methods and Organisational Methods.

Show Explanation

Correct Answer: C. Non-quantitative Methods (evaluating the whole job) and Quantitative Methods (using factors and points/values). Non-quantitative approaches like Ranking are more holistic, while quantitative ones like Point-Ranking are more analytical and factor-based.

Question 29: Identify a defining characteristic of the ‘Ranking’ method used in job evaluation.

A. It requires assigning numerical points to job factors like ‘skill’ and ‘effort’.
B. It involves comparing jobs in their entirety against each other to create a sequence based on perceived overall importance or difficulty.
C. It relies on detailed, pre-written descriptions for different job grades.
D. It primarily uses market salary survey data to determine job value.

Show Explanation

Correct Answer: B. It involves comparing jobs in their entirety against each other to create a sequence based on perceived overall importance or difficulty. This method ranks whole jobs (e.g., Job A > Job B > Job C) without breaking them down into compensable factors.

Question 30: The ‘Job Classification’ or ‘Job Grading’ method of job evaluation operates by:

A. Ranking all jobs from highest to lowest based on direct comparison.
B. Assigning points to various job factors and summing them up.
C. Defining a series of grade levels with descriptions, and then assigning each job to the grade whose description best fits its overall responsibilities.
D. Calculating the monetary value of each specific factor within a job.

Show Explanation

Correct Answer: C. Defining a series of grade levels with descriptions, and then assigning each job to the grade whose description best fits its overall responsibilities. For example, creating grades like ‘Clerical Grade I’, ‘Clerical Grade II’, etc., with descriptions, and fitting jobs into these.

Question 31: How is job value typically determined using the ‘Factor Comparison’ method?

A. By subjectively ranking the job against all other jobs in the organisation.
B. By assigning the job to a predefined grade based on a general description.
C. By breaking the job down into key factors (e.g., skill, effort), comparing it factor by factor against benchmark jobs with established values, and summing the derived values for each factor.
D. By calculating the average salary paid for similar jobs in the external market.

Show Explanation

Correct Answer: C. By breaking the job down into key factors (e.g., skill, effort), comparing it factor by factor against benchmark jobs with established values, and summing the derived values for each factor. This method compares factors like ‘Mental Requirements’ of the job being evaluated to the same factor in key jobs.

Question 32: Which job evaluation method involves identifying key compensable factors, defining degrees within each factor, assigning points to these degrees based on importance, and then summing the total points for a job to determine its relative value?

A. Ranking Method.
B. Job Classification Method.
C. Point-Ranking Method (or Point Method).
D. Factor Comparison Method.

Show Explanation

Correct Answer: C. Point-Ranking Method (or Point Method). This is a widely used quantitative method where jobs accumulate points based on the level (degree) assessed for various factors (e.g., Education, Complexity), leading to a total point score.

Question 33: In compensation management, what information does a “Compa-ratio” provide?

A. The ratio of fixed pay to variable pay within an employee’s total compensation.
B. A comparison of an employee’s actual salary to the midpoint of the established salary range for their specific job position.
C. The percentage increase in an employee’s salary from the previous year.
D. The company’s overall compensation costs as a percentage of total revenue.

Show Explanation

Correct Answer: B. A comparison of an employee’s actual salary to the midpoint of the established salary range for their specific job position. It helps assess if an employee’s pay is low, average, or high relative to the target pay level for their role.

Question 34: If AS represents an employee’s Actual Salary and MP represents the Midpoint of the pay range for their job, how is the Compa-ratio (CR) calculated?

A. CR = (MP / AS) x 100
B. CR = (AS / MP) x 100
C. CR = (AS – MP) / MP x 100
D. CR = (MP – AS) / AS x 100

Show Explanation

Correct Answer: B. CR = (AS / MP) x 100. The formula divides the actual salary by the range midpoint and expresses the result as a percentage.

Question 35: According to typical compa-ratio zone definitions, a ratio between 96% and 103% usually indicates that an employee’s pay corresponds to which level of job performance or competence?

