Compensation Quiz: Are You a Comp Whiz Kid?
By Bridget Quigg, PayScale.com
Becoming a compensation whiz can be an intimidating task, especially with all of the lingo you need to know. How strong is your compensation know-how? This compensation quiz is intended help you test yourself and fill in the gaps in your knowledge.
In the following list you will find five compensation keywords and then the definitions for them below. Your job is to match each term to its definition. The correct answers are at the bottom of the post. Have fun!
A. Market ratio
B. Premium pay
C. Range penetration
D. Job family
E. Level cutters
Definition #1. Jobs that are affiliated by having the same nature of duties, e.g. marketing or finance.
Definition #2. The comparison of internal pay to the market pay rate for a job. A ___ ___ is calculated by dividing the company’s internal pay for a job by the midpoint of the market data for the job. It is not possible to calculate a ___ ____ without knowing the market midpoint for that job (you don’t, however, need to know anything about the market data for any other points on that range). ____ ____s are a useful measurement when comparing how employees are being paid relative to the market for the same job. While there are often several exceptions, companies often strive to have employee pay within close proximity to the midpoint. Reviewing your ____ ____ can help you assess if you are in fact doing so, and/or if some employees are too high or too low relative to the market.
Definition #3. Phrases or words used to distinguish the variety of levels in a particular job family, e.g. in accounting, a senior versus a junior accountant.
Definition #4. An amount that is added to a base salary to pay additional monies for situations such as graveyard shift, working weekends, or working away from home.
Definition #5. An individual’s pay compared to the complete pay range, or how far into a pay range and employee has progressed. Usually expressed as a percentage, a _____ _____ of 30 percent means that an employee is 30 percent of the way into his/or her range and has 70 percent more of that range to move through. Calculated as (Pay Rate- Minimum) ÷ (Maximum-Minimum). This can be a useful measure to assess overall if your employees are mostly in the lower parts of their range and have a lot of room before they reach the maximum or if there are certain employees or groups of employees who are begin paid toward the top of the range, which could become a problem.
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More Resources from PayScale:
- Get a free PayScale compensation report and see salary ranges for the position of your choice
- Attend one of our free compensation webinars.
- Download our free whitepaper, 5 Easy Steps to a Smart Compensation Plan.
Answers: 1-D, 2-A, 3-E, 4-B, 5-C