A. Universally recognised as outstanding performer.
B. New or inexperienced, or performing unsatisfactorily.
C. Gaining experience but not yet fully competent.
D. Fully competent, performing the job as defined and expected.

Show Explanation

Correct Answer: D. Fully competent, performing the job as defined and expected. This range is centered around the midpoint (100%) and generally aligns with employees meeting the standard requirements of their role effectively.

Question 36: In a Factor Comparison job evaluation system, benchmark jobs have established monetary values for key factors. Consider these values: Electrician (Physical Requirements = ₹12, Responsibility = ₹18), Welder (Mental Requirements = ₹10, Working Conditions = ₹4), Mechanist (Skills = ₹23). A new job, ‘Fitter’, is evaluated and found comparable to: Welder for Mental Requirements, Electrician for Physical Requirements, Mechanist for Skills, Welder for Working Conditions, and Electrician for Responsibility. What is the calculated daily rate for the Fitter job based on summing these factor values?

A. ₹50
B. ₹54
C. ₹67
D. ₹80

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Correct Answer: C. ₹67. The rate is calculated by summing the values from the comparable benchmark job factors: 10 (Mental) + 12 (Physical) + 23 (Skills) + 4 (Working Conditions) + 18 (Responsibility) = ₹67.

Question 37: A job evaluation plan uses the Point-Ranking method. The factor ‘Skill’ has several sub-factors, including ‘Education Level’. Points are assigned based on the required degree: Degree 1 (HSC) = 20 points, Degree 2 (Bachelors) = 35 points, Degree 3 (Masters) = 50 points. If a job initially required Degree 1 but is revised to require Degree 2, what would be the new point value for the ‘Education Level’ sub-factor for this job?

A. 20 points
B. 35 points
C. 50 points
D. Cannot be determined.

Show Explanation

Correct Answer: B. 35 points. The question provides the point values associated with each degree. Since the requirement changed to Degree 2, the corresponding point value is 35 points.

Question 38: In a Point-Ranking system, the factor ‘Effort’ (Weight 20%) has two sub-factors: ‘Problem Solving’ (Degree 1 = 10 pts) and ‘Task Complexity’ (Degree 1 = 10 pts). A specific job is rated as Degree 1 for Problem Solving and Degree 1 for Task Complexity. Calculate the total points for the ‘Effort’ factor for this job based only on these degree points (ignoring weighting for this calculation).

A. 10 points
B. 20 points
C. 30 points
D. 40 points

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Correct Answer: B. 20 points. The question asks for the sum of the points based on the assigned degrees for the sub-factors. Degree 1 for Problem Solving gives 10 points, and Degree 1 for Task Complexity gives 10 points. The total points for the factor based on these degree ratings is 10 + 10 = 20 points.

Question 39: A company uses a Point-Ranking system. Job A scores a total of 150 points. Job B scores a total of 180 points. Job C scores a total of 155 points. Based on the principle of placing jobs with similar point totals into the same pay grade, which jobs are most likely to be grouped together?

A. Job A and Job B
B. Job B and Job C
C. Job A and Job C
D. All three jobs in different grades.

Show Explanation

Correct Answer: C. Job A and Job C. The Point-Ranking method places jobs with similar total points into the same pay grade. Job A (150 points) and Job C (155 points) have closer scores compared to Job B (180 points), making them likely candidates for the same grade.

Question 40: The established salary range for a ‘Data Entry Operator’ position is ₹16,000 to ₹24,000 per month. What is the midpoint (MP) of this salary range?

A. ₹16,000
B. ₹18,000
C. ₹20,000
D. ₹24,000

Show Explanation

Correct Answer: C. ₹20,000. The midpoint is the average of the minimum and maximum range values: MP = (16000 + 24000) / 2 = 40000 / 2 = 20,000.

Question 41: Using the midpoint calculated in Q40 (MP = ₹20,000), determine the compa-ratio for a Data Entry Operator, Anil, whose actual monthly salary (AS) is ₹19,000.

A. 90.0%
B. 95.0%
C. 100.0%
D. 105.0%

Show Explanation

Correct Answer: B. 95.0%. Calculation using CR = (AS / MP) x 100: CR = (19000 / 20000) x 100 = 0.95 x 100 = 95.0%.

Question 42: The midpoint of the salary range for an ‘Accountant’ position is ₹50,000 per month. An employee, Priya, working as an Accountant has a compa-ratio of 110.0%. Calculate Priya’s actual monthly salary (AS).

A. ₹45,000
B. ₹50,000
C. ₹55,000
D. ₹60,000

Show Explanation

Correct Answer: C. ₹55,000. Rearranging the formula AS = (CR / 100) x MP: AS = (110.0 / 100) x 50000 = 1.10 x 50000 = 55,000.

Question 43: A specific job role has an established pay range midpoint of ₹32,000. An employee in this role, Ben, currently earns an actual salary of ₹34,560. What is Ben’s compa-ratio?

A. 92.6%
B. 100.0%
C. 105.0%
D. 108.0%

Show Explanation

Correct Answer: D. 108.0%. Calculation using CR = (AS / MP) x 100: CR = (34560 / 32000) x 100 = 1.08 x 100 = 108.0%.

Question 44: A company defines compa-ratio zones for performance interpretation as follows: Zone 1 (80-87%), Zone 2 (88-95%), Zone 3 (96-103%), Zone 4 (104-111%), Zone 5 (112-120%). An employee has a calculated compa-ratio of 86.5%. Into which performance interpretation zone does this fall?

A. Zone 1
B. Zone 2
C. Zone 3
D. Zone 4

Show Explanation

Correct Answer: A. Zone 1. The compa-ratio 86.5% falls within the range defined for Zone 1 (80-87%), typically associated with new, inexperienced, or unsatisfactorily performing incumbents.

Question 45: Using the zones defined in Q44, an employee’s compa-ratio is 105.2%. Which zone corresponds to this ratio?

A. Zone 2 (88-95%)
B. Zone 3 (96-103%)
C. Zone 4 (104-111%)
D. Zone 5 (112-120%)

Show Explanation

Correct Answer: C. Zone 4 (104-111%). The compa-ratio 105.2% falls within the range for Zone 4, often indicating performance consistently above the standard job definition.

Question 46: An employee earns ₹28,800 per month. The midpoint for their job’s pay range is ₹30,000 per month. First, calculate their compa-ratio, then determine the corresponding zone using: Zone 1 (80-87%), Zone 2 (88-95%), Zone 3 (96-103%), Zone 4 (104-111%), Zone 5 (112-120%).

A. 96.0%, Zone 3
B. 90.0%, Zone 2
C. 104.2%, Zone 4
D. 88.0%, Zone 2

Show Explanation

Correct Answer: A. 96.0%, Zone 3. Calculation: CR = (28800 / 30000) x 100 = 0.96 x 100 = 96.0%. This value falls within Zone 3 (96-103%), typically indicating a fully competent performer.

Question 47: If an employee’s actual performance is assessed as ‘gaining experience but not yet fully competent’, which compa-ratio zone (using zones from Q44) would ideally align with this performance level?

A. Zone 1 (80-87%)
B. Zone 2 (88-95%)
C. Zone 3 (96-103%)
D. Zone 4 (104-111%)

Show Explanation

Correct Answer: B. Zone 2 (88-95%). This zone is explicitly defined as corresponding to those gaining experience but not yet fully competent in the job.

Question 48: An employee has a compa-ratio of 115%. Using the zones defined in Q44, what level of performance does this typically signify?

A. New or inexperienced.
B. Fully competent.
C. Performing above definition.
D. Universally recognised as outstanding.

Show Explanation

Correct Answer: D. Universally recognised as outstanding. The compa-ratio 115% falls within Zone 5 (112-120%), which is reserved for outstanding performers.

Question 49: A manager finds that an employee’s compa-ratio is 99%. According to the zones defined in Q44, this employee’s pay level suggests they are likely perceived as:

A. Unsatisfactory performer.
B. Gaining experience.
C. Fully competent.
D. Outstanding performer.

Show Explanation

Correct Answer: C. Fully competent. A compa-ratio of 99% falls squarely within Zone 3 (96-103%), which corresponds to fully competent performers meeting job expectations.

Question 50: An employee’s actual salary is ₹42,000, while the midpoint for their job range is ₹40,000. Calculate the compa-ratio and identify the corresponding zone using the definitions from Q44.

A. 105.0%, Zone 4
B. 95.2%, Zone 2
C. 110.0%, Zone 4
D. 102.5%, Zone 3

Show Explanation

Correct Answer: A. 105.0%, Zone 4. Calculation: CR = (42000 / 40000) x 100 = 1.05 x 100 = 105.0%. This value falls within Zone 4 (104-111%), suggesting performance above the standard job definition.

Question 51: Why is there a perceived need to link employee compensation to their performance?

A. Because all jobs require the exact same level of skill and effort.
B. To ensure all employees receive identical pay irrespective of their contribution.
C. Because individuals performing the same job often exhibit different levels of skill and finesse.
D. To simplify the process of calculating monthly salaries for the accounts department.

Show Explanation

Correct Answer: C. Because individuals performing the same job often exhibit different levels of skill and finesse. Linking pay to performance acknowledges that even in the same role, employees may perform with varying degrees of effectiveness and skill, and it aims to recognise and potentially reward these differences, which can motivate better performance.

Question 52: What characterises a ‘fixed’ compensation system?

A. Employees receive a salary that fluctuates monthly based on company profits.
B. Employees are guaranteed an agreed-upon rate of pay regardless of their individual job performance.
C. Compensation is determined solely by the number of units produced by the employee.
D. Pay includes a base amount plus a bonus component tied to achieving specific targets.

Show Explanation

Correct Answer: B. Employees are guaranteed an agreed-upon rate of pay regardless of their individual job performance. A fixed compensation system provides a stable, predetermined salary or wage, ensuring employees know their income level, but it may not directly incentivise performance beyond the basic job requirements.

Question 53: Which drawback is associated with a purely ‘fixed’ compensation system?

A. It creates excessive pressure on employees to meet high production targets.
B. It can lead to employees performing below their potential due to lack of financial incentive for extra effort.
C. Measuring performance accurately for calculating pay becomes very difficult.
D. It often results in variable and unpredictable monthly pay for employees.

Show Explanation

Correct Answer: B. It can lead to employees performing below their potential due to lack of financial incentive for extra effort. When compensation is fixed regardless of output or quality (beyond a minimum standard), there may be less motivation for employees to exceed expectations or strive for higher performance levels.

Question 54: What is a key feature of a ‘totally variable’ compensation system?

A. It guarantees a minimum base salary to all employees.
B. Pay is directly and solely linked to the employee’s measured performance or output.
C. It combines a fixed salary component with performance-based bonuses.
D. Compensation depends primarily on seniority and years of service within the organisation.

Show Explanation

Correct Answer: B. Pay is directly and solely linked to the employee’s measured performance or output. In a totally variable system, earnings fluctuate based entirely on quantifiable results, such as units produced or sales achieved, offering high potential rewards but also income uncertainty.

Question 55: In which type of industry might a ‘totally variable’ compensation system face challenges in implementation due to difficulties in performance measurement?

A. Manufacturing units with clear production counts.
B. Sales departments with quantifiable targets.
C. Service industries where performance quality is harder to quantify objectively.
D. Piece-rate work environments where output is easily tracked.

Show Explanation

Correct Answer: C. Service industries where performance quality is harder to quantify objectively. Measuring performance in service roles often involves subjective elements like customer satisfaction or quality of interaction, making it difficult to base compensation entirely on objective, variable metrics.

Question 56: How does a ‘mixed’ compensation system operate?

A. It provides only a fixed salary determined by job evaluation.
B. It relies exclusively on performance metrics to determine pay.
C. It guarantees a basic fixed pay component and adds variable pay based on performance.
D. It allows employees to choose between a fixed or variable pay plan each year.

Show Explanation

Correct Answer: C. It guarantees a basic fixed pay component and adds variable pay based on performance. A mixed system aims to provide income security through a base salary while also motivating higher performance through additional, variable compensation linked to achieving specific goals or results.

Question 57: What is essential for the effective functioning of both variable and mixed compensation systems?

A. A strong trade union presence.
B. A well-established and fair performance appraisal system.
C. Government regulations mandating minimum wage levels.
D. Complete secrecy regarding all pay levels within the organisation.

Show Explanation

Correct Answer: B. A well-established and fair performance appraisal system. To link pay to performance accurately and fairly, organisations need a reliable system to measure and evaluate employee contributions against set standards or goals.

Question 58: What does the ‘cafeteria’ or ‘menu’ approach to compensation structure allow employees to do?

A. Receive free meals in the company canteen as part of their package.
B. Choose how their total compensation package is allocated across different components like basic pay, HRA, etC.
C. Select their preferred work timings and leave schedule.
D. Opt out of the mandatory retirement fund contributions.

Show Explanation

Correct Answer: B. Choose how their total compensation package is allocated across different components like basic pay, HRA, etc. This approach provides flexibility, allowing employees to structure their pay components within a total cost-to-company limit, potentially optimising tax benefits and meeting personal needs.

Question 59: In the context of employee compensation, what does ‘Cost to Company’ (CTC) typically include?

A. Only the basic salary and dearness allowance.
B. Only the variable performance-linked incentive amount.
C. The employee’s net take-home pay after all deductions.
D. The total cost incurred by the company for an employee, including salary, allowances, benefits like LFC, medical, etc.

Show Explanation

Correct Answer: D. The total cost incurred by the company for an employee, including salary, allowances, benefits like LFC, medical, etc. CTC represents the overall expenditure by the employer related to an employee’s package, encompassing direct pay and the monetary value of various benefits.

Question 60: In designing a compensation structure using regression analysis, what typically represents the ‘X axis’ variable?

A. The weighted average market base pay.
B. The job evaluation points assigned to benchmark jobs.
C. The company’s desired market lead percentage.
D. The calculated predicted base pay for each job.

Show Explanation

Correct Answer: B. The job evaluation points assigned to benchmark jobs. Regression analysis is used to establish a relationship (market pay line) between the internal value of jobs (represented by job evaluation points on the X axis) and external market pay rates (on the Y axis).

Question 61: A company performs a regression analysis to create a market pay line and finds the R squared value to be 0.92. What does this indicate?

A. The company should lead the market pay by 92%.
B. 92% of the variation in market pay is explained by the job evaluation points.
C. Only 8% of the benchmark jobs fit the pay line model.
D. The calculated predicted base pay is 92% accurate.

Show Explanation

Correct Answer: B. 92% of the variation in market pay is explained by the job evaluation points. R squared (R²) measures how well the regression model fits the data. A high value (like 0.92 or 92%) suggests that the job evaluation points are a strong predictor of market pay rates, making the model reliable for setting internal pay.

Question 62: If a regression analysis yields a market pay line equation of Predicted Pay = 5000 + (150 * Job Evaluation Points), what is the predicted base pay for a benchmark job with 200 job evaluation points?

A. ₹ 30,000
B. ₹ 35,000
C. ₹ 15,000
D. ₹ 20,500

Show Explanation

Correct Answer: B. ₹ 35,000. Substitute the Job Evaluation Points (200) into the equation: Predicted Pay = 5000 + (150 * 200) = 5000 + 30000 = ₹ 35,000.

Question 63: A company uses regression analysis to determine the predicted market pay for a job is ₹ 40,000. If the company strategy is to lead the market in base pay by 3%, what should be the target base pay rate offered for this job?

A. ₹ 40,000
B. ₹ 41,200
C. ₹ 38,800
D. ₹ 43,000

Show Explanation

Correct Answer: B. ₹ 41,200. To lead by 3%, the company needs to pay 103% of the predicted market rate. Calculation: ₹ 40,000 * 1.03 = ₹ 41,200.

Question 64: In the Indian Banking Industry, what significant change occurred regarding wage settlement for ‘workman’ staff from 1966 onwards?

A. Wages began to be decided solely by individual bank management discretion.
B. Government tribunals were established as the primary method for setting wages.
C. Wages started being settled through Bipartite Settlements between the Indian Banks’ Association (IBA) and trade unions.
D. Banks were given complete autonomy to set wages based on their individual capacity to pay.

Show Explanation

Correct Answer: C. Wages started being settled through Bipartite Settlements between the Indian Banks’ Association (IBA) and trade unions. This marked a shift from third-party adjudication (tribunals) to direct negotiations between management (represented by IBA) and employee unions for workman staff.

Question 65: As per the IXth Bipartite Settlement in the Indian Banking Industry (signed 11.11.2020), what is the nature of the Performance Linked Incentive (PLI)?

A. It replaces the existing basic pay and dearness allowance structure.
B. It is a one-time payment made only upon retirement.
C. It is an annual incentive paid over and above normal salary, linked to the bank’s annual performance.
D. It is paid monthly based on individual employee performance targets.

Show Explanation

Correct Answer: C. It is an annual incentive paid over and above normal salary, linked to the bank’s annual performance. The PLI was introduced as an additional component, payable annually based on the bank achieving certain financial results, specifically related to operating profit growth and net profit status.

Question 66: According to the PLI matrix introduced in the IXth Bipartite Settlement, if a bank achieves a Year-on-Year (YoY) growth in Operating Profit of 8% and reports a Net Profit, how many days’ salary (Basic + DA) would be payable as PLI?

A. Nil
B. 5 days
C. 10 days
D. 15 days

Show Explanation

Correct Answer: B. 5 days. The matrix specifies 5 days’ pay for YoY Operating Profit growth between 5% and 10% (inclusive of 5%, exclusive of 10%). Since the bank also has a Net Profit, this slab is applicable.

Question 67: According to the PLI matrix, if a bank records a YoY growth in Operating Profit of 12% and also has a Net Profit, what PLI is payable?

A. 5 days’ pay
B. 10 days’ pay
C. 15 days’ pay
D. Nil

Show Explanation

Correct Answer: B. 10 days’ pay. The matrix specifies 10 days’ pay for YoY Operating Profit growth greater than 10% up to 15%. The presence of Net Profit makes this slab payable.

Question 68: Consider a bank that achieves a YoY Operating Profit growth of 6% but does not report a Net Profit for the financial year. Based on the PLI rules from the IXth Bipartite Settlement, what PLI is payable?

A. Nil
B. 5 days’ pay
C. 10 days’ pay
D. 15 days’ pay

Show Explanation

Correct Answer: B. 5 days’ pay. The rule states that if a bank has growth in Operating Profit of 5% or more, but there is no Net Profit, the minimum 2nd slab of 5 days will be payable.

Question 69: A bank reports a YoY growth in Operating Profit of 18% and achieves a substantial Net Profit. According to the PLI matrix, how many days’ salary (Basic + DA) should be paid as PLI?

A. 5 days
B. 10 days
C. 15 days
D. 20 days

Show Explanation

Correct Answer: C. 15 days. The matrix indicates 15 days’ pay for YoY Operating Profit growth greater than 15%. Since the bank has a Net Profit, this highest slab is applicable.

Question 70: What type of reward programme is the ‘Recognition And Career Enhancement (RACE)’ programme mentioned in the context of Kotak?

A. An informal peer-to-peer appreciation system using e-cards.
B. An award for employees completing long service tenures like 10 or 15 years.
C. A structured, time-bound programme for the sales force based on performance for recognition and career growth.
D. A benefit providing emergency financial loans during contingencies.

Show Explanation

Correct Answer: C. A structured, time-bound programme for the sales force based on performance for recognition and career growth. RACE is described as a formal programme aimed specifically at the sales team, linking performance to career progression and rewards in a transparent manner.

Question 1: What primary purpose does gathering regular employee feedback serve for progressive organisations?

Question 2: Which method is considered a formal way of gathering employee feedback within an organisation?

Question 3: In the context of employee feedback, what do exit interviews primarily help management understand?

Question 4: What is the main objective of conducting climate surveys in an organisation?

Question 5: Which department typically coordinates the process of climate surveys, including design, administration, and tabulation?

Question 6: In a typical climate survey, what does the dimension ‘Responsibility’ assess?

Question 7: What potential negative consequence can arise from an improperly conducted employee survey?

Question 8: According to the fundamental principles discussed, what is considered the prime motive for an individual to take up a job?

Question 9: What is a likely outcome if an organisation’s compensation is significantly disproportionate to the work type and industry standards?

Question 10: What does the concept of “Total Rewards” encompass in an organisational context?

Question 11: Which of the following are considered the three primary categories of rewards within the “Total Rewards” framework?

Question 12: According to the WorldatWork Total Rewards Model, which element involves programmes used by an employer to supplement cash compensation, such as health and retirement plans?

Question 13: Which element of Total Rewards focuses on organisational practices and policies that support employees in achieving success both at work and at home?

Question 14: What does the ‘Talent Development’ component of Total Rewards provide to employees?

Question 15: What reason does research suggest is often behind the failure of Total Rewards programmes to achieve their objectives?

Question 16: According to the management principles described by Armstrong & Murlis, what essential function does a reward strategy serve?

Question 17: When formulating the purpose of a reward program, identifying its meaningfulness to employees is crucial. Why is this important?

Question 18: For any component, like training opportunities or health insurance, to be formally considered part of an organisation’s “Total Rewards” strategy, what two conditions must it meet?

Question 19: Analysing described reward philosophies (like those aiming to attract top talent or ensure fairness), what is a central purpose of such philosophies?

Question 20: Considering systems designed for employee recognition, such as providing platforms for appreciation or acknowledging specific behaviours, what key principle often contributes to their effectiveness?

Question 21: In the context of employee rewards, what does ‘compensation’ typically encompass?

Question 22: When an organisation determines its compensation levels, which internal factor often serves as a fundamental basis?

Question 23: How can the external market situation impact the compensation offered for specific job roles?

Question 24: Among different wage concepts, which one aims to provide a wage sufficient not only for basic sustenance but also for satisfying social needs and providing a measure of security like insurance?

Question 25: What is a primary goal behind labour laws such as The Payment of Wages Act and The Minimum Wages Act in India?

Question 26: What fundamental activity does ‘Job Evaluation’ involve within an organisation?

Question 27: One key objective achieved through the process of Job Evaluation is to:

Question 28: Job evaluation techniques are generally divided into two main categories based on their approach. What are these categories?

Question 29: Identify a defining characteristic of the ‘Ranking’ method used in job evaluation.

Question 30: The ‘Job Classification’ or ‘Job Grading’ method of job evaluation operates by:

Question 31: How is job value typically determined using the ‘Factor Comparison’ method?

Question 32: Which job evaluation method involves identifying key compensable factors, defining degrees within each factor, assigning points to these degrees based on importance, and then summing the total points for a job to determine its relative value?

Question 33: In compensation management, what information does a “Compa-ratio” provide?

Question 34: If AS represents an employee’s Actual Salary and MP represents the Midpoint of the pay range for their job, how is the Compa-ratio (CR) calculated?

Question 35: According to typical compa-ratio zone definitions, a ratio between 96% and 103% usually indicates that an employee’s pay corresponds to which level of job performance or competence?

Question 40: The established salary range for a ‘Data Entry Operator’ position is ₹16,000 to ₹24,000 per month. What is the midpoint (MP) of this salary range?

Question 41: Using the midpoint calculated in Q40 (MP = ₹20,000), determine the compa-ratio for a Data Entry Operator, Anil, whose actual monthly salary (AS) is ₹19,000.

Question 42: The midpoint of the salary range for an ‘Accountant’ position is ₹50,000 per month. An employee, Priya, working as an Accountant has a compa-ratio of 110.0%. Calculate Priya’s actual monthly salary (AS).

Question 43: A specific job role has an established pay range midpoint of ₹32,000. An employee in this role, Ben, currently earns an actual salary of ₹34,560. What is Ben’s compa-ratio?

Question 44: A company defines compa-ratio zones for performance interpretation as follows: Zone 1 (80-87%), Zone 2 (88-95%), Zone 3 (96-103%), Zone 4 (104-111%), Zone 5 (112-120%). An employee has a calculated compa-ratio of 86.5%. Into which performance interpretation zone does this fall?

Question 45: Using the zones defined in Q44, an employee’s compa-ratio is 105.2%. Which zone corresponds to this ratio?

Question 46: An employee earns ₹28,800 per month. The midpoint for their job’s pay range is ₹30,000 per month. First, calculate their compa-ratio, then determine the corresponding zone using: Zone 1 (80-87%), Zone 2 (88-95%), Zone 3 (96-103%), Zone 4 (104-111%), Zone 5 (112-120%).

Question 47: If an employee’s actual performance is assessed as ‘gaining experience but not yet fully competent’, which compa-ratio zone (using zones from Q44) would ideally align with this performance level?

Question 48: An employee has a compa-ratio of 115%. Using the zones defined in Q44, what level of performance does this typically signify?

Question 49: A manager finds that an employee’s compa-ratio is 99%. According to the zones defined in Q44, this employee’s pay level suggests they are likely perceived as:

Question 50: An employee’s actual salary is ₹42,000, while the midpoint for their job range is ₹40,000. Calculate the compa-ratio and identify the corresponding zone using the definitions from Q44.

Question 51: Why is there a perceived need to link employee compensation to their performance?

Question 52: What characterises a ‘fixed’ compensation system?

Question 53: Which drawback is associated with a purely ‘fixed’ compensation system?

Question 54: What is a key feature of a ‘totally variable’ compensation system?

Question 55: In which type of industry might a ‘totally variable’ compensation system face challenges in implementation due to difficulties in performance measurement?

Question 56: How does a ‘mixed’ compensation system operate?

Question 57: What is essential for the effective functioning of both variable and mixed compensation systems?

Question 58: What does the ‘cafeteria’ or ‘menu’ approach to compensation structure allow employees to do?

Question 59: In the context of employee compensation, what does ‘Cost to Company’ (CTC) typically include?

Question 60: In designing a compensation structure using regression analysis, what typically represents the ‘X axis’ variable?

Question 61: A company performs a regression analysis to create a market pay line and finds the R squared value to be 0.92. What does this indicate?

Question 62: If a regression analysis yields a market pay line equation of Predicted Pay = 5000 + (150 * Job Evaluation Points), what is the predicted base pay for a benchmark job with 200 job evaluation points?

Question 63: A company uses regression analysis to determine the predicted market pay for a job is ₹ 40,000. If the company strategy is to lead the market in base pay by 3%, what should be the target base pay rate offered for this job?

Question 64: In the Indian Banking Industry, what significant change occurred regarding wage settlement for ‘workman’ staff from 1966 onwards?

Question 65: As per the IXth Bipartite Settlement in the Indian Banking Industry (signed 11.11.2020), what is the nature of the Performance Linked Incentive (PLI)?

Question 66: According to the PLI matrix introduced in the IXth Bipartite Settlement, if a bank achieves a Year-on-Year (YoY) growth in Operating Profit of 8% and reports a Net Profit, how many days’ salary (Basic + DA) would be payable as PLI?

Question 67: According to the PLI matrix, if a bank records a YoY growth in Operating Profit of 12% and also has a Net Profit, what PLI is payable?

Question 68: Consider a bank that achieves a YoY Operating Profit growth of 6% but does not report a Net Profit for the financial year. Based on the PLI rules from the IXth Bipartite Settlement, what PLI is payable?

Question 69: A bank reports a YoY growth in Operating Profit of 18% and achieves a substantial Net Profit. According to the PLI matrix, how many days’ salary (Basic + DA) should be paid as PLI?

Question 70: What type of reward programme is the ‘Recognition And Career Enhancement (RACE)’ programme mentioned in the context of Kotak?

